AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP XX XXX XX, XX (Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxx)
The Agreement of Limited Partnership is made and entered into as
of the 30th day of June, 1998 by and among, Columbia Pacific Master
Fund '98 General Partnership, a Washington general partnership
("CP")and Xxxxxx X Xxxx, an Individual (Xxxx).
The undersigned desire to amend the prior partnership agreement of
the Partnership, dated as of March 1, 1996, to reflect the fact
that CP and Xxxx have purchased all of the partnership interest
held by ESC XX XX, Inc and all of the interest held by Emeritus
Properties IV, Inc., and to make certain other revisions and
amendments, as set forth below. The undersigned agree to continue
to operate as a limited partnership under the laws of the state of
Washington as follows.
The parties hereto agree as follows:
1. Definitions. The following terms used in the Agreement shall
have the meanings specified below:
1.1 "Act" means the Washington Limited Partnership Act, as amended
from time to time.
1.2 "Agreement" means this Agreement of the ESC II, LP as it may
be amended from time to time.
1.3 "Assignee" means a person who has acquired a Limited Partner's
Interest in whole or part and has not become a Substitute Limited
Partner.
1.4 "Capital Account" means the account maintained for each
Partner in accordance with Section 7.5. In the case of a transfer
of an interest, the transferee shall succeed to the Capital
Account of the transferor, or, in the case of a partial transfer,
a proportionate share thereof.
1.5 "Capital Contribution" means the total amount of money and the
fair market value of all property contributed to the Partnership
by each Partner pursuant to the terms of the Agreement. Capital
Contribution shall also include any amounts paid directly by a
Partner to any creditor of the Partnership in respect of any
guaranty or similar obligation undertaken by such Partner in
connection with
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the Partnership's operations. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution
made by a predecessor holder of the interest of such Partner.
1.6 "Cash Available for Distribution" means all cash receipts of
the Partnership, excluding cash available upon liquidation of the
Partnership, in excess of amounts reasonably required for payment
of operating expenses, repayment of current liabilities, repayment
of such amounts of Partnership indebtedness as the General Partner
shall determine necessary or advisable, and the establishment of
and additions to such cash reserves as the General Partner in its
sole discretion shall deem necessary or advisable, including, but
not limited to, reserves for capital expenditures, replacements,
contingent or unforeseen liabilities or other obligations of the
Partnership.
1.7 "Code" means the United States Internal Revenue Code of 1986,
as amended. References to specific Code Sections or Treasury
Regulations shall be deemed to refer to such Code Sections or
Treasury Regulations as they may be amended from time to time or
to any successor Code Sections or Treasury Regulations if the Code
Section or Treasury Regulation referred to is repealed.
1.8 "Convertible Notes" means a S 1,500,000 note and a $450,000
note payable by the Partnership to the Convertible Note Holder.
The notes shall be convertible into amount to a 20% limited
partnership interest.
1.9 "Convertible Note Holder" means ESC XX XX, Inc. and Emeritus
Properties IV, Inc.
1.10 "Deemed Capital Account" means a Partner's Capital Account
,as calculated from time to time, adjusted by (i) adding thereto
the sum of (A) the amount of such Partner's Mandatory Obligation,
if any, and (B) each Partner's share of Minimum Gain (determined
after any decreases therein for such year) and (ii) subtracting
therefrom (A) allocations of losses and deductions which are
reasonably expected to be made as of the end of the taxable year
to the Partners pursuant to Code Section 704(e)(2), Code Section
706(d) and Treasury Regulation Section 1.751-1 (b)(2)(ii), and (B)
distributions which at the end of the taxable year are reasonably
expected to be made to the Partner to the extent that said
distributions exceed offsetting increases to the Partner's Capital
Account (including allocations of the Qualified Income Offset
pursuant to Section 8.5 but excluding allocations of Minimum Gain
Chargeback pursuant to Section8.4) that are reasonably expected to
occur during (or prior to) the taxable years in which such
distributions are reasonably expected to be made.
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1.11 "General Partner" means CP and those persons who are admitted
as General Partners under Section 15.3 hereof.
1.12 "Interest" or "Partnership Interest" means the ownership
interest of a Partner in the Partnership at any particular time,
including the right of such Partner to any and all benefits to
which such Partner may be entitled as provided in the Agreement
and in the Act, together with the obligations of such Partner to
comply with all the terms and provisions of the Agreement and the
Act.
1.13 "Limited Partners" means Xxxx and those persons who are
admitted as Limited Partners under Section 14.5 hereof.
1.14 "Mandatory Obligation" means the sum of (i) the amount of a
Partner's remaining contribution obligation (including the amount
of any Capital Account deficit such Partner is obligated to
restore upon liquidation) provided that such contribution must be
made in all events within ninety (90) days of liquidation of the
Partner's interest as determined under Treasury Regulation Section
1.704- 1 (b)(2)(ii)(g) and (ii) the additional amount, if any,
such Partner would be obligated to contribute as of year end to
retire recourse indebtedness of the Partnership if the Partnership
were to liquidate as of such date and dispose of all of its assets
at book value.
1.15 "Minimum Gain" means the amount determined by computing, with
respect to each nonrecourse liability of the Partnership, the
amount of gain, if any, that would be realized by the Partnership
if it disposed of the Partnership Property subject to such
nonrecourse liability in full satisfaction thereof in a taxable
transaction, and then by aggregating the amounts so determined.
Such gain shall be determined in accordance with Treasury
Regulation Section 1.704-2(d). Each Partner's share of Minimum
Gain at the end of any taxable year of the Partnership shall be
determined in accordance with Treasury Regulation Section 1.704-
2(g)(1).
1.16 "Net Income" or "Net Loss" means taxable income or loss
(including items requiring separate computation under Section 702
ot the Code) of the Partnership as determined using the method of
accounting chosen by the General Partner and used by the
Partnership for federal income tax purposes, adjusted in
accordance with Treasury Regulation Section 1.704-1 (b)(2)(iv)(g),
for any property with differing tax and book values, to take into
account depreciation, depletion, amortization and gain or loss as
computed for book purposes.
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1.17 "Partners" means the persons or entities admitted to the
Partnership as General Partners and Limited Partners.
1.18 "Partnership" means the Limited Partnership created and
governed by the Agreement.
1.19 "Partnership Property" means any real or personal property
owned by the Partnership.
1.20 "Percentage Interest" means the percentage interest of each
Partner as set forth on Appendix A.
1.21 "Project" means the independent and assisted living facility
located in Dallas, Texas, commonly known as Xxxxxxx Towers,
together with any and all improvements as shall be made to such
property by the Partnership from time to time.
1.22 "Substitute Limited Partner" means an Assignee who has been
admitted to all rights of Partnership pursuant to Section 14.5
hereof.
2. Formation. The Partners hereby agree to continue as a limited
partnership and operate the Partnership under the terms and
conditions set forth herein. Except as otherwise provided herein,
the rights and liabilities of the Partners shall be governed by
the Act.
3. Name. The name of the Partnership shall be ESC II, LP. The
General Partner may from time to time change the name of the
Partnership or adopt such trade or fictitious names as it may
determine to be appropriate.
4. Office: Agent for Service of Process. The principal office of
the Partnership shall be at 0000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx 00000. Xxxxx X. XxXxxxx shall be the agent for
the Partnership, or such successor as the General Partner may
designate.
5. Puraoses and Limitations.
5.1 Puraoses of the Partnershin. The sole purpose and the business
of the Partnership is to acquire, construct, develop, own,
maintain, operate and sell the Project, and to provide such
necessary or complementary services as would customarily be
available in the operation of a full service assisted living care
residence. Notwithstanding anything contain herein to the
contrary, the Partnership shall not engage in any business, and
shall have no purpose, unrelated
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to the Project, and shall not acquire real property or own assets
other than those related to the furtherance of the purposes of the
Partnership.
5.2. Partnership Limitations. The Company shall not, without the
written consent of the holder of the Project Loan or refinancing
thereof:
(a) engage in any business or activity other than those set forth
in Section 5.1;
(b) merge into or consolidate with any person or entity;
(c) hold itself out to be responsible for the debts of another
person or entity;
(d) make any loans or advances to any third party, including any
General Partner, Limited Partner or affiliate of the Partnership;
and
(e) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
6. Term. The term of the Partnership commenced on the date of the
filing of the Certificate of Limited Partnership for the
Partnership in the office of the Washington Secretary of State,
and shall continue until December 31, 2025, unless sooner
dissolved, wound up and terminated in accordance with the
provisions of this Agreement and the Act.
7. Percenta e Interests and Ca ital Contributions.
rs shall
7.1 Capital Contributions, Percentaae Interests. The Partne have
the Partnership for the Percentage Interests in the Partnership as
shown on Appendix A.
7.2 No Interest on Capital Account. No Partner shall be entitled
to receive interest on such Partner's Capital Contributions or
such Partner's Capital Account.
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7.3 No Withdrawal of Capital. Except as otherwise provided in this
Agreement, no Partner shall have the right to withdraw or demand a
return of any or all of such Partner's Capital Contribution. It is
the intent of the Partners that no distribution (or any part of
any distribution) made to any Partner pursuant to Section 10
hereof shall be deemed a return or withdrawal of Capital
Contributions, even if such distribution represents (in full or in
part) a distribution of revenue offset by depreciation or any
other non-cash item accounted for as an expense, loss or deduction
from, or offset to, the Partnership's income, and that no Partner
shall be obligated to pay any such amount to or for the account of
the Partnership or any creditor of the Partnership. However, if
any court of competent jurisdiction holds that, notwithstanding
the provisions of this Agreement, any Partner is obligated to make
any such payment, such obligation shall be the obligation of such
Partner and not of any other Partner, including the General
Partner.
7.4 Additional Capital.
(a) Except as otherwise provided for herein or mutually agreed
upon by the Partners, no Partner shall be obligated to make an
additional Capital Contribution to the Partnership.
(b) In the event additional capital is needed for the operation of
the Project, CP agrees to lend 80% of such amounts, to the
Partnership (the
"Capital Loans"). The Capital Loans shall bear interest at nine
percent per annum, Capital Loans shall be repaid prior to any
distributions to the Partners. The balance of 20% shall be drawn
from the proceeds evidenced by the Convertible Notes.
7.5 Capital Accounts. The Partnership shall maintain a Capital
Account for each Partner in accordance with Treasury Regulations
issued under Code Section 704. The initial Capital Account balance
for each Partner shall be the amount of initial Capital
Contributions made by each Partner under Section 7.1 above
7.6 Default. In the event any Partner shall fail to contribute any
cash or property when due hereunder, such Partner shall remain
liable therefor to the Partnership, which may institute
proceedings in any court of competent jurisdiction in connection
with which such Partner shall pay the costs of such collection,
including reasonable attorneys' fees.
8. Allocations.
8.1 Allocation of Net Loss from Onerations. Except as otherwise
provided in this Section 8 and in Section 16.3, from and after the
effective date of this Agreement, the Partnership shall allocate
any Net Loss 1 OO% to CP.
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8.2 Allocation of Net Income from Operations. Except as otherwise
provided in this Section 8 and Section 16.3, from and after the
effective date of this Agreement, the Partnership shall allocate
all Net Income as follows:
/a) First, to the Partners in proportion to, and up to the amount
of, aggregate distributions ot Cash Available for Distribution
made to the Partners from the date of this Agreement through the
end of the calendar year with respect to which such allocations
are being made;
(b) Second, in proportion to, and up to the amount of, Net Losses
allocated to the Partners in accordance with Section 8.1; and
(c) Thereafter, all remaining Net Income shall be allocated in
proportion to each Partner's Percentage Interest.
8.3 Limitation on Net Loss Allocations. Notwithstanding anything
contained in this Section 8, no Limited Partner shall be allocated
Net Loss to the extent such allocation would cause a negative
balance in such Partner's Deemed Capital Account as of the end of
the taxable year to which such allocation relates.
8.4 Minimum Gain Charaeback. If there is a net decrease in Minimum
Gain during a taxable year of the Partnership, then
notwithstanding any other provision of this Section 8 or Section
16.3, each Partner must be allocated items of income and gain for
such year, and succeeding taxable years to the extent necessary
(the "Minimum Gain Chargeback"), in proportion to, and to the
extent of
,an amount required under Treasury Regulation Section 1.704-2(f).
8.5 aualified Income Offset. If at the end of any taxable year and
after operation of Section 8.4, any Limited Partner shall have a
negative balance in its Deemed Capital Account, then
notwithstanding anything contained in this Section 8, there shall
be reallocated to each Limited Partner with a negative balance in
its Deemed Capital Account (determined after the allocation of
income, gain or loss under this Section 8 for such year) each item
of Partnership gross income (unreduced by any deductions) and gain
in proportion to such negative balances until the Deemed Capital
Account for each such Limited Partner is increased to zero.
8.6 Curative Allocations. The allocations set forth in Sections
8.3, 8.4 and 8.5 (the "Regulatory Allocations") are intended to
comply with certain requirements of the Treasury Regulations
issued pursuant to Code Section 704(b). It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with
special allocations of other items of Partnership income, gain,
loss, or deduction pursuant
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to this Section 8.6. Therefore, notwithstanding any other
provision of this Section 8 (other than the Regulatory
Allocations), the General Partner shall make such offsetting
special allocations of Partnership income, gain, loss, or
deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital
Account balance such Partner would have had if the Regulatory
Allocations were not part of the Agreement and all Partnership
items were allocated pursuant to Sections 8.1 and 8.2.
8.7 Modification of Partnershin Allocations. It is the intent of
the
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Partners that each Partner s distributive share of income ain,
loss, deduction, or credit /or items thereof) shall be determined
and allocated in accordance with this Section 8 to the fullest
extent permitted by Section 704(b) of the Code. In order to
preserve and protect the determinations and allocations provided
for in this Section 8, the General Partner shall be, and hereby
is, authorized and directed to allocate income, gain, loss,
deduction or credit (or items thereof) arising in any year
differently from the manner otherwise provided for in this Section
8 if, and to the extent that, allocation of income, gain, loss,
deduction or credit (or items thereof) in the manner provided for
in this Section 8 would cause the determination and
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allocation of each Partner s distributive share of income ain,
loss, deduction or credit (or items thereof), not to be permitted
by Section 704(b) of the Code and Treasury Regulations promulgated
thereunder. Any allocation made pursuant to this Section 8.7 shall
be made only after the General Partner has secured an opinion of
counsel that such modification is the minimum modification
required to comply with Code Section 704(b) and shall be deemed to
be a complete substitute for any allocation otherwise provided for
in this Section 8 and no amendment of this Agreement or approval
of any Partner shall be required. The Limited Partners shall be
given notice of the modification within thirty (30) days of the
effective date thereof, such notice to include the text of the
modification and a statement of the circumstances requiring the
modification to be made.
8.8 Deficit Capital Accounts at Liauidation. It is understood and
agreed that one purpose of the provisions of this Section 8 is to
insure that none of the Partners has a deficit Capital Account
balance after liquidation and to insure that all allocations under
this Section 8 will be respected by the Internal Revenue Service.
The Partners and the Partnership neither intend nor expect that
any Partner will have a deficit Capital Account balance after
liquidation and, notwithstanding anything to the contrary in this
Agreement, the provisions of this Agreement shall be construed and
interpreted to give effect to such intention. However, if
following a liquidation of a Partner's interest as determined
under Treasury Regulation Section 1.704-1 (b)(2)(ii)(g), a Partner
has a deficit balance in its Capital Account after the allocation
of Net Income pursuant to this Section 8 and Section 16.3 and all
other adjustments have been made to such Partner's Capital Account
for Partnership operations and liquidation, such Partner shall
have
7
an obligation to restore such deficit balance only if such Partner
is a General Partner.
9. Partnership Expenses. The Partner shall be reimbursed for, all
costs may include, but are not limited to:
Partnership shall pay, and the General and expenses of the
Partnership, which
(a) All organizational expenses incurred in the formation of the
Partnership and the selling of interests in the Partnership;
(b) All costs of personnel employed by the Partnership;
(c) All costs reasonably related to the conduct of the
Partnership's day to day business affairs, including, but without
limitation, the cost of supplies, utilities, taxes, license fees,
and services contracted from third parties;
(d) All costs of borrowed money, taxes and assessments on
Partnership property, and other taxes applicable to the
Partnership;
(e) Legal, audit, accounting, brokerage and other fees;
(f) Printing and other expenses and taxes incurred in connection
with the issuance, distribution, transfer, registration and
recording of documents evidencing ownership of an interest in the
Partnership or in connection with the business of the Partnership;
(g) Fees and expenses paid to contractors, mortgage bankers,
brokers and services, leasing agents, consultants, on-site
managers, real estate brokers, insurance brokers and other agents,
including affiliates of the General Partner;
/h) Expenses in connection with the acquisition, preparation,
design, planning, construction, development, disposition,
replacement, alteration, repair, remodeling, refurbishment,
leasing, financing and refinancing and operation of Partnership
property (including the costs and expenses of legal and accounting
fees, insurance premiums, real estate brokerage and leasing
commissions and of maintenance of such property);
(i) The cost of insurance obtained in connection with the business
of the Partnership;
/j) Expenses of revising, amending, conveying, modifying or
terminating the Partnership;
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Ik) Expenses in connection with distributions made by the
Partnership to, and communications and bookkeeping and clerical
work necessary in maintaining relations with Limited Partners;
(I) Expenses in connection with preparing and mailing reports
required to be furnished to the Limited Partners for investment,
tax reporting or other purposes which the General Partner deems
appropriate;
(m) Costs incurred in connection with any litigation, including
any examinations or audits by regulatory agencies; and
(n) Costs of preparation and dissemination of informational
material and documentation relating to potential sale, refinancing
or other disposition of Partnership properties.
10. Distributions of Cash Available for Distribution. At such
times and in such amounts as the General Partner in its discretion
determines appropriate, Cash Available for Distribution shall be
distributed among the Partners in accordance with their Percentage
Interests, except as otherwise provided in Sections 16.4.
11. Powers Rights and Obligations of the General Partner.
11.1 General Authoritv and Powers of General Partner. Except as
provided in Section 11.7 and in certain parts of this Section
11.1, the General Partner shall have the exclusive right and power
to manage, operate and control the Partnership and to do all
things and make all decisions necessary or appropriate to carry on
the business and affairs of the Partnership. The General Partner
may designate a person to be responsible for the day to day
management of the Partnership. The authority of the General
Partner shall include, but shall not be limited to the following:
(a) To spend the capital and revenues of the Partnership;
(b) To manage, sell, develop, improve, operate and dispose of any
Partnership properties, provided, however, that a sale or disposal
of the property must be approved by the Partners in accordance
with Section 11.7 below, and further provided that capital
improvements in excess of 550,000 must be approved by the Partners
and the Convertible Note Holders in accordance with Section 11.7
below;
(c) To employ persons, firms and/or corporations for the operation
and management of the Partnership's business and for the operation
and development of the property of the Partnership, including but
not limited to sales agents, management agents, architects,
engineers, contractors, attorneys and accountants;
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(d) To acquire, lease and sell personal and/or real property, hire
and fire employees, and to do all other acts necessary,
appropriate, or helpful for the operation of the Partnership
business;
(e) To execute, acknowledge and deliver any and all instruments to
effectuate any of the foregoing powers and any other powers
granted the General Partner under the laws of the state of
Washington or other provisions of this Agreement;
(f) To enter into and to execute agreements for employment or
services, as well as any other agreements and all other
instruments the General Partner deems necessary or appropriate to
operate the Partnership's business and to operate and dispose of
Partnership properties or to effectively and properly perform its
duties or exercise its powers hereunder;
(g) To borrow money on a secured or unsecured basis from
individuals, banks and other lending institutions to finance
construction of the project or refinance Partnership assets, to
meet other Partnership obligations, provide Partnership working
capital and for any other Partnership purpose, and to execute
promissory notes, mortgages, deeds of trust and assignments of
Partnership property, and such other security instruments as a
lender of funds may require to secure repayment of such
borrowings; provided, however, that such financing activity is
approved by the Partners of the Partnership and the Convertible
Note Holders in accordance with Section 11.7 below; provided, that
no individual, bank or other lending institution to which the
General Partner applies for a loan shall be required to inquire as
to the purpose for which such loan is sought, and as between the
Partnership and such individual, bank or other lending institution
it shall be conclusively presumed that the proceeds of such loan
are to be, and will be, used for purposes authorized under the
terms of this Agreement;
/h) To enter into such agreements and contracts with parties and
to give such receipts, releases and discharges, with respect to
the business of the Partnership as the General Partner deems
advisable or appropriate;
(i) To purchase, at the expense of the Partnership, such liability
and other insurance as the General Partner, in its sole
discretion, deems advisable to protect the Partnership's assets
and business; however, the General Partner shall not be liable to
the Partnership or the other Partners for failure to purchase any
insurance; and
(j) To xxx and be sued, complain, defend, settle and/or
compromise, with respect to any claim in favor of or against the
Partnership, in the name and on behalf of the Partnership.
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11.2 Time Devoted to Partnership; Other Ventures. The General
Partner shall devote so much of its time to the business of the
Partnership as in its judgment the conduct of the Partnership's
business reasonably requires. The General Partner may engage in
business ventures and activities of any nature and description
independently or with others, whether or not in competition with
the business of the Partnership, and shall have no obligation to
disclose business opportunities available to it, and neither the
Partnership nor any of the other Partners shall have any rights in
and to such independent ventures and activities or the income or
profits derived therefrom by reason of its acquisition of
interests in the Partnership. This Section 11.2 is intended to
modify any provisions or obligations of the Act to the contrary
and each of the Partners and the Partnership hereby waives and
releases any claims they may have under the Act with respect to
any such activities or ventures of the Partners.
11.3 Liability of General Partner to Limited Partners and
Partnership. In carrying out their duties and exercising the
powers hereunder, the General Partner shall exercise reasonable
skill, care and business judgment. A General Partner shall not be
liable to the Partnership or a Limited Partner for any act or
omission performed or omitted by it in good faith pursuant to the
authority granted to it by this Agreement as a General Partner or
Tax Matters Partner unless such act or omission constitutes gross
negligence or willful misconduct by such General Partner.
11.4 Indemnification. The Partnership shall indemnify and hold
harmless the General Partner from any loss or damage, including
attorneys' fees actually and reasonably incurred by it, by reason
of any act or omission performed or omitted by it on behalf of the
Partnership or in furtherance of the Partnership's interests or as
Tax Matters Partner; however, such indemnification or agreement to
hold harmless shall be recoverable only out of the assets ot the
Partnership and not from the Limited Partners. The foregoing
indemnity shall not extend to acts or omissions performed or
omitted by a General Partner which constitutes gross negligence or
willful misconduct by such General Partner.
11.5 Fiduciary Resnonsibilitv. The General Partner shall have a
fiduciary responsibility for the safekeeping and use of all funds
and assets of the Partnership, and all such funds and assets shall
be used in accordance with the terms of this Agreement.
11.6 Contracts with the General Partner.
(a) The Partners specifically consent to and acknowledge that the
Partnership shall contract with ESC III, LP. an affiliate of CP,
Xxx Xxxxx and controlled by the Convertible Note Holders for the
management of the Project.
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Ib) The Partner specifically consent to and acknowledge that
General Partner will lend funds to the Partnership from time to
time to cover operating deficits.
11.7 Restrictions on Authority of General Partner.
(a) Except as provided in Sections 11.7b/ below, the following
Partnership decisions shall require the written consent of the
Partners in the Partnership and the Convertible Note Holders,
which consent shall not be unreasonably withheld. In the event any
of the following actions are proposed, the General Partner shall
provide written notice of the proposed action to all Partners,
which notice period shall not be less than twenty (20) days,
during which time the Partners and Convertible Note Holders shall
be entitled to consult with the General Partner regarding the
proposed action.
(i) The dissolution and winding up of the Partnership;
(ii) The sale, exchange or other transfer of all or substantially
all the assets of the Partnership;
(iii) A change in the nature of the business of the
Partnership;
(iv) The admission of a new or substitute General Partner, or the
transfer of an interest of a General Partner;
(v) The expenditure of funds for capital improvements
in excess of 550,000;
(vi) The event of any of the financing activities as described in
the preceding Section 11.1 Ig); or
(vii) The change of any or all of the provisions of the
partnership agreement
(b) Notwithstanding the provisions of Section 11.7(a), no consent
or approval of the Partners shall be required prior to a transfer
of the Project or other Partnership property for no consideration
other than full or partial satisfaction of Partnership
indebtedness such as by deed in lieu of foreclosure or similar
procedure.
(c) Notwithstanding the provisions of Section 11.7(a)(i), the
dissolution and winding up or insolvency filing of the Partnership
shall require the consent of the General Partner.
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12. Status of Limited and Partners.
12.1 No Participation in Managiement. Except as specifically
provided in Section 11.7 herein, no Limited Partner shall take
part in the conduct or control of the Partnership's business or
the management of the Partnership, or have any right or authority
to act for or on the behalf of, or otherwise bind, the Partnership
(except a Limited Partner who may also be a General Partner and
then only in its capacity as a General Partner within the scope of
his or her authority hereunder).
12.2 Limitation of Liability. No Limited Partner shall have,
solely by virtue of his or her status as a Limited Partner in the
Partnership, any personal liability whatever, whether to the
Partnership, to any Partners or to the creditors of the
Partnership, for the debts or obligations of the Partnership or
any of its losses beyond the amount committed by him or her to the
capital of the Partnership, except as otherwise required by the
Act.
12.3 Death or Incapacity of Limited Partner_. The death, legal
incapacity, dissolution, termination, merger, consolidation or
bankruptcy of a Limited Partner shall not cause a dissolution of
the Partnership, but the rights of such Limited Partner to share
in the Net Income and Net Loss of the Partnership, to receive
distributions from the Partnership and to assign an interest in
the Partnership pursuant to Section 14.3 hereof shall, on the
happening of such an event, devolve upon such Limited Partner's
executor, administrator, guardian, conservator, or other legal
representative or successor, as the case may be, subject to the
terms and conditions of this Agreement, and the Partnership shall
continue as a limited partnership. However, in any such event such
legal representative or successor, or any assignee of such legal
representative or successor shall be admitted to the Partnership
as a Limited Partner only in accordance with and pursuant to all
of the terms and conditions of Section 14.5 hereof.
12.4 Recourse of Limited Partner. The Limited and Partners shall
look solely to the assets of the Partnership for all distributions
with respect to the Partnership and their Capital Contributions
thereto and share of Net Income and Net Loss thereof and shall
have no recourse therefor, upon dissolution or otherwise, against
any General Partner or any other Limited Partner.
12.5 No Right to Property. No Limited Partner, regardless of the
nature of his or her contributions to the capital of the
Partnership, shall have any right to demand or receive any
distribution from the Partnership in any form other than cash,
upon dissolution or otherwise.
13. Books and Records Accounting Reports and Statements and Tax
Matters.
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13.1 Books and Records. The General Partner shall, at the expense
of the Partnership, keep and maintain, or cause to be kept and
maintained, the books and records of the Partnership on the same
method of accounting as utilized for federal income tax purposes,
which shall be kept separate and apart from the books and records
of the General Partner.
13.2 Annual Accounting Period. All books and records of the
Partnership shall be kept on the basis of an annual accounting
period ending December 31 of each year, except for the final
accounting period which shall end on the date of termination of
the Partnership. All references herein to the "fiscal year of the
Partnership" are to the annual accounting period described in the
preceding sentence, whether the same shall consist of twelve
months or less.
13.3 General Partner's Re orts to Limited and Partners. The
General Partner shall send at Partnership expense to each Limited
Partner the following:
(a) Within seventy-five (75) days after the end of each fiscal
year of the Partnership, such information as shall be necessary
for the preparation by such Limited Partner of such Partner's
federal income tax return which shall include a computation of the
distributions to such Limited Partner and the allocation to such
Limited Partner of profits or losses, as the case may be; and
(b) Within one hundred twenty (120) days after the end of each
fiscal year of the Partnership, an annual report, which shall
include:
/i) A balance sheet;
(ii) A statement of income and expenses;
(iii) A statement of changes in Partners' capital; and
(iv) A statement of the balances in the Capital Accounts of the
Partners.
13.4 Ri ht to Examine Records. The Limited and General Partners
shall be entitled at their own expense, upon written request
directed to the Partnership, to review the records of the
Partnership at all reasonable times and at the location where such
records are kept by the Partnership.
13.5 Tax Matters Partner. Should there be any controversy with the
Internal Revenue Service or any other taxing authority involving
the Partnership, the General Partner may expend such funds as it
deems necessary and advisable in the interest of the Partnership
to resolve such controversy satisfactorily, including, without
being limited thereto, attorneys' and accounting fees. CP is
hereby
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designated as the "Tax Matters Partner" as referred to in Section
6231 (a)(7)(A) of the Code, and is specially authorized to
exercise all of the rights and powers now or hereafter granted to
the Tax Matters Partner under the Code.
Any cost incurred in the audit by any governmental authority of
the income tax returns of a Partner (as opposed to the
Partnership) shall not be a Partnership expense. The General
Partner agrees to consult with and keep the Partners advised with
respect to (i) any income tax audit of a Partnership income tax
return, and (ii) any elections made by the Partnership for
federal, state or local income tax purposes.
13.6 Tax Returns. The General Partner shall, at Partnership
expense, cause the Partnership to prepare and file a United States
Partnership Return of Income and all other tax returns required to
be filed by the Partnership for each fiscal year of the
Partnership.
13.7 Tax Elections. The Partnership shall make an election
pursuant to Section 754 of the Code to adjust the basis of the
assets of the Partnership. Each of the Limited and General
Partners will, upon request, supply any information necessary to
properly give effect to any such election. In addition, the
General Partner, in its sole discretion, shall be authorized to
cause the Partnership to make and revoke any other elections for
federal income tax purposes as it deems appropriate, necessary, or
advisable.
14. Transfers of Limited and Partnership Interests; Withdrawal
and Admission of Limited Partners.
14.1 General Prohibition. No Limited Partner may voluntarily or
involuntarily, directly or indirectly, sell, transfer, assign,
pledge or otherwise dispose of, or mortgage, pledge, hypothecate
or otherwise encumber, or permit or suffer any encumbrance of, all
or any part of his or her interest in the Partnership, except as
provided in this Section 14. Any other purported sale, transfer,
assignment, pledge or encumbrance shall be null and void and of no
force or effect whatsoever.
14.2 No Withdrawal of Limited Partner. No Limited Partner shall
have the right to withdraw from the Partnership except as
otherwise provided in this Agreement.
14.3 Transfers by Limited Partner.
(a) Subject to any restrictions on transferability required by law
or contained elsewhere in this Agreement, a Limited Partner may
transfer such Limited Partner's entire interest in the Partnership
upon satisfaction of the following conditions:
coopergeorge2
(i) The transfer shall be by bequest, or by operation of the laws
of intestate succession, or shall be made to an existing Partner
in the Partnership, or
/ii) Be approved in writing by the General Partner, which approval
shall be withheld only if the proposed transfer does not comply
with the requirements of this Section 14.3.
(b) No sale, exchange, transfer, assignment, gift, pledge,
encumbrance, hypothecation or other disposition of a Limited
Partner's interest in the Partnership, whether voluntary or
involuntary, shall be valid or effective if, in the opinion of
counsel to the Partnership, it would be likely to:
(i) Violate the registration provision of the Securities Act of
1933, as amended;
(ii) Violate the laws of any state, or the regulations of any
government agency, applicable to such transfer;
(iii) Cause all or a portion of the Partnership's property to be
treated as tax-exempt use property, as defined in Section 168(h)/1
) of the Code (unless such transfer has been previously approved
by the General Partner); or
(iv) Cause the Partnership to be regarded as an unincorporated
association taxable as a corporation.
(c) Prior to recognizing any assignment of a Limited Partner's
interest that has been transferred in accordance with this Section
14.3, the General Partner may require the transferor and
transferee to execute and acknowledge such reasonable and
customary instruments as the General Partner may deem necessary or
desirable to effect such transfer.
(d) A transferee of a Limited Partner shall be entitled to the
allocations and distributions attributable to the interest sold or
assigned to it and the return of capital to which the transferor
otherwise would have been entitled; provided, however, such
transferee shall not be entitled to the other rights of a Limited
Partner unless and until such transferee becomes a Limited Partner
in accordance with Section 14.5.
(e) A transfer of an interest complying with all the requirements
of this Section 14.3 shall be effective as of the first day of the
calendar month succeeding the month in which all such requirements
have been satisfied. All distributions made after such effective
date on account of a
xxxxxx george2 -17-
transferred interest shall be paid to the transferee. In the
absence of notice to the General Partner of the transfer of a
Partnership interest, whether by operation of law or otherwise,
and the General Partner's consent in the case of voluntary
transfers, any distribution or other payment to a transferor or to
his executors, administrators or legal representatives shall
acquit the Partnership and the General Partner of liability, to
the extent of such distribution or payment to any other person
and/or entity which may have an interest in such payment.
14.4 Assignment as Security Permitted. Notwithstanding any other
provision of this Section 14, a Limited Partner may assign, as
security for a loan or other indebtedness incurred by such
Partner, such Partner's right to receive distributions from the
Partnership, and the General Partner, upon receipt of notification
of any such assignment, shall acknowledge such assignment and
shall agree to pay or distribute proceeds in accordance with
instructions from such Partner subject to such conditions,
including indemnification, as the General Partner may reasonably
require; provided, however, that such lender shall acknowledge in
writing to the General Partner that such assignment of proceeds
shall not entitle such lender to foreclose or otherwise acquire or
sell the Partnership Interest and that the only right acquired by
such lender shall be the right to receive distributions of cash
and property, if any, made by the Partnership to the Partners in
accordance with this Agreement.
14.5 Admission of Transferees as Limited Partners.
(a) No transferee of a Limited Partner shall be admitted as a
Limited Partner unless all of the following conditions have been
satisfied:
(i) The transfer complies with Section 14.3; and
(ii) The prospective transferee has executed an instrument, in
form and substance satisfactory to the General Partner, accepting
and agreeing to be bound by all the terms and conditions of this
Agreement, including the power of attorney set forth in Section 17
hereof, and has paid all expenses of the Partnership in effecting
the transfer;
(iii) All requirements of the Act regarding the admission of a
transferee Limited Partner have been complied with by the
transferee, the transferring Limited Partner, and the Partnership;
and
/iv) Such transfer is effected in compliance with all applicable
state and federal securities laws.
(b) In the event of a transfer complying with all the requirements
of Section 14.3 hereof and the transferee being admitted as a
Limited Partner pursuant to this Section 14.5, the General Partner
for themselves and for
xxxxxx george2
each Limited and Partner pursuant to the Power of Attorney granted
by each Limited and Partner, shall execute an amendment to this
Agreement and, if required by the Act, file an amended certificate
for the Partnership. Unless named in this Agreement, as amended
from time to time, no person shall be considered a Partner; and
the Partnership, each Partner, and any other person having
business with the Partnership need deal only with Partners so
named and shall not be required to deal with any other person by
reason of a transfer by, or by reason of the death of, a Partner,
except as otherwise expressly provided herein.
15. Transfers of General Partnershi Interests. Withdrawal and
Admission ot General Partners.
15.1 No Withdrawal of a General Partner. The General Partner shall
have no right to withdraw from the Partnership except as otherwise
provided in this Agreement.
15.2 Death or Incompetencv of a General Pa_ rtner. A General
Partner shall cease to be a General Partner upon the death,
bankruptcy, withdrawal, dissolution, or adjudication of
incompetency of such General Partner.
15.3 Transfer b a General Partner. Admission of Additional or
Successor General Partners. A General Partner may not transfer its
interest as a general partner, or any part thereof, to a third
party and no additional or successor general partner(s) shall be
admitted to the Partnership, except with the approval of the other
Partners.
16. Dissolution Winding Up and Termination.
16.1 Events Causina Dissolution. The Partnership shall be
dissolved and its affairs shall be wound up upon the happening of
the first to occur of any of the following events:
/a) Expiration of the term of the Partnership stated in
Section 6 hereof;
(b) Entry of a decree of judicial dissolution pursuant to the
Act;
(c) The sale or other disposition of all or substantially all of
the assets of the Partnership;
(d) The vote of Partners holding a majority of the Percentage
Interests of the Partnership to dissolve; or
xxxxxx george2
Ie) The death, bankruptcy, withdrawal, dissolution or adjudication
of incompetency of the General Partner, unless at the time of the
occurrence of any of such events there is at least one other
General Partner, in which case the business of the Partnership
shall be carried on by the remaining General Partner(s). In the
event the business of the Partnership is carried on pursuant to
the previous sentence, the interest of the deceased, bankrupt,
dissolved or incompetent General Partner in Net Income and Net
Loss and its Capital Account shall be converted to a Limited
Partner interest but shall otherwise be maintained and continued.
16.2 Winding Up. Upon dissolution of the Partnership for any
reason, the General Partner shall commence to wind up the affairs
of the Partnership and to liquidate its assets. In the event the
Partnership has terminated because the Partnership lacks a General
Partner, then the Limited Partners shall appoint a new General
Partner solely for the purpose of winding up the affairs of the
Partnership. The General Partner shall have the full right and
unlimited discretion to determine the time, manner and terms of
any sale or sales of Partnership property pursuant to such
liquidation. Pending such sales, the General Partner shall have
the right to continue to operate or otherwise deal with the assets
of the Partnership. A reasonable time shall be allowed for the
orderly winding up of the business of the Partnership and the
liquidation of its assets and the discharge of its liabilities to
creditors so as to enable the General Partner to minimize the
normal losses attendant upon a liquidation, having due regard to
the activity and condition of the relevant markets for the
Partnership properties and general financial and economic
conditions. Any Partner may be a purchaser of any properties of
the Partnership upon liquidation of the Partnership's assets,
including
,without limitation, any liquidation conducted pursuant to a
judicial dissolution or otherwise under judicial supervision;
provided, however, that the purchase price and terms of sale are
fair and reasonable to the Partnership.
16.3 Allocation of Net Income and Net Loss U on Termination or
Sale. All Net Income and Net Loss upon dissolution of the
Partnership or from sale, conversion, disposition or taking of all
or substantially all of the Partnership's property, including, but
not limited to the proceeds of any eminent domain proceeding or
insurance award (respectively, "Gain on Sale" or "Loss on Sale")
shall be allocated as follows:
(a) Loss on Sale shall be allocated among the Partners as
follows:
(i) First, proportionately to those Partners having positive
Capital Account balances until all positive Capital Accounts have
been reduced to zero; and
xxxxxx george2 -20-
(ii) Thereafter, in proportion to the Partners'
Percentage Interest.
(b) Gain on Sale to the extent available shall be allocated among
the Partners as tollows:
(i) First, to those Partners having negative Capital Account
balances in proportion to such negative balances until they are
increased to zero;
(ii) Second, to each of the Partners in the amount and manner
necessary to cause the Partners' Capital Accounts to be in the
ratio of their respective Percentage Interests; and
(iii) Thereafter, any remaining Gain on Sale shall be allocated to
the Partners in proportion to their Percentage Interests.
16.4 Distributions. Prior to making distributions in dissolution
to the Partners, the General Partner shall first pay or make
provision for all debts and liabilities of the Partnership,
including payment of any Capital Loans, and all expenses of
liquidation. Subject to the right of the General Partner to set up
such cash reserves as it may deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the
Partnership, the proceeds of liquidation and any other funds of
the Partnership shall first be distributed to Partners in
proportion to their Capital Account balances as adjusted by the
allocations provided for in Section 16.3; and thereafter, the
balance, if any, to the Partners in proportion to their Percentage
Interests.
16.5 Certificate of Cancellation; Renort; Termination. Upon the
dissolution and commencement of winding up of the Partnership, the
General Partner shall execute and file certificate of cancellation
of the Partnership. Within a reasonable time following the
completion of the liquidation of the Partnership's assets, the
General Partner shall prepare and furnish to each Partner, at the
expense of the Partnership, a statement which shall set forth the
assets and liabilities ot the Partnership as of the date of
complete liquidation and the amount of each Partner's distribution
pursuant to Section 16.4 hereof. Upon completion of the
liquidation and distribution of all Partnership funds, the
Partnership shall terminate and the General Partner shall have the
authority to execute and file all documents required to effectuate
the termination of the Partnership.
17. Special and Limited Power of Attorney.
(a) CP, as General Partner, with full powers of substitution,
shall at all times during the existence of the Partnership have a
special and limited power of attorney as the authority to act in
the name and on the behalf of the Limited Partners to make,
execute, swear to, verify, acknowledge and file the
coopergeorge2
following documents and any other documents deemed to be necessary
for the business of the Partnership:
(i) This Agreement, any separate certificates of limited
partnership, fictitious business name statements, as well as any
amendments to the foregoing which, under the laws of any state,
are required to be filed or which the General Partner deems it
advisable to file; and
(ii) Any other instrument or document which may be required to be
filed by the Partnership under the laws of any state or by an
governmental agency, or which the General Partner deems it
advisable to tile.
(b) The special and limited power of attorney granted to the
General Partner hereby:
(i) Is a special and limited power of attorney coupled with an
interest, is irrevocable, shall survive the death or incompetency
of the granting Limited Partner, and is limited to those matters
herein set forth;
(ii) May be exercised by the General Partner for the Limited
Partners by reterencing the list of the Limited Partners on
Appendix A and executing any instrument with a single signature
acting as attorney-in-fact for them;
(iii) Shall survive a transfer by a Limited Partner of such
Limited Partner's interest in the Partnership pursuant to Section
14.3 hereof for the sole purpose of enabling the General Partner
to execute, acknowledge and file any instrument or document
necessary or appropriate to admit a transferee as a Limited
Partner; and
(iv) Notwithstanding the foregoing, in the event that CP ceases to
be a General Partner in the Partnership, the power of attorney
granted by this Section 17 shall terminate immediately, but any
such termination shall not affect the validity of any documents
executed prior to such termination, or any other actions
previously taken pursuant to this power of attorney or in reliance
upon its validity, all of which shall continue to be valid and
binding upon the Limited Partners in accordance with their terms.
18. Amendments. This Agreement may not be amended without the
written agreement of all parties hereto.
19. Miscellaneous.
19.1 Notices. Any notice, offer, consent or other communication
required or permitted to be given or made hereunder shall be in
writing and shall be
xxxxxx george2 -22-
deemed to have been sufficiently given or made when delivered
personally to the party (or an officer of the party) to whom the
same is directed, or (except in the event of a mail strike) five
(5) days after being mailed by first class mail, postage prepaid,
if to the Partnership or to the General Partner, to the office
described in Section 4 hereof, or if to a Limited Partner, to his
or her last known address or when received by facsimile if to the
Partnership or to the General Partner, to the facsimile number for
the office described in Section 4 hereof, or if to a Limited
Partner, to his or her facsimile number. Any Partner may change
his or her address for the purpose of this Section 19.1 by giving
notice of such change to the Partnership, such change to become
effective on the tenth day after such notice is given.
19.2 Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes any prior agreement or
understandings among them, oral or written, all of which are
hereby canceled. This Agreement may not be modified or amended
other than pursuant to Section 18 hereof.
19.3 Captions; Pronouns. The paragraph titles or captions
contained in this Agreement are inserted only as a matter of
convenience of reference. Such titles and captions in no way
define, limit, extend or describe the scope of this Agreement nor
the intent of any provision hereof. All pronouns and any variation
thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person or
persons may require.
19.4 Counteraarts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute
one and the same agreement. Delivery of any executed counterpart
of a signature page to this Agreement by facsimile shall be
effective as delivery of an executed original of this Agreement.
19.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of
Washington.
IN WITNESS WHEREOF the parties have executed this Agreement as of
the date first above written.
By :
Xxxxxx X. Xxxx
COLUMBIA PACIFIC MASTER FUND '98 GENERALJ PARTNERSHIP, a
Washington general partnership
xxxxxx george2 -23-
By Columbia Pacific Growth Fund '98 Limited Partnership, a
Washington limited partnership, its general partner
By: B.F. Limited Partnership, a Washington limited partnership,
its general partner
By: Columbia Pacific Group, Inc., a Washington corporation, its
general partner
By : _
Xxxxxx X. Xxxx, President
By Columbia Pacific DA '98 Limited Partnership, a Washington
limited partnership, its general partner
By: B.F. Limited Partnership, a Washington limited partnership,
its general partner
By: Columbia Pacific Group, Inc., a Washington corporation, its
general partner
By:
By Columbia Pacific RD '98 Limited Partnership
r
limited partnership, its general partner
Washington
By: B.F. Limited Partnership, a Washington limited partnership,
its general partner
By: Columbia Pacific Group, Inc., a Washington corporation, its
general partner
\
By:
Xxxxxx X. Xxxx, President
xxxxxx george2 -24-
ESC II, LP
APPENDIX A
PERCENTAGE
INTEREST
GENERAL PARTNER
Columbia Pacific Master Fund '98 General Partnership 99%
LIMITED PARTNERS
Xxxxxx X. Xxxx
