This is a limited partnership agreement executed this ........... day of ....................., 20......, by and among JOHN SMITH, TOM JONES [the SAMPLE CORP. comprised of SMITH AND JONES] as general partner(s), and ALVIN ADAMS, BEN BRUCE, CHARLES CAROL, AND DAN DAILY as limited partners.
ARTICLE 1
General
Section 1.1. Formation.
The parties hereto hereby form a limited partnership (hereinafter called the "Partnership") pursuant to the provisions of the Uniform Limited Partnership Act of the State of ............... The partners shall sign and file for record a certificate of limited partnership as required by the aforesaid Act.
Section 1.2. Name and Place of Business.
The Partnership shall be conducted under the name of LAND DEVELOPMENT COMPANY and its principal place of business in the State of ..............., unless changed by action of the General Partners upon notice to the Limited Partners, shall be located at ..............., or at such other or additional place or places as may be designated by the General Partners.
Section 1.3(1) Specific Purpose.
The primary and specific purpose of the Partnership is to acquire that certain parcel of unimproved land, situated in the City of ..............., ............... County, State of ..............., more particularly described in Exhibit "A" attached hereto; to construct apartment buildings thereon; and to operate, maintain, and manage said apartment buildings as an investor for residential rental purposes.
Section 1.3(2). General Purpose.
The Partnership may also acquire, own, hold, improve, develop, operate, and manage real property other than the property referred to in Paragraph 1.3(1) above, and with respect to all Partnership property do all things reasonably incidental thereto, including (by way of illustration) mortgaging, refinancing, selling, leasing and subleasing or otherwise disposing of said property and the improvements at any time.
Section 1.4. Term of the Partnership.
The term of the Partnership commenced on ..............., 19..... the date the original Agreement and Certificate of Limited Partnership was filed with the appropriate authority of the State of ..............., as required by the ............... Uniform Limited Partnership Act, and shall expire on December 31, 1985, unless sooner terminated in accordance with Section ..... or any other provision of this agreement.
ARTICLE 2
Capital Contributions and Loans
Section 2.1. General Partners and Their Contributions.
The General Partners and their initial capital contributions to the Partnership shall be as follows:
Initial Capital
General Partners Contribution
John Smith & Tom Jones $10,000
(or, the Sample Corp.)
[Alternative Provision--Section 2.1A].
Section 2.1A.
It is acknowledged that the General Partner(s) JOHN SMITH and TOM JONES [the SAMPLE CORP.] have [has] acquired an option to purchase the real property described in Exhibit A, attached hereto. Upon the execution of this Agreement by the General Partners and by the original Limited Partners, the General Partners will convey said option for and in exchange of a total capital account of $10,000. Said sum represents the value of the option over and above the cost ($1,000) of said option. The cost of said option is to be reimbursed to the General Partners out of Partnership assets as soon as practical after theoriginal Limited Partners have made their capital contributions.
[Alternative Provision--Section 2.1B]
Section 2.1B.
It is acknowledged that the General Partner(s) JOHN SMITH and TOM JONES [the SAMPLE CORP.] have [has] acquired real property described in Exhibit A, attached hereto, subject to a first mortgage [deed of trust] in favor of CONSTRUCTION LOAN BANK, dated ..............., 19....., securing an "interest only" note ..............., Dollars ($ .....), and subject to a subordinated or second purchase-money mortgage [deed of trust] in favor of SAM SELLER, dated ..............., 19....., securing an "interest-only" purchase-money note in the principal amount of ............... Dollars ($ .....). The former note was issued by SMITH & JONES, a partnership composed of the General Partners [by the SAMPLE CORP., as principal and not as the agent of the partnership--a corporation comprised of SMITH and JONES, as shareholders] pursuant to a Construction Loan Agreement between the SMITH & JONES partnership [the SAMPLE CORP.] and the CONSTRUCTION LOAN BANK. Simultaneously with the conveyance to the Partnership of the property, the following shall also occur:(a) The General Partner(s) will cause to be assigned to the Partnership all of the rights and benefits of, in,
to and/or under the following: (i) The Construction Loan Agreement with CONSTRUCTION LOAN BANK;
(ii) The Permanent Mortgage Loan Commitment with SAMPLE INSURANCE CO.;
(iii) That certain Note Purchase ("Buy-Sell") Agreement dated ..............., 19....., between the SMITH & JONES partnership [the SAMPLE CORP.] as borrower, the CONSTRUCTION LOAN BANK as construction lender, and SAMPLE INSURANCE CO., as permanent lender, whereunder the parties agree that SAMPLE INSURANCE CO. will purchase the aforesaid first mortgage [deed of trust] note from CONSTRUCTION LOAN BANK on or before ..............., 19....., [closing date] if the conditions in the Construction Loan Agreement and Permanent Mortgage Loan Commitment are met, which Agreements are incorporated by reference in the Note Purchase Agreement, respectively, as exhibits A and B thereof;
(iv) The construction Contract Agreement for construction work, dated ..............., 19....., with the SMITH & JONES partnership [the CONTRACTOR]. (b) The Partnership will assume and agree to observe and perform all of the obligations and covenants of, in, to and/or under the aforesaid Agreements, except that the General Partners in their capacity as agents of the Partnership will not assume the indebtedness evidenced by the aforesaid mortgage [deed of trust] notes.
(c) Upon the assignment of the aforesaid Agreements to the Partnership, the capital accounts of the General Partner(s) will be credited with a sum ($10,000) equal to the excess of the fair market value of the property (as determined by the General Partner(s)) over the amount of liabilities to which the property is subjected.
(d) [Optional:] The General Partner(s) covenant and agree as follows: (i) The General Partner(s) will complete or cause to be completed on the property by ..............., 19....., [closing date] the improvements contemplated by and in accordance with the plans and specifications (described in Exhibit A to the Note Purchase Agreement) prepared by Mr. Alan Architect, which require approval by CONSTRUCTION LOAN BANK, pursuant to condition No. ..... of the Construction Loan Agreement and SAMPLE INSURANCE CO., pursuant to condition No. ..... of the Permanent Mortgage Loan Commitment Letter.
(ii) By ..............., 19....., [closing date] the property will be free and clear of all liens and encumbrances other than those set forth in Schedule B of that certain title Policy No. ..... issued by ..............., dated ..............., 19....., as required by condition No. ..... of the Permanent Mortgage Loan Commitment.
(iii) The General Partner(s) will not permit the aggregate amount of the principal balance of outstanding indebtedness under the aforesaid notes to exceed at any time their present amounts.
(iv) By ..............., 19....., [closing date] the General Partner(s) will use their best efforts to create an aggregate annual gross rental (rent-roll) payable under valid and enforceable apartment leases covering apartments on the property with an original term of not less than one year, free of concessions, allowances, or offsets, to be equal to $ .......... from not more than ............... percent (.....%) of the number of total apartment units. (v) The General Partner(s) will perform or cause to be performed all the other conditions and requirements of the Note Purchase Agreement necessary or appropriate to require SAMPLE INSURANCE CO. to purchase from CONSTRUCTION LOAN BANK on or before ..............., 19....., [closing date] the aforesaid note secured by the first mortgage [deed of trust] covering the property in the platform amount of ............... Dollars ($..........), or if need be, in the lesser amount of ............... Dollars ($..........), if the leasing requirement (referred to in paragraph (iv) above) pursuant to condition No. ..... of the Permanent Mortgage Loan Commitment is not met.
(e) [Optional:] It is understood and agreed that if SAMPLE INSURANCE CO. does not purchase from CONSTRUCTION LOAN BANK the note secured by the first mortgage (deed of trust) by ..............., 19....., [closing date], then the General Partners will, within a reasonable time, obtain for and on behalf of the Partnership a long-term loan (or loans) sufficient in amount to pay and satisfy the indebtedness to CONSTRUCTION LOAN BANK, evidenced by the aforesaid note in favor thereof, and on such terms and conditions as in the discretion of the General Partners may be in the best interests of the Partnership, and shall give written notice of the terms of such substitute loan(s) to the Limited Partners, who will have sixty (60) days to accept or reject the terms of the substitute loan(s). If for any reason such terms are not acceptable to at least a majority of the Limited Partners, then within thirty (30) days after written notice of such rejection, the General Partners shall redeem the interests of the Limited Partners by returning their initial capital contributions. Section 2.2. Limited Partners and Their Contributions.
The original Limited Partners and their initial capital contributions to the Partnership shall be as follows:
Limited Partner Initial Capital Contribution
Alvin Adams:$20,000
Ben Bruce: $20,000
Charles Carol: $20,000
Dan Daily: $20,000
Section 2.3. Additional Capital Contributions.
In the event the General Partners at any time deem additional capital contributions reasonably necessary to fund increased construction costs and/or financing costs, and/or to otherwise conduct the business of the Partnership, the Limited Partners shall make such subsequent capital contributions as are needed in proportion to their capital interests (as defined in Section .....) within thirty (30) days after written request by the General Partners, but in no event shall the Limited Partners be required to make additional contributions aggregating more than ............... Dollars ($..........). If any Limited Partner fails to make such additional contribution(s), the other Partners, both General and Limited, shall be afforded the opportunity to advance the needed amount(s), which may, in the discretion of the General Partners, be regarded as loans to the Partnership. In addition, the General Partners reserve the right to sell additional limited partnership interests in exchange for cash contributions aggregating not more than ............... Dollars ($..........) (in excess of the sum of $80,000 contributed by the original Limited Partners) in the event that this becomes necessary in the judgment of the General Partners. The allocation of profits and losses among the Partners shall accordingly be adjusted pursuant to Section ......
Section 2.4. Capital Accounts and Distribution of Profits.
An individual capital account shall be established for each Partner equal to his original capital contribution, credited by (1) his additional contributions to capital and (2) his share of Partnership profits if transferred from his drawing account, and debited by (1) distributions to him that reduce his interest in Partnership capital and (2) his share of Partnership losses if transferred from his drawing account.
Section 2.5. Drawing Accounts.
An individual Drawing Account shall be maintained for each Partner, which shall be credited by his share of Partnership profits, and debited by (1) his share of Partnership losses, and (2) all his withdrawals during the year, which shall be limited to such amounts as the General Partners determine from time to time. A credit balance in the Partner's Drawing Account shall constitute
a liability of the Partnership to the Partner involved, and shall not increase such Partner's interest in Partnership capital unless the General Partners determine otherwise. A debit balance in the Partner's Drawing Account shall constitute a liability of the Partner involved to the Partnership and shall not decrease such Partner's interest in Partnership capital unless the General Partners determine otherwise.
Section 2.6. Liability of Limited Partner.
No Limited Partner shall be personally liable for any debts of the Partnership (or for any loss beyond the amount of his capital interest as a Limited Partner.)
[Alternative Provision--Section 2.6A. Liability of Limited Partner]
Section 2.6A. Liability of Limited Partner.
No Limited Partner shall be personally liable to outsiders for any liability or net loss of the Partnership beyond the amount of his capital interest as a Limited Partner.
Section 2.7. Loans to the Partnership.
The Partnership shall obtain only nonrecourse financing; accordingly, neither the General Partners nor Limited Partners will be subjected to personal liabilitywith respect to such financing, and the lenders, with respect to any construction, permanent and/or other loan to the Partnership, shall have recourse only against Partnership assets for repayment.
In the event an advance is made to the Partnership by a Partner, such advance shall be deemed in the sole discretion of the General Partners to be either a loan or a capital contribution to the Partnership.
[Optional Provision--Section 2.8. Indemnification of General Partners]
Section 2.8. Indemnification of General Partners.
Each General Partner shall be entitled to prompt indemnity from the Partnership for any payment or liability reasonably made or incurred in connection with any act performed by said General Partner within the scope of his authority, except for acts of malfeasance, or gross negligence or misrepresentation, provided that any indemnity shall be paid only out of and to the extent of Partnership assets.
ARTICLE 3
Allocation of Profits and Losses and Salaries
Section 3.1. Profits and Losses.
All Partnership profits and losses shall be distributed in the following proportions:
The General Partners shall receive 10 percent (10%) of all profits and losses. The balance of 90 percent (90%) shall be allocated among all the Partners in proportion to their ownership of Partnership capital.
[Alternative Provision--Section 3.1A. Profits and Losses]
Section 3.1A. Profits and Losses.
All Partnership profits and losses shall be distributed in the following proportions:
The General Partners shall receive 20 percent (20%) of all capital and I.R.C. 1231 gains and losses. The balance of 80 percent (80%), and the entire amount of gains and loss, exclusive of capital and I.R.C. 1231 gains and losses, shall be allocated among all the Partners in proportion to their ownership of Partnership capital.
Section 3.2. Salaries and Other Compensation.
(a) No interest shall be payable in respect to the Partners' Capital Accounts.
(b) No salary shall be paid to the General Partners for services rendered.
[Alternative Provision--Section 3.2A. Salaries]
Section 3.2A. Salaries.
The General Partners shall each receive a salary equal to 5 percent (5%) of annual net Partnership profits, computed without regard to the salary deduction, but not less than $10,000 per annum, and any such salaries earned or paid shall, like any other expense, be deductible from Partnership income in determining the profits or losses for distribution to the Partners under Section 3.1.
ARTICLE 4
Administrative Provisions
Section 4.1. Management of the Partnership.
The business of the Partnership shall be managed and controlled solely by the General Partner(s).
Section 4.2. Authority of General Partners.
The General Partners are authorized on behalf of the Partnership to do and perform whatever in their sole discretion is reasonably necessary to effectuate the purposes of the Partnership. By way of the foregoing, the General Partners, except as provided in U.L.P.A. 9, have all the rights and powers and are subject to all the restrictions and liabilities of a partner in a partnership without limited partners.
Section 4.3. Outside Activities.
The General Partners shall devote whatever time and attention to Partnership business as may, in their sole discretion, be reasonably necessary to perform their duties. Each General Partner may engage in transactions connected with the business of the Partnership and may hold interests in other business ventures of every kind for his own account whether or not such business ventures are in direct or indirect competition with the business of the Partnership and whether or not the Partnership also has an interest therein.
Section 4.4. Partnership Books.
The Partnership books shall fully and accurately reflect the transactions of the Partnership and such books, together with a certified copy of the Certificate of Limited Partnership and any amendments thereto, shall at all times be maintained at the principal place of business of the Partnership and shall be open to the reasonable inspection of the General Partners, original and substituted Limited Partners, and/or their duly authorized representatives.
Section 4.5. Accounting Method and Annual Reports.
The Partnership shall maintain its accounting records and report its income for tax purposes on the accrual basis. In addition, the General Partners shall have the books and records of the Partnership examined each year by an independent Certified Public Accountant who shall prepare, on an annual basis, financial statements based on such examination and shall distribute copies thereof to all Partners.
ARTICLE 5
Death or Retirement of Partner
Section 5.1. Sale of a Partnership Interest.
(1) Sale of General Partner's Interest. A General Partner may not sell or transfer his interest in Partnership capital and/or profits without the written consent of a majority of the then-remaining Partners, both General and Limited [without the written consent of Limited Partners owning collectively at least 50 percent (50%) of Partnership capital], which consent shall not, depending on the circumstances, unreasonably be withheld. Such sale or other disposition may, at the option of the remaining Partners, cause a dissolution of the Partnership in accordance with Section 5.2(1) of this Agreement.
(2) [Optional:] Sale of Limited Partner's Interest-- Right of First Refusal. If any Limited Partner intends to sell or transfer his Partnership interest, said Partner must at least sixty (60) days prior to disposition of his interest, notify the remaining Partners of his intent and identify in writing the proposed transferee and terms of sale. Within forty (40) days after the receipt of such notice, the Partnership may elect to acquire said interest at the price and on the terms proposed to the prospective transferee by means of a liquidating distribution, or if the majority of the remaining Limited Partners agree, by causing all the remaining Partners to purchase said interest on a prorated basis in accordance with the ratio of each Partner's capital interest to the total amount of Partnership capital owned by all the Partners. In the event the interest of the retiring Partner is not acquired by the Partnership or by the remaining Partners collectively, the interest shall next be offered to the remaining Partners as individuals at the price and terms proposed to the prospective transferee. Within twenty (20) days after receipt of the offer, each Partner desiring to purchase the interest or a portion thereof shall be entitled to purchase the interest or portion thereof on a prorated basis determined by a majority of the General Partners. In the event the entire interest is not acquired in the foregoing manner, the retiring Limited Partner may sell his interest or the remaining portion thereof to the proposed transferee on the terms contained in the notice of sale.
If the interest of the retiring Partner is acquired by the Partnership or collectively purchased by the remaining Partners, the General Partners at the time of acquisition shall at their option separately determine the amounts of the liquidating distribution or, in the latter case, the amounts of the purchase price allocable to the value of the retiring Partner's interest in the Partnership's unrealized receivables (as defined in I.R.C. 751(a)), if any, inventory items (as defined in I.R.C. 751(d)(2)), and goodwill, if any.
Section 5.2. Death of a General Partner.
(1) The retirement, expulsion, death, incompetency and/or bankruptcy of a General Partner shall dissolve the Partnership unless the business is continued by the remaining General Partners with the written consent of a majority of the then-remaining Partners, both General and Limited [with the written consent of Limited Partners owning collectively at least 50 percent (50%) of Partnership capital]. If the remaining General Partners continue the business of the Partnership, the personal representative or assignee of the retiring, expelled, deceased, incompetent, or bankrupt General Partner shall become an additional Limited Partner with the same right to share profits and losses and with the same balance in his capital and/or drawing account as had been owned by the retiring, expelled, deceased, incompetent, or bankrupt General Partner.
(2) [Optional;] Buy-Sell Agreement on Death of a General Partner. On the death or retirement of any General Partner, the Partnership will be required to acquire the interest of the deceased or retiring Partner. The value of the interest so acquired shall equal in amount the sum of the deceased (or retiring) Partner's capital account and his proportionate share of Partnership net income or loss accrued to the date of this death or retirement, unless included in his drawing account. Within sixty (60) days after the death or withdrawal of the Partner, he or his personal representative shall receive from or pay to the Partnership any positive or negative balance in his drawing account, as the case may be. In valuing his interest, all Partnership assets shall be valued at book value except that the parties shall determine separately the fair market value of the Partnership's unrealized receivables (as defined in I.R.C. 751(a)), if any; inventory items (as defined in I.R.C. 751(d)(2)), if any; and real property, if any. Fifty percent (50%) of the difference between the fair market and book value of these items, if any, shall increase or decrease the deceased or retiring Partner's capital account, as the case may be.
ARTICLE 6
Dissolution and Termination of the Partnership
Section 6.1. Causes of Dissolution.
The Partnership shall not be dissolved prior to the expiration of the Partnership term except in the event (1) any General Partner retires, dies, is expelled, becomes incompetent and/or bankrupt and the business is not continued by the remaining General Partners in accordance with Section 5.2(1); or (2) all of the Partners, both General and Limited, unanimously agree to dissolve.
Section 6.2. Winding up the Partnership.
In winding up the affairs of the Partnership after dissolution, the Partners shall continue to share profits and losses in the same manner as before dissolution, and the liquidation proceeds shall be applied in the following priority:
1. To pay all amounts owed to creditors of the Partnership other than Partners;
2. To pay Partners for unpaid salaries and loans made to the Partnership;
3. To pay Limited Partners any remaining balances credited to their drawing or capital accounts;
4. To pay General Partners any remaining balances credited to their drawing or capital accounts.
ARTICLE 7
Miscellaneous
Section 7.1. Arbitration.
Any dispute arising out of or in connection with this Agreement shall be decided by arbitration in accordance with the ten prevailing commercial arbitration rules of the American Arbitration Association, and judgment thereon may be entered in any court having jurisdiction thereof.
Section 7.2. Binding Effect.
This Agreement shall be binding upon, and inure to, the benefit of the heirs, executors, administrators, personal representatives and assigns of the respective Partners.
Section 7.3. Applicable Law.
This Agreement shall be construed in accordance with the laws of the State of ...............
Section 7.4. Amendment.
This Agreement may be amended with the written consent of the General Partners and Limited Partners owning at least 50 percent (50%) of Partnership capital.
Section 7.5. Notices.
Any notice required or desired to be given to any Partner or the Partnership shall be in writing and shall be sufficient if sent by registered or certified mail to the last known address of the Partner, or in the latter case, the principal office of the Partnership. IN WITNESS WHEREOF, the Partners have executed this Agreement on ..............., 19......
General Partners:
Limited Partners:
This legal form, letter, or template should not be used without consulting an attorney first. It may not be valid in your state, country or jurisdiction. | If you can't find what you need in our free forms, templates, and letters, over 25,000 forms covering almost every topic can be found here or even more here. These forms cost a few dollars, but generally are available in customized versions for various states and are usually more complete. |
Back to Sample Mortgage, Partnership, Joint Venture, and Commercial Security Agreements
|
