<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
------------
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
COMMISSION FILE NO.
0-14105
------------
MURRAY INCOME PROPERTIES I, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1946214
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5550 LBJ FREEWAY, SUITE 675, DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
(972) 991-9090
Registrant's Telephone Number, including Area Code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Properties held for sale
Land $ 6,232,801 $ 6,232,801
Buildings and improvements 18,147,298 20,490,165
------------ ------------
24,380,099 26,722,966
Less accumulated depreciation 10,300,267 11,446,824
------------ ------------
Net properties held for sale 14,079,832 15,276,142
Cash and cash equivalents 3,826,463 1,835,163
Accounts receivable, net of allowances
of $16,806 and $6,568, in 2000 and 1999,
respectively 409,990 635,472
Other assets, at cost, net of accumulated
amortization of $654,828 and $636,144
in 2000 and 1999, respectively 350,179 293,169
------------ ------------
$ 18,666,464 $ 18,039,946
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 38,702 $ 34,880
Accrued property taxes 124,059 213,431
Security deposits 161,454 165,484
------------ ------------
Total liabilities 324,215 413,795
------------ ------------
Minority interest in joint venture 1,349,675 1,237,802
------------ ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 283,898 263,173
Cumulative cash distributions (444,603) (435,962)
------------ ------------
(159,705) (171,789)
------------ ------------
Limited Partners (28,227 Interests):
Capital contributions, net of offering costs 24,570,092 24,570,092
Cumulative net earnings 14,367,770 13,352,224
Cumulative cash distributions (21,785,583) (21,362,178)
------------ ------------
17,152,279 16,560,138
------------ ------------
Total partners' equity 16,992,574 16,388,349
------------ ------------
$ 18,666,464 $ 18,039,946
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
---------- ----------
<S> <C> <C>
INCOME:
Rental $ 730,331 $ 831,605
Interest 38,525 21,342
Gain on termination of lease 898,562 -0-
---------- ----------
1,667,418 852,947
---------- ----------
EXPENSES:
Depreciation 130,903 206,713
Property operating 217,731 202,951
General and administrative 110,902 102,428
Bad debts (recoveries), net 10,238 (72)
---------- ----------
469,774 512,020
---------- ----------
Earnings before minority interest 1,197,644 340,927
Minority interest in joint venture's earnings 161,373 36,862
---------- ----------
Net earnings $1,036,271 $ 304,065
========== ==========
Basic earnings per limited partnership interest $ 35.98 $ 10.56
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1999:
Balance at December 31, 1998 $ (160,476) $ 17,114,473 $ 16,953,997
Net earnings 6,081 297,984 304,065
Cash distributions (8,641) (423,405) (432,046)
------------ ------------ ------------
Balance at March 31, 1999 $ (163,036) $ 16,989,052 $ 16,826,016
============ ============ ============
THREE MONTHS ENDED MARCH 31, 2000:
Balance at December 31, 1999 $ (171,789) $ 16,560,138 $ 16,388,349
Net earnings 20,725 1,015,546 1,036,271
Cash distributions (8,641) (423,405) (432,046)
------------ ------------ ------------
Balance at March 31, 2000 $ (159,705) $ 17,152,279 $ 16,992,574
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,036,271 $ 304,065
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts (recoveries), net 10,238 (72)
Depreciation 130,903 206,713
Amortization of other assets 18,684 16,683
Gain on termination of lease (898,562) -0-
Proceeds from termination of lease 2,206,834 -0-
Minority interest in joint venture's earnings 161,373 36,862
Change in assets and liabilities:
Accounts receivable 17,287 (112,630)
Other assets (75,694) 1,354
Accounts payable 3,822 12,163
Accrued property taxes and security deposits (93,402) (82,972)
----------- -----------
Net cash provided by operating activities 2,517,754 382,166
----------- -----------
Cash flows from investing activities -
Additions to investment properties (44,908) (10,506)
----------- -----------
Cash flows from financing activities:
Distributions to minority interest in joint venture (49,500) (55,050)
Cash distributions (432,046) (432,046)
----------- -----------
Net cash used in financing activities (481,546) (487,096)
----------- -----------
Net increase (decrease) in cash and cash equivalents 1,991,300 (115,436)
Cash and cash equivalents at beginning of period 1,835,163 1,808,765
----------- -----------
Cash and cash equivalents at end of period $ 3,826,463 $ 1,693,329
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
MURRAY INCOME PROPERTIES I, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
1. BASIS OF ACCOUNTING
The consolidated financial statements include the accounts of the
Partnership and Tower Place Joint Venture (85% owned by the Partnership). All
significant intercompany balances and transactions have been eliminated in
consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
On March 10, 2000, in a special meeting of the Partnership, the Limited
Partners approved the proposed sale of the Partnership's properties, in one or a
series of sale transactions (which may include one or more properties owned by
Murray Income Properties II, Ltd. ("MIP II"), an affiliate of the Partnership
under joint management), the subsequent dissolution and liquidation of the
Partnership upon the sale of the Partnership's last property, and an amendment
to the Partnership Agreement to permit the proposed asset sale, dissolution and
liquidation on the terms set forth in a proxy statement mailed to the Limited
Partners on or about January 14, 2000. As a result, the Partnership has begun
marketing the properties for sale, and after the sale of the last property and
the winding up of all other business affairs, the Partnership will be
liquidated. Effective March 10, 2000, the Partnership's properties are reported
as "Properties held for sale" at the lower of carrying value or fair value less
cost to sell. Management of the Partnership expects no loss to result from the
sale of properties, and no adjustment was made to account for the
reclassification to Properties held for sale.
Rental income is recognized as earned under the leases. Accordingly, the
Partnership accrues rental income for the full period of occupancy using the
straight line method over the related terms. At March 31, 2000 and December 31,
1999, $220,259 and $414,813, respectively, of accounts receivable related to
such accruals.
Other assets consist primarily of deferred leasing costs which are
amortized using the straight line method over the lives of the related leases.
Depreciation, prior to March 10, 2000, was provided over the estimated
useful lives of the respective assets using the straight line method. The
estimated useful lives of the buildings and improvements range from three to
twenty-five years. No depreciation is provided on properties held for sale after
March 10, 2000, the date on which the Partnership changed the classification of
its properties to Properties held for sale.
No provision for income taxes has been made as the liabilities for such
taxes are those of the individual Partners rather than the Partnership. The
Partnership files its tax return on the accrual basis used for Federal income
tax purposes.
Basic earnings and cash distributions per limited partnership interest are
based upon the limited partnership interests outstanding at period-end and the
net earnings and cash distributions allocated to the Limited Partners in
accordance with the Partnership Agreement, as amended.
6
<PAGE> 7
For purposes of reporting cash flows, the Partnership considers all
certificates of deposit and highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
The following information relates to estimated fair values of the
Partnership's financial instruments as of March 31, 2000 and December 31, 1999.
For cash and cash equivalents, accounts receivable, accounts payable, accrued
property taxes payable, and security deposits, the carrying amounts approximate
fair value because of the short maturity of these instruments.
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, Cash Distributions from
Operations ("Operating Distributions") are allocated and paid 7% to the
Non-corporate General Partner, 3% to the Corporate General Partner and 90% to
the Limited Partners. An amount equal to 5% of Operating Distributions out of
the 7% allocated to the Non-corporate General Partner and the entire amount of
Operating Distributions allocated to the Corporate General Partner is
subordinated to the prior receipt by the Limited Partners of a non-cumulative 7%
annual return from either Operating Distributions or Cash Distributions from
Sales or Refinancings. Net profits or losses, excluding gain or loss from sales
or refinancing, are allocated to the General Partners and Limited Partners in
the same proportions as the Operating Distributions for the year. Cash
distributions from the sale or refinancing of a property are allocated as
follows:
(a) First, all Cash Distributions from Sales or Refinancings shall be allocated
99% to the Limited Partners and 1% to the Non-corporate General Partner
until the Limited Partners have been returned their original invested
Capital from Cash Distributions from Sales or Refinancings, plus their
Preferred Return from Cash Distributions from Operations or Cash
Distributions from Sales or Refinancings, or both.
(b) Next, all Cash Distributions from Sales or Refinancings shall be allocated
1% to the Non-corporate General Partner and 99% to the Limited Partners and
the General Partners. Such 99% will be allocated (i) first to the Corporate
General Partner in an amount equal to any unpaid Cash Distributions from
Operations subordinated to the Limited Partners' 7% non-cumulative annual
return and (ii) thereafter, 80% to the Limited Partners and 20% to the
General Partners.
Cash Distributions from Sales or Refinancings (other than the 1% of Cash
Distributions from Sales or Refinancings payable to the Non-corporate
General Partner) payable to the General Partners shall be allocated 62 1/2%
to the Non-corporate General Partner and 37 1/2% to the Corporate General
Partner.
(c) Upon the sale of the last property owned by the Partnership, Cash
Distributions from Sales or Refinancings shall be allocated and paid to the
Partners in an amount equal to, and in proportion with, their existing
capital account balances. Such distributions shall be made only after
distribution of all Cash Distributions from Operations and only after all
allocations of Partnership income, gain, loss, deduction and credit
(including net gain from the sale or other disposition of the properties)
have been closed to the Partners' respective capital accounts.
7
<PAGE> 8
3. PROPERTIES HELD FOR SALE
The Partnership owns and operates Mountain View Plaza, a shopping center
located in Scottsdale, Arizona, and Castle Oaks Village, a shopping center
located in Castle Hills (San Antonio), Texas. In addition, the Partnership owns
an 85% interest in Tower Place Joint Venture, a joint venture which owns Tower
Place Festival Shopping Center located in Pineville (Charlotte), North Carolina.
The remaining 15% interest in the joint venture is owned by MIP II. The Tower
Place Joint Venture Agreement provides that the Partnership will share profits,
losses, and cash distributions according to the Partnership's 85% ownership
interest in the joint venture.
The Partnership has adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information",
which established standards for the way that public business enterprises report
information about operating segments in audited financial statements, as well as
related disclosures about products and services, geographic areas, and major
customers. The Partnership defines each of its shopping centers as operating
segments; however, management has determined that all of its properties have
similar economic characteristics and also meet the other criteria which permit
the properties to be aggregated into one reportable segment. Management of the
Partnership makes decisions about resource allocation and performance assessment
based on the same financial information presented throughout these consolidated
financial statements.
4. TERMINATION FEE INCOME
On February 14, 2000, the Partnership executed a lease termination
agreement with General Cinema at Tower Place Festival Shopping Center. Pursuant
to this agreement, General Cinema paid Tower Place Joint Venture a termination
fee of $2,206,834 as consideration for the Joint Venture releasing the tenant
from its future lease obligations, including $197,957 of straight line rent
receivable. In conjunction with the termination, the Joint Venture retired the
net book value of the theater and related assets of $1,110,315, which will be
demolished to allow for construction of a Bally Total Fitness facility and 6,500
square feet of additional retail space. The Partnership recorded a gain on
termination of the lease of $898,562 as income during the quarter ended March
31, 2000.
5. OTHER
Information furnished in this interim report reflects all adjustments
consisting of normal recurring adjustments, which, in the opinion of management,
are necessary to reflect a fair presentation of the results for the periods
presented.
The financial information included in this interim report as of March 31,
2000 and for the three months ended March 31, 2000 and 1999 has been prepared by
management without audit by independent public accountants. The Partnership's
1999 annual report contains audited consolidated financial statements including
the notes to the consolidated financial statements and should be read in
conjunction with the financial information contained in this interim report.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Liquidity and Capital Resources
On March 10, 2000, in a special meeting of the Partnership, the Limited
Partners approved the proposed sale of the Partnership's properties, in one or a
series of sale transactions (which may include one or more properties owned by
Murray Income Properties II, Ltd. ("MIP II"), an affiliate of the Partnership
under joint management), the subsequent dissolution and liquidation of the
Partnership upon the sale of the Partnership's last property, and an amendment
to the Partnership Agreement to permit the proposed asset sale, dissolution and
liquidation on the terms set forth in a proxy statement mailed to the Limited
Partners on or about January 14, 2000. As a result, the Partnership has begun
marketing the properties for sale, and after the sale of the last property and
the winding up of all other business affairs, the Partnership will be
liquidated. Effective March 10, 2000, the Partnership's properties are reported
as "Properties held for sale" at the lower of carrying value or fair value less
cost to sell. Management of the Partnership expects no loss to result from the
sale of properties, and no adjustment was made to account for the
reclassification to Properties held for sale.
As of March 31, 2000, the Partnership had cash and cash equivalents of
$3,826,463. Such amounts represent cash generated from operations and working
capital reserves. Included in cash and cash equivalents is approximately
$2,200,000 received by Tower Place Joint Venture from General Cinema as
consideration for the termination of its lease at Tower Place Festival Shopping
Center. These proceeds will be utilized to demolish the existing theater
building and to construct a new 25,728 square foot facility to be leased by
Bally Total Fitness and approximately 6,500 square feet of new retail space.
Rental income from leases with escalating rental rates is accrued using the
straight line method over the related lease terms. At March 31, 2000 and
December 31, 1999, there were $220,259 and $414,813, respectively, of accounts
receivable related to such accruals. Accounts receivable also consist of tenant
receivables, receivables for rent collected (but not yet remitted to the
Partnership by the property management companies), and interest receivable on
short-term investments. The decrease in accounts receivable of $215,244 from
December 31, 1999 to March 31, 2000 is primarily due to a decrease in
receivables related to the accruals described above. $197,957 of the receivable
for accrued rent, related to the General Cinema lease at Tower Place Festival
Shopping Center, was collected during the quarter ended March 31, 2000, as part
of the termination fee paid by General Cinema to Tower Place Joint Venture. As
of March 31, 2000 and December 31, 1999, the Partnership had allowances of
$16,806 and $6,568 respectively, for uncollectible accounts receivable.
The decrease of $89,372 in accrued property taxes from December 31, 1999 to
March 31, 2000 is primarily due to the payment of 1999 property taxes for the
Partnership's properties.
During the three months ended March 31, 2000, the Partnership made Cash
Distributions from Operations totaling $432,046 related to the three month
period ended December 31, 1999. Subsequent to March 31, 2000, the Partnership
made a Cash Distribution from Operations of $432,046 (which was reduced by
$26,250 related to 1999 North Carolina state income taxes paid on behalf of the
partners in connection with the operation of Tower Place Joint Venture) relating
to the three months ended March 31, 2000. The distributed funds were derived
from the net cash flow generated from operations of the Partnership's properties
and from interest earned, net of administrative expenses, on funds invested in
short-term money market instruments.
Future liquidity is currently expected to result from cash generated from
the operations of the Partnership's properties (which could be affected
negatively in the event of weakened occupancies and/or rental rates), interest
earned on funds invested in short-term money market instruments and ultimately
through the sale of the Partnership's properties.
9
<PAGE> 10
Results of Operations
Rental income decreased $101,274 (12%) for the three months ended March 31,
2000 as compared to the same period in 1999. The following information details
the rental income generated, bad debt expense incurred, and average occupancy
for the periods shown for each of the Partnership's properties.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
2000 1999
--------- ---------
<S> <C> <C>
Mountain View Plaza Shopping Center
Rental income $ 283,027 $ 241,343
Bad debt expense (recovery) -0- (72)
Average occupancy 99% 97%
Castle Oaks Village Shopping Center
Rental income $ 104,317 $ 132,475
Bad debt expense (recovery) -0- -0-
Average occupancy 82% 95%
Tower Place Festival Shopping Center
Rental income $ 342,987 $ 457,787
Gain on termination of lease 898,562 -0-
Bad debt expense 10,238 -0-
Average occupancy 78% 97%
</TABLE>
Rental income at Mountain View Plaza in Scottsdale, Arizona increased
$41,684 for the three months ended March 31, 2000 as compared to the same period
in 1999 due to higher occupancy, higher rental rates and higher tenant
reimbursements for common area maintenance costs, real estate taxes and
insurance costs.
Occupancy at Mountain View averaged 99% during the quarter ended March 31,
2000, a three percent increase over the previous quarter. In January, two new
tenants totaling 2,403 square feet took occupancy of their spaces. As of March
31, 2000, Mountain View was 100% occupied.
Rental income at Castle Oaks Village in Castle Hills (San Antonio), Texas
decreased $28,158 for the three months ended March 31, 2000 as compared to the
same period in 1999 primarily due to lower occupancy and lower tenant
reimbursements for common area maintenance costs, real estate taxes and
insurance costs.
Occupancy at Castle Oaks averaged 82% during the quarter ended March 31,
2000, a one percent increase over the previous quarter. In March, a new tenant
who signed a lease for 932 square feet took occupancy of its space.
Rental income at Tower Place Festival in Pineville (Charlotte), North
Carolina decreased $114,800 for the three months ended March 31, 2000 as
compared to the same period in 1999 primarily due to lower occupancy. General
Cinema, which occupied approximately 28% of the total leaseable space at Tower
Place, terminated its lease on February 14, 2000, after payment of approximately
$2,200,000 as consideration for the termination of its lease. A new Bally Total
Fitness facility and an additional 6,500 square feet of retail space will be
constructed on the site previously occupied by General Cinema. At this time, it
is anticipated that Bally will open for business in the first quarter of 2001.
10
<PAGE> 11
Occupancy at Tower Place averaged 78% during the quarter ended March 31,
2000, an eight percent decrease from the previous quarter. In January a tenant
who occupied 1,050 square feet vacated its space, and in February a tenant who
occupied 3,287 square feet vacated its space.
Depreciation, prior to March 10, 2000, was provided over the estimated
useful lives of the respective assets using the straight line method. The
estimated useful lives of the buildings and improvements range from three to
twenty-five years. No depreciation is provided on properties held for sale after
March 10, 2000, the date on which the Partnership changed the classification of
its properties to Properties held for sale.
Property operating expenses consist primarily of real estate taxes,
property management fees, insurance costs, utility costs, repair and maintenance
costs, leasing and promotion costs, and amortization of deferred leasing costs.
Property operating expenses increased $14,780 (7%) for the period ended March
31, 2000 as compared to the same period in 1999 because of higher repair and
maintenance costs at Tower Place and Castle Oaks, higher pest control costs at
Mountain View and higher real estate taxes at Tower Place. Mountain View's total
operating expenses increased with increases in leasing and promotion costs,
property management fees and pest control costs being offset by lower legal fees
and utility expenses. Castle Oaks total operating expenses increased primarily
due to higher repair and maintenance costs and landscaping costs. Tower Place's
total operating expenses increased, with increases in repair and maintenance
costs and real estate taxes being offset by lower property management fees.
General and administrative expenses incurred are related to legal and
accounting expenses, rent, investor services costs, salaries and benefits and
various other costs required for the administration of the Partnership,
including reimbursements of shared direct operating costs to Murray Income
Properties II, Ltd. General and administrative expenses increased $8,474 for the
quarter ended March 31, 2000 as compared to the same period in 1999 primarily
due to increases in accounting and legal costs, investor services cost,
telephone expenses, and salaries and benefits.
Words or phrases when used in the Form 10-Q or other filings with the
Securities and Exchange Commission, such as "does not believe" and "believes" or
similar expressions, are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
11
<PAGE> 12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Partnership's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable, accrued property taxes
payable, and security deposits. The carrying amount of these instruments
approximate fair value due to the short-term nature of these instruments.
Therefore, the Partnership believes it is relatively unaffected by interest rate
changes or other market risks.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 10, 2000, a special meeting of the Limited Partners was held to
approve the sale of the Partnership's properties, in one or a series of sale
transactions (which may include one or more properties owned by Murray Income
Properties II, Ltd., an affiliate of the Partnership under joint management),
the subsequent dissolution and liquidation of the Partnership upon the sale of
the Partnership's last property and an amendment to the partnership agreement to
permit the proposed asset sale, dissolution and liquidation on the terms set
forth in a proxy statement mailed to the limited partners on or about January
14, 2000. At the meeting, holders of 22,627 Interests (80%) out of a total of
28,277 Interests were represented by proxy. The vote was 21,949 Interests (78%)
for the proposal, 244 Interests (1%) against the proposal and 434 Interests (1%)
abstaining. Because more than 50% of the outstanding Interests voted to approve
the proposal, the Partnership has begun marketing the properties for sale, and
after the sale of the last property and the winding up of the Partnership's
other business affairs, the Partnership will be liquidated and dissolved.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2a Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934. Reference is made to the Partnership's
Schedule 14A, filed with the Securities and Exchange Commission
on January 13, 2000. (File No. 0-14105)
2b Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 9, 2000. (File
No. 0-14105)
2c Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 23, 2000.
(File No. 0-14105)
3a Agreement of Limited Partnership of Murray Income Properties
Ltd.-84. Reference is made to Exhibit A of the Prospectus dated
May 31, 1984 contained in Amendment No. 2 to Partnership's Form
S-11 Registration Statement. (File No. 2-90016)
3b Amended and Restated Certificate and Agreement of Limited
Partnership dated as of May 23, 1984. Reference is made to
Exhibit 3b to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3c Amended and Restated Certificate and Agreement of Limited
Partnership dated as of June 25, 1984. Reference is made to
Exhibit 3c to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3d Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 27, 1984. Reference is made to
Exhibit 3d to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3e Amended and Restated Certificate and Agreement of Limited
Partnership dated as of April 1, 1985. Reference is made to
Exhibit 3e to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3f Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 15, 1989. Reference is made to
Exhibit 3f to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3g Amended and Restated Certificate and Agreement of Limited
Partnership dated as of January 10, 1990. Reference is made to
Exhibit 3g to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
13
<PAGE> 14
3h Amendment to Amended and Restated Certificate and Agreement of
Limited Partnership, dated March 22, 2000. Reference is made to
Exhibit 3h to the 1999 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 27, 2000. (File No.
0-14105)
27 Financial Data Schedule. Filed herewith.
99a Glossary, as contained in the Prospectus dated May 31, 1984 filed
as part of Amendment No. 2 to Registrant's Form S-11 Registration
Statement. (File No. 2-90016) Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as contained
in the Prospectus dated May 31, 1984 filed as part of Amendment
No. 2 to Registrant's Form S-11 Registration Statement. (File No.
2-90016) Filed herewith.
99c Amendment number nine to the Agreement of Limited Partnership
contained in the Proxy Statement dated October 11, 1989. Filed
herewith.
99d Management Compensation as contained in the Prospectus (Pages 10
through 17) dated May 31, 1984 filed as part of Amendment No. 2
to Registrant's Form S-11 Registration Statement. (File No.
2-90016) Filed herewith.
(b) Reports on Form 8-K filed during the quarter ended March 31, 2000:
None
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MURRAY INCOME PROPERTIES I, LTD.
By: Murray Realty Investors VIII, Inc.
A General Partner
Date: May 12, 2000 By: /s/ Mitchell Armstrong
----------------------------------
Mitchell Armstrong
President
Chief Financial Officer
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
2a Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934. Reference is made to the Partnership's
Schedule 14A, filed with the Securities and Exchange Commission
on January 13, 2000. (File No. 0-14105)
2b Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 9, 2000. (File
No. 0-14105)
2c Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 23, 2000.
(File No. 0-14105)
3a Agreement of Limited Partnership of Murray Income Properties
Ltd.-84. Reference is made to Exhibit A of the Prospectus dated
May 31, 1984 contained in Amendment No. 2 to Partnership's Form
S-11 Registration Statement. (File No. 2-90016)
3b Amended and Restated Certificate and Agreement of Limited
Partnership dated as of May 23, 1984. Reference is made to
Exhibit 3b to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3c Amended and Restated Certificate and Agreement of Limited
Partnership dated as of June 25, 1984. Reference is made to
Exhibit 3c to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3d Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 27, 1984. Reference is made to
Exhibit 3d to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3e Amended and Restated Certificate and Agreement of Limited
Partnership dated as of April 1, 1985. Reference is made to
Exhibit 3e to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3f Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 15, 1989. Reference is made to
Exhibit 3f to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
3g Amended and Restated Certificate and Agreement of Limited
Partnership dated as of January 10, 1990. Reference is made to
Exhibit 3g to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-14105)
</TABLE>
<PAGE> 17
<TABLE>
<S> <C>
3h Amendment to Amended and Restated Certificate and Agreement of
Limited Partnership, dated March 22, 2000. Reference is made to
Exhibit 3h to the 1999 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 27, 2000. (File No.
0-14105)
27 Financial Data Schedule. Filed herewith.
99a Glossary, as contained in the Prospectus dated May 31, 1984 filed
as part of Amendment No. 2 to Registrant's Form S-11 Registration
Statement. (File No. 2-90016) Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as contained
in the Prospectus dated May 31, 1984 filed as part of Amendment
No. 2 to Registrant's Form S-11 Registration Statement. (File No.
2-90016) Filed herewith.
99c Amendment number nine to the Agreement of Limited Partnership
contained in the Proxy Statement dated October 11, 1989. Filed
herewith.
99d Management Compensation as contained in the Prospectus (Pages 10
through 17) dated May 31, 1984 filed as part of Amendment No. 2
to Registrant's Form S-11 Registration Statement. (File No.
2-90016) Filed herewith.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MURRAY
INCOME PROPERTIES I, LTD. AND CONSOLIDATED JOINT VENTURE BALANCE SHEET AND
STATEMENT OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-Q FOR THE QUARTER ENDED MARCH 31, 2000.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,826,463
<SECURITIES> 0
<RECEIVABLES> 426,796
<ALLOWANCES> 16,806
<INVENTORY> 0
<CURRENT-ASSETS> 4,236,453
<PP&E> 24,380,099
<DEPRECIATION> 10,300,267
<TOTAL-ASSETS> 18,666,464
<CURRENT-LIABILITIES> 162,761
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,992,574
<TOTAL-LIABILITY-AND-EQUITY> 18,666,464
<SALES> 0
<TOTAL-REVENUES> 1,667,418
<CGS> 0
<TOTAL-COSTS> 348,634
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,238
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,036,271
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,036,271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,036,271
<EPS-BASIC> 35.98
<EPS-DILUTED> 35.98
</TABLE>
<PAGE> 1
EXHIBIT 99.A
In the event that the General Partners decide to honor a request, they
will notify the requesting Limited Partner in writing of such fact and will
forward to such Limited Partner the documents necessary to effect such
repurchase within 60 days following the receipt of the request by the General
Partners. The purchase price will be equal to 90% of the estimated fair value
of the Interests to be repurchased, as determined by the General Partners by
using such methods of valuation as they deem appropriate. The General Partners
may consider, among other criteria, the current market value of the
Partnership's properties and other assets, less all outstanding Partnership
debts and obligations. The General Partners will, as soon as possible following
return of such documents from the Limited Partner, repurchase the Interests of
the Limited Partner, provided that (i) sufficient amounts are then available in
the Repurchase Fund to repurchase all of such Interests and (ii) such documents
are returned by the end of the fiscal quarter in which the Limited Partner's
request was received by the General Partners ("current quarter"). In the event
that items (i) or (ii) above are not met, the General Partners may repurchase a
portion of such Interests or defer the repurchase of all such Interests. If the
General Partners determine to defer all or a portion of the repurchase of
certain Interests, the Limited Partners will be deemed to have priority over
subsequent requests for repurchases.
Special Power of Attorney
Under the Partnership Agreement and Subscription Agreement, each
Limited Partner irrevocably appoints the General Partners his attorney-in-fact
to make, execute, sign, acknowledge, swear to, deliver, record and file any
document or instrument which may be considered necessary or desirable by the
General Partners executing the same to carry out fully the provisions of the
Partnership Agreement.
Dissolution and Liquidation
Article XV of the Partnership Agreement provides that the Partnership
shall be dissolved and its business wound up upon the earliest to occur of (a)
the date of disposition of all assets of the Partnership, (b) the date of the
removal, resignation, adjudication of bankruptcy, insolvency or dissolution of
a General Partner, unless the Limited Partners elect to continue the business
of the Partnership, (c) that date on which Limited Partners holding a majority
of Interests vote in favor of dissolution and termination, or (d) January 31,
2020.
Upon the election by the Limited Partners to continue the business of
the Partnership after an event specified in (b) above, the Partnership shall be
required to purchase the General Partner's general partnership interest
pursuant to Section 12.3 and Section 12.4 of the Partnership Agreement.
Upon the completion of the liquidation of the Partnership, the General
Partners have the authority to execute and record a certificate of cancellation
of the Partnership, as well as any and all other documents required to
effectuate the dissolution and termination of the Partnership.
GLOSSARY
As used in this Prospectus, the following definitions of terms are
applicable:
"Affiliate": (i) any person directly or indirectly controlling,
controlled by, or under common control with, another person, (ii) a
person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such other person, (iii) any
officer, director, partner, general trustee, or any other person acting
in a substantially similar capacity of such person, and (iv) if such
other person is an officer, director, partner, trustee or holder of 10%
or more of the voting securities or beneficial interests of such person,
any other entity for which such person acts in any capacity.
65
<PAGE> 2
"Average Annual Unreturned Invested Capital": The total of all the
Limited Partners' Original Invested Capital reduced by the total of all Cash
Distributions from Sales or Refinancings (but not below zero) to Limited
Partners, as reflected on the Partnership's books and records, weighted on a
daily average basis for the period.
"Cash Distributions from Operations": Distributions of cash receipts
from Gross Revenues after (i) operating expenses (without deduction for
depreciation), (ii) amounts set aside for reasonable reserves and (iii)
payments on the Partnership's other current obligations.
"Cash Distributions from Sales or Refinancings": Distributions of cash
receipts from Net Proceeds from Sales or Refinancings realized by the
Partnership from sales or refinancings of the Partnership's properties after
(i) amounts set aside for reasonable reserves and (ii) payments on the
Partnership's other current obligations.
"Closing Date": Such date as designated by the General Partners as the
date when the last Interest has been sold by the Partnership, but in no event
later than one year after the Registration Statement first became effective.
"Corporate General Partner": Murray Realty Investors VIII, Inc.
"Escrow Agent": Mercantile National Bank at Dallas, Dallas, Texas, or
its successor.
"General Partners": Murray Realty Investors VIII, Inc. and Crozier
Partners VIII, Ltd.
"Gross Revenues": All Partnership revenues from whatever source
derived, exclusive of revenues from the sale or refinancing of Partnership
properties.
"Initial Closing Date": The date on which subscriptions for the minimum
of 3,000 Interests have been accepted by the General Partners.
"Interest": The limited partnership interest in the Partnership
acquired by the payment of 81,000 to the Partnership.
"Limited Partners": All persons who are admitted to the Partnership as
limited partners.
"Minimum Deadline": This date that is 120 days after the date of this
Prospectus, unless extended by the General Partners by up to an additional 90
days.
"NASAA Guidelines": The guidelines for real estate programs as adopted
by the North American Securities Administrators Association as they exist on
the date the Partnership's Registration Statement is declared effective by the
Securities and Exchange Commission.
"Net Proceeds from Sales or Refinancings": The net cash realized by the
Partnership from sales, refinancings or other dispositions of Partnership
properties after the payment of all debts and expenses related to the
transactions.
"Non-corporate General Partner": Crozier Partners VIII, Ltd.
"Organizational and Offering Expenses": Expenses incurred in connection
with the organization of the Partnership and the offering of the Interests
(excluding selling commissions), including legal fees, accounting fees, escrow
fees, printing costs, filing and qualification fees, reimbursement of expenses
(excluding salaries and related salary expenses incurred during the
organization of the Partnership) incurred by the General Partners or their
Affiliates and other disbursements in connection with the sale and distribution
of Interests.
"Original Invested Capital": An amount equal to $1,000 per Interest.
"Partner": Any General Partner or Limited Partner.
"Partnership": The partnership created under the Agreement of Limited
Partnership attached as Exhibit A.
66
<PAGE> 3
"Preferred Return": The cumulative preferred return to each
Limited Partner equal to 12% per annum on his Average Annual Unreturned
Invested Capital from either Cash Distributions from Operations or Cash
Distributions from Sales or Refinancings, or both. Such cumulative preferred
return shall be calculated from the beginning of the first full fiscal quarter
after such Limited Partner purchased such Interest. A Limited Partner shall be
deemed to have purchased an Interest as of the date on which the purchase of
such Interest is reflected on the certificate of limited partnership filed with
the Secretary of State of Texas.
"Property Management Fee": The fee payable for property
management services.
"Prospectus": The prospectus contained in the Registration
Statement on the date the Registration Statement is declared effective by the
Securities and Exchange Commission.
"Registration Statement": The Partnership's Registration
Statement on Form S-11 filed with the Securities and Exchange Commission and as
amended from time to time.
"Repurchase Fund": 25% of the Corporate General Partner's share
of Cash Distributions from Operations to be used to repurchase Limited Partner
Interests under certain circumstances.
THE OFFERING
Subject to the conditions set forth in this Prospectus and in
accordance with the terms and conditions of the Partnership Agreement, the
Partnership offers through the Dealer Manager a maximum of 30,000 Interests
priced at $1,000 per Interest. Except for investors in certain states that have
imposed higher purchase requirements as set forth in the Subscription
Agreement, a form of which is included as Exhibit B, the minimum subscription
for an Individual Retirement Account is two Interests. The minimum subscription
for other investors is five Interests.
The Interests are being offered on a "best efforts" basis through
Murray Securities Corporation (the "Dealer Manager"), an Affiliate of the
General Partners. As compensation for its services in soliciting and obtaining
subscribers for the purchase of the Interests, the Partnership has agreed to
pay the Dealer Manager a commission of up to a maximum of 8 1/2% of the gross
proceeds on all sales made directly by it or by other dealers in accordance
with the following schedule:
<TABLE>
<CAPTION>
Amount of Investment
- ---------------------------------- Commission
From To Rate
- ---------- ---------- ----------
<S> <C> <C>
$ 2,000 $ 25,000.................... 8 1/2%
26,000 100,000.................... 7 1/2%
101,000 250,000.................... 6 1/2%
251,000 500,000.................... 5 1/2%
501,000 1,000,000.................... 4 1/2%
over $1,000,000...................................... 2 1/2%
</TABLE>
Subscriptions may be combined for the purpose of determining the total
commissions payable in the case of subscriptions made by any investor who,
subsequent to his initial purchase of Interests, subscribes for the purchase of
additional Interests. Any request to combine subscriptions will be subject to
verification by the General Partners that all of such subscriptions were made
by a single investor. In such an event, the commission payable with respect to
the initial purchase of Interests will be computed using the commission
schedule set forth above. The commission payable with respect to any subsequent
purchase of Interests will equal the commission that would have been payable in
accordance with the commission schedule set forth above if all purchases had
been made simultaneously, less the commissions that previously have been paid
with respect to all prior purchases of Interests by such an investor. The
difference between 8.5% of the gross proceeds from the sale of Interests and
the amount payable to the Dealer Manager with respect to such sale will be
reimbursed to the Limited Partner as soon as possible after his admission to
the Partnership.
67
<PAGE> 1
EXHIBIT 99.B
paid to the Terminated General Partners by the Partnership), such interest to
be payable at the time of each installment of principal, which shall be payable
as the Terminated General Partner and the Partnership may agree, or if they
cannot so agree, then annually over a period of five years from the date of the
Terminated General Partner's retirement, resignation, removal, adjudication of
bankruptcy, insolvency, dissolution, insanity or death. No prepayment penalty
shall be charged to the Partnership for the early payment of its note.
12.3 The fair market value of the Terminated General Partner's
interest to be purchased by the Partnership according to the provisions of
Section 12.2 above shall be determined by agreement between the Terminated
General Partner and the Partnership. If the Terminated General Partner and the
Partnership cannot agree upon the fair market value of such Partnership
interest within 90 days after the date of the Terminated General Partner's
retirement, resignation, removal, adjudication of bankruptcy, insolvency,
dissolution, insanity or death, then the Terminated General Partner and the
Partnership shall each select an independent appraiser within the next thirty
days. If such appraisers fail to agree on the fair market value of the
Terminated General Partner's interest within the next 90 days, then the two
appraisers shall jointly appoint a third appraiser whose determination shall be
final and binding. The Terminated General Partner and the Partnership shall
each compensate their respective appraisers, and the compensation of the third
appraiser, if necessary, shall be borne equally by each party.
12.4 Within 90 days after the retirement, resignation, removal,
adjudication of bankruptcy, insolvency, dissolution, insanity or death of a
General Partner (except that a General Partner shall not voluntarily withdraw
from the Partnership without at least 90 days' prior written notice to the
other General Partner and the Limited Partners of intention to withdraw, and in
such event, within the period from the date of the notice of intention to
withdraw to the date of withdrawal specified in the notice of intention),
Limited Partners holding a majority of the Interests may elect to continue the
business of the Partnership and, if they desire to do so, may elect a successor
General Partner.
ARTICLE XIII
Transfer of a Partnership Interest
13.1 The General Partners may, pursuant to this Article XIII, admit
as a substituted Limited Partner any successor in interest to a Limited Partner
who is either deceased or under legal disability or who is an assignee of a
Limited Partner.
13.2 Subject to the provisions of this Article XIII, compliance with
the suitability standards imposed by the Partnership, applicable "blue sky"
laws and the applicable rules of any other governmental authority, a Limited
Partner shall have the right to assign the whole or any portion of his
Interests (but not less than five Interests unless to an Individual Retirement
Account and then not less than two Interests) by a written assignment, the
terms of which are not in contravention of any of the provisions of this
Agreement. Any assignment in contravention of any of the provisions of this
Article XIII shall be of no force and effect and shall not be binding upon or
recognized by the Partnership.
(a) Except as provided in (b) below, an assignee of a Limited
Partner's Interest who is not admitted as a substituted Limited Partner
shall have no right to require any information or account of the
Partnership's transactions or to inspect the Partnership's books; he
shall only be entitled to receive Distributions from the Partnership and
the share of income, gain, loss, deduction and credit attributable to
the Interests acquired by reason of such assignment from the first day
of the month following the month in which the written instrument of
assignment, executed by the assignor and in form and substance
reasonably satisfactory to the General Partners, and other documents
reasonably deemed necessary or appropriate by the General Partners (as,
for example, evidence that the assignee meets investor suitability
standards) shall have been received by the Partnership.
A-17
<PAGE> 2
(b) Anything herein to the contrary notwithstanding, both the
Partnership and the General Partners shall be entitled to (i) treat the
assignor of such Interests as the absolute owner thereof in all
respects, and shall incur no liability for allocations of income, gain,
loss, deduction or credit for Distributions or for transmittal of
reports and notices required to be given to holders of Interests, until
the last day of the month in which the Partnership shall have received
the written assignment executed by the assignor in form and substance
reasonably satisfactory to the General Partners and other documents
reasonably deemed necessary or appropriate by the General Partners
(including evidence of the assignee's compliance with standards imposed
by applicable "blue sky" laws) or (ii) treat the assignee as a
substitute Limited Partner in the place of his assignor, should the
General Partners deem, in their absolute discretion, that such treatment
is in the best interests of the Partnership for any of its purposes or
for any of the purposes of this Agreement.
13.3 No assignee shall have the right to become a substituted
Limited Partner in place of his assignor unless all of the following conditions
are satisfied:
(a) The written consent of the General Partners to such
substitution shall be obtained, the granting of which shall not be
unreasonably withheld;
(b) A duly executed written instrument of assignment setting forth
the intention of the assignor that the assignee shall become a
substituted Limited Partner in his place shall have been filed with
the Partnership;
(c) The Interests being acquired by the assignee shall consist of
at least two Interests if such assignee is an Individual Retirement
Account and at least five Interests if such assignee is not an
Individual Retirement Account and, if the assignor shall retain any
Interests, such retention shall consist of at least two Interests if
such assignor is an Individual Retirement Account and at least five
Interests if such assignor is not an Individual Retirement Account;
(d) The assignor and assignee shall execute and acknowledge such
other instruments as the General Partners reasonably deem necessary or
desirable to effect such assignment and admission, including, but not
limited to, evidence of the assignee's compliance with standards imposed
by any applicable "blue sky" laws, the written acceptance and adoption
by the assignee of the provisions of this Agreement and his execution,
acknowledgment and delivery to the General Partners of a special power
of attorney, the form and content of which are more fully described in
Article XXI hereof; and
(e) The Partnership shall have received from the assignor or
assignee a transfer fee to cover all reasonable expenses of the
transfer, not to exceed $50 per transaction, but such transfer fee
may be waived by the General Partners, in their discretion.
13.4 Any person admitted to the Partnership as a substituted Limited
Partner shall be subject to all of the provisions of this Agreement as if an
original party to it.
13.5 The General Partners shall amend the certificate of limited
partnership at least once each quarter to add assignees as substituted Limited
Partners.
13.6 Upon the death or legal disability of an individual who is a
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 of his interests in the Partnership and to join with such assignee in
making application to substitute such assignee as a Limited Partner. However,
such personal representative shall not have the right to become a substituted
Limited Partner in the place of his predecessor in interest unless the
conditions of this Article XIII (other than the requirement that the assignor
execute and acknowledge instruments) are first satisfied.
A-18
<PAGE> 3
13.7 Upon the adjudication of bankruptcy or insolvency, dissolution
or other cessation of existence as a legal entity of a Limited Partner which is
not an individual, the authorized representative of such entity shall have all
of 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. However, such representative
shall not have the right to become a substituted Limited Partner in the place of
his predecessor in interest unless the conditions of this Article XIII (other
than the requirement that the assignor execute and acknowledge instruments) are
first satisfied.
13.8 A General Partner may not assign his or its interest as a
General Partner to anyone other than the Partnership as provided in Article XII
of this Agreement.
13.9 No assignment of any Interests may be made if the Interests
sought to be assigned, when added to the total of all other Interests assigned
within the period of 12 consecutive months prior to the proposed date of
assignment, would, in the opinion of counsel for the Partnership, result in the
termination of the Partnership under Section 708 of the Internal Revenue Code
of 1954, as amended.
13.10 Any assignment, sale, exchange or other transfer in
contravention of any of the provisions of this Article XIII shall be void and
ineffectual, and shall not bind or be recognized by the Partnership.
ARTICLE XIV
Indemnification
14.1 No General Partner and no officer, director, partner, Affiliate
or assign of a General Partner shall be liable to the Partnership or any
Limited Partner for any loss or damage suffered by the Partnership or any
Limited Partner which arises out of any error in judgment or other action or
inaction not constituting negligence (gross or ordinary), fraud or breach of
fiduciary duty which was taken in good faith, in accordance with the exercise
of reasonable business judgment and pursuant to a determination that such
course of conduct was in the best interest of the Partnership. The Partnership
or its receiver or trustee shall indemnify, save harmless and pay all judgments
and claims against the General Partners (and each of them) or their officers,
directors, partners, Affiliates 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 activities of the
Partnership or in dealing with third parties on behalf of the Partnership,
including costs and attorneys' fees (which attorneys' fees may be paid as
incurred) and any amounts expended in the settlement of any claims of
liability, loss or damage, provided that such action was taken in good faith,
in accordance with the exercise of reasonable business judgment and pursuant to
a determination that such course of conduct was in the best interest of the
Partnership and did not constitute fraud, negligence (gross or ordinary) or
breach of fiduciary duty by such General Partner or such officer, director,
partner, Affiliate or assign and provided further that any such indemnification
shall be recoverable only from the assets of the Partnership and not from the
assets of the holders of Interests. Notwithstanding the foregoing, no
Affiliate will be indemnified or excused from liability under this Agreement in
connection with Partnership activities to the extent such Affiliate is
rendering contract services for which it receives a competitive fee. 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 a General Partner shall be responsible for such
obligations. The Partnership shall not pay for any insurance covering liability
of a General Partner or of officers, directors, partners, Affiliates and
assigns of a General Partner for actions or omissions for which indemnification
is not permitted hereunder; provided, however, that nothing contained herein
shall preclude the Partnership from purchasing and paying for such types of
insurance, including extended coverage liability and casualty and workmen's
compensation, as would be customary for any person owning comparable property
and engaged in a similar business or from naming a General Partner and any
Affiliate as additional
A-19
<PAGE> 1
EXHIBIT 99.C
expenditure made by the Partnership which the General Partners deem to
be the fair, just and equitable share that should be borne by Murray
Income Properties II, Ltd.
AMENDMENT NO. 9
Explanation of Amendment. Section 10.15 requires the Corporate General
Partner to allocate 25% of its share of Cash Distributions from Operations to a
"Repurchase Fund" for the purchase of Interests upon the request of a Limited
Partner. The Corporate General Partner is permitted to commingle the amount
allocated to the "Repurchase Fund" with other assets of the Corporate General
Partner. To the present time, however, the Corporate General Partner has not
been paid any Cash Distributions from Operations since the allocation and
payment of Cash Distributions to the Corporate General Partner is subordinated
to the prior receipt by the Limited Partners of a non-cumulative 7% annual
return from either Cash Distributions from Operations or Cash Distributions from
Sales or Refinancings, or both, on their Average Annual Unreturned Invested
Capital.
Since the amendments herein will reduce the allocation of Cash
Distributions from Operations to the Corporate General Partner from 8% to 3% and
will reallocate 5% of such 8% to the Non-Corporate General Partner (subordinate,
of course, in each instance to the prior receipt by the Limited Partners of a
non-cumulative 7% annual return from either Cash Distributions from Operations
or Cash Distributions from Sales or Refinancings, or both), this amendment will
require both the Corporate General Partner and the Non-Corporate General
Partner, in the proportions of 3/8ths for the Corporate General Partner and
5/8ths for the Non-Corporate General Partner, respectively, to allocate 25% of
their respective shares of any such subordinated Cash Distributions from
Operations to a "Repurchase Fund" to be established by each of them,
respectively.
The Amendment. The last two sentences in the first paragraph of Section
10.15 are hereby deleted and there is hereby substituted in lieu thereof the
following three sentences:
"The Corporate General Partner will allocate 25% of its share of Cash
Distributions from Operations to a "Repurchase Fund" and the
Non-Corporate General Partner will allocate to a "Repurchase Fund" 25%
of its 5% share of Cash Distributions from Operations that is
subordinated to the prior receipt by the Limited Partners of a
non-cumulative 7% annual return from either Cash Distributions from
Operations or Cash Distributions from Sales or Refinancings, or both, on
their Average Annual Unreturned Invested Capital. The Corporate General
Partner's share of Cash Distributions from Operations allocated to the
Repurchase Fund will be commingled with other assets of the Corporate
General Partner and the Non-corporate General Partner's share of Cash
Distributions from Operations allocated to the Repurchase Fund will be
commingled with other assets of the Non-corporate General Partner. Any
repurchase of Interests pursuant to this Section 10.15 shall be in the
proportions of 3/8ths by the Corporate General Partner and 5/8ths by the
Non-corporate General Partner, respectively.*
AMENDMENT NO. 10
Explanation of Amendment. Section 11.3 provides in respect of voting on
any matter on which the Limited Partners are entitled to vote that each Limited
Partner will be deemed to be "--the holder of only those Interests shown on
Exhibit A, as amended by the last-filed certificate of limited partnership." The
Texas Uniform Limited Partnership Act requires the filing of a certificate of
limited partnership that lists the name and address of each limited partner of a
limited partnership and the amount of the contribution of each limited partner
to the partnership. The certificate of limited partnership filed in the office
of the Secretary of State is authoritative as to the identity of limited
partners. The Texas Uniform Limited Partnership also does not permit an owner of
a limited partnership interest to be considered a "limited
(vi)
<PAGE> 1
EXHIBIT 99.D
commissions on such Interests. No selling commissions were paid on the
five Interest purchased by the Initial Limited Partner.
(4) For a discussion of the limitations imposed by the NASAA Guidelines
with respect to the percentage of capital contributions available for
the payment of acquisition expenses, see footnote (3) to "Management
Compensation."
(5) Assumes an initial working capital reserve of 2% of gross offering
proceeds. See "Investment Objectives and Policies - Working Capital
Reserve."
MANAGEMENT COMPENSATION
The following table sets forth the types and estimates of the amounts
of all fees, compensation, income, distributions and other payments that the
General Partners and their Affiliates will or may receive in connection with
the operations of the Partnership. SUCH FEES, COMPENSATION, INCOME,
DISTRIBUTIONS AND OTHER PAYMENTS WERE NOT DETERMINED BY ARMS-LENGTH BARGAINING.
See "Conflicts of Interest."
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Offering Stage
Selling Commissions Murray Securities Corpora- Up to $85 per Interest sold,
tion, an Affiliate of the reduced for purchases by one
General Partners(1) investor of more than 25
Interests and for purchases
by officers, directors, partners,
employees or Affiliates of the
General Partners or their
Affiliates. Actual amount
depends upon number of
Interests sold but could be
$2,549,575 if 30,000 Interests
are sold.(2)
Reimbursement of Murray Realty Investors Actual out-of-pocket Organiza-
Organizational and VIII, Inc. or its Affiliates tional and Offering
Offering Expenses(3) Expenses, including
accounting, legal, printing,
registration fees, etc.
Acquisition Stage
Purchase of Murray Properties Actual costs of properties
Properties at Cost(4) Company, an Affiliate acquired by Affiliates.
of the General Partners, Dollar amount is not
or its Affiliates determinable at this time.(5)
Title Insurance Dallas Title Company or A portion of the premium
Commissions(6) Texas Title Company, paid for title insurance upon
Affiliates of the General acquisition of a property.
Partners(7) The premium in Texas is
fixed by the State. Dollar
amount is not determin-
able at this time.(5)
</TABLE>
10
<PAGE> 2
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Operational Stage
Property Management Fees Murray Management Corp- An amount equal to (a) for
oration, an Affiliate of its management services,
the General Partners(8) the lesser of (i) 6% of gross
revenues or (ii) the amount
customarily charged in
arms length transactions
by others rendering com-
parable services in the
locality where the property
is located, considering the
size and type of each such
property plus (b) reim-
bursement for the actual costs
of on-site personnel engaged
in the management, leasing
and maintenance of the
property of the Partnership
and certain other costs.
Dollar amount is not deter-
minable at this time.(5)
Reimbursement of Part- Murray Realty Investors Actual cost of goods and
nership Operational VIII, Inc. or its materials used for and by the
Expenses(9) Affiliates Partnership and obtained
from an entity not affiliated
with a General Partner or an
Affiliate of the General
Partners and certain ad-
ministrative services. Dollar
amount is not determinable
at this time.(5)
Casualty Insurance Murray General Agency, A portion of the premiums
Commissions Inc., an Affiliate of paid for casualty insur-
the General Partners(10) ance. The cost of the
insurance cannot exceed
the lower quote for com-
parable terms and coverage
from two independent
brokers. Dollar amount is
not determinable at this
time.(5)
Partnership Administrative Murray Savings Associa- The excess of Murray Savings
and Property Operating tion, an Affiliate of Association's rate of
Account the General Partners(11) return on the Partnership
funds in such account over
the interest rate paid to
the Partnership on such
account. Dollar amount is
not determinable at this
time.(5)
</TABLE>
11
<PAGE> 3
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- ------------------------ ------------------------ --------------------------------
<S> <C> <C>
Interest and Other A General Partner or an An amount not in excess of
Financing Charges or Affiliate of the General the amounts that would be
Fees Partners(12) charged by unrelated lending
institutions on comparable
loans for the same purpose
and in the same locality but
never in excess of 2% over
the prime rate of Mercantile
National Bank at Dallas.
Dollar amount is not
determinable at this time.(5)
Distributive Share of Crozier Partners VIII, The Non-corporate General
Cash Distributions Ltd. and Murray Realty Partner will receive 2% of
from Operations(13) Investors VIII, Inc.(14) all Cash Distributions from
Operations. The Corporate
General Partner will receive
8% of all Cash Distributions
from Operations, subject to
the Limited Partners having
received a noncumulative
annual cash return equal to
7% of their Average Annual
Unreturned Invested Capital,
calculated from the Closing
Date. Dollar amount is not
determinable at this time.(5)
Liquidation Stage
Real Estate Commissions Crozier Partners VIII, Ltd. An amount equal to 50% of the
or its Affiliates; Murray competitive real estate
Realty Investors VIII, Inc. commission, such commission
or its Affiliates(14)(15) not to exceed 6% of the sales
price of the property. Such
commissions will be payable
only after Limited Partners
have been returned their
Original Invested Capital
from Cash Distributions from
Sales or Refinancings, plus
their Preferred Return from
either Cash Distributions
from Operations or Cash
Distributions from Sales or
Refinancings, or both. Dollar
amount is not determinable
at this time.(5)
</TABLE>
12
<PAGE> 4
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- --------------------------- ------------------------- -------------------------------
<S> <C> <C>
Title Insurance Commissions Dallas Title Company or Texas A portion of the premiums paid
Title Company, Affiliates of for title insurance upon sale,
the General Partners(7) financing or refinancing of a
property if such title
insurance is provided by
Dallas Title Company or
Texas Title Company. The
premium in Texas is fixed by
the State. Dollar amount is
not determinable at this
time.(5)
Distributive Share of Cash Crozier Partners VIII, Ltd. The Non-corporate General
Distributions from Sales or and Murray Realty Partner will receive 1% of
Refinancings(13)(16) Investors VIII, Inc.(14) all Cash Distributions from
Sales or Refinancings. The
remaining 99% shall be
allocated (a) first to the
Limited Partners until they
have been returned their
Original Invested Capital
from Cash Distributions from
Operations or Cash
Distributions from Sales or
Refinancings, or both (b)
then to the Corporate General
Partner in an amount equal to
any unpaid Cash Distributions
from Operations subordinated
to the Limited Partners' 7%
noncumulative annual return
and (c) thereafter, the
remainder shall be allocated
80% to the Limited Partners
and 20% to the General
Partners. See "Income and
Losses and Cash
Distributions." Dollar amount
is not determinable at this
time.(5)
</TABLE>
- ------------
(1) The Dealer Manager may authorize certain other broker-dealers who are
members of the National Association of Securities Dealers, Inc., to sell
Interests on a "best efforts" basis. In the event of sale by such other
broker-dealers, the Dealer Manager has advised the Partnership that the
Dealer Manager will pay to such other broker-dealers all or a portion of
its commission from such sales.
(2) See "The Offering" for a discussion of the reduction in selling
commissions payable with respect to sales to one purchaser or more than
25 Interests or with respect to sales to officers, directors, partners,
employees or Affiliates of the General Partners or their Affiliates.
13
<PAGE> 5
(3) The NASAA Guidelines require that, at a minimum, an amount equal to the
greater of (i) 67% of the Limited Partners' capital contributions or
(ii) 80% of such capital contributions reduced by .1625% for each 1% of
indebtedness encumbering the Partnership's properties be committed to
investment in properties. Investment in properties, as defined under the
NASAA Guidelines, is the amount of capital contributions actually paid
or allocated to the purchase, development, construction or improvement
of properties acquired by the Partnership (including working capital
reserves not in excess of 5% of gross offering proceeds). The remaining
capital contributions not invested in properties are available for the
payment of Organizational and Offering Expenses, selling commissions,
acquisition fees and acquisition expenses. Acquisition fees for this
purpose shall be the total of all fees and commissions paid by any party
in connection with the purchase or development of property by the
Partnership, including real estate commissions, acquisition fees,
selection fees, development fees, non-recurring management fees, or any
fees of a similar nature, however designated, but excluding a
development fee paid to a person not affiliated with the General
Partners or their Affiliates in connection with actual development of
property after acquisition by the Partnership. Acquisition expenses for
this purpose include, but are not limited to, legal fees and expenses,
travel and communication expenses, costs of appraisals, loan commitment
and loan fees ("points"), nonrefundable option payments on properties
not acquired, accounting fees and expenses, title insurance, and
miscellaneous expenses related to selection and acquisition of
properties, whether or not acquired. It is anticipated that the
Partnership will not pay any acquisition fees to the General Partners or
their Affiliates and the total of acquisition fees to all parties and
acquisition expenses will not exceed 1% of the Limited Partners' capital
contributions. Based on these assumptions and assuming the sale of
30,000 Interests with Organizational and Offering Expenses and selling
commissions equal to 11.5% of the Limited Partners' capital
contributions, the amount that would be invested in properties would be
equal to 87.5% of such contributions. The amount invested in Partnership
properties will comply with the NASAA Guidelines limitations set forth
above.
(4) An Affiliate of the General Partners may purchase property in its own
name (and assume loans in connection therewith) and temporarily hold
title thereto for the purpose of facilitating the acquisition of such
property or the borrowing of money or obtaining of financing for the
Partnership, or any other purpose related to the business of the
Partnership, provided that such property is purchased by the Partnership
for a price no greater than the cost of such property to the Affiliate,
and provided there is no difference in interest rates of the loans
secured by the property at the time acquired by the Affiliate and the
time acquired by the Partnership, nor any other benefit arising out of
such transaction to the Affiliate apart from compensation otherwise
permitted herein. In such event, such Affiliate may be reimbursed for
its expenses incurred in holding such real property prior to the
acquisition of such property by the Partnership. On March 15, 1984,
Murray Properties Company acquired Mountain View Plaza, a shopping
center in Scottsdale, Arizona for a purchase price of $6,392,916. If
sufficient funds are received by the Partnership pursuant to this
offering, the Partnership will acquire the Property from Murray
Properties Company and Murray Properties Company will be reimbursed as
provided herein. See "The Property."
(5) Any prediction of such dollar amount would necessarily involve
assumptions of future events that cannot be determined at this time.
(6) To the extent a seller of property to the Partnership sets the sales
price at a level sufficient to cover the premium for title insurance,
the Partnership, in effect, will pay the premium in the purchase price
of the property.
(7) The Partnership has entered into nonexclusive contracts with Dallas
Title Company and Texas Title Company, Affiliates of the General
Partners, pursuant to which each has agreed that, upon the request of
the Partnership, it will handle the closing of purchases, sales,
financings or refinancings by the Partnership of properties situated in
Texas and will cause to be issued title
14
<PAGE> 6
insurance policies on such properties. Either of such title insurance
agencies may receive a portion of the commission on premiums paid for title
insurance by the Partnership or by a seller of real property to the
Partnership. In Texas, title insurance premiums and the policy forms are
prescribed by the State. Each contract provides that if such title insurance
agency does not derive, in any calendar year, at least 75% of its gross
income from persons or entities not affiliated with a General Partner, that
agency's contract will terminate upon the earlier of 60 days after the end
of the calendar year or as soon as the Partnership can arrange for another
person or entity to perform such services. Each contract also provides that
it may be terminated by either party, without penalty, on 60 days' prior
written notice and that such title insurance agency shall not render
services or receive title insurance commissions in connection with the
reinvestment of any proceeds from a sale or refinancing of Partnership
properties.
(8) The Partnership has entered into an agreement with Murray Management
Corporation, an Affiliate of the General Partners, pursuant to which Murray
Management Corporation will be responsible for the management of each
property and the collection of its rental income, for which services it will
receive a monthly Property Management Fee. This Property Management Fee is
payable for professional supervisory management services undertaken in
connection with the operation of the Partnership's properties. Such fee
shall include all leasing and re-leasing fees and bonuses, and
leasing-related services, except that a separate fee may be paid for the
one-time initial lease-up of a newly constructed property if such service is
not included in the purchase price of the property, provided that such fee
shall not exceed the lesser of the cost of such services or 90% of the
competitive price that would be charged by non-affiliated persons rendering
similar services in the same or comparable geographic location. Murray
Management Corporation shall pay from the Property Management Fee, and not
as an expense of the Partnership, the expenses of rendering supervisory
property management services; provided, however, that the wages and expenses
of on-site personnel engaged in the management, leasing and maintenance of
the Partnership's properties and supplies, repairs, furniture, equipment
costs and other costs directly attributable to the Partnership's property
operations shall be deemed to be property operating expenses and as such
shall be borne by the Partnership by reimbursement to Murray Management
Corporation. Wages and other actual expenses of personnel may be allocated
between properties of the Partnership and other properties managed by Murray
Management Corporation if such properties are owned by (i) a public or
private program sponsored by the General Partners or their Affiliates or any
joint venture in which a General Partner or an Affiliate is a party or (ii)
an unaffiliated third party. Murray Management Corporation has the right to
subcontract to third parties a portion or all of the management services to
be rendered by it with respect to any particular property, provided that (a)
Murray Management Corporation shall at all times remain responsible for the
management of such property, (b) the Partnership shall not be required to
pay for duplicate services and (c) the aggregate cost to the Partnership
will not exceed the amount which would be customarily charged in arms-length
transactions by others rendering similar services in the locality where the
property is located, considering the size and type of each such property, if
only one entity had provided all such services. The agreement between the
Partnership and Murray Management Corporation may be terminated by either
party, without penalty, on 60 days' prior written notice.
(9) Except as set forth below, reimbursements to a General Partner or an
Affiliate of a General Partner shall not be allowed. A General Partner or an
Affiliate of a General Partner may be reimbursed for: (a) the actual cost of
goods and materials used for or by the Partnership and obtained from an
entity not affiliated with a General Partner or an Affiliate of a General
Partner; and (b) the lesser of the cost or 90% of the competitive price
charged by unaffiliated parties for (i) salaries and related salary expenses
for services that could be performed directly for the Partnership by
independent parties, including parties, including legal, accounting,
transfer agent, data processing, duplicating and administration of investor
accounts and (ii) Partnership reports and communications to investors. All
such transactions shall be pursuant to the terms of a written contract
15
<PAGE> 7
between the Partnership and such General Partner or Affiliate which
precisely describes the services to be rendered or the goods or materials
to be provided. No reimbursement shall be permitted for services for which
the General Partners or Affiliates receive a separate fee or for (i)
salaries, related salary expenses, traveling expenses, and other
administrative items which are incurred by any Controlling Person or which
are not directly attributable to the rendering of services to the
Partnership and (ii) any indirect expenses incurred in performing services
for the Partnership, such as rent or depreciation, utilities, capital
equipment, and other administrative items. "Controlling Person" for this
purpose shall mean any person, regardless of title, who performs executive
or senior management functions for the General Partners or Affiliates
similar to those of officers, directors, executive management and senior
management, or any person who either holds 5% or more equity interest in
the General Partners or Affiliates or has the power to direct or cause the
direction of the General Partners or Affiliates, whether through the
ownership of voting securities, by contract, or otherwise, or, in the
absence of a specific role or title, any person having the power to direct
or cause the direction of the management level employees and policies of
the General Partners or Affiliates. It is not intended that every person
who carries a title such as vice president, senior vice president,
secretary or treasurer be included in the definition of Controlling Person.
In no event shall any amount charged to the Partnership as a reimbursable
expense by the General Partners exceed the lesser of the actual cost of
such services or the amount which the Partnership would be required to pay
to independent parties for comparable services. "Costs" for purposes of
this paragraph shall include the price of goods and materials paid to
independent third parties, and direct costs incurred by the General
Partners or their Affiliates in the transactions, including overhead
directly attributable to the transaction, but excluding general or
administrative overhead. "Costs of Services" for purposes of this paragraph
shall mean the pro rata cost of personnel, including an allocation of
overhead directly attributable to such personnel, based on the amount of
time such personnel spent on such services, or other method of allocation
acceptable to the Partnership's independent certified public accountant.
Reimbursements are also allowable for certain organizational and offering
expenses and for the actual costs of on-site personnel engaged in the
management, leasing and maintenance of the property of the Partnership as
provided in note (8) above.
(10) The Partnership has entered into a nonexclusive contract with Murray
Insurance Agency, Inc., an Affiliate of the General Partners, pursuant to
which, upon the request of the Partnership, such agency will endeavor to
obtain fire, casualty or similar insurance on the properties of the
Partnership. Any commission on any casualty insurance brokered by it will
not exceed the amount customarily received by it from the brokerage of
comparable policies for unaffiliated persons. Before such agency brokers
any fire, casualty or similar insurance on any property of the Partnership,
quotes must have been received from two unaffiliated insurance brokers for
coverage and terms and comparable to that proposed to be provided by such
agency. No insurance will be brokered by the Partnership through such
agency unless the cost of such insurance will be no greater than the lower
quote of the two unaffiliated insurance agencies. The contract with Murray
Insurance Agency, Inc. provides that if such agency does not derive at
least 75% of its gross income from business done with persons or entities
not affiliated with a General Partner, that agency's contract will
terminate upon the earlier of 60 days after the end of the calendar year or
as soon as the Partnership can arrange for another person or entity to
perform such services. The contract also provides that it may be terminated
by either party, without penalty, on 60 days' prior written notice. Murray
General Agency Inc., an Affiliate of the General Partners, will receive
commissions on insurance premiums paid to Murray Insurance Agency, Inc. by
virtue of contractual arrangements between it and Murray Insurance Agency,
Inc.
(11) The General Partners may open and maintain an interest-bearing
Partnership administrative and property operating account at Murray Savings
Association, a stock association organized under the Texas Savings and Loan
Act. Murray Savings Association is a wholly-owned subsidiary of Murray
Financial Corporation, an Affiliate of the General Partners. Murray Savings
Association will pay the Partnership the highest interest rate permitted by
law on such
16
<PAGE> 8
accounts. Such accounts are insured up to a maximum of $100,000 by the
Federal Savings and Loan Insurance Corporation ("FSLIC"). It is not
anticipated that the balance of such accounts will exceed $100,000 on an
ongoing basis except to the extent monthly property operating expenses
have not been charged against collected rental income for any such
month. Murray Savings Association may receive indirect compensation to
the extent that Murray Savings Association's rate of return on the
Partnership funds in such account exceeds the interest rate paid to the
Partnership on such accounts. The Partnership will not be charged any
servicing fees on this account.
(12) It is not contemplated that a General Partner or any Affiliate of a
General Partner will make a loan to the Partnership, but the Partnership
Agreement permits any General Partner or any Affiliate of a General
Partner to make a loan to the Partnership if the interest and other
financing charges or fees on any such loan is not in excess of the
amounts which would be charged by unaffiliated lending institutions on
comparable loans for the same purpose in the same locality but not in
excess of 2% over the prime rate of Mercantile National Bank at Dallas.
Any financing charges or fees on any loan to the Partnership by a
General Partner or an Affiliate of a General Partner will be only those
incurred by such General Partner or Affiliate in connection with the
making of such a loan. Neither a General Partner nor an Affiliate of a
General Partner will make a profit from the Partnership's payment of
financing charges or fees. No property of the Partnership shall secure
any loan made to the Partnership by a General Partner or an Affiliate of
a General Partner if, at the inception of the loan, any payment of
principal or interest is to be made more than two years after the date
of the loan.
(13) For a discussion of Cash Distributions from Operations and Cash
Distributions from Sales or Refinancing, see "Income and Losses and Cash
Distributions."
(14) Crozier Partners VIII, Ltd. was formed as of January 10, 1984 under The
Texas Uniform Limited Partnership Act with Jack E. Crozier as the
general partner and Fulton Murray, individually, Fulton Murray in his
capacity as Trustee of the Beverly Murray Wilson Trust and Fulton Murray
and RepublicBank Dallas, N.A. in their capacities as Trustees of a trust
created under the Will of Owen M. Murray, Deceased, as the limited
partners.
(15) All real estate commissions payable to the General Partners or their
Affiliates for real estate brokerage services in connection with sales
of properties of the Partnership shall be cumulative but shall be paid
only after the Limited Partners have been returned their Original
Invested Capital from Cash Distributions from Sales or Refinancings,
plus their Preferred Return. If an unaffiliated broker participates in
the sale of a Partnership property, the subordination requirement will
apply only to the commission, if any, earned by the General Partners or
their Affiliates. The total of all real estate commissions payable to
all parties in connection with the sale of a Partnership property shall
not exceed a competitive real estate commission which is reasonable,
customary and competitive in light of the size, type and location of the
property or 6% of the sales price of the property. Real estate
commissions payable to the General Partners or their Affiliates will be
allocated two-thirds to the Non-corporate General Partner or its
Affiliates and one-third to the Corporate General Partner or its
Affiliates.
(16) Cash Distributions from Sales or Refinancings payable to the General
Partners (other than the 1% of Cash Distributions from Sales or
Refinancings payable to the Non-corporate General Partner) will be
divided two-thirds to the Non-corporate General Partner and one-third to
the Corporate General Partner.
17
