<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
____________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1996. . . . . . . . . . . . .
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.
0-17183
____________
MURRAY INCOME PROPERTIES II, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-2085586
(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)
(214) 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
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
________________________________________________________________________________
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Investment properties, at cost
Land $5,789,291 $5,789,291
Buildings and improvements 17,442,442 17,392,710
----------- ------------
23,231,733 23,182,001
Less accumulated depreciation 6,441,264 6,257,762
----------- ------------
Net investment properties 16,790,469 16,924,239
Investment in joint venture, at equity 1,524,853 1,535,208
Cash and cash equivalents 685,709 921,646
Certificates of deposit 895,000 895,000
Accounts and notes receivable, net of allowance
of $13,638 and $14,034 in 1996 and 1995,
respectively 483,107 439,157
Other assets, at cost, net of accumulated
amortization of $362,546 and $346,707 in
1996 and 1995, respectively 228,275 218,791
----------- ------------
$20,607,413 $20,934,041
=========== ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $16,506 $8,808
Accrued property taxes 68,938 267,722
Security deposits and other liabilities 88,700 91,468
Deferred income 51,020 42,162
----------- ------------
Total liabilities 225,164 410,160
----------- ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 536,813 526,381
Cumulative cash distributions ( 539,747) ( 530,515)
----------- ------------
( 1,934) ( 3,134)
----------- ------------
Limited Partners (314,687 interests):
Capital contributions, net of offering costs 27,029,395 27,029,395
Cumulative net earnings 10,012,151 9,702,625
Cumulative cash distributions (16,657,363) (16,205,005)
----------- ------------
20,384,183 20,527,015
----------- ------------
Total partners' equity 20,382,249 20,523,881
----------- ------------
$20,607,413 $20,934,041
=========== ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 3
NCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF EARNINGS
(UNAUDITED)
________________________________________________________________________________
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
---------- ---------
<S> <C> <C>
Income:
Rental $723,596 $659,985
Interest 25,194 22,364
Equity in earnings of joint venture 35,095 29,526
-------- --------
783,885 711,875
-------- --------
Expenses:
Depreciation 183,502 187,402
Property operating 188,068 164,665
General and administrative 92,753 88,225
Bad debts (recoveries), net (396) (358)
-------- --------
463,927 439,934
-------- --------
Net Earnings $319,958 $271,941
======== ========
Earnings per limited partnership interest $.98 $.83
======== ========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(UNAUDITED)
________________________________________________________________________________
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Three months ended March 31, 1995:
Balance at December 31, 1994 $(3,341) $21,332,763 $21,329,422
Net earnings 9,549 262,392 271,941
Cash distributions (9,232) (452,358) (461,590)
------- ----------- -----------
Balance at March 31, 1995 $(3,024) $21,142,797 $21,139,773
======= =========== ===========
Three months ended March 31, 1996:
Balance at December 31, 1995 $(3,134) $20,527,015 $20,523,881
Net earnings 10,432 309,526 319,958
Cash distributions (9,232) (452,358) (461,590)
------- ----------- -----------
Balance at March 31, 1996 $(1,934) $20,384,183 $20,382,249
======= =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
________________________________________________________________________________
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $319,958 $271,941
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts (recoveries), net ( 396) ( 358)
Depreciation 183,502 187,402
Equity in earnings of joint venture ( 35,095) ( 29,526)
Amortization of other assets 15,839 18,529
Amortization of deferred income ( 1,625) ( 1,625)
Change in assets and liabilities:
Accounts receivable ( 43,554) ( 66,263)
Other assets (25,323) 10,043
Accounts payable 7,698 4,515
Accrued property taxes, security deposits
and other liabilities and deferred income (191,069) (197,881)
---------- --------
Net cash provided by operating activities 229,935 196,777
---------- --------
Cash flows from investing activities:
Additions to investment properties ( 49,732) ( 579)
Purchases of certificates of deposit (199,000) (100,000)
Proceeds from redemptions of certificates of deposit 199,000 99,000
Distributions from joint venture 45,450 42,000
---------- --------
Net cash provided by (used in)
investing activities ( 4,282) 40,421
---------- --------
Cash flows from financing activities - cash distributions (461,590) (461,590)
---------- --------
Net decrease in cash and cash equivalents (235,937) (224,392)
Cash and cash equivalents at beginning of period 921,646 919,644
---------- --------
Cash and cash equivalents at end of period $ 685,709 $ 695,252
========== =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
________________________________________________________________________________
1. BASIS OF ACCOUNTING
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, 1996 and December
31, 1995, $231,360 and $239,622, respectively, of accounts receivable related
to such accruals.
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.
Other assets consist primarily of deferred leasing costs which are
amortized using the straight line method over the lives of the related leases.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
building and improvements range from three to twenty-five years.
Effective January 1, 1995, the Partnership implemented Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," (SFAS 121)
which establishes the method of accounting for rental property when
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Partnership periodically reevaluates the propriety of the
carrying amounts of investment properties to determine whether current events
and circumstances warrant an adjustment to such carrying amounts. Such
evaluations are performed utilizing annual appraisals performed by independent
appraisers as well as internally developed estimates of expected undiscounted
future cash flows. In the event the carrying value of an individual property
exceeds expected future undiscounted cash flows, the property is written down
to the most recently appraised value. Since inception of the Partnership, none
of the Partnership's properties have required write downs.
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.
Earnings per limited partnership interest are based upon the limited
partnership interests outstanding at period-end and net earnings allocated to
the Limited Partners in accordance with the terms of the Partnership Agreement,
as amended.
Certificates of deposit are held at commercial banks and are stated at
cost, which approximates market. 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, 1996 and December 31, 1995.
For cash and cash equivalents, certificates of deposit, accounts and notes
receivable, accounts payable accrued property taxes payable, and security
deposits, the carrying amounts approximate fair value because of the short
maturity of these instruments.
6
<PAGE> 7
________________________________________________________________________________
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or losses
of the Partnership and cash distributions are generally allocated 98% to the
Limited Partners and 2% to the General Partners, except that all depreciation
shall be allocated to those Limited Partners subject to Federal income taxes.
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 either Cash Distributions from Operations or
Cash Distributions from Sales or Refinancings.
(b) Next, all Cash Distributions from Sales or Refinancings shall be
allocated 99% to the General Partners and 1% to the Non-corporate General
Partner in an amount equal to any unpaid Cash Distributions from
Operations subordinated to the Limited Partners' 7% non-cumulative annual
return. Such 99% shall be allocated 62 1/2% to the Non-corporate General
Partner and 37 1/2% to the Corporate General Partner.
(c) 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 85% to the Limited Partners and 15% to the General Partners.
Such 15% shall be allocated 62 1/2% to the Non-corporate General Partner
and 37 1/2% to the Corporate General Partner.
3. INVESTMENT PROPERTY
The Partnership owns and operates Paddock Place Shopping Center in
Nashville, Tennessee, Germantown Collection Shopping Center located in
Germantown (Memphis), Tennessee and 1202 Industrial Place (an office/warehouse
facility) located in Grand Prairie, Texas.
4. INVESTMENT IN JOINT VENTURE
The Partnership owns a 15% interest in Tower Place Joint Venture, a joint
venture that owns and operates Tower Place Festival Shopping Center located in
Pineville (Charlotte), North Carolina. The Partnership accounts for the joint
venture using the equity method. The remaining 85% interest in the joint
venture is owned by Murray Income Properties I, Ltd. ("MIP I"), an affiliated
real estate limited partnership. The Tower Place Joint Venture Agreement
provides that the Partnership will share profits, losses, and cash
distributions according to the Partnership's 15% ownership interest in the
joint venture.
5. TRANSACTIONS WITH AFFILIATES
Murray Realty Investors IX, Inc. ("MRI IX"), the Corporate General
Partner, entered into a property management agreement with the Partnership for
the management of 1202 Industrial Place, effective January 1, 1996. Pursuant
to this agreement, MRI IX earned property management fees in the amount of
$3,253 during the three months ended March 31, 1996.
7
<PAGE> 8
________________________________________________________________________________
6. 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,
1996 and for the three months ended March 31, 1996 and 1995 has been prepared
by management without audit by independent public accountants who do not
express an opinion thereon. The Partnership's annual report contains audited
financial statements. The notes to the financial statements in the
Partnership's 1995 annual report are an integral part of the financial
statements presented herein.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
As of March 31, 1996, the Partnership had cash, cash equivalents and
certificates of deposit of $1,580,709. Such amounts represents cash generated
from operations and working capital reserves.
Rental income from leases is accrued using the straight line method over
the related lease terms. At March 31, 1996 and December 31, 1995, there were
$231,360 and $239,622, respectively, of accounts receivable related to such
accruals. Accounts receivable also consist of tenant receivables, receivables
for rent collected (but not yet remitted by the property management companies
managing the properties), and interest receivable on short-term investments.
The increase in accounts receivable of $43,554 (exclusive of bad debts and
recoveries) from December 31, 1995 to March 31, 1996 is primarily due to
increases in tenant receivables and receivables for rent collected (but not yet
remitted by the property management companies) at Germantown and Paddock Place.
As of March 31, 1996 and December 31, 1995, the Partnership had allowances of
$13,638 and $14,034, respectively, for uncollectible accounts receivable.
The decrease in accrued property taxes of $198,784 from December 31, 1995
to March 31, 1996 is primarily due to payments of 1995 property taxes for the
Partnership's properties.
During the three months ended March 31, 1996, the Partnership made Cash
Distributions from Operations of $461,590 related to the three-month period
ended December 31, 1995. Subsequent to March 31, 1996, the Partnership made
Cash Distributions from Operations of $461,590 (which was reduced by $1,398
related to 1995 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, 1996. The funds distributed 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 and certificates of deposit.
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
certificates of deposit, and ultimately through the sale of the Partnership's
properties.
Results of Operations
Rental income increased $63,611 for the three months ended March 31, 1996
as compared to the same period in 1995. The following information details the
rental income generated, bad debt expense incurred, and average occupancy for
the periods shown for the Partnership's properties.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
-------- --------
<S> <C> <C>
Paddock Place Shopping Center
Rental income $354,072 $283,266
Bad debt expense (recovery) $ ( 396) $ ( 358)
Average occupancy 96% 97%
Germantown Collection Shopping Center
Rental income $260,242 $264,794
Bad debt expense $-0- $-0-
Average occupancy 99% 100%
</TABLE>
9
<PAGE> 10
1202 Industrial Place Office/Warehouse
--------------------------------------
Rental income $109,282 $111,925
Bad debt expense -0- -0-
Average occupancy 100% 100%
Rental income at Paddock Place Shopping Center in Nashville, Tennessee
increased $70,806 for the three months ended March 31, 1996 as compared to the
same period in 1995 due to an increase in rental rates, an increase in
percentage rent received from J. Alexander's Restaurant and the receipt of a
$40,000 fee as consideration for the termination of the Waldenbooks lease.
Occupancy at the Paddock Place averaged 96% during the first quarter, a
two percent increase over the previous quarter. During December 1995, the
General Partners agreed to terminate the lease of Waldenbooks, who occupied
4,160 square feet. At the same time, leases were signed with Radio Shack and
New York Bagel who will occupy 2,000 and 2,160 square feet, respectively.
Radio Shack opened in March and New York Bagel is expected to open in May. As
part of the termination agreement, Waldenbooks agreed to pay rent on the space
until the new tenant opened so that there was no interruption of income to the
Partnership. A new tenant who signed a lease for 1,935 square feet took
occupancy of its space in February. In March, the General Partners terminated
the lease of a furniture store who occupied 5,222 square feet and whose lease
was to expire on August 31, 1996. A new 41 month lease was signed with a
furniture store who took occupancy immediately upon the termination of the
prior lease.
Rental income at the Germantown Collection in Germantown (Memphis),
Tennessee decreased $4,552 for the three months ended March 31, 1996 as
compared to the same period in 1995 due to a decrease in tenant reimbursements
for common area maintenance costs and insurance costs.
Occupancy at the Germantown averaged 99% during the first quarter,
unchanged from the previous quarter. In December, a tenant who occupied 1,024
square feet vacated its space upon expiration of its lease. The space was
subsequently released and the new tenant took occupancy February 1. As of
March 31, the Germantown Collection was 100% occupied.
Rental income at 1202 Industrial Place in Grand Prairie (Dallas), Texas
decreased $2,643 for the three months ended March 31, 1996 as compared to the
same period in 1995 primarily due to a decrease in tenant reimbursement for
common area maintenance costs.
Occupancy at 1202 Industrial Place remained 100% during the quarter.
"Equity in earnings of joint venture" represents the Partnership's 15%
interest in the earnings of Tower Place Joint Venture. Rental income at Tower
Place increased $34,203 for the three months ended March 31, 1996 as compared
to the same period in 1995 primarily due to an increase in rental rates, an
increase in percentage rent received, and an increase in tenant reimbursements
for common area maintenance costs. Tower Place's total operating expenses
decreased with decreases in repair and maintenance costs, utility costs and
leasing and promotion expenses. The following information details rental
income generated, bad debt expense incurred, and average occupancy for the
periods shown for Tower Place Shopping Center.
10
<PAGE> 11
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------- --------
<S> <C> <C>
Tower Place Shopping Center
---------------------------
Rental income 447,783 $413,580
Bad debt expense (recovery) $(94) $( 623)
Average occupancy 95% 95%
</TABLE>
The Partnership's share of income from the joint venture increased $5,569
for the quarter ended March 31, 1996 as compared to the same period in 1995 for
the reasons stated above.
Occupancy at Tower Place Festival in Pineville (Charlotte), North Carolina
averaged 95% during the quarter, unchanged from the previous quarter. In
March, the General Partners agreed to terminate the lease of a restaurant who
occupied 2,959 square feet and subsequently signed a lease for this space with
Manhattan Bagel, a national bagel and delicatessen chain. They are scheduled
to open for business in June. During the fourth quarter of 1995, a new lease
for 2,600 square feet was signed and this tenant took occupancy in January.
Another new lease for 2,670 square feet was signed and this tenant took
occupancy in December, 1995. Two tenants occupying 5,400 square feet renewed
their leases for three years and another tenant occupying 2,100 square feet
renewed its lease for one year. In December, a tenant who occupied 2,700
square feet vacated its space prior to the expiration of its lease. Management
is attempting to collect what is owed under this lease.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight line method. The estimated useful lives of the
building and improvements range from three to twenty-five years.
Property operating expenses consist primarily of utility costs, repair and
maintenance costs, leasing and promotion costs, real estate taxes, insurance,
and property management fees. Total property operating expenses increased
$23,403 for the three months ended March 31, 1996 as compared to the same
period in 1995. The increase is due to higher repair and maintenance costs,
utilities costs, snow removal costs, property management fees and insurance
costs. Property operating expenses at Germantown increased primarily because
of increases in utilities, landscaping services and real estate taxes.
Property operating expenses at Paddock Place increased, with increases in
utilities, snow removal costs, and property management fees being offset by
lower amortization of leasing costs. Property operating expenses at 1202
Industrial Place increased because of higher repair and maintenance costs (the
building was painted during the quarter) and higher insurance costs.
General and administrative expenses incurred are related to legal and
accounting costs, rent, investor services costs, salaries and benefits and
various other costs required for the administration of the Partnership.
General and administrative expenses increased $4,528 for the three months ended
March 31, 1996 as compared to the same period in 1995 primarily as a result of
higher appraisal costs and higher salaries and benefits.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
3a Agreement of Limited Partnership of
Murray Income Properties II, Ltd. Reference is made to
Exhibit A of the Prospectus dated February 20, 1986
contained in Amendment No. 1 to Partnership's Form S-11
Registration Statements filed with the Securities and
Exchange Commission on February 13, 1986. (File No.
33-2294)
3b Amended and Restated Certificate
and Agreement of Limited Partnership dated as of
November 15, 1989. 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. 0-17183)
3c Amended and Restated Certificate
and Agreement of Limited Partnership dated as of
January 10, 1990. 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. 0-17183)
10a Management Agreement with Murray
Realty Investors IX, Inc. for management and operation
services described in the Management Agreement dated
January 1, 1996 at 1202 Industrial Place. Filed
herewith.
27 Financial Data Schedule. Filed
herewith.
99a Glossary as contained in the
Prospectus dated February 20, 1986 filed as part of
Amendment No. 2 to Registrant's Form S-11 Registration
Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of
Limited Partnership as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No. 2 to
Registrant's Form S-11 Registration Statement (File No.
33-2394). 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 dated February 20, 1986 filed as part
of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 33-2394). Filed
herewith.
(b) Reports on Form 8-K filed during the three months ended
March 31, 1996:
None
12
<PAGE> 13
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 II, Ltd.
By: Murray Realty Investors IX, Inc.
A General Partner
Dated: May 13, 1996 By: /s/ Mitchell Armstrong
--------------------------------
Mitchell Armstrong
President
Chief Financial Officer
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3a Agreement of Limited partnership of Murray Income
Properties II, Ltd. Reference is made to Exhibit A of the
Prospectus dated February 20, 1986 contained in Amendment
No. 1 to Partnership's Form S-11 Registration Statements
filed with the Securities and Exchange Commission on
February 13, 1986 (File No. 33-2294).
3b Amended and Restated Certificate and Agreement of
Limited Partnership dated as of November 15, 1989.
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. 0-17183).
3c Amended and Restated Certificate and Agreement of
Limited partnership dated as of January 10, 1990. 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. 0-17183).
10a Management Agreement with Murray Realty Investors
IX, Inc. for management and operation services described in
the management Agreement dated January 1, 1996 at
1202 Industrial Place. Filed herewith.
27 Financial Data Schedule. Filed herewith.
99a Glossary as contained in the prospectus dated
February 20, 1986 filed as part of Amendment No. 2 to
Registrant's Form S-11 Registration Statement (File
No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited
Partnership as contained in the Prospectus dated February
20, 1986 filed as part of Amendment No. 2 to Registrant's
Form S-11 Registration Statement (File No. 33-2394). 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 dated February 20, 1986 filed as part of
Amendment No. 2 to Registrant's Form S-11 Registration
Statement (File No. 33-2394). Filed herewith.
</TABLE>
<PAGE> 1
EXHIBIT 10a
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT, dated this 15th day of December, 1995, by and between
MURRAY INCOME PROPERTIES II, LTD., hereinafter called "Owner", and Murray
Realty Investors IX, Inc., hereafter called "Manager."
WITNESSETH:
WHEREAS, Owner owns and has the right to collect rents from and manage
the Property hereinafter described, and desires to engage Manager to manage and
operate such Property.
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
ARTICLE I
PROPERTY
1.1 Property: The Property which is the subject of this Agreement is
1202 Industrial Place (the "Building") which with outer improvements is located
and situated on the real property described on Schedule "A" attached hereto and
made a part hereof (the "Land"). The Building, the Land and other improvements
located on the Land and all appurtenances thereto are hereinafter collectively
referred to as the "Property".
ARTICLE II
COMMENCEMENT DATE
2.1 Manager's duties and responsibilities under this Agreement shall
begin as of the 1st day of January, 1996, and shall continue until
termination as provided in Article XIII hereof.
ARTICLE III
MANAGER'S RESPONSIBILITIES
3.1 Management. Manager shall manage, operate and maintain the
Property in an efficient and satisfactory manner consistent with Owner's
instruction and subject to Owner's payment of the costs related thereto as
hereinafter set out.
3.2 Employees: Independent Contractor. Manager shall have in its
employ at all times a sufficient number of capable employees to enable it to
properly, adequately, safely and economically manage, maintain the Property.
All matters pertaining to the employment, supervision, compensation, promotion
and discharge of such employees are the responsibility of Manager, which is in
all respects the employer of such employees. Manager shall fully comply with
all applicable laws and regulations having to do with workers' compensation,
social security, unemployment insurance, hours of labor, wages, working
conditions and other employer-employee related subjects. This Agreement is not
one of agency by Manager for Owner but one with Manager engaged independently
in the business of managing properties on its own behalf, as an independent
contractor. All employment arrangements are therefore solely Manager's concern
and Owner shall have no liability with respect thereto.
3.3 Employee Staffing. Owner and Manager shall mutually agree on the
appropriate number of "on-site" employees whose salaries may be charged to the
Property for services rendered to the Property. This employee staffing plan
shall be reflected in the approved Operating Budget and shall be subject to
modification from time to time upon the mutual agreement of Owner and Manager.
3.4 Compliance with Laws, Mortgages, etc. Manager shall at Owner's
expense comply with all federal, state and municipal laws, ordinances,
regulations and orders relative to the management, operation, repair and
maintenance of the Property and with the rules, regulations or order of the
local Board of Fire Underwriters or other similar body. Manager shall promptly
remedy any violation of any such law, ordinance rule, regulation or order which
comes to its attention.
Expenses incurred in remedying violations may be paid from the
Operating Account established by Owner pursuant to the terms of Section 7.1
hereof; provided, such expenses do not exceed $3,000 in any one instance. When
more than such amount is required or if the violation is one for which the
Property title holder might be subject to penalty, Manager shall promptly
notify Owner so that prompt arrangements may be made to remedy the violation
at Owner's expense.
<PAGE> 2
Manager shall be responsible for compliance with all terms and
conditions contained in any space lease, mortgage, deed of trust or other
security instruments affecting the Property; provided, however, Manager shall
not be required to make any payment or incur any liability on account thereof.
3.5 Approved Budgets. Manager shall, within ten (10) days after
execution of this Agreement, prepare and submit to Owner an Operating Budget
and a Capital Budget for the promotion, operation, repair and maintenance of
the Property for the 1996 calendar year. The Manager shall submit a proposed
budget in subsequent years no later than October 1 of each year.
Owner will consider the proposed budgets and then will consult Manager
in the ensuing period prior to the commencement of the forthcoming calendar
year in order to agree on an "Approved Operating Budget" and an "Approved
Capital Budget".
Manager agrees to use diligence and to employ all reasonable efforts to
ensure that the actual costs of maintaining and operating the Property shall
not exceed the Approved Budget pertaining thereto, either in total or in any
one accounting category. All expenses must be charged to the proper account as
specified in the Approved Chart of Accounts and no expense may be classified or
reclassified for the purpose of avoiding an excess in the annual budgeted
amount of any accounting category. Manager shall secure Owner's prior written
approval for any expenditure that will result in an excess of the greater of
$1,5000,000 or ten percent (10%) of the annual budgeted amount in any one
accounting category of the Approved Operating Budget.
During the calendar year, Manager shall inform Owner of any major
increases in costs and expenses that were not foreseen during the budget
preparation period and thus were not reflected in either Approved Budget.
3.6 Collection of Rents and Other Income. Manager shall, if requested
in writing to do so by Owner, collect all rents (including escalation billings
resulting from tenant participation in increase in expenses, taxes and common
area maintenance charges) and other charges which may become due at any time
from any tenant or from others for services provided in connection with of for
the use of any Property or any portion thereof. If requested in writing to do
so, Manager shall collect and identify any income due Owner from miscellaneous
services provided to tenants or the public including, but not limited to,
parking income, tenant storage, and coin operated machines of all types (e.g.,
vending machines, pay telephones, etc.). All monies so collected shall be
deposited in the Operating Account established by Owner pursuant to Section 7.1
hereof. Manger may not, without the prior written approval of Owner, terminate
any lease, lock out a tenant, institute suit for rent or for use and occupancy,
or proceeding for recovery of possession. In connection with any collection
efforts, only legal counsel or collection firms designated by Owner shall be
retained. Manager shall not write off any income items without prior approval
of Owner.
3.7 Competitive Bidding. All contracts for repairs, capital
improvements, goods and services exceeding $3,000.00 shall be awarded on the
basis of competitive bidding, solicited in the following manner:
(a) A minimum of 2 written bids shall be obtained for each purchase up
to $10,000. Purchases over $10,000 will require a minimum
of 3 bids.
(b) Each bid will be solicited on a form prescribed by Owner so that
uniformity will exist in bid quotes.
(c) Manager shall submit bid quotes with a recommendation to Owner for
written approval. If Manager advises acceptance of a bid other
than the lowest, Manager shall adequately support in writing
its recommendations to Owner.
(d) Owner shall be free to accept or reject any and all bid quotes.
(e) Manager may request Owner to waive competitive bidding rules.
(f) Contracts may be entered into with affiliates of Manager provided
Owner approved the contracts.
Owner may pay for such expenses from its own resources or may authorize
payment by Manager out of the Operating Account.
3.8 Repairs. Manager shall attend to the making and supervision of
all ordinary and extraordinary repairs, decorations and alterations subject to
the limits of the approved Operating Budget. Excluded from this provision are
expenditures to refurbish, rehabilitate, remodel, or otherwise prepare areas
covered by new leases unless otherwise agreed upon in writing between the
parties hereto.
<PAGE> 3
In case of emergency, Manager may make expenditures for repairs which
exceed the limits in Section 3.7 hereof without prior written approval if it
is necessary to prevent damage or injury.
3.9 Capital Improvements. The Approval Capital Budget constitutes an
authorization for Manager to expend money for projects up to $5,000.00. With
respect to the purchase and installation of major items (costs in excess of
$5,000.00) of new or replacement equipment, Manager shall recommend that Owner
purchase these items when Manager believes such purchase to be necessary or
desirable. Owner may arrange to purchase and install the same itself or may
authorize Manager to do so subject to prescribed supervision and specification
requirements and conditions.
The competitive bid rules outlined in Section 3.7 hereof will be
observed.
3.10 Service Contracts. Manager shall not enter into any contract for
cleaning, maintaining, repairing or servicing any Property or any of the
constituent parts of any Property that requires annual payments in excess of
$3,000.00 without the prior written consent of Owner. As a condition to
obtaining such consent. Manager shall supply Owner with a copy of the proposed
contract and shall state to Owner the relationship, if any, between Manager (or
the person or persons in control or Manager) and the party proposed to supply
such goods or services, or both.
All service contracts shall: (a) be in the name of Manager, (b) be
assignable, at Owner's option, to Owner or Owner's nominee, (c) include a
provision for cancellation thereof by Owner or Manager upon not more than
thirty (30) days written notice and (d) shall require that all contractors
provide evidence of sufficient insurance. Unless Owner specifically waives such
requirements, either by memorandum or as an amendment to the contract, all
service contracts shall be subject to bid under procedures as specified in
Section 3.7 hereof. If this Agreement is terminated pursuant to Article XIII
hereof, Manager shall, at Owner's option, assign to Owner or Owner's nominee
all service agreements pertaining to the Property.
3.11 Non-Owned Properties. If Owner does not have title to the
Property, then notwithstanding the provisions of this Agreement including the
provisions relative to the making of repairs or maintenance of the Property,
Manager shall not incur any expenses in any month in excess of the income from
the property during that month. In any case in which there is doubt, Manager
shall inform Owner of the situation so that Owner may have the opportunity of
determining what action should be taken under the circumstances.
3.12 Taxes, Mortgages. Manage shall, if so requested, obtain and
verify bills for real estate and personal taxes, improvements, assessments and
other like charges which are or may become liens against the Property and
recommend payment or appeal as in its best judgment it may decide. Manager
shall forward such bills to Owner for payment by Owner in such time to permit
Owner to avoid penalty for late payment or to permit Owner to take advantage of
discounts. Manager shall not make any payments on account of any ground lease,
mortgage, deed of trust or other security instrument, if any, affecting the
Property.
ARTICLE IV
INSURANCE
4.1 Insurance. Owner, at its expense, will obtain and keep in force
adequate insurance against physical damage (i.e., fire with extended coverage
endorsement, boiler and machinery, etc.) and against liability for loss, damage
or injury to property or persons which might arise out of the occupancy,
management, operation or maintenance of the Property. Manager will be covered
as an additional insured in all liability insurance maintained with respect to
the Property. Owner shall save Manager harmless from any liability on account
of loss, damage or injury actually insured against and actually collected by
Owner. Manager shall notify Owner and the insurance carrier after manager
receives notice of any such loss, damage or injury and will take no action
(such as admission of liability) which might bar Owner from obtaining any
protection afforded by any policy Owner may hold or which might prejudice Owner
in its defense to a claim based on such loss, damage or injury. Owner shall
have the exclusive right, at its option, to conduct the defense to any claim,
demand or suit within limits prescribed by the policy or policies of insurance.
Manager shall furnish whatever information is requested by Owner for
the purpose of establishing the placement of insurance coverages and shall aid
and cooperate in every reasonable way with respect to such insurance and any
loss thereunder. Owner shall include in its hazard policy covering the
Property, personal property, fixtures and equipment located thereon, and
Manager shall include in any fire policies for its furniture, furnishings or
fixtures situated at the Property, appropriate clauses pursuant to which the
respective insurance carriers shall waive all rights of subrogation with
respect to losses payable under such policies.
<PAGE> 4
4.2 Additional Insurance. Manager must furnish a certificate
evidencing Workers' Compensation and crime insurance in a form acceptable to
Owner. Crime insurance shall be for an amount not less than $40,000. The
certificate shall be attached thereto an endorsement that Owner will be given
at least ten (10) days prior written notice of cancellation of or any material
change in the policy. Owner will not reimburse Manager for Manager's cost of
such insurance, or for any and all coverage Manager obtains for its own account.
4.3 Subcontractor's Insurance. Manager shall require that all
subcontractors brought onto the Property have insurance coverage at the
subcontractor's expense, in the following minimum amounts:
(a) Workers' Compensation - Statutory Amount
(b) Employer's Liability (in those areas where it is required) $100,000
minimum
(c) Comprehensive General Liability (minimum):
i. $100,000 Bodily Injury per person
$300,000 per occurrence
$100,000 Property Damage
or
ii. $300,000 Combined Single Limit
Manager must obtain Owner's permission to waive any of the above
requirements. Higher amounts may be required if the work to be performed is
sufficiently hazardous. Manager shall obtain and keep on file a Certificate of
Insurance which shows that the subcontractor is so insured.
ARTICLE IV
FINANCIAL REPORTING AND RECORD KEEPING
5.1 Books of Accounts. Manager, in the conduct of its responsibilities
to Owner, shall maintain adequate and separate books and records for the
Property, the entries to which shall be supported by sufficient documentation
to ascertain that said entries are properly and accurately recorded to the
Property. Such books and records shall be maintained by Manager at Manager's
address stated in Section 15.1 hereof or at such other location as may be
mutually agreed upon in writing. Manager shall ensure such control over
accounting and financial transactions as is reasonably required to protect
Owner's assets from theft, error or fraudulent activity on the part of
Manager's employees or other agents. Losses arising from such instances are to
be borne by Manger and shall include but not be limited to:
(a) Theft of assets by Manager's employees or other agents.
(b) Overpayment or duplicate payment of invoices arising from either
fraud or error.
(c) Unauthorized use of facilities by Management's employees or
associates.
5.2 Account Classification. Manager shall adopt a Chart of Accounts
acceptable to Owner.
5.3 Financial Reports. Manager shall furnish reports of all
transactions occurring during the prior month. these reports are to be received
by Owner on or before the 10th day of the month after the above described
accounting period and must show all collections, delinquencies, uncollectible
items, vacancies, and other matters pertaining to the management, operations,
and maintenance of the Property during the month. The report shall include the
items listed on Schedule "B", attached hereto and made a part hereof, and a
comparison of monthly and year-to-date actual income and expense with the
Approved Operating Budget for the Property. In addition, Manager shall prepare
forms prescribed by Owner to facilitate the input of financial information into
Owner's accounting system.
5.4 Supporting Documentation. As additional support to the monthly
financial statements, Management shall provide such additional supporting
documentation as may reasonably be requested by Owner.
5.5 Transfer of Funds. If Owner elects in writing to have Manager
collect rents payable for Leases with respect to the Property, on or before the
10th of every month, Manager shall remit the cash balance in the Operating
Account after deducting the authorized working capital amount and known major
expenditures that will be paid between that date and the last day of the month
and the sums which Owner is required to maintain in the Operating Account.
<PAGE> 5
Checks for remittances should be delivered to Owner, independent of
required financial reports, in the most expeditious manner possible as directed
by Owner.
5.6 Accounting Principles. All financial statements and reports
required by Owner will be prepared in accordance with generally accepted
accounting principles with the execution that Owner may specify that the
statements be prepared on a cash basis.
ARTICLE VI
OWNER'S RIGHT TO AUDIT
6.1 Owner reserves the right for Owner's employees, or others
appointed by Owner, to conduct examinations during normal business hours after
three (3) days written notification, of the books and records maintained for
Owner by Manager no matter where the books and records are located. Owner also
reserves the right to perform any and all additional audit tests relating to
Manager's activities, either at the Property or at any office of Manager;
provided, such audit tests are related to those activities performed by Manager
for Owner.
Should Owner's employees or appointees discover weaknesses in internal
control or errors in record keeping, Manager shall correct such discrepancies,
either upon discovery or within a reasonable period of time. Manager shall
inform Owner, in writing, of the action taken to correct such audit
discrepancies.
Any and all such audits conducted by Owner's employees or appointees
will be at the sole expense of Owner unless audit discrepancies are discovered
in excess of three percent (3%) and then will be at Manager's expense.
ARTICLE VII
BANK ACCOUNTS
7.1 Operating Account. Owner shall establish an Operating Account for
the Property and shall maintain therein funds sufficient to pay for the
operation, maintenance and repair of the Property in accordance with the
approved Budget. Such Operating Account shall be maintained in a bank approved
by Owner in a special account or accounts (the "Operating Account") for the
Property in the name of Manager.
The bank shall be informed in writing that the funds are held in trust
for Owner. A separate and exclusive account shall be created with a name
designated by Owner for the Property. Out of the account, Manager shall pay the
operating expenses of the Property and any other payments relative to the
Property as required by the terms of this Agreement. If more than one account
is required to operate the Property, each account must have a unique name.
7.2 Change of Banks. Owner may direct Manager to change a depository
bank of the depository arrangements.
7.3 Access to Account. Through the use of signature cards, authorized
representatives of Owner and/or Manager shall be permitted access to any and
all funds in the bank accounts described in Sections 7.1 and 7.2 hereof.
ARTICLE VIII
PAYMENT OF EXPENSES
8.1 Manager's Costs to be Reimbursed. Manager shall be reimbursed out
of the Operating Account or by Owner for the cost of the gross salary and
wages, payroll taxes, insurance, workers' compensation and other benefits of
Manager's employees required to properly, adequately, safely and economically
manage, operate and maintain the Property subject to this Agreement; provided,
that such employee costs have been identified and approved in the Operating
Budget.
8.2 Costs Eligible for Payment from Operating Account. Manager may
pay the following expenses directly from the Operation Account subject to the
conditions outlined in Article III hereof:
(a) Cost to correct any violation of federal, state and municipal
laws, ordinances, regulations and orders relative to the leasing,
use, repair and maintenance of the Property, or relative to the
rules, regulations or order of the local Board of Fire
Underwriters or other similar body.
(b) Actual and reasonable cost of making all repairs, decorations
and alterations.
(c) Cost incurred by Manager in connection with all service agreements
approved by Owner.
<PAGE> 6
(d) Cost of collection of delinquent rentals collected through a
collection agency which has been approved in writing in advance by
Owner.
(e) Legal fees of attorneys; provided, such attorneys have been
approved (or designated as provided in Section 3.6 hereof) by Owner
in writing in advance of retention and the specific amount of such
attorneys' fee has been approved by Owner in writing in advance of
payment.
(f) Cost of capital expenditures subject to the restrictions in
Section 3.9 hereof.
(g) Cost of capital expenditures subject to the restrictions in
Section 3.9 hereof.
(h) Cost of service contracts approved by Owner and cost of utilities.
(i) Cost of printed forms and supplies required for use at the
Property.
(j) Cost of travel by Manager's employees or agents to and from the
Property.
8.3 Non-Reimbursable Costs. The following expenses or costs incurred
by or on behalf of Manager in connection with the management of the Property
shall be at the sole cost and expense of Manager and shall not be reimbursed
by Owner:
(a) Cost of gross salary and wages, payroll taxes, insurance, worker's
compensation, and other benefits of manager's office personnel not
identified in the approved operating Budget.
(b) General accounting and reporting services which are considered to
be within the reasonable scope of Manager's responsibility to
Owner.
(c) Cost of forms, papers, ledgers, and other supplies and equipment
used in Manager's office at any location off the Property.
(d) Cost of electronic data processing equipment, or any pro-rata
charge thereon, whether located at the Property or at Manager's
office off the Property.
(e) Cost of electronic data processing, or any pro-rata charge thereof,
for data processing provided by computer service companies.
(f) Political or charitable contributions, except that certain
charitable contributions may be made after prior consent of Owner.
(g) Cost of advances made to employees.
(h) Cost attributable to losses arising from gross negligence or fraud
on the part of Manager, Manager's associates or Manager's
employees.
(i) Cost of comprehensive crime insurance purchased by Manager for its
own account.
(j) Training expenses.
(k) Employment fees unless specifically approved by Owner.
(l) All other costs or expenses of Manager not enumerated in
Section 8.2 hereof.
ARTICLE IX
INSUFFICIENT DEPOSITS TO OPERATING ACCOUNT
9.1 Priorities. If at any time the balance of funds in the Operating
Account shall not be sufficient to pay the bills and charges which may be
incurred with respect to the property, or if such account is insufficient to
pay the combined sum of both bills and charges, Manager shall submit to Owner a
statement of all remaining unpaid bills. Owner shall provide monies to pay any
unpaid expenses.
<PAGE> 7
ARTICLE X
SALES OF A PROPERTY
10.1 Cooperation with Sales Broker. If Owner executes a listing
agreement with a broker for sale or lease of any of the Property, or any part
thereof, Manager shall cooperate with such broker to the end that the
respective activities of Manager and broker may be carried on without friction
and without reference with tenants and occupants. Manager will permit the
broker to exhibit the Property during reasonable business hours, provided the
broker has secured Manager's permission in advance. Manager will not
participate in any brokerage commissions associated with the Property unless it
does so under a separate agreement with the Owner.
ARTICLE XI
COOPERATION
11.1 Cooperation. Should any claims, demands, suits or other legal
proceedings be made or instituted by any person against Owner or title holder
of the Property which arise out of any of the matters relating to this
Agreement, Manager shall give owner all pertinent information and reasonable
assistance in the defense or other disposition thereof.
ARTICLE XII
COMPENSATION
12.1 Compensation. Each month Manager shall receive the fees provided
for in Schedule "C" for its services in managing the Property in accordance
with the terms and tenor of this Agreement.
The term "Gross Rental Receipts" for the purpose of computation of the
management fee provided for in Schedule "C" hereof will include all income and
receipts of any kind related to the occupancy and use of the Property except:
(1) security deposits, unless and not until such deposits are applied
as rental income upon termination of a lease;
(2) rents paid in advance of the date until the month in which such
payments are to apply as rental income;
(3) receipts of monies payable under policies of fire and casualty
insurance;
(4) receipts of monies payable as a result of condemnation of all or
any part of the Property; and
(5) expenses paid directly by tenants.
12.2 Default. Should Owner fail to perform Owner's obligations
hereunder and if such failure shall continue for a period of ten (10) days
after Owner's receipt of written notice from Manager of such default, Manager
may, in addition to any other remedies Manager may have at law or in equity,
cancel and terminate this Agreement and proceed to collect by any lawful means
any sums which may be due Manager under this Agreement.
ARTICLE XIII
TERMINATION
13.1 Termination on 60-day Notice. Either party hereto may terminate
this Agreement without cause by giving the other party at least sixty (60) days
written notice; provided, however, that the provisions hereof relating to
financial settlements shall survive such termination until full settlement has
been made in accordance with this Agreement.
13.2 Final Accounting. Upon termination of this Agreement for any
reason, Manager shall deliver to Owner the following with respect to the
Property:
(a) A final accounting, reflecting the expenses on the Property as of
the date of termination or withdrawal to be delivered within thirty
(30) days after such termination or withdrawal.
(b) Any balance or monies of Owner or tenant security deposits, or
both, held by Manager with respect to the Property to be delivered
immediately upon such termination or withdrawal.
<PAGE> 8
(c) All records, contracts, leases, receipts for deposits, unpaid bills
and other papers or documents which pertain to the Property to be
delivered immediately upon such termination or withdrawal.
Upon such termination or withdrawal, Owner will assume responsibility
for payment of all approved or authorized unpaid bills and shall pay Manager
any fees due hereunder to the date of such termination.
ARTICLE XIV
NOTICES
14.1 Notices. All notices, demands, consents and reports provided for
in this Agreement shall be in writing and shall be given to Owner or Manager at
the address set forth below or at such other address as they individually may
specify thereafter in writing:
OWNER Murray Income Properties II, Ltd.
c/o Crozier Partners IX, Inc.
5550 LBJ Freeway, Suite 675
Lock Box #6 Dallas, Texas 75240
Attn: Brent Buck
MANAGER Murray Realty Investors IX, Inc.
5550 LBJ Freeway, Suite 675
Lock Box #6 Dallas, Texas 75240
Attn: Linda S. Flynn
Such notice or other communication may be mailed by United States
registered or certified mail, return receipt requested, postage prepaid and may
be deposited in a United States Post Office or a depository for the receipt of
mail regularly maintained by the post office. Such notices, demands, consents
and reports may also be hand delivered or by any other method or means
permitted by law. For purposes of this Agreement, notices will be deemed to
have been "given" upon personal delivery thereof or 48 hours after having been
deposited in the United States mail as provided above.
ARTICLE XV
NON-ASSIGNABLE, ETC.
15.1 No Assignment. This Agreement and all rights hereunder shall not
be assignable by either party hereto (except as may be required by a surety
company in a matter of subrogation).
15.2 Consent and Approvals. Owner's consents or approvals may be
given only by representatives of Owner from time to time designated in writing
by an officer of Owner located at the address provided in Section 14.1 hereof.
All such consents or approvals shall also be in writing. Consents and/or
approvals will not be necessary if they are not readily obtainable in emergency
situations where life and property are in jeopardy.
15.3 Pronouns. The pronouns used in this Agreement referring to Owner
and/or Manager shall be understood and construed to apply whether Owner and/or
manager be an individual, co-partnership, corporation or an individual or
individuals doing business under a firm or trade name.
15.4 Amendments. Except as otherwise herein provided, any and all
amendments, additions or deletions to this Agreement shall be null and void
unless approved by the parties in writing.
15.5 Headings. All headings herein are inserted for convenience and
ease of reference only and are not to be considered in the construction or
interpretation of any provision of this Agreement.
15.6 Representations. Manager represents and warrants that it is
fully qualified and licensed, to the extent required by law, to manage the
Property and perform all obligations assumed by Manager hereunder and has the
authority to enter into this Agreement.
15.7 Complete Agreement. This Agreement and Schedules "A", "B" and
"C", attached hereto and made a part hereof supersedes and takes the place of
any and all previous agreements entered into between the parties hereto
relating to the Property covered by this Agreement.
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first above written.
OWNER:
MURRAY INCOME PROPERTIES II, LTD
BY: CROZIER PARTNERS IX, Ltd.
BY: /s/ JACK E. CROZIER
--------------------------------
Jack E. Crozier
General Partner
MANAGER:
MURRAY REALTY INVESTORS IX, Inc.
BY: /s/ BRENT BUCK
--------------------------------
Brent Buck
Executive Vice President
<PAGE> 10
SCHEDULE "A"
(Legal Description)
BEING all of that certain lot, tract or parcel of land situated in Block 7,
THIRD INSTALLMENT, INDUSTRIAL COMMUNITY NO. 5, GREAT SOUTHWEST INDUSTRIAL
DISTRICT, an addition to the City of Grand Prairie, Tarrant County, Texas, as
recorded in volume 388-78, page 58, of the Plat Records of Tarrant County,
Texas, and Block 2, FOURTH INSTALLMENT, INDUSTRIAL COMMUNITY NO. 5, GREAT
SOUTHWEST INDUSTRIAL DISTRICT, an addition to the City of Grand Prairie,
Tarrant County, Texas, as recorded in volume 388-110, page 94 of the Plat
Records of Tarrant County, Texas, and being more particularly described
as follows:
BEGINNING at the northwest corner of Site 1, Block 2 of the Fourth Installment
of Industrial Community No. 5, Great Southwest Industrial District, an Addition
to the City of Grand Prairie, Tarrant County, Texas, as recorded in volume
388-115, page 33, of the Plat Records of Tarrant County, Texas; said point also
being on the south right-of-way line of Avenue R (a 60 foot right-of-way);
THENCE South, 418.98 feet along the west line of Site 1 to an iron rod
for corner;
THENCE North 89 degrees 53 minutes 56 seconds West, 900.00 feet to an iron rod
for corner on the east right-of-way line of Great Southwest Parkway (a 100.00
foot right-of-way);
THENCE North, 392.39 feet with the east line of Great Southwest Parkway to an
iron rod for corner at the beginning of a curve to the right having a central
angle of 90 degrees 00 minutes 00 seconds and a radius of 25.00 feet;
THENCE around said curve, a distance of 39.27 feet to an iron rod for corner
on the south line of Avenue R;
THENCE East, 875.00 feet with the south line of Avenue R to the PLACE OF
BEGINNING and CONTAINING 376,231.59 square feet or 8.6371 acres of land, more
or less.
<PAGE> 11
SCHEDULE "C"
to
OFFICE BUILDING MANAGEMENT AGREEMENT
by and Between
MURRAY INCOME PROPERTIES II, LTD., as "Owner"
and
Murray Realty Investors IX, Inc., as "Manager"
1. The competition or fee payable for the services provided for herein
shall be three percent (3%) of the Gross Monthly Rental Receipts from the
Property, which compensation or fee shall be paid monthly in arrears
without any deduction or setoff whatsoever with the first payment being due
on or before the tenth (10th) day of the calendar month next following the
calendar month in which the term hereof commences and continuing thereafter
on the same day of each subsequent calendar month during the term hereof
for the immediately preceding calendar month or partial calendar month
except that the compensation or fee for the last month or partial month
shall be payable within ten (10) days after the expiration of the term
hereof. Should the term hereof commence on a date other than the first day
of any calendar month or expire on a date other than the last day of a
calendar month, the compensation or fee provided for in Paragraph (i) above
shall be prorated on the basis of the number of days in that month.
2. Tenant Finish Fee. Should Manager perform construction services in
connection with the completion of improvements to be made in leased
premises by virtue of lease agreements affecting the Properties or
otherwise at the request of Owner, Owner agrees to pay Manager a fee which
shall be mutually agreed upon by both parties.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 685,709
<SECURITIES> 895,000
<RECEIVABLES> 496,745
<ALLOWANCES> 13,638
<INVENTORY> 0
<CURRENT-ASSETS> 2,063,816
<PP&E> 23,231,733
<DEPRECIATION> 6,441,264
<TOTAL-ASSETS> 20,607,413
<CURRENT-LIABILITIES> 85,444
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,382,249
<TOTAL-LIABILITY-AND-EQUITY> 20,607,413
<SALES> 0
<TOTAL-REVENUES> 783,885
<CGS> 0
<TOTAL-COSTS> 371,570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (396)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 319,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 319,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319,958
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
<PAGE> 1
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 affected Limited Partners will be deemed to have priority over
subsequent requests for repurchases. Investors should be aware that the General
Partners have no obligation to repurchase Interests. If Interests are
repurchased, the General Partner then owning such Interests shall in all
respects be treated as a Limited Partner with respect to those Interests
repurchased.
Special Power of Attorney
Under the Partnership Agreement and Subscription Agreement each Limited
Partner irrevocably appoints the General Partners his attorneys-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)
180 days from the date of this Prospectus, unless subscriptions for 30,000
Interests are accepted by such date, (b) the date of disposition of all assets
of the Partnership, (c) 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, (d) that date on
which Limited Partners holding a majority of Interests vote in favor of
dissolution and termination, or (e) January 31, 2025.
Upon the election by the Limited Partners to continue the business of
the Partnership after an event specified in (c) above, the Partnership shall be
required to purchase the General Partners' general partnership interest
pursuant to Section 12.2 and Section 12.3 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.
"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 (excluding Cash Distributions from
Sales or Refinancings applied to the Limited Partners' Preferred Return) to
Limited Partners (but not below zero), 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
68
<PAGE> 2
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 18 months after the Registration Statement first became
effective.
"Crozier Partners": Crozier Partners IX, Ltd.
"Escrow Agent": MBank Dallas, N.A., Dallas, Texas, or its successor.
"General Partners": Murray Realty Investors IX, Inc. and Crozier
Partners IX, 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 30,000 Interests have been accepted by the General Partners.
"Initial Limited Partner": Richard H. Shaw.
"Interest": The limited partnership interest in the Partnership acquired
by the payment of $100 to the Partnership.
"Limited Partners": All subscribers for Interests who are admitted to
the Partnership as limited partners and listed on Schedule A to the
Partnership Agreement.
"Minimum Deadline": The date that is 180 days after the date of this
Prospectus.
"MRI": Murray Realty Investors IX, Inc.
"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.
"Organizational and Offering Expenses": Expenses incurred in connection
with the organization of the Partnership and the offering of the Interests
(excluding selling commissions and the dealer manager fee), including legal
fees, accounting 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 $100 per Interest.
"Partner": Any General Partner, Limited Partner or, until the Initial
Closing Date, the Initial Limited Partner.
"Partnership": The partnership created under the Amended and Restated
Certificate and Agreement of Limited Partnership attached as Exhibit A.
"Partnership Agreement": The Amended and Restated Certificate and
Agreement of Limited Partnership attached as Exhibit A.
"Preferred Return": The cumulative preferred return to each Limited
Partner equal to 10% per annum on his Average Annual Unreturned Invested
Capital from either Cash Distributions from Operations or Cash Distributions
from Sales or Refinancings. 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
69
<PAGE> 3
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, as
amended or supplemented.
"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 MRI's share of Cash Distributions from
Operations to be used to repurchase Limited Partner Interests under certain
circumstances.
"Subordinated Amount": MRI's unpaid Cash Distributions from Operations
subordinated to the Limited Partners' 7% noncumulative annual return.
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 300,000 Interests at $100 per
Interest, subject to the right of the Dealer Manager to increase the offering
by up to an additional 200,000 Interests. 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 or a Keogh Plan is 20
Interests. The minimum subscription for other investors is 50 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 their 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% 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 $ 99,999 8%
100,000 249,999 7%
250,000 499,999 6%
500,000 749,999 5%
750,000 999,999 4%
1,000,000 and over 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. To be eligible for combination, subscriptions must be
identical for all of the following: registration, type of ownership and tax
identification or social security number. 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% 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 or, at the option of such Limited Partner, as
evidenced on his executed subscription agreement in the form of Exhibit B
hereto, will be applied to
70
<PAGE> 1
"Terminated General Partner") shall be purchased by the Partnership for a
purchase price determined according to the provisions of Section 12.3 hereof.
The last to remain of MRI and Crozier Partners, and the successors thereof,
shall not resign or withdraw from the Partnership without the concurrence of a
majority in interest of the Limited Partners. If such retirement or resignation
is voluntary, the purchase price shall be paid in the form of a non-interest
bearing unsecured promissory note with principal payable, if at all, from
distributions which the Terminated General Partner otherwise would have
received had the Terminated General Partner not resigned or retired. If such
termination is involuntary, the Partnership shall have the option to pay the
purchase price of such interest to the Terminated General Partner either in
cash or by a promissory note of the Partnership, payable to such Terminated
General Partner in a face amount equal to said purchase price and containing
provisions as would be usual and customary in a commercial promissory note,
including provisions for interest, at a rate equal to the prime rate of
interest from time to time charged by MBank Dallas, N.A. to its best commercial
customers (but in no event to exceed the maximum rate permitted by law to be
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 removal, adjudication of bankruptcy, insolvency or
dissolution. 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
resignation, removal, adjudication of bankruptcy, insolvency or dissolution,
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. If the Partnership or the Terminated General
Partner fails to appoint an independent appraiser within the thirty day period
provided for in this paragraph, then the fair market value of the Terminated
General Partner's interest will be determined in accordance with the then
current rules of the American Arbitration Association, and the expense of such
arbitration shall be borne equally by the Terminated General Partner and the
Partnership.
12.4 Within 90 days after the resignation, removal, adjudication of
bankruptcy, insolvency or dissolution of a General Partner (except that a
General Partner shall not voluntarily withdraw from the Partnership without
complying with the terms of Section 12.2 and 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 or continue the business of the
Partnership with the remaining 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.
<PAGE> 2
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 50 Interests unless to an Individual Retirement Account or Keogh
Plan and then not less than 20 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.
(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 or 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 substituted 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 20 Interests if such assignee is an Individual Retirement
Account or Keogh Plan and at least 50 Interests if such assignee is not
an Individual Retirement Account or Keogh Plan and, if the assignor
shall retain any Interests, such retention shall consist of at least
20 Interests if such assignor is an Individual Retirement Account or
Keogh Plan and at least 50 Interests if such assignor is not an
Individual Retirement Account or Keogh Plan;
(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, acknowledgement and delivery to the
General
A-21
<PAGE> 3
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 $500 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 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.
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
Interests 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 or Affiliate
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 and Affiliates from any liability, loss or damage incurred by them
or by the Partnership by reason of any act performed or omitted to be
A-22
<PAGE> 1
for this purpose include only the price of goods and materials paid to
independent third parties and direct costs incurred by the General Partners or
their Affiliates in the transaction, including overhead directly attributable
to the transaction but excluding general and administrative overhead. Further,
all such transactions between the Partnership and a General Partner or an
Affiliate of a General Partner must be pursuant to the terms of a written
contract between the Partnership and such General Partner or Affiliate which
precisely described the services to be rendered or the goods or materials
to be provided and the compensation therefor.
These provisions are inconsistent with the direct management by the
Partnership of its business, operations and affairs and the proposed
restructuring wherein the Partnership and Murray Income Properties, Ltd.-84
will employ their own executive and managerial personnel, secretaries,
accountants and other staff, rent office space, pay their own utility bills,
and in general run their own business, operations and affairs and share
expenses. Murray Income Properties, Ltd.-84 is an Affiliate of the Partnership.
Consequently, this amendment proposes to create an exception to the scope of
Section 10.9 that would allow the Partnership, in conjunction with Murray
Income Properties, Ltd.-84, to manage its own business and affairs and
conduct its own operations through its own staff out of its own office and
to share personnel, office and other general and administrative overhead
expenses with Murray Income Properties, Ltd.-84. Further, the amendment
allows the salaried personnel to be persons who are Affiliates of the
General Partners so long as their compensation and benefits are comparable
to the amounts that would be paid for their services if they were not
Affiliates of a General Partner.
The Amendment. A new paragraph is hereby added to the end of
Section 10.9 that reads as follows:
"Notwithstanding anything contained in this Section 10.9 or
elsewhere in this Agreement, the Partnership may directly conduct,
operate and manage its business and affairs. The Partnership may
employ, either alone or in association with Murray Income Properties,
Ltd.-84, managerial and executive personnel, secretaries, accountants
and other support staff in the conduct of the business, operations
and affairs of the Partnership. If any person employed by the
Partnership is an Affiliate of a General Partner (or if an Affiliate
of a General Partner is employed by Murray Income Properties, Ltd.-84
and the Partnership is to reimburse Murray Income Properties, Ltd.-84
for a portion of the compensation and benefits paid to such person),
the compensation and benefits paid by the Partnership (or by Murray
Income Properties, Ltd.-84 as appropriate) for the services of such
person shall be comparable to the amount that would be paid to such
person if such person was not an Affiliate of a General Partner.
The Partnership may reimburse Murray Income Properties, Ltd.-84 for
that proportion of any expenditure made by Murray Income Properties,
Ltd.-84 which the General Partners deem to be the fair, just and
equitable share that should be borne by the Partnership and,
conversely, the Partnership may pay, and seek reimbursement from,
Murray Income Properties, Ltd.-84 for that proportion of any
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, Ltd.-84."
Amendment No. 9
Explanation of Amendment. Section 10.17 requires MRI 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.
MRI is permitted to commingle the amount allocated to the "Repurchase Fund"
with other assets of MRI. To the present time, however, MRI has not been
paid any Cash Distributions from Operations since the allocation and payment
of Cash Distributions to MRI is subordinated to the prior receipt by the
Limited Partners of a noncumulative 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.
(vi)
<PAGE> 2
Since the amendments herein will reduce the allocation of Cash
Distributions from Operations to MRI from 8% to 3% and will reallocate 5% of
such 8% to Crozier Partners (subordinate, of course, in each instance to the
prior receipt by the Limited Partners of a noncumulative 7% annual return
from either Cash Distributions from Operations or Cash Distributions from
Sales or Refinancings, or both), this amendment will require both MRI and
Crozier Partners, in the proportions of 3/8ths for MRI and 5/8ths for Crozier
Partners, 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 third and fourth sentences in Section 10.17 are
hereby deleted and there is hereby substituted in lieu thereof the following
three sentences:
"MRI will allocate 25% of its share of Cash Distributions from
Operations to a "Repurchase Fund" and Crozier Partners 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 noncumulative 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. MRI's share of Cash Distributions from Operations allocated
to the Repurchase Fund will be commingled with other assets of MRI and
Crozier Partners' share of Cash Distributions from Operations
allocated to the Repurchase Fund will be commingled with other
assets of Crozier Partners. Any repurchase of Interests pursuant to
this Section 10.15 shall be in the proportions of 3/8ths by MRI
and 5/8ths by Crozier Partners, 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 partner," with the
voting and other rights appurtenant to that status, unless the owner is named in
the certificate of limited partnership. The Texas Revised Limited Partnership
Act that will be adopted by these amendments no longer requires that the
identity of the limited partners be disclosed in the certificate of limited
partnership filed in the office of the Secretary of State, which filing was
often burdensome on limited partnerships and considered by some people to be an
invasion of their financial privacy. Instead, the Texas Revised Limited
Partnership Act requires the limited partnership to maintain records showing the
name and mailing address of each partner and a written statement of the date on
which each partner in a limited partnership became a partner. This amendment
makes the records of the Partnership authoritative as to the identity of the
holders of Interests entitled to vote on any particular matter that is submitted
to a vote of the Limited Partners.
The Amendment. The Last sentence of Section 11.3 is hereby amended
to read as follows:
"For purposes of determining the number of votes which he is entitled
to cast, a Limited Partner shall be deemed to be the holder of only
those Interests which are reflected as owned by him by the records
of the Partnership."
(vii)
<PAGE> 1
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 ARM'S-
LENGTH BARGAINING. See "Conflicts of Interest."
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
Offering Stage
<S> <C> <C>
Selling Commissions Murray Securities Up to $8 per Interest sold,
Corporation(1) reduced for purchases by one
investor of more than 1,000
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 $2,400,000 if 300,000
Interests are sold or
$4,000,000 if 500,000 Interests
are sold.(2)
Dealer Manager Fee Murray Securities Up to $2 per Interest sold,
Corporation(1) reduced 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
$600,000 if 300,000 Interests
are sold or $1,000,000 if
500,000 Interests are sold.(2)
Reimbursement of MRI or its Affiliates Actual out-of-pocket
Organizational Organizational and Offering
Offering Expenses(3) Expenses, including accounting,
legal, printing, registration
fees, etc.
<CAPTION>
Acquisition Stage
<S> <C> <C>
Reimbursement of Murray Properties Actual costs incurred in
Acquisition and Company or its acquiring and holding
Holding Costs(4) Affiliates properties prior to their
acquisition by the Partnership.
Dollar amount is not
determinable at this time.(5)
Title Insurance Dallas Title Company A portion of the premium paid for
Commissions(6) or Texas Title title insurance upon acquisition
Company(7) of a property. The premium in
Texas is fixed by the State.
Dollar amount is not determinable
at this time.(5)
</TABLE>
10
<PAGE> 2
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
Operational Stage
<S> <C> <C>
Property Management Murray Management For its management services,
Fees Corporation(8) an amount not to exceed the
lesser of (i) in the case of
apartment complexes, 5% of
gross revenues, in the case
of shopping centers, office
buildings and office/showroom
centers, 6% of gross revenues
(or 3% if leasing performed
by third parties) and in the
case of shopping centers,
office buildings and office/
showroom centers which are
leased on a long-term (ten or
more years) net (or similar)
basis, 1% of gross revenues
or (ii) the amount customarily
charged in arm's-length
transactions by others
rendering comparable services
in the locality where the
property is located, considering
the size and type of each such
property. In addition, Murray
Management Corporation will be
reimbursed for the actual
costs of on-site personnel
engaged in the management,
leasing and maintenance of the
property of the Partnership.
Dollar amount is not
determinable at this time.(5)
Reimbursement of MRI or its Affiliates Actual cost of goods and
Partnership materials used for and by the
Operational Partnership and obtained from
Expenses(9) an entity not affiliated with
a General Partner or an
Affiliate of the General
Partners and certain
administrative services. Dollar
amount is not determinable
at this time.(5)
Casualty Insurance Murray General A portion of the premiums paid
Commissions Agency, Inc.(10) for casualty insurance. The
cost of the insurance cannot
exceed the lower quote for
comparable terms and
coverage from two independent
brokers. Dollar amount is not
determinable at this time.(5)
Partnership Murray Savings The excess of Murray Savings
Administrative Association(11) Association's rate of return
Account and on the Partnership funds in
Property Operating such accounts over the interest
Accounts rate paid to the Partnership
on such accounts. 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 amount not in excess of the
Financing Charges an Affiliate of the amounts that would be charged
or Fees General Partners(12) 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 MBank Dallas, N.A.,
Dallas, Texas. Dollar amount is
not determinable at this
time.(5)
Distributive Share of Crozier Partners and Crozier Partners will receive
Cash Distributions MRI(14) 2% of all Cash Distributions
from Operations(13) from Operations. MRI 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 Initial
Closing Date. Dollar amount
is not determinable at this
time.(5)
<CAPTION>
Liquidation Stage
<S> <C> <C>
Real Estate Crozier Partners or An amount not to exceed the
Commissions its Affiliates; lesser of (i) 50% of the
MRI or its competitive real estate
Affiliates(14)(15) commission or (ii) 3% of the
sales price of the property,
provided that all real estate
commissions or similar fees
paid to all persons shall not
exceed the lesser of the
competitive real estate
commission or 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.
Dollar amount is not
determinable at this time.(5)
Title Insurance Dallas Title Company A portion of the premiums paid
Commissions or Texas Title for title insurance upon sale,
Company(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)
</TABLE>
12
<PAGE> 4
<TABLE>
<CAPTION>
Entity Receiving Method of Determination
Form of Compensation Compensation and Estimated Dollar Amount
- -------------------- ---------------- ---------------------------
<S> <C> <C>
Distributive Share Crozier Partners Crozier Partners will receive
of Cash and MRI(14) 1% of all Cash Distributions
Distributions from from Sales or Refinancings.
Sales or The remaining 99% shall be
Refinancings(13)(16) allocated (a) first, to the
Limited Partners until they
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, (b) then, to
MRI 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
85% to the Limited Partners
and 15% 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 sales by
such other broker-dealers, the Dealer Manager has advised the
Partnership that the Dealer Manager will reallow to such other broker-
dealers all or a portion of the selling commissions with respect to
such sales. Such other broker-dealers, together with the Dealer
Manager, may also be reimbursed up to an additional 1/2% of gross
offering proceeds in connection with their due diligence activities.
(2) See "The Offering" for a discussion of the rebate of selling commissions
payable with respect to sales to one purchaser of more than 1,000
Interests and the rebate of selling commissions and the dealer manager
fee with respect to sales to officers, directors, partners, employees
or Affiliates of the General Partners or their Affiliates.
(3) For nonleveraged programs such as the Partnership, the NASAA
Guidelines require that, at a minimum, 82% of the Limited Partners'
capital contributions 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 the purchase of properties,
working capital reserves not in excess of 5% of gross offering proceeds
and other cash payments such as interest and taxes but excluding front-
end fees, defined as fees and expenses paid by any party for any
services rendered during the Partnership's organizational or
acquisition phase including organization and offering expenses,
acquisition fees, acquisition expenses and any other similar fees,
however designated). 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, nonrecurring management fees, or any fees of a
similar nature,
13
<PAGE> 5
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. The
Partnership will acquire its properties on an unleveraged basis. In
addition, the Partnership will not pay any acquisition fees to the
General Partners or their Affiliates and the total of acquisition fees
to unaffiliated parties and acquisition expenses will not exceed 1% of
the Limited Partners' capital contributions. Based on those assumptions
and assuming the sale of 300,000 Interests with Organizational and
Offering Expenses, selling commissions and the dealer manager fee equal
to 13.0% of the Limited Partners' capital contributions, the amount that
would be invested in properties would be equal to 86.0% 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 temporarily hold title thereto for the purpose of facilitating
the acquisition of such property or any other purpose related to the
business of the Partnership. In such event, such Affiliate may be
reimbursed for its costs incurred in acquiring and holding such real
property prior to the acquisition of such property by the Partnership.
Such costs will consist of the price paid by such Affiliate for
such property, plus the amount of any net cash flow deficit or minus the
amount of any net cash flow surplus incurred by such Affiliate during
its ownership and operation of such 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, if 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 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% if 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. In the case of apartment complexes,
such fee shall include all leasing and releasing fees and bonuses,
and leasing-related services. In the case of shopping centers, office
buildings and office/showroom centers, where Murray Management
Corporation is not responsible for leasing, re-leasing and leasing-
related services with respect to
14
<PAGE> 6
the property, its fee shall not exceed 3% of gross revenues.
Notwithstanding the foregoing, a separate competitive 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 cost or 90%
of the competitive price that would be charged by unaffiliated persons
rendering similar services in the same or comparable geographic
location. In the case of shopping centers, office buildings and office/
showroom centers which are leased on a long-term net (or similar)
basis, a one-time initial leasing fee of 3% of gross revenues may be
taken on each lease payable over the first five full years of the
original term of the lease. 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 personnel, supplies, repairs, furniture
and 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 duplicative services
and (c) the aggregate cost to the Partnership will not exceed the
amount which would be customarily charged in arm's-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
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 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 and
the compensation therefor. 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 reimbursable 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 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
15
<PAGE> 7
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 90% of 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. Notwithstanding the foregoing, 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 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 through 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 account and property operating accounts 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. Such accounts are insured up to a maximum of
$100,000 in the aggregate by the Federal Savings and Loan Insurance
Corporation ("FSLIC"). The General Partners will not permit the balance
of such accounts to exceed the maximum amount insured by the FSLIC.
Murray Savings Association may receive indirect compensation to the
extent that Murray Savings Association's rate of return on the
Partnership funds in such accounts exceeds the interest rate paid to the
Partnership on such accounts. The Partnership will receive an interest
rate competitive with similar accounts at unrelated institutions and
will not be charged any servicing fees on the accounts.
(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 a 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 are 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 MBank Dallas, N.A. 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 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
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<PAGE> 8
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. No loans, secured or unsecured, may be 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 three years after the date of the loan.
(13) For a discussion of Cash Distributions from Operations and Cash
Distributions from Sales or Refinancings, see "Income and Losses and
Cash Distributions."
(14) Crozier Partners was formed as of December 19, 1985, 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) Real estate commissions are payable to the General Partners or their
Affiliates only if such General Partner or Affiliate provides a
substantial amount of the services in the sales effort. All real estate
commissions payable to the General Partners or their Affiliates for
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 the lesser of a
competitive real estate commission wihch 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 one-third
to Crozier Partners or its Affiliates and two-thirds to MRI 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 Crozier Partners) will be allocated one-third
to Crozier Partners and two-thirds to MRI.
CONFLICTS OF INTEREST
The General Partners are subject to various conflicts of interest
because of other activities and entities in which they have a direct or
indirect financial interest. This Prospectus attempts to highlight those
conflicts of interest but a potential investor should be aware that because of
future activities or circumstances not now foreseen, the listing herein may not
be complete. The General Partners, having the exclusive authority to manage the
operations and affairs of the Partnership and to make all decisions regarding
the business of the Partnership, will seek to resolve any matter involving a
conflict of interest in a manner which, in their best judgment, is fair and
reasonable to the Partnership.
Murray Realty Investors IX, Inc., a General Partner, is a wholly-owned
subsidiary of Murray Realty Investors, Inc., which is a wholly-owned subsidiary
of Murray Properties Company. Murray Properties Company is a wholly-owned
subsidiary of Murray Financial Corporation. The general partner of Crozier
Partners IX, Ltd., a General Partner, is Jack E. Crozier, and the limited
partners are 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. Jack E. Crozier owns approximately 11% of the
outstanding stock and is the President of Murray Financial Corporation and is
an officer and director of substantially all Affiliates of Murray Financial
Corporation. Fulton Murray, members of his family and trusts for their
benefit own the remaining outstanding stock of Murray Financial Corporation.
Mr. Murray is the Chairman of the Board and Chief Executive Officer and a
director of Murray Financial Corporation and is an officer and director of
substantially all Affiliates of Murray Financial Corporation. Murray Financial
Corporation is engaged, directly or through subsidiaries, in various real
estate
17
