Capital and contributions. 1. Initial limited partner. The initial limited partner has made a capital contribution to the partnership of $_____. At the time that additional limited partners are admitted to the partnership and make capital contributions totalling not less than $_____, the initial limited partner shall withdraw from the partnership and his or her Capital Contribution shall be returned. 2. Limited partners' capital contributions. Each limited partner other than the initial limited partner shall make a capital contribution of $_____ per unit, payable $_____ in cash at closing (the "initial payment"), and $_____ by delivery of a promissory note (the "limited partner note") requiring payments as follows: Amount Date
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Payments by limited partners directly to a financial institution to which limited partner notes are assigned shall be deemed to be payments to the partnership in discharge of a limited partner's obligation to make installment payments under this agreement. 3. General partners' capital contribution. The general partner shall make aggregate capital contributions in cash at closing equal to one ninety-ninth of the aggregate capital contributions made by the limited partners. 4. Interests. No partner shall be paid interest on any capital contributions. 5. Withdrawal and return of capital contributions. No partner shall be entitled to withdraw any part of his or her capital contribution or to receive any distributions from the partnership except as provided by this agreement. Except as provided in subsection _________, the general partner shall not be liable to the limited partners for the return of the limited partners' capital contributions, which return shall be made solely from partnership assets. No partner shall have the right to demand or receive property other than cash in return for his or her capital contribution, although certain property may be distributed in kind in accordance with subsection _________. 6. Financing. The additional funds required by the Partnership to meet its initial cash needs for the _________ will be borrowed by the partnership from third parties upon those terms and conditions as the general partner, in its sole discretion, deems necessary or appropriate. The general partner may (but is under no obligation to) loan or advance to the partnership funds as it deems advisable. Interest on the loans or advances shall not be in excess of the lesser of (a) the general partner's interest costs, or (b) the rate that would be charged the partnership (without reference to the general partner's financial abilities or guarantees) by unrelated banks on comparable loans for the same purpose, and further provided that the general partner shall not receive points or other financing charges or fees regardless of the amount of any loan or advance. 7. Default. (a). Events. If any partner fails to pay all or a portion of the installment payments within _________ days after any payment is due pursuant to the limited partner note, then the partner shall be in default under this agreement. (b). Adjustment in tax losses. On the occurrence of default by a limited partner that continues past the then current fiscal year of the partnership the defaulting limited partner shall not be allocated any tax losses of the partnership for the taxable year in which the default occurs and all subsequent taxable years until the aggregate tax losses allocated to the defaulting limited partner are equal to the tax losses that would have been allocated to the partner had his or her participating share at all times
been computed according to the ratio of (1) his or her capital contributions (not including any unpaid installment payment), to (2) the aggregate capital contributions of all limited partners. Any tax losses that would have been allocated to a defaulting limited partner but for this subsection 7(b) shall be specially allocated in proportion to their respective shares among the general partners and other limited partners in accordance with subsection _________. (c). Offset. The general partner is authorized specifically to withhold and to apply to the unpaid amount of any installment payment then due and payable, any distribution to which a defaulting limited partner otherwise would be entitled. (d). Sale of unit. The partnership may sell the unit of a defaulting limited partner to any person on the terms and conditions as shall be agreed on between the partnership and the person. Any amount received from a person acquiring the unit of a defaulting limited partner shall be applied, (i) to the payment of the partnership's fees and expenses with respect to that sale; (ii) to the limited partner's unpaid installment payments, plus interest at the maximum legal rate accrued from the date the installment payments are due until paid, together with reasonable court costs and attorneys' fees incurred in connection with the collection of the installment payments; (iii) to the payment to the partnership as liquidated damages by the defaulting limited partner, of an amount equal to _________ percent of the remaining proceeds from the sale of the interest; and (iv) to the defaulting limited partner. Any amounts received pursuant to this subsection 7(d) by a defaulting limited partner shall constitute complete and full discharge for all amounts owing to the defaulting limited partner on account of his or her interest in the partnership. (e). Obligations of defaulting limited partner and remedies. The obligations of a defaulting limited partner to the partnership under this agreement shall be extinguished by, and only by and to the extent of, the actual payment of the defaulting limited partner's installment payments (plus interest and any other applicable fees and charges under subsection 7(d) to the partnership (whether by the defaulting limited partner, by the sale of his or her interest, or in his or her stead by a purchaser of the interest, or by those other means or remedies as may be available to the partnership). In no event, however, shall the partnership be obligated to use any particular remedies available at law or equity to collect unpaid installment payments (plus interest, costs, fees, and expenses of collection as provided in subsection 7(d)), from a defaulting limited partner, together with reasonable court costs and attorneys' fees incurred in connection with the collection of the installment payments, and nothing in this agreement shall be construed in any way to limit or restrict the availability of these remedies.