Amended And Restated Agreement
Of Limited Partnership Of
XxXxxxxxx Housing Associates Limited Partnership
TABLE OF CONTENTS
Page
I. DEFINITIONS ............................................. 2
1.1 "Accountant" ................................... 2
1.2 "Act" .......................................... 2
1.3 "Actual Tax Credit"............................. 2
1.4 "Adjusted Capital Account Deficit" ............. 2
1.5 "Affiliate" .................................... 2
1.6 "Agreement" or "Partnership Agreement".......... 2
1.7 "Apartment Housing"............................. 3
1.8 "Assignee" ..................................... 3
1.9 "Bankruptcy" or "Bankrupt"...................... 3
1.10 "Break-even Operations"......................... 3
1.11 "Budget"........................................ 3
1.12 "Capital Account" .............................. 3
1.13 "Capital Contribution" ......................... 4
1.14 "Cash Expenses"................................. 4
1.15 "Cash Receipts"................................. 4
1.16 "Code" ......................................... 4
1.17 "Completion of Construction".................... 5
1.18 "Compliance Period"............................. 5
1.19 "Consent of the Special Limited Partner"........ 5
1.20 "Construction Budget"........................... 5
1.21 "Construction Contract"......................... 5
1.22 "Construction Lender"........................... 5
1.23 "Construction Loan" ............................ 5
1.24 "Contractor" ................................... 6
1.25 "Debt Service Coverage"......................... 6
1.26 "Deferred Management Fee"....................... 6
1.27 "Developer"..................................... 6
1.28 "Development Fee" .............................. 6
1.29 "Distributions" ................................ 6
1.30 "Fair Market Value" ............................ 6
1.31 "First Year Certificate" ....................... 6
1.32 "Force Majeure"................................. 7
1.33 "General Partner" .............................. 7
1.34 "Gross Asset Value" ............................ 7
1.35 "Hazardous Substance"........................... 8
1.36 "Improvements".................................. 8
1.37 "In-Balance".................................... 8
1.38 "Incentive Management Fee"...................... 9
1.39 "Income and Losses"............................. 8
1.40 "Construction Inspector"......................... 10
1.41 "Insurance" .................................... 10
1.42 "Insurance Company" ............................ 11
1.43 "Interest" ..................................... 11
1.44 "Involuntary Withdrawal"........................ 11
1.45 "Land Acquisition Fee".......................... 11
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1.46 "LIHTC"......................................... 11
1.47 "Limited Partner"............................... 11
1.48 "Management Agent".............................. 11
1.49 "Management Agreement".......................... 12
1.50 "Minimum Set-Aside Test"........................ 12
1.51 "Mortgage" or "Mortgage Loan"................... 12
1.52 "Net Operating Income".......................... 12
1.53 "Nonrecourse Deductions"........................ 13
1.54 "Nonrecourse Liability"......................... 13
1.55 "Operating Deficit" ............................ 13
1.56 "Operating Deficit Guarantee Period"............ 13
1.57 "Operating Loans"............................... 13
1.58 "Original Limited Partner" ..................... 13
1.59 "Partner(s)" ................................... 13
1.60 "Partner Nonrecourse Debt" ..................... 13
1.61 "Partner Nonrecourse Debt Minimum Gain" ........ 13
1.62 "Partner Nonrecourse Deductions" ............... 13
1.63 "Partnership" .................................. 13
1.64 "Partnership Minimum Gain" ..................... 13
1.65 "Permanent Mortgage Commencement" .............. 13
1.66 "Person" ....................................... 14
1.67 "Plans and Specifications"...................... 14
1.68 "Project Documents" ............................ 14
1.69 "Projected Annual Tax Credits" ................. 14
1.70 "Projected Tax Credits" ........................ 14
1.71 "Qualified Tenants" ............................ 14
1.72 "Rent Restriction Test" ........................ 14
1.73 "Asset Management Fee".......................... 15
1.74 "Revised Projected Tax Credits"................. 15
1.75 "Sale or Refinancing"........................... 15
1.76 "Sale or Refinancing Proceeds" ................. 15
1.77 "Special Limited Partner"....................... 15
1.78 "State" ........................................ 15
1.79 "State Tax Credit Agency" ...................... 15
1.80 "Substitute Limited Partner" ................... 15
1.81 "Syndication Fee"............................... 15
1.82 "Tax Credit" ................................... 15
1.83 "Tax Credit Compliance Fee" .................... 16
1.84 "Tax Credit Conditions"......................... 16
1.85 "Tax Credit Period"............................. 16
1.86 "Title Policy".................................. 16
1.87 "TRA 1986" ..................................... 16
1.88 "Treasury Regulations" ......................... 16
1.89 "Withdrawing" or "Withdrawal"................... 16
II. NAME .................................................... 17
III. PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE ............ 17
3.1 Principal Executive Office ..................... 17
3.2 Agent for Service of Process ................... 17
IV. PURPOSE ................................................. 17
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4.1 Purpose of the Partnership..................... 17
4.2 Authority of the Partnership................... 17
V. TERM .................................................... 18
VI. GENERAL PARTNER'S CONTRIBUTIONS AND LOANS................ 18
6.1 Capital Contribution of General Partner......... 18
6.2 Construction Obligations........................ 18
6.3 Operating Obligations........................... 19
6.4 Other General Partner Loans..................... 19
VII. CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
AND SPECIAL LIMITED PARTNER............................ 20
7.1 Original Limited Partner........................ 20
7.2 Capital Contribution of Limited Partner......... 20
7.3 Repurchase of Limited Partner's Interest........ 22
7.4 Adjustment of Limited Partner's
Capital Contribution.......................... 23
7.5 Capital Contribution of Special Limited Partner. 25
7.6 Return of Capital Contribution.................. 26
7.7 Liability of Limited Partner and Special
Limited Partner................................. 26
VIII. WORKING CAPITAL AND RESERVES ............................ 26
8.1 Operating and Maintenance Account............... 26
8.2 Tax and Insurance Account....................... 26
8.3 Other Reserves.................................. 27
IX. MANAGEMENT AND CONTROL .................................. 27
9.1 Power and Authority of General Partner ......... 27
9.2 Payments to the General Partners and Others .... 27
9.3 Specific Powers of the General Partner ......... 29
9.4 Authority Requirements.......................... 30
9.5 Limitations on General Partner's
Power and Authority .......................... 31
9.6 Restrictions on Authority of General Partner.... 32
9.7 Duties of General Partner ...................... 33
9.8 Obligations to Repair and Rebuild Apartment
Housing....................................... 35
9.9 Partnership Expenses ........................... 35
9.10 General Partner Expenses ....................... 36
9.11 Other Business of Partners ..................... 36
9.12 Covenants, Representations and Warranties....... 36
X. ALLOCATIONS OF INCOME, LOSSES AND CREDITS ............... 40
10.1 General ........................................ 40
10.2 Allocations From Sale or Refinancing............ 40
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10.3 Special Allocations............................. 41
10.4 Curative Allocations............................ 44
10.5 Other Allocation Rules.......................... 45
10.6 Tax Allocations: Code Section 704(c)........... 46
10.7 Allocation Among Limited Partners............... 46
10.8 Allocation Among General Partners .............. 46
10.9 Modification of Allocations .................... 47
XI. DISTRIBUTION ............................................ 47
11.1 Distribution of Net Operating Income ........... 47
11.2 Distribution of Sale or Refinancing Proceeds.... 47
XII. TRANSFERS OF LIMITED PARTNER'S INTEREST
IN THE PARTNERSHIP..................................... 48
12.1 Assignment of Limited Partner's Interest ....... 48
12.2 Effective Date of Transfer ..................... 49
12.3 Invalid Assignment ............................. 49
12.4 Assignee's Rights to Allocations
and Distributions ............................ 49
12.5 Substitution of Assignee as Limited Partner
or Special Limited Partner.................... 49
12.6 Death, Bankruptcy, Incompetency, etc.
of a Limited Partner ......................... 50
XIII. WITHDRAWAL, REMOVAL AND REPLACEMENT OF GENERAL
PARTNER .............................................. 50
13.1 Withdrawal of General Partner .................. 50
13.2 Removal of General Partner ..................... 50
13.3 Effects of a Withdrawal......................... 53
13.4 Successor General Partner....................... 54
13.5 Admission of Additional or Successor
General Partner ................................ 55
13.6 Transfer of Interest ........................... 55
13.7 No Goodwill Value............................... 55
XIV. BOOKS AND ACCOUNTS, REPORTS, TAX RETURNS,
FISCAL YEAR AND BANKING ............................... 56
14.1 Books and Accounts ............................. 56
14.2 Accounting Reports ............................. 57
14.3 Other Reports .................................. 59
14.4 Late Reports ................................... 60
14.5 Annual Site Visits.............................. 60
14.6 Tax Returns..................................... 60
14.7 Fiscal Year .................................... 60
14.8 Banking ........................................ 60
14.9 Certificates and Elections ..................... 60
XV. DISSOLUTION, WINDING UP, TERMINATION AND
LIQUIDATION OF THE PARTNERSHIP ........................ 61
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15.1 Dissolution of Partnership ..................... 61
15.2 Return of Capital Contribution upon
Dissolution .................................... 61
15.3 Distributions of Assets ........................ 61
15.4 Deferral of Liquidation......................... 62
15.5 Liquidation Statement .......................... 63
15.6 Certificates of Dissolution; Certificate of
Cancellation of Certificate of Limited
Partnership .................................. 63
XVI. AMENDMENTS .............................................. 63
XVII. MISCELLANEOUS ........................................... 64
17.1 Voting Rights .................................. 64
17.2 Meeting of Partnership ......................... 64
17.3 Notices ........................................ 65
17.4 Successors and Assigns ......................... 65
17.5 Recording of Certificate of Limited
Partnership. ................................. 65
17.6 Amendment of Certificate of Limited
Partnership .................................. 65
17.7 Counterparts ................................... 66
17.8 Captions ....................................... 66
17.9 Saving Clause................................... 66
17.10 Certain Provisions.............................. 66
17.11 Tax Matters Partners............................ 67
17.12 Expiration of Compliance Period................. 67
17.13 Number and Gender .............................. 68
17.14 Entire Agreement ............................... 68
17.15 Governing Law .................................. 69
17.16 Attorney's Fees ................................ 69
17.17 Receipt of Correspondence ...................... 69
17.18 Security Interest and Right of Set-Off ......... 69
EXHIBIT A - Legal Description...................... A-1
EXHIBIT B - Form of Legal Opinion.................. B-1 - B-4
EXHIBIT C - Certification and Agreement............ C-1 - C-4
EXHIBIT D - Form of Completion Certificate......... D-1
EXHIBIT E - Accountant's Certificate............... E-1
EXHIBIT F - Contractor's Letter.....................F-1
EXHIBIT G - Depreciation Schedule...................G-1
EXHIBIT H - Report of Operations................... H-1 - H-10
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Amended And Restated Agreement
Of Limited Partnership Of
XxXxxxxxx Housing Associates Limited Partnership
This Amended And Restated Agreement Of Limited Partnership is being
entered into effective as of the date written below by and between ERC
Properties, Inc., as the general partner (the "General Partner"), WNC Holding,
LLC, a California limited liability company as the limited partner (the "Limited
Partner"), WNC Housing, L.P., as the special limited partner (the "Special
Limited Partner") and Xxx Xxxxxxx and ERC Properties, Inc. as the withdrawing
limited partner (the "Original Limited Partner").
RECITALS
WHEREAS, XxXxxxxxx Housing Associates Limited Partnership, a Kansas
limited partnership (the "Partnership") recorded a certificate of limited
partnership with the Kansas Secretary of State on February 9, 2000. A
partnership agreement dated February 10, 2000 was entered into by and between
the General Partner and the Original Limited Partner (the "Original Partnership
Agreement").
WHEREAS, the Partners desire to enter into this Agreement to provide
for, among other things, (i) the continuation of the Partnership, (ii) the
admission of the Limited Partner and the Special Limited Partner as partners of
the Partnership, (iii) the liquidation of the Original Limited Partner's
Interest in the Partnership, (iv) the payment of Capital Contributions by the
Limited Partner and the Special Limited Partner to the Partnership, (v) the
allocation of Income, Losses, Tax Credits and distributions of Net Operating
Income and other cash funds of the Partnership among the Partners, (vi) the
determination of the respective rights, obligations and interests of the
Partners to each other and to the Partnership, and (vii) certain other matters.
WHEREAS, the Partners desire hereby to amend and restate the Original
Partnership Agreement.
NOW, THEREFORE, in consideration of their mutual agreements herein set
forth, the Partners hereby agree to amend and restate the Original Partnership
Agreement in its entirety to provide as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 "Accountant" shall mean Xxxxx, Xxxxx & Xxxxxx, CPA's, or such
other firm of independent certified public accountants as may be engaged for the
Partnership by the General Partner with the Consent of the Special Limited
Partner, which consent will not be unreasonably withheld. Notwithstanding any
provision of this Agreement to the contrary, the Special Limited Partner shall
have the discretion to dismiss the Accountant for cause if such Accountant fails
to provide, or untimely provides, or inaccurately provides, the information
required in Section 14.2 or 14.3 of this Agreement.
Section 1.2 "Act" shall mean the laws of the State governing limited
partnerships, as now in effect and as the same may be amended from time to time.
Section 1.3 "Actual Tax Credit" shall mean as of any point in time, the
total amount of the LIHTC actually allocated by the Partnership to the Limited
Partner and not subsequently recaptured or disallowed, representing 99.980.9998%
of the LIHTC actually received by the Partnership, as shown on the applicable
tax returns of the Partnership.
Section 1.4 "Adjusted Capital Account Deficit" shall mean with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant fiscal period, after giving effect to the following
adjustments:
(a) credit to such Capital Account any amounts which such Partner is
obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted consistently therewith.
Section 1.5 "Affiliate" shall mean (a) any Person directly or indirectly
controlling, controlled by, or under common control with another Person; (b) any
Person owning or controlling 10% or more of the outstanding voting securities of
such other Person; (c) any officer, director, trustee, or partner of such other
Person; and (d) if such Person is an officer, director, trustee or general
partner, any other Person for which such Person acts in any such capacity.
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Section 1.6 "Agreement" or "Partnership Agreement" shall mean this Amended
and Restated Agreement of Limited Partnership, as it may be amended from time to
time. Words such as "herein," "hereinafter," "hereof," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement, refers to this
Agreement as a whole, unless the context otherwise requires.
Section 1.7 "Apartment Housing" shall collectively mean the approximately
10 acres of land in McPherson, XxXxxxxxx County, Kansas, as more fully described
in Exhibit "A" attached hereto and incorporated herein by this reference, and
the Improvements.
Section 1.8 "Architect of Record" shall mean The Hill Firm, who shall be
responsible for architectural program development including design, construction
blueprint, project specifications manual, contract administrative services, and
project close-out procedures.
Section 1.9 "Asset Management Fee" shall have the meaning set forth in
Section 9.2(d) hereof.
Section 1.10 "Assignee" shall mean a Person who has acquired all or a
portion of the Limited Partner's or the Special Limited Partner's beneficial
interest in the Partnership and who has not been substituted in the stead of the
transferor as a Partner.
Section 1.11 "Bankruptcy" or "Bankrupt" shall mean the making of an
assignment for the benefit of creditors, becoming a party to any liquidation or
dissolution action or proceeding, the commencement of any bankruptcy,
reorganization, insolvency or other proceeding for the relief of financially
distressed debtors, or the appointment of a receiver, liquidator, custodian or
trustee and, if any of the same occur involuntarily, the same not being
dismissed, stayed or discharged within 90 days; or the entry of an order for
relief under Title 11 of the United States Code. A Partner shall be deemed
Bankrupt if the Bankruptcy of such Partner shall have occurred and be
continuing.
Section 1.12 "Break-even Operations" shall mean at such time as the
Partnership has Cash Receipts equal to Cash Expenses, as determined by the
Accountant and approved by the Special Limited Partner which approval shall not
be unreasonably withheld. For purposes of this definition, any one-time up-front
fee paid to the Partnership from any source shall not be included in Cash
Receipts to calculate Break-even Operations. Moreover, in the event any rent
concession is granted for the rental of an apartment unit the value of the
rental concession shall be amortized over the term of the lease.
Section 1.13 "Budget" shall mean the annual operating Budget of the
Partnership as more fully described in Section 14.3 of this Agreement.
Section 1.14 "Capital Account" shall mean, with respect to each Partner,
the account maintained for such Partner comprised of such Partner's Capital
Contribution as increased by allocations to such Partner of Partnership Income
3
(or items thereof) and any items in the nature of income or gain which are
specially allocated pursuant to Section 10.3 or 10.4 hereof, and decreased by
the amount of any Distributions made to such Partner, and allocations to such
Partner of Partnership Losses (or items thereof) and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 10.3 or
10.4 hereof. In the event of any transfer of an interest in the Partnership in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest. The foregoing definition and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), as amended or any successor thereto, and
shall be interpreted and applied in a manner consistent with such Treasury
Regulation.
Section 1.15 "Capital Contribution" shall mean the total amount of money,
or the Gross Asset Value of property contributed to the Partnership, if any, by
all the Partners or any class of Partners or any one Partner as the case may be
(or by a predecessor-in-interest of such Partner or Partners), reduced by any
such capital which shall have been returned pursuant to Section 7.3, 7.4 or 7.6
of this Agreement. A loan to the Partnership by a Partner shall not be
considered a Capital Contribution.
Section 1.16 "Cash Expenses" shall mean all cash operating obligations of
the Partnership (other than those covered by Insurance) in accordance with the
applicable Budget (specifically excluding depreciation and similar items for
which no cash outlay is required) including without limitation, the payment of
the monthly Mortgage payments, the Management Agent fees (which shall be deemed
to include that portion of such fees which is currently deferred and not paid),
the Asset Management Fee, the funding of reserves in accordance with Article
VIII of this Agreement, advertising and promotion, utilities, maintenance,
repairs, Partner communications, legal, telephone, any other expenses which may
reasonably be expected to be paid in a subsequent period but which on an accrual
basis is allocable to the period in question, such as Insurance, real estate
taxes and audit, tax or accounting expenses (excluding deductions for cost
recovery of buildings; improvements and personal property and amortization of
any financing fees) and any seasonal expenses (such as snow removal, the use of
air conditioners in the middle of the summer, or heaters in the middle of the
winter) which may reasonably be expected to be paid in a subsequent period shall
be allocated equally per month over the calendar year. Cash Expenses payable to
Partners or Affiliates of Partners shall be paid after Cash Expenses payable to
third parties. Construction Loan interest and construction costs of any nature
whatsoever are not Cash Expenses and shall not be paid from Cash Receipts. The
provisions of Section 6.2 govern the payment of construction costs and
construction interest.
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Section 1.17 "Cash Receipts" shall mean actual cash received on a cash
basis by the Partnership from operating revenues of the Partnership, including
without limitation rental income (but not any subsidy thereof from the General
Partner or an Affiliate thereof) and laundry income, but excluding prepayments,
security deposits, Capital Contributions, borrowings, lump-sum payment, any
extraordinary receipt of funds, and any income earned on investment of its
funds.
Section 1.18 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
Section 1.19 "Completion of Construction" shall mean the date the
Partnership receives the required certificate of occupancy (or the local
equivalent) for all 72 apartment units, or by the issuance of the Construction
Inspector's certification, in a form substantially similar to the form attached
hereto as Exhibit "D" and incorporated herein by this reference, with respect to
completion of all the apartment units in the Apartment Housing. Completion of
Construction further means that the construction shall be completed in good
quality, and free and clear of all mechanic, material and similar liens.
Notwithstanding, Completion of Construction shall not be deemed to have
occurred: if the statutory time period for the filing of any liens by the
Contractor, subcontractors, material suppliers or any one else entitled to file
a construction lien has not lapsed; or if on such date any liens or other
encumbrances as to title to the Apartment Housing exist, other than the
Construction Loan.
Section 1.20 "Compliance Period" shall mean the period set forth in Section
42 (i)(1) of the Code, as amended, or any successor statute.
Section 1.21 "Consent of the Special Limited Partner" shall mean the prior
written consent of the Special Limited Partner.
Section 1.22 "Construction Budget" shall mean the agreed upon cost of
construction of the Improvements, including soft costs (which includes, but is
not limited to, financing charges, market study, Development Fee, architect
fees, etc.), based upon the Plans and Specifications. The final Construction
Budget is referenced in the Development, Construction and Operating Budget
Agreement entered into by and between the Partners the even date hereof, and
incorporated herein by this reference. The Development Construction and
Operating Budget Agreement shall: list all subcontractors and material suppliers
who will account for five percent or more of the cost of construction of the
Improvements; and show a trade payment breakdown specifying the cost of each
classification of construction requirements pursuant to the Plans and
Specifications.
Section 1.23 "Construction Contract" shall mean the construction contract
dated August 1, 2001 in the amount of $3,312,000, entered into between the
Partnership and the Contractor pursuant to which the Improvements are being
5
constructed in accordance with the Plans and Specifications. The Construction
Contract shall be a fixed price agreement (includes materials and labor) at a
cost consistent with the Construction Budget.
Section 1.24 "Construction Inspector" shall mean The Hill Firm, or any
successor thereto with the Consent of the Special Limited Partner. The
Construction Inspector shall make regular inspections of the construction site,
but in no event less than once a month, to confirm that construction of the
Improvements are in conformance with the Plans and Specifications. The
Construction Inspector will sign-off on all the draw requests made by the
Contractor and provide the documents specified in Section 14.3(a) of this
Agreement. The Partnership shall budget for, and pay the cost of, the
Construction Inspector. If there is, at any time, an identity of interest
between the Partnership and the Construction Inspector, or between the
Contractor and the Construction Inspector, then the General Partner will
immediately relieve the Construction Inspector of any inspecting duties. The
General Partner shall dismiss the Construction Inspector for cause if the
Construction Inspector fails to detect, or fails to notify the General Partner
and Special Limited Partner within five business days of a draw request, that:
(a) the Construction Budget is not In-Balance; (b) a change order; (c) any
modification to the Plans and Specifications; or (d) any modification to a
construction line item from the approved Construction Budget as specified in the
Development, Construction and Operating Budget Agreement.
Section 1.25 "Construction Lender" shall mean Fidelity Bank or any
successor thereto.
Section 1.26 "Construction Loan" shall mean the loan obtained from
Construction Lender in the principal amount of $2,156,780 at an interest rate
equal to prime minus 50 basis points per annum for a term of 15 years to provide
funds for the acquisition, renovation and/or construction and development of the
Apartment Housing. Where the context admits, the term "Construction Loan" shall
include any deed, deed of trust, note, security agreement, assumption agreement
or other instrument executed by, or on behalf of, the Partnership or General
Partner in connection with the Construction Loan.
Section 1.27 "Contractor" shall mean ERC Construction Group, LLC, which is
the general construction contractor for the Apartment Housing.
Section 1.28 "Debt Service Coverage" shall mean for the applicable period
the ratio between the Net Operating Income (excluding Mortgage payments) and the
debt service required to be paid on the Mortgage(s). As example, a 1.15 Debt
Service Coverage means that for every $1.00 of debt service required to be paid
6
there must be $1.15 of Net Operating Income available. A worksheet for the
calculation of Debt Service Coverage is found in the Report of Operations
attached hereto as Exhibit "H" and incorporated herein by this reference.
Section 1.29 "Deferred Management Fee" shall have the meaning set forth in
Section 9.2(c) hereof.
Section 1.30 "Developer" shall mean ERC Development Group, LLC.
Section 1.31 "Development Fee" shall mean the fee payable to the Developer
for services incident to the development and construction of the Apartment
Housing in accordance with the Development Fee Agreement between the Partnership
and the Developer dated the even date herewith and incorporated herein by this
reference. Development activities do not include services for the acquisition of
land or syndication activities.
Section 1.32 "Distributions" shall mean the total amount of money, or the
Gross Asset Value of property (net of liabilities securing such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code), distributed to Partners with respect to their
Interests in the Partnership, but shall not include any payments to the General
Partner or its Affiliates for fees or other compensation as provided in this
Agreement or any guaranteed payment within the meaning of Section 707(c) of the
Code, as amended, or any successor thereto.
Section 1.33 "Fair Market Value" shall mean, with respect to any property,
real or personal, the price a ready, willing and able buyer would pay to a
ready, willing and able seller of the property, provided that such value is
reasonably agreed to between the parties in arm's-length negotiations and the
parties have sufficiently adverse interests.
Section 1.34 "First Year Certificate" shall mean the certificate to be
filed by the General Partner with the Secretary of the Treasury as required by
Code Section 42(1)(1), as amended, or any successor thereto.
Section 1.35 "Force Majeure" shall mean any act of God, strike, lockout, or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, fire, flood, explosion, governmental action, governmental delay or
restraint.
Section 1.36 "General Partner(s)" shall mean ERC Properties, Inc., and such
other Persons as are admitted to the Partnership as additional or substitute
General Partners pursuant to this Agreement. If there is more than one General
Partner of the Partnership, the term "General Partner" shall be deemed to
collectively refer to such General Partners or individually may mean any General
Partner as the context dictates.
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Section 1.37 "Gross Asset Value" shall mean with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the Fair Market Value of such asset, as determined
by the contributing Partner and the General Partner, provided that, if the
contributing Partner is a General Partner, the determination of the Fair Market
Value of a contributed asset shall be determined by appraisal;
(b) the Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective Fair Market Values, as determined by the General
Partner, as of the following times: (1) the acquisition of an additional
Interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (2) the distribution by the Partnership
to a Partner of more than a de minimis amount of Partnership property as
consideration for an Interest in the Partnership; and (3) the liquidation of the
Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to
clauses (1) and (2) above shall be made only with the Consent of the Special
Limited Partner and only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) the Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the Fair Market Value of such asset on the
date of distribution as determined by the distributee and the General Partner,
provided that, if the distributee is a General Partner, the determination of the
Fair Market Value of the distributed asset shall be determined by appraisal; and
(d) the Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section
10.3(g) hereof; provided however, that Gross Asset Values shall not be adjusted
pursuant to this Section 1.37(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.37(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.37(d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section 1.37(a), Section 1.37(b), or Section 1.37(d) hereof, such
Gross Asset Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Income and Losses.
8
Section 1.38 "Hazardous Substance" shall mean and include any substance,
material or waste, including asbestos, petroleum and petroleum products
(including crude oil), that is or becomes designated, classified or regulated as
"toxic" or "hazardous" or a "pollutant" or that is or becomes similarly
designated, classified or regulated, under any federal, state or local law,
regulation or ordinance including, without limitation, Compensation and
Liability Act of 1980, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, and the
regulations adopted and publications promulgated pursuant thereto.
Section 1.39 "Improvements" shall mean the 9 buildings containing 72
apartment units and ancillary and appurtenant facilities (including those
intended for commercial use, if any,) being constructed for family and built in
accordance with the Project Documents. It shall also include all furnishings,
equipment and personal property used in connection with the operation thereof.
Section 1.40 "In-Balance" shall mean, on any occasion, when the amount of
the undisbursed Construction Loan and the undisbursed Capital Contributions of
the Limited Partner and Special Limited Partner required to be paid-in through
and including the issuance of a certificate of occupancy (or the local
equivalent) are sufficient in the Special Limited Partner's reasonable judgment
to pay all of the following sums: (a) all costs of construction to achieve
Completion of Construction; (b) all costs of marketing, ownership, maintenance
and leasing of the Apartment Housing units; and (c) all interest and all other
sums accruing or payable under the Construction Loan documents. In making a
determination that the financing is In-Balance, the Special Limited Partner will
also consider whether the undisbursed Capital Contributions of the Limited
Partner and Special Limited Partner, the Mortgage and other sources of permanent
financing (but not Cash Receipts) are adequate to retire the Construction Loan
at the earlier of the time of Mortgage closing and funding, or maturity of the
Construction Loan.
Section 1.41 "Incentive Management Fee" shall have the meaning set forth in
Section 9.2(e) hereof.
Section 1.42 "Income and Loss(es)" shall mean, for each fiscal year or
other period, an amount equal to the Partnership's taxable income or loss for
such year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Income or Losses pursuant to
this Section 1.42 shall be added to such taxable income or loss;
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(b) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Income and Losses pursuant to this Section 1.42 shall be subtracted
from such taxable income or loss;
(c) in the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 1.37(a) or (b) hereof, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Income and Losses;
(d) gain or loss resulting from any disposition of Partnership assets
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) in lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account depreciation for such fiscal year or other period,
computed as provided below; and
(f) notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Sections 10.3 or 10.4 hereof shall not
otherwise be taken into account in computing Income or Losses.
Depreciation for each fiscal year or other period shall be calculated as
follows: an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period for federal income tax purposes, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however,
if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
General Partner.
For purposes of this Agreement, the term Income when used alone shall
include all items of income or revenue contemplated in this Section and the term
Losses when used alone shall include all items of loss or deductions
contemplated in this Section.
Section 1.43 "Insurance" shall mean:
(a) during construction, the Partnership will provide and maintain, or
cause the Contractor to provide and maintain, builder's risk insurance in an
amount equal to 100% of the insurable value of the Apartment Housing at the date
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of completion; comprehensive general liability insurance with limits against
bodily injury of not less than $1,000,000 per occurrence and an aggregate of
$2,000,000 and against property damage of not less than $1,000,000; and worker's
compensation insurance, with statutory guidelines;
(b) during operations the Partnership will provide and maintain business
interruption coverage covering actual sustained loss for 6 months, worker's
compensation; hazard coverage (including but not limited to fire, or other
casualty loss to any structure or building on the Apartment Housing in an amount
equal to the full replacement value of the damaged property without deducting
for depreciation); and comprehensive general liability coverage against
liability claims for bodily injury or property damage in the minimum amount of
$1,000,000 per occurrence and an aggregate of $2,000,000;
(c) all liability coverage shall include an umbrella liability coverage
in a minimum amount of $4,000,000 per occurrence and an aggregate of $4,000,000;
(d) all Insurance polices shall name the Partnership as the named
insured, the Limited Partner as an additional insured, and WNC & Associates,
Inc. as the certificate holder;
(e) all Insurance policies shall include a provision to notify the
insured, the Limited Partner and the certificate holder prior to cancellation;
(f) hazard coverage must include inflation and building or ordinance
endorsements; and
(g) the Contractor must also provide evidence of liability coverage
equal to $1,000,000 per occurrence with an aggregate of $2,000,000 and shall
name the Partnership as an additional insured and WNC & Associates, Inc., as
certificate holder.
Section 1.44 "Insurance Company" shall mean any insurance company engaged
by the General Partner for the Partnership with the Consent of the Special
Limited Partner which Insurance Company shall have an A rating or better for
financial safety by A.M. Best or Standard & Poor's.
Section 1.45 "Interest" shall mean the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled hereunder and
the obligation of such Partner to comply with the terms of this Agreement.
Section 1.46 "Involuntary Withdrawal" shall mean any Withdrawal of a
General Partner caused by death, adjudication of insanity or incompetence,
Bankruptcy, or the removal of a General Partner pursuant to Section 13.2 hereof.
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Section 1.47 "Land Acquisition Fee" shall mean the fee payable to the
General Partner in an amount equal to $4,500 for the General Partner's services
in locating, negotiating and closing on the purchase of the real property upon
which the Improvements are, or will be, erected.
Section 1.48 "LIHTC" shall mean the low-income housing tax credit
established by TRA 1986 and which is provided for in Section 42 of the Code, as
amended, or any successor thereto.
Section 1.49 "Limited Partner" shall mean WNC Holdings, LLC, a California
limited partnership, and such other Persons as are admitted to the Partnership
as additional or Substitute Limited Partners pursuant to this Agreement.
Section 1.50 "Management Agent" shall mean the property management company
which oversees the property management functions for the Apartment Housing and
which is on-site at the Apartment Housing. The initial Management Agent shall be
ERC Management Group, LLC.
Section 1.51 "Management Agreement" shall mean the agreement between the
Partnership and the Management Agent for property management services. The
management fee shall equal up to 5% of gross revenues. Neither the Management
Agreement nor any ancillary agreement shall provide for an initial rent-up fee,
a set-up fee, nor any other similar pre-management fee payable to the Management
Agent. The Management Agreement shall provide that it will be terminable at will
by the Partnership at anytime following the Withdrawal or removal of the General
Partner and, in any event, on any anniversary of the date of execution of the
Management Agreement, without payment or penalty for failure to renew the same.
Section 1.52 "Minimum Set-Aside Test" shall mean the 40-60 set-aside test
pursuant to Section 42(g), as amended and any successor thereto, of the Code
with respect to the percentage of apartment units in the Apartment Housing to be
occupied by tenants whose incomes are equal to or less than the required
percentage of the area median gross income.
Section 1.53 "Mortgage" or "Mortgage Loan" shall mean the permanent
nonrecourse financing wherein the Partnership promises to pay: (a) Fidelity
Bank, or its successor or assignee, the principal sum of $1,950,000, plus
interest on the principal at a maximum rate of 8.0% per annum over a term of 15
years and amortized over 30 years; Where the context admits, the term "Mortgage"
or "Mortgage Loan" shall include any mortgage, deed, deed of trust, note,
regulatory agreement, security agreement, assumption agreement or other
instrument executed in connection with the Mortgage which is binding on the
Partnership; and in case any Mortgage is replaced or supplemented by any
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subsequent mortgage or mortgages, the Mortgage shall refer to any such
subsequent mortgage or mortgages. Prior to closing the Mortgage, the General
Partner shall provide to the Special Limited Partner a draft of the Mortgage
documents for review and approval. Based on the draft Mortgage documents, if the
terms of the Mortgage are not as specified above and the Special Limited Partner
determines that the Debt Service Coverage of those Mortgage Loans requiring an
amortized monthly principal and interest payment falls below 1.15 based on then
current Cash Expenses and Cash Receipts then the General Partner shall adjust
the principal loan amount and close on a Mortgage which will produce a 1.15 Debt
Service Coverage. The Mortgage funds shall be used to retire the Construction
Loan and if there are any funds remaining the Mortgage funds shall be used to
retire any outstanding hard construction costs including labor and materials.
Section 1.54 "Net Operating Income" shall mean the cash available for
Distribution on an annual basis, when Cash Receipts exceed Cash Expenses.
Section 1.55 "Nonrecourse Deductions" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).
Section 1.56 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).
Section 1.57 "Operating Deficit" shall mean, for the applicable period,
insufficient funds to pay operating costs when Cash Expenses exceed Cash
Receipts, as determined by the Accountant and approved by the Special Limited
Partner provided, however, there shall be no liability for an Operating Deficit
which occurs as a result of an Unavoidable Event.
Section 1.58 "Operating Deficit Guarantee Period" shall mean the period
commencing the date the first apartment unit in the Apartment Housing is
available for its intended use and ending three years following the achievement
of three consecutive months of break-even operations. The Operating Deficit
Guarantee Period shall not be extended as a result of an Unavoidable Event but
will not expire unless the Partnership has achieved Completion of Construction
of the Apartment Housing.
Section 1.59 "Operating Loans" shall mean loans made by the General Partner
to the Partnership pursuant to Article VI of this Agreement, which loans do not
bear interest and are repayable only as provided in Article XI of this
Agreement.
Section 1.60 "Original Limited Partner" shall mean Xxx Xxxxxxx and ERC
Properties, Inc.
Section 1.61 "Partner(s)" shall collectively mean the General Partner, the
Limited Partner and the Special Limited Partner or individually may mean any
Partner as the context dictates.
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Section 1.62 "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.
Section 1.63 "Partner Nonrecourse Debt Minimum Gain" shall mean an amount,
with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Treasury Regulations.
Section 1.64 "Partner Nonrecourse Deductions" shall have the meaning set
forth in Sections 1.704-2 (i)(1) and 1.704-2(i)(2) of the Treasury Regulations.
Section 1.65 "Partnership" shall mean the limited partnership continued
under this Agreement.
Section 1.66 "Partnership Minimum Gain" shall mean the amount determined in
accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
Section 1.67 "Permanent Mortgage Commencement" shall mean the first date on
which all of the following have occurred: (a) the Construction Loan shall have
been converted in full; (b) the Mortgage shall have closed and funded; and (c)
amortization of the Mortgage shall have commenced.
Section 1.68 "Person" shall collectively mean an individual,
proprietorship, trust, estate, partnership, joint venture, association, company,
corporation or other entity.
Section 1.69 "Plans and Specifications" shall mean the plans, blueprints
and specifications manual for the construction of the Improvements which are
approved by the local city/county building department with jurisdiction over the
construction of the Improvements and which Plans and Specifications are referred
to in the Construction Contract. Any material changes to the Plans and
Specifications after approval by the appropriate government building department
shall require the Consent of the Special Limited Partner.
Section 1.70 "Project Documents" shall mean all documents relating to the
Construction Loan, Mortgage Loan and Construction Contract. It shall also
include all documents required by any governmental agency having jurisdiction
over the Apartment Housing in connection with the development, construction and
financing of the Apartment Housing, including but not limited to, the approved
Plans and Specifications for the development and construction of the Apartment
Housing.
Section 1.71 "Projected Annual Tax Credits" shall mean LIHTC in the amount
of $112,637 for 2002, $270,301 per year for each of the years 2003 through 2011,
and $16,894 for 2012, which the General Partner has projected to be the total
14
amount of LIHTC which will be allocated to the Limited Partner by the
Partnership, constituting 99.980.9998% of the aggregate amount of LIHTC of
$2,703,550 to be available to the Partnership.
Section 1.72 "Projected Tax Credits" shall mean LIHTC in the aggregate
amount of $2,703,550.
Section 1.73 "Qualified Tenants" shall mean any tenants who have incomes of
60% (or such smaller percentage as the General Partner shall agree) or less of
the area median gross income, as adjusted for family size, so as to make the
Apartment Housing eligible for LIHTC.
Section 1.74 "Rent Restriction Test" shall mean the test pursuant to
Section 42 of the Code whereby the gross rent charged to tenants of the
low-income apartment units in the Apartment Housing cannot exceed 30% of the
qualifying income levels of those units under Section 42.
Section 1.75 "Revised Projected Tax Credits" shall have the meaning set
forth in Section 7.4(a) hereof.
Section 1.76 "Sale or Refinancing" shall mean any of the following items or
transactions: a sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Partnership, a condemnation of or
casualty at the Apartment Housing or any part thereof, a claim against a title
insurance company, the refinancing of any Mortgage or other indebtedness of the
Partnership and any similar item or transaction; provided, however, that the
payment of Capital Contributions by the Partners shall not be included within
the meaning of the term "Sale or Refinancing."
Section 1.77 "Sale or Refinancing Proceeds" shall mean all cash receipts of
the Partnership arising from a Sale or Refinancing (including principal and
interest received on a debt obligation received as consideration in whole or in
part, on a Sale or Refinancing) less the amount paid or to be paid in connection
with or as an expense of such Sale or Refinancing, and with regard to damage
recoveries or insurance or condemnation proceeds, the amount paid or to be paid
for repairs, replacements or renewals resulting from damage to or partial
condemnation of the Apartment Housing.
Section 1.78 "Special Limited Partner" shall mean WNC Housing, L.P., a
California limited partnership, and such other Persons as are admitted to the
Partnership as additional or substitute Special Limited Partners pursuant to
this Agreement.
Section 1.79 "State" shall mean the State of Kansas.
Section 1.80 "State Tax Credit Agency" shall mean the state agency of
Kansas which has the responsibility and authority to administer the LIHTC
program in Kansas.
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Section 1.81 "Substitute Limited Partner" shall mean any Person who is
admitted to the Partnership as a Limited Partner pursuant to Section 12.5 or
acquires the Interest of the Limited Partner pursuant to Section 7.3 of this
Agreement.
Section 1.82 "Syndication Fee" shall mean the fee payable to the General
Partner in an amount equal to $10,000 for the General Partner's services in
forming the Partnership, locating and approving the Limited Partner and the
Special Limited Partner as the investors in the Partnership, negotiating and
finalizing this Partnership Agreement and for such other services referenced in
Treasury Regulation Section 1.709-2(B).
Section 1.83 "Tax Credit" shall mean any credit permitted under the Code or
the law of any state against the federal or a state income tax liability of any
Partner as a result of activities or expenditures of the Partnership including,
without limitation, LIHTC.
Section 1.84 "Tax Credit Compliance Fee" shall mean the fee payable to the
General Partner in accordance with Section 9.2(f) of this Agreement.
Section 1.85 "Tax Credit Conditions" shall mean, for the duration of the
Compliance Period, any and all restrictions including, but not limited to,
applicable federal, state and local laws, rules and regulations, which must be
complied with in order to qualify for the LIHTC or to avoid an event of
recapture in respect of the LIHTC.
Section 1.86 "Tax Credit Period" shall mean the ten-year time period
referenced in Code Section 42(f)(1) over which the Projected Tax Credits are
allocated to the Partners. It is the intent of the Partners that the Projected
Tax Credits will be allocated during the Tax Credit Period and not a longer
term.
Section 1.87 "Title Policy" shall mean the policy of insurance covering the
fee simple title to the Apartment Housing from a company approved by the Special
Limited Partner. The Title Policy shall be an ALTA owners title policy naming
the Partnership as an insured party, the Limited Partner and Special Limited
Partner as an insured party, and including a non-imputation and fairway
endorsement. The Title Policy shall also insure against rights-of-way,
easements, or claims of easements, not shown by public records. During
construction of the Improvements, the Title Policy shall be in an amount equal
to the Construction Loan amount and the Limited Partner's Capital Contribution.
Upon Permanent Mortgage Commencement, the Title Policy shall be in an amount
equal to the Mortgage amount and the Limited Partner's Capital Contribution.
Section 1.88 "TRA 1986" shall mean the Tax Reform Act of 1986.
Section 1.89 "Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
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Section 1.90 "Unavoidable Event" shall mean action or inaction taken by the
United States Congress which effects this Apartment Housing, restrictions placed
by the United States Congress which effects this Apartment Housing, or the
insolvency of Insurance Company. Lack of funds shall not be deemed to be a cause
beyond the control of a party unless such funding shortfall is caused by action
of the United States government, restrictions placed by the United States
Congress or losses caused as a result of the insolvency of the Insurance company
providing policies of insurance for any portion of the Apartment Housing.
Section 1.91 "Withdrawing" or "Withdrawal" (including the verb form
"Withdraw" and the adjectival forms "Withdrawing" and "Withdrawn") shall mean,
as to a General Partner, the occurrence of the death, adjudication of insanity
or incompetence, Bankruptcy of such Partner, the withdrawal, removal or
retirement from the Partnership of such Partner for any reason, including any
sale, pledge, encumbering, assignment or other transfer of all or any part of
its General Partner Interest and those situations when a General Partner may no
longer continue as a General Partner by reason of any law or pursuant to any
terms of this Agreement.
ARTICLE II
NAME
The name of the Partnership shall be "XxXxxxxxx Housing Associates
Limited Partnership."
ARTICLE III
PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE
Section 3.1 Principal Executive Office. The principal executive office of
the Partnership is located at 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 or at
such other place or places within the State as the General Partner may hereafter
designate.
Section 3.2 Agent for Service of Process. The name of the agent for service
of process on the Partnership is Mr. Xxxx Xxxxx, whose address is 000
Xxxxxxxxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000-0000.
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ARTICLE IV
PURPOSE
Section 4.1 Purpose of the Partnership. The purpose of the Partnership is
to acquire, construct, own and operate the Apartment Housing in order to
provide, in part, Tax Credits to the Partners in accordance with the provisions
of the Code and the Treasury Regulations applicable to LIHTC and to sell the
Apartment Housing. The Partnership shall not engage in any business or activity
which is not incident to the attainment of such purpose.
Section 4.2 Authority of the Partnership. In order to carry out its
purpose, the Partnership is empowered and authorized to do any and all acts and
things necessary, appropriate, proper, advisable or incidental to the
furtherance and accomplishment of its purpose, and for protection and benefit of
the Partnership, including but not limited to the following:
(a) acquire ownership of the real property referred to in Exhibit "A"
attached hereto;
(b) construct, renovate, rehabilitate, own, maintain and operate the
Apartment Housing in accordance with the Project Documents;
(c) provide housing to Qualified Tenants, subject to the Minimum
Set-Aside Test and the Rent Restriction Test and consistent with the
requirements of the Project Documents so long as any Project Documents remain in
force;
(d) maintain and operate the Apartment Housing, including hiring the
Management Agent (which Management Agent may be any of the Partners or an
Affiliate thereof) and entering into any agreement for the management of the
Apartment Housing during its rent-up and after its rent-up period in accordance
with this Agreement;
(e) enter into the Construction Loan and Mortgage;
(f) rent dwelling units in the Apartment Housing from time to time, in
accordance with the provisions of the Code applicable to LIHTC; and
(g) do any and all other acts and things necessary or proper in
accordance with this Agreement.
ARTICLE V
TERM
The Partnership term commenced upon the filing of the Certificate of
Limited Partnership in the office of, and on the form prescribed by, the
Secretary of State of Kansas, and shall continue until December 31, 2052 unless
terminated earlier in accordance with the provisions of this Agreement or as
otherwise provided by law.
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ARTICLE VI
GENERAL PARTNER'S CONTRIBUTIONS AND LOANS
Section 6.1 Capital Contribution of General Partner. The General Partner
shall make a Capital Contribution equal to $5.00
Section 6.2 Construction Obligations.
(a) The General Partner hereby guarantees a lien free Completion of
Construction of the Apartment Housing on or before 12/01/02 ("Completion Date")
at a total development cost of not more than $4,244,867 ("Development Budget"),
which includes all hard and soft costs incident to the acquisition, development
and construction of the Apartment Housing in accordance with the Construction
Budget, the Construction Contract, and the Project Documents. Notwithstanding
the foregoing, the Completion Date shall be extended if delays are the result of
an Unavoidable Event. At any time during construction and prior to Permanent
Mortgage Commencement, if the Special Limited Partner ascertains that the
Development Budget exceeds the sum of the Capital Contributions and the Mortgage
and the Development Fee amount then the General Partner shall be responsible for
and shall be obligated to pay such financing shortfalls, provided such
shortfalls are not caused by or are a result of an Unavoidable Event. Any such
shortfalls shall be paid the difference thereof within thirty days of receiving
written notice from the Special Limited Partner except as otherwise provided for
in this Agreement. Any advances by the General Partner pursuant to the previous
sentence shall not be repayable, shall not change the Interest of any Partner in
the Partnership and shall be considered a guaranteed payment to the Partnership
for cost overruns. Upon such notice from the Special Limited Partner, the
General Partner shall advance the requested funds into the Construction Lender's
construction account.
(b) In addition, if (1) the Improvements are not completed on or before
the Completion Date (which date may be extended in the events of Force Majeure
or an Unavoidable Event, but in no event longer than three months from the
Completion Date); (2) prior to completing the Improvements, the Construction
Lender sends a notice of default under the Construction Loan; or (3) a
foreclosure action is commenced against the Partnership, none of which are
caused by or are a result of an Unavoidable Event, then at the Special Limited
Partner's election, either the General Partner will be removed from the
Partnership and the Special Limited Partner will be admitted as successor
General Partner, all in accordance with Article XIII hereof, or the General
Partner will repurchase the Interest of the Limited Partner and the Special
Limited Partner for an amount equal to the amounts theretofore paid by the
Limited Partner and the Special Limited Partner, less any distributions
previously made to the Limited Partner or Special Limited Partner, and the
Limited Partner and the Special Limited Partner shall have no further Interest
19
in the Partnership. If the Special Limited Partner elects to have the General
Partner repurchase such Interests then the repurchase shall occur within 60 days
after the General Partner receives written demand from the Special Limited
Partner. If the Special Limited Partner elects to remove the General Partner
then the provisions of Article XIII apply.
Section 6.3 Operating Obligations. From the date the first apartment unit
in the Apartment Housing is available for its intended use until three
consecutive months of Break-even Operations, the General Partner will
immediately provide to the Partnership the necessary funds to pay Operating
Deficits, so long as such Operating Deficits are not caused by or arise as a
result of an Unavoidable Event, which funds shall not be repayable, shall not
change the Interest of any Partner and shall be considered a guaranteed payment
to the Partnership for cost overruns. For the balance of the Operating Deficit
Guarantee Period the General Partner will immediately provide Operating Loans to
pay any Operating Deficits not otherwise caused or created by a Unavoidable
Event. The aggregate maximum amount of the Operating Loan(s) the General Partner
will be obligated to lend over the entire life of the Operating Deficit
Guarantee Period will not exceed one year's operating expenses (including debt
and reserves) approved by the General Partner and the Special Limited Partner.
Each Operating Loan shall be nonrecourse to the Partners, and shall be repayable
out of 50% of the available Net Operating Income or Sale or Refinancing Proceeds
in accordance with Article XI of this Agreement.
Section 6.4 Other General Partner Loans. After expiration of the Operating
Deficit Guarantee Period, with the Consent of the Special Limited Partner, the
General Partner may loan to the Partnership any sums required by the Partnership
and not otherwise reasonably available to it. Any such loan shall bear simple
interest (not compounded) at the 10-year Treasury money market rate in effect as
of the day of the General Partner loan, or, if lesser, the maximum legal rate.
The maturity date and repayment schedule of any such loan shall be as agreed to
by the General Partner and the Special Limited Partner. The terms of any such
loan shall be evidenced by a written instrument. The General Partner shall not
charge a prepayment penalty on any such loan. Any loan in contravention of this
Section shall be deemed an invalid action taken by the General Partner and such
advance will be classified as a General Partner Capital Contribution.
ARTICLE VII
CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
AND SPECIAL LIMITED PARTNER
Section 7.1 Original Limited Partner. The Original Limited Partner made
a Capital Contribution of $95. Effective as of the date of this Agreement, the
Original Limited Partner's Interest has been liquidated and the Partnership has
reacquired the Original Limited Partner's Interest in the Partnership. The
20
Original Limited Partner acknowledges that it has no further interest in the
Partnership as a limited partner as of the date of this Agreement, and has
released all claims, if any, against the Partnership arising out of its
participation as a limited partner.
Section 7.2 Capital Contribution of Limited Partner. The Limited Partner
shall make a Capital Contribution in the amount of $2,067,799, as may be
adjusted in accordance with Section 7.4 of this Agreement, in cash on the dates
and subject to the conditions hereinafter set forth.
(a) $570,000 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
(1) a legal opinion in a form substantially similar to the
form of opinion attached hereto as Exhibit "B" and incorporated herein by this
reference;
(2) a fully executed Certification and Agreement in the form
attached hereto as Exhibit "C" and incorporated herein by this reference;
(3) a copy of a title commitment, (in a form and substance
satisfactory to the Special Limited Partner) constituting an agreement by such
title company to issue the Title Policy within fifteen working days. The title
commitment will show the Apartment Housing to be free from liens except the
Construction Loan and free from other exceptions not previously approved by the
Special Limited Partner;
(4) Insurance required during construction;
(5) a copy of the recorded grant deed (warranty deed)
(6) a fully executed Construction Loan document; and
(b) $375,000 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
(1) the Construction Inspector's certification of twenty-five
percent completion of the total construction;
(2) the construction documents required pursuant to Section
14.3(a) of this Agreement, if not previously provided to the Limited Partner;
(3) any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b);
and
(4) a determination by the Special Limited Partner that
construction financing is In-Balance.
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(c) $375,000 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
(1) the Construction Inspector's certification of fifty
percent completion of the total construction;
(2) the construction documents required pursuant to Section
14.3(a) of this Agreement, if not previously provided to the Limited Partner;
(3) any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b);
and
(4) a determination by the Special Limited Partner that
construction financing is In-Balance.
(d) $375,000 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
(1) a certificate of occupancy (or equivalent evidence of
local occupancy approval if a permanent certificate is not available) on all the
apartment units in the Apartment Housing;
(2) a completion certification in a form substantially similar
to the form attached hereto as Exhibit "D" and incorporated herein by this
reference, indicating that the Improvements have been completed in accordance
with the Project Documents;
(3) a letter from the Contractor in a form substantially
similar to the form attached hereto as Exhibit "F" and incorporated herein by
this reference stating that all amounts payable to the Contractor have been paid
in full and that the Partnership is not in violation of the Construction
Contract;
(4) Insurance required during operations;
(5) the construction documents required pursuant to Section
14.3(a) of this Agreement, if not previously provided to the Limited Partner;
(6) any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b);
and
(7) a determination by the Special Limited Partner that
construction financing is In-Balance.
(e) $100,000 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
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(1) Mortgage Loan documents signed and the Mortgage funded;
(2) endorsement to the Title Policy dated no more than ten
days prior to the scheduled Capital Contribution based on as-built survey and
confirming that there are no liens, claims or rights to a lien or judgments
filed against the property or the Apartment Housing during the time period since
the issuance of the Title Policy referenced above in Section 7.2(a);
(3) the current rent roll evidencing a minimum 90% occupancy
by Qualified Tenants for 90 consecutive days immediately prior to funding;
(4) copies of all initial tenant files including completed
applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, and income
certification forms (LIHTC specific) collected by the Management Agent, or
General Partner, verifying each tenant's eligibility pursuant to the Minimum
Set-Aside Test;
(5) Completion of Construction;
(6) a construction closeout binder, which shall include, but
is not limited to, as-built drawings, all operating manuals, and all
manufacturing warranty agreements. In addition, the Contractor shall provide the
Partnership a one-year warranty on all parts, materials and work-quality;
(7) any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b);
and
(8) copies of the executed lease agreement with the tenants.
(f) $272,799 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
(1) a copy of the declaration of restrictive
covenants/extended use agreement entered into between the Partnership and the
State Tax Credit Agency;
(2) an audited construction cost certification (which includes
an itemized cost breakdown);
(3) the Accountant's final Tax Credit certification in a form
substantially similar to the form attached hereto as Exhibit "E" and
incorporated herein by this reference;
23
(4) Debt Service Coverage of 1.15 for 90 consecutive days
immediately prior to funding;
(5) Internal Revenue Code Form 8609, or any successor form;
and
(6) any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b).
Section 7.3 Repurchase of Limited Partner's Interest. Within 60 days after
the General Partner receives written demand from the Limited Partner and/or the
Special Limited Partner, the Partnership shall repurchase the Limited Partner's
Interest and/or the Special Limited Partner's Interest in the Partnership by
refunding to it in cash the full amount of the Capital Contribution which the
Limited Partner and/or the Special Limited Partner has theretofore made in the
event that, for any reason, the Partnership shall fail to:
(a) cause the Apartment Housing to be placed in service by 12/01/02;
(b) achieve 90% occupancy of the Apartment Housing by Qualified Tenants
by April 1, 2003;
(c) obtain Permanent Mortgage Commencement by April 1, 2003;
(d) meet both the Minimum Set-Aside Test and the Rent Restriction Test
not later than December 31 of the first year the Partnership elects the LIHTC to
commence in accordance with the Code; or
(e) obtain a carryover allocation, within the meaning of Section 42 of
the Code, from the State Tax Credit Agency on or before December 31, 2001.
(f) Notwithstanding anything to the contrary which may be set forth
elsewhere in this Agreement, the General Partner shall not be required to
purchase the Limited Partner and Special Limited Partner's interest in the
Partnership if one or more of the above-referenced failures is caused by or due
to an Unavoidable Event.
Section 7.4 Adjustment of Capital Contributions.
(a) The amounts of the Limited Partner's and the Special Limited
Partner's Capital Contributions were determined in part upon the amount of Tax
Credits that were expected to be available to the Partnership, and was based on
the assumption that the Partnership would be eligible to claim, in the
aggregate, the Projected Tax Credits. If the anticipated amount of Projected Tax
Credits to be allocated to the Limited Partner and Special Limited Partner as
evidenced by IRS Form 8609, Schedule A thereto, provided to the Limited Partner
and Special Limited Partner are less than $2,703,279 (the new Projected Tax
24
Credit amount, if applicable, shall be referred to as the "Revised Projected Tax
Credits") then the Limited Partner's and Special Limited Partner's Capital
Contribution provided for in Section 7.2 and Section 7.5 respectively shall be
adjusted by the amount which will make the total Capital Contribution to be paid
by the Limited Partner and Special Limited Partner to the Partnership equal to
76.5% of the Revised Projected Tax Credits so anticipated to be allocated to the
Limited Partner and Special Limited Partner. If any Capital Contribution
adjustment referenced in this Section 7.4(a) is a reduction which is greater
than the remaining Capital Contribution to be paid by the Partner whose Capital
Contribution is being adjusted, then the General Partner shall have ninety days
from the date the General Partner receives notice from either the Limited
Partner or the Special Limited Partner to pay the shortfall. Notwithstanding the
forgoing, if the reduction in Tax Credits is attributable to a Unavoidable
Event, the General Partner shall have no liability to the Limited Partner or
Special Limited Partner for the return of any Capital Contributions to the
Partner whose Capital Contribution is being adjusted. If the Capital
Contribution adjustment referenced in this Section 7.4(a) is an increase then
the Partner whose Capital Contribution is being adjusted shall have ninety days
from the date the Limited Partner and Special Limited Partner have received
notice from the General Partner to pay the increase.
(b) The General Partner is required to use its best efforts to rent
100% of the Apartment Housing's apartment units to tenants who meet the Minimum
Set-Aside Test throughout the Compliance Period. If at the end of any calendar
year during the first five calendar years following the year in which the
Apartment Housing is placed in service, the Actual Tax Credit for any fiscal
year or portion thereof is or will be less than the Projected Annual Tax Credit,
or the Projected Annual Tax Credit as modified by Section 7.4(a) of this
Agreement if applicable, and if the reduction is not caused by or attributed to
an Unavoidable Event, (the "Annual Credit Shortfall"), then the next Capital
Contribution owed by the Limited Partner shall be reduced by the Annual Credit
Shortfall amount, and any portion of such Annual Credit Shortfall in excess of
such Capital Contribution shall be applied to reduce succeeding Capital
Contributions of the Limited Partner. If the Annual Credit Shortfall is greater
than the Limited Partner's remaining Capital Contributions then the General
Partner shall pay to the Limited Partner the excess of the Annual Credit
Shortfall over the remaining Capital Contributions. The General Partner shall
have sixty days to pay the Annual Credit Shortfall from the date the General
Partner receives notice from the Special Limited Partner. The provisions of this
Section 7.4(b) shall apply equally to the Special Limited Partner in proportion
to its Capital Contribution and anticipated annual Tax Credit.
(c) In the event that, for any reason, at any time after the first five
calendar years following the year in which the Apartment Housing is placed in
service, there is an Annual Credit Shortfall which is not caused by or
attributable to an Unavoidable Event, then there shall be a reduction in the
25
General Partner's share of Net Operating Income in an amount equal to the Annual
Credit Shortfall and said amount shall be paid to the Limited Partner. In the
event there are not sufficient funds to pay the full Annual Credit Shortfall to
the Limited Partner at the time of the next Distribution of Net Operating
Income, then the unpaid Annual Credit Shortfall shall be repaid in the next year
in which sufficient monies are available from the General Partner's share of Net
Operating Income. In the event a Sale or Refinancing of the Apartment Housing
occurs prior to repayment in full of the Annual Credit Shortfall then the excess
will be paid in accordance with Section 11.2(b). The provisions of this Section
7.4(b) shall apply equally to the Special Limited Partner in proportion to its
Capital Contribution and anticipated annual Tax Credit.
(d) The General Partner has represented, in part, that the Limited
Partner will receive Projected Annual Tax Credits of $112,637 in 2002 and
$270,301 in 2003. In the event the 2002 or 2003 Actual Tax Credits are less than
projected, and the reduction is not caused by an Unavoidable Event, then the
Limited Partner's Capital Contribution shall be reduced by an amount equal to
76.5% times the difference between the Projected Annual Tax Credits for 2002 or
2003 and the Actual Tax Credits for 2002 or 2003. If the 2002 or 2003 Actual Tax
Credits are less than projected, and the reduction is not caused by an
Unavoidable Event, then the Special Limited Partner's Capital Contribution shall
be reduced following the same equation referenced in the preceding sentence. If,
at the time of determination thereof, the Capital Contribution adjustment
referenced in this Section 7.4(d) is greater than the balance of the Limited
Partner's or Special Limited Partner's Capital Contribution payment which is
then due, if any,and the reduction is not caused by an Unavoidable Event, then
the excess amount shall be paid by the General Partner to the Limited Partner
and/or the Special Limited Partner within sixty days of the General Partner
receiving notice of the reduction from the Limited Partner and/or the Special
Limited Partner.
(e) The Partners recognize and acknowledge that the Limited Partner and
the Special Limited Partner are making their Capital Contribution, in part, on
the expectation that the Projected Tax Credits are allocated to the Partners
over the Tax Credit Period. If the Projected Tax Credits are not allocated to
the Partners during the Tax Credit Period and the failure to allocate is not
caused by or attributable to an Unavoidable Event then the Limited Partner's and
Special Limited Partner's Capital Contribution shall be reduced by an amount
agreed upon by the Partners, in good faith, to provide the Limited Partner and
the Special Limited Partner with their anticipated internal rate of return.
(f) In the event any one or more of the following occurs which are not
caused by an Unavoidable Event: (1) a filing of a tax return by the Partnership
evidencing a reduction in the qualified basis or eligible basis of the Apartment
Housing causing a recapture of Tax Credits previously allocated to the Limited
Partner or an adjustment to Schedule K-1; (2) a reduction in the qualified basis
26
or eligible basis of the Apartment Housing for income tax purposes following an
examination or review by the Internal Revenue Service (IRS) resulting in a
recapture or reduction of Tax Credits previously claimed or an adjustment to
Schedule K-1; (3) a decision by any court or administrative body upholding an
assessment of deficiency against the Partnership with respect to any Tax Credit
previously claimed or tax losses previously claimed, in connection with the
Apartment Housing, unless the Partnership shall timely appeal such decision and
the collection of such assessment shall be stayed pending the disposition of
such appeal; or (4) a decision of a court affirming such decision upon such
appeal then, in addition to any other payments to which the Limited Partner
and/or the Special Limited Partner are entitled under the terms of this Section
7.4, the General Partner shall pay to the Limited Partner and the Special
Limited Partner within sixty days of receiving notice from the Limited Partner
and/or the Special Limited Partner the sum of (A) the amount of the Tax Credit
recapture, (B) the cumulative tax effect of a decrease in net loss from rental
real estate activities, a decrease in depreciation expense deductions, an
increase in organization expense amortization, a decrease in tax preference
items, and decrease in the amortization deduction; (C) any interest and
penalties imposed on the Limited Partner or Special Limited Partner with respect
to such recapture, and (D) an amount sufficient to pay any tax liability owed by
the Limited Partner or Special Limited Partner resulting from the receipt of the
amounts specified in (A), (B) and (C).
(g) The increase in the Capital Contribution of the Limited Partner and
the Special Limited Partner pursuant to Section 7.4(a) shall be subject to the
Limited Partner and Special Limited Partner having funds available to pay any
such increase at the time of its notification of such increase. For these
purposes, any funds theretofore previously earmarked by the Limited Partner or
Special Limited Partner to make other investments, or to be held as required
reserves, shall not be considered available for payment hereunder. In such event
the Limited Partner's Interest in the Partnership shall be reduced
proportionately and the General Partner shall be permitted to sell the
additional Tax Credits to other parties hereunder without first obtaining
consent or approval of the Limited Partner or Special Limited Partner.
Section 7.5 Capital Contribution of Special Limited Partner. The Special
Limited Partner shall make a Capital Contribution of $207 at the time of the
Limited Partner's Capital Contribution payment referenced in Section 7.2(a) upon
the same conditions. The Special Limited Partner shall be in a different class
from the Limited Partner and, except as otherwise expressly stated in this
Agreement, shall not participate in any rights allocable to or exercisable by
the Limited Partner under this Agreement.
Section 7.6 Return of Capital Contribution. From time to time the
Partnership may have cash in excess of the amount required for the conduct of
the affairs of the Partnership, and the General Partner may, with the Consent of
27
the Special Limited Partner, determine that such cash should, in whole or in
part, be returned to the Partners, pro rata, in reduction of their Capital
Contribution. No such return shall be made unless all liabilities of the
Partnership (except those to Partners on account of amounts credited to them
pursuant to this Agreement) have been paid or there remain assets of the
Partnership sufficient, in the sole discretion of the General Partner, to pay
such liabilities.
Section 7.7 Liability of Limited Partner and Special Limited Partner. The
Limited Partner and Special Limited Partner shall not be liable for any of the
debts, liabilities, contracts or other obligations of the Partnership. The
Limited Partner and Special Limited Partner shall be liable only to make Capital
Contributions in the amounts and on the dates specified in this Agreement and,
except as otherwise expressly required hereunder, shall not be required to lend
any funds to the Partnership or, after their respective Capital Contributions
have been paid, to make any further Capital Contribution to the Partnership.
ARTICLE VIII
WORKING CAPITAL AND RESERVES
Section 8.1 Operating and Maintenance Account. The General Partner, on
behalf of the Partnership, shall establish an operating and maintenance account
and shall deposit thereinto an annual amount equal to Two Hundred Dollars per
residential unit per year for the purpose of repairs, maintenance and capital
improvements. Said deposit shall be made monthly in equal installments.
Withdrawals from such account shall be made only with the Consent of the Special
Limited Partner. Any balance remaining in the account at the time of a sale of
the Apartment Housing shall be allocated in accordance with Section 11 and
distributed equally between the General Partner and the Limited Partner.
Section 8.2 Tax and Insurance Account. The General Partner, on behalf of
the Partnership, shall establish a tax and insurance account ("T & I Account")
for the purpose of making the requisite Insurance premium payments and the real
estate tax payments. The annual deposit to the T & I Account shall equal the
total annual Insurance payment and the total annual real estate tax payment.
Said amount shall be deposited monthly in equal installments. Withdrawals from
such account shall be made only for its intended purpose. Any balance remaining
in the account at the time of a sale of the Apartment Housing shall be allocated
and distributed equally between the General Partner and the Limited Partner.
Section 8.3 Other Reserves. The General Partner, on behalf of the
Partnership, may establish out of funds available to the Partnership a reserve
account sufficient in its sole discretion to pay any unforeseen contingencies
which might arise in connection with the furtherance of the Partnership business
including, but not limited to, (a) any rent subsidy required to maintain rent
28
levels in compliance with the Tax Credit Conditions; and (b) any debt service or
other payments for which other funds are not provided for hereunder or otherwise
expected to be available to the Partnership. The General Partner shall not be
liable for any good-faith estimate which it shall make in connection with
establishing or maintaining any such reserves nor shall the General Partner be
required to establish or maintain any such reserves if, in its sole discretion,
such reserves do not appear to be necessary.
ARTICLE IX
MANAGEMENT AND CONTROL
Section 9.1 Power and Authority of General Partner. Subject to the Consent
of the Special Limited Partner or the consent of the Limited Partner where
required by this Agreement, and subject to the other limitations and
restrictions included in this Agreement, the General Partner shall have complete
and exclusive control over the management of the Partnership business and
affairs, and shall have the right, power and authority, on behalf of the
Partnership, and in its name, to exercise all of the rights, powers and
authority of a partner of a partnership without limited partners. If there is
more than one General Partner, all acts, decisions or consents of the General
Partners shall require the concurrence of all of the General Partners. No
actions taken without the authorization of all the General Partners shall be
deemed valid actions taken by the General Partners pursuant to this Agreement.
No Limited Partner or Special Limited Partner (except one who may also be a
General Partner, and then only in its capacity as General Partner within the
scope of its authority hereunder) shall have any right to be active in the
management of the Partnership's business or investments or to exercise any
control thereover, nor have the right to bind the Partnership in any contract,
agreement, promise or undertaking, or to act in any way whatsoever with respect
to the control or conduct of the business of the Partnership, except as
otherwise specifically provided in this Agreement.
Section 9.2 Payments to the General Partners and Others.
(a) The Partnership shall pay to the Developer a Development Fee in the
amount of approximately $361,942 in accordance with the Development Fee
Agreement entered into by and between the Developer and the Partnership on the
even date hereof. The Development Fee Agreement provides, in part, that the
Development Fee shall first be paid from available proceeds in accordance with
Section 9.2(b) of this Agreement and if not paid in full then the balance of the
Development Fee will be paid in accordance with Section 11.1 of this Agreement.
(b) The Partnership shall utilize the proceeds from the Capital
Contributions paid pursuant to Section 7.2 and Section 7.5 of this Agreement for
development costs including, but not limited to, land costs, Land Acquisition
Fee, architectural fees, survey and engineering costs, financing costs, loan
29
fees, Syndication Fee, building materials and labor. If any Capital Contribution
proceeds are remaining after Completion of Construction and all acquisition,
development and construction costs, excluding the Development Fee, are paid in
full and the Construction Loan retired, then the remainder shall: first be paid
to the Developer in payment of the Development Fee; second be paid to the
General Partner as a reduction of the General Partner's Capital Contribution;
and any remaining Capital Contribution proceeds shall be paid to the General
Partner as a Partnership oversight fee.
(c) The Partnership shall pay to the Management Agent a property
management fee for the leasing and management of the Apartment Housing in an
amount in accordance with the Management Agreement. The term of the Management
Agreement shall not exceed one year, and the execution or renewal of any
Management Agreement shall be subject to the prior Consent of the Special
Limited Partner. If the Management Agent is an Affiliate of the General Partner
then commencing with the termination of the Operating Deficit Guarantee Period,
in any year in which the Apartment Housing has an Operating Deficit, 40% of the
management fee will be deferred ("Deferred Management Fee"). Deferred Management
Fees, if any, shall be paid to the Management Agent in accordance with Section
11.1 of this Agreement and, if not paid shall accrue and the unpaid portion
shall be payable on a cumulative basis in the first year in which there is
sufficient Net Operating Income to pay the same.
(1) The General Partner shall, upon receiving any request of
the Mortgage lender requesting such action, dismiss the Management Agent as the
entity responsible for management of the Apartment Housing under the terms of
the Management Agreement; or, the General Partner shall dismiss the Management
Agent at the request of the Special Limited Partner upon proper showing of cause
for such dismissal.
(2) The appointment of any successor Management Agent is
subject to the Consent of the Special Limited Partner, which may only be sought
after the General Partner has provided the Special Limited Partner with accurate
and complete disclosure respecting the proposed Management Agent.
(d) The Partnership shall pay to the Limited Partner an Asset
Management Fee commencing in 2003 equal to $2,500 which will be increased
annually by the Consumer Price Index (CPI), but not to exceed $4,000 the Limited
Partner's services in assisting with the preparation of tax returns and the
reports required in Sections 14.2 and 14.3 of this Agreement. The Reporting Fee
shall be payable within seventy-five (75) days following each calendar year and
shall be payable from Net Operating Income in the manner and priority set forth
in Section 11.1 of this Agreement. Provided, however, that if in any year Net
30
Operating Income is insufficient to pay the minimum of $2,500, the unpaid
portion thereof shall accrue and be payable on a cumulative basis in the first
year in which there is sufficient Net Operating Income, as provided in Section
11.1, or sufficient Sale or Refinancing Proceeds, as provided in Section 11.2.
The General Partner shall ensure that any accrued Asset Management Fee will be
reflected in the annual audited financial statement.
(e) The Partnership shall pay to the General Partner through the
Compliance Period an annual Incentive Management Fee equal to 35% of the
remaining Net Operating Income, but not greater than $6,250 commencing in 2003
for overseeing the marketing, lease-up and continued occupancy of the
Partnership's apartment units, obtaining and monitoring the Mortgage Loan,
maintaining the books and records of the Partnership, selecting and supervising
the Partnership's Accountants, bookkeepers and other Persons required to prepare
and audit the Partnership's financial statements and tax returns, and preparing
and disseminating reports on the status of the Apartment Housing and the
Partnership, all as required by Article XIV of this Agreement. The Partners
acknowledge that the Incentive Management Fee is being paid as an inducement to
the General Partner to operate the Partnership efficiently, to maximize
occupancy and to increase the Net Operating Income. The Incentive Management Fee
shall be payable from Net Operating Income in the manner and priority set forth
in Section 11.1 of this Agreement upon completion and delivery of the annual
audit pursuant to Section 14.2(a) of this Agreement. If the Incentive Management
Fee is not paid in any year it shall not accrue for payment in subsequent years.
(f) The Partnership shall pay to the General Partner through the
Compliance Period an annual Tax Credit Compliance Fee equal to 35% of the
remaining Net Operating Income, but not greater than $6,250 commencing in 2003
for the services of the General Partner in ensuring compliance by the
Partnership and the Apartment Housing with all Tax Credit rules and regulations.
The Tax Credit Compliance Fee shall be payable from Net Operating Income in the
manner and priority set forth in Section 11.1 of this Agreement upon completion
and delivery of the annual audit pursuant to Section 14.2(a) of this Agreement.
If the Tax Credit Compliance Fee is not paid in any year it shall not accrue for
payment in subsequent years.
Section 9.3 Specific Powers of the General Partner. Subject to the other
provisions of this Agreement, the General Partner, in the Partnership's name and
on its behalf, may:
(a) hold, sell, transfer, lease, manage or otherwise deal with any
real, personal or mixed property, interest therein or appurtenance thereto in
accordance with this Agreement;
(b) employ, contract and otherwise deal with, from time to time,
Persons whose services are necessary or appropriate in connection with
management and operation of the Partnership business, including, without
limitation, contractors, agents, brokers, Accountants and Management Agents
31
(provided that the selection of any Accountant or Management Agent has received
the Consent of the Special Limited Partner) and attorneys, on such terms as the
General Partner shall determine within the scope of this Agreement;
(c) pay as a Partnership expense any and all costs and expenses
associated with the formation, development, organization and operation of the
Partnership, including the expense of annual audits, tax returns and LIHTC
compliance;
(d) deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(e) execute the Construction Loan and the Mortgage; and
(f) execute, acknowledge and deliver any and all instruments to
effectuate any of the foregoing.
Section 9.4 Authority Requirements. During the Compliance Period, the
following provisions shall apply.
(a) Each of the provisions of this Agreement shall be subject to, and
the General Partner covenants to act in accordance with, the Tax Credit
Conditions and all applicable federal, state and local laws and regulations.
(b) The Tax Credit Conditions and all such laws and regulations, as
amended or supplemented, shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successor and assigns, and
they shall control as to any terms in this Agreement which are inconsistent
therewith, and any such inconsistent terms of this Agreement shall be
unenforceable by or against any of the Partners.
(c) Upon any dissolution of the Partnership or any transfer of the
Apartment Housing, no title or right to the possession and control of the
Apartment Housing and no right to collect rent therefrom shall pass to any
Person who is not, or does not become, bound by the Tax Credit Conditions in a
manner that, in the opinion of counsel to the Partnership, would avoid a
recapture of Tax Credits thereof on the part of the former owners.
(d) Any conveyance or transfer of title to all or any portion of the
Apartment Housing required or permitted under this Agreement shall in all
respects be subject to the Tax Credit Conditions and all conditions, approvals
or other requirements of the rules and regulations of any authority applicable
thereto.
Section 9.5 Limitations on General Partner's Power and Authority.
Notwithstanding the provisions of this Article IX, the General Partner shall
not:
32
(a) except as required by Section 9.4, act in contravention of this
Agreement;
(b) act in any manner which would make it impossible to carry on the
ordinary business of the Partnership;
(c) confess a judgment against the Partnership;
(d) possess Partnership property, or assign the Partner's right in
specific Partnership property, for other than the exclusive benefit of the
Partnership;
(e) admit a Person as a General Partner except as provided in this
Agreement including but not limited to a change in the General Partner
organizational structure because of merger, consolidation, asset sale, stock
sale or swap, or otherwise;
(f) admit a Person as a Limited Partner or Special Limited Partner
except as provided in this Agreement;
(g) violate any provision of the Mortgage;
(h) cause the Apartment Housing apartment units to be rented to anyone
other than Qualified Tenants;
(i) violate the Minimum Set-Aside Test or the Rent Restriction Test for
the Apartment Housing;
(j) cause any recapture of the Tax Credits;
(k) permit any creditor who makes a nonrecourse loan to the Partnership
to have, or to acquire at any time as a result of making such loan, any direct
or indirect interest in the profits, income, capital or other property of the
Partnership, other than as a secured creditor;
(l) commingle funds of the Partnership with the funds of another
Person; or
(m) take any action which requires the Consent of the Special Limited
Partner or the consent of the Limited Partner unless the General Partner has
received said Consent.
Section 9.6 Restrictions on Authority of General Partner. Without the
Consent of the Special Limited Partner the General Partner shall not:
(a) sell, exchange, lease (except in the normal course of business to
Qualified Tenants) or otherwise dispose of the Apartment Housing;
33
(b) incur indebtedness other than the Construction Loan and Mortgage in
the name of the Partnership, other than in the ordinary course of the
Partnership's business;
(c) engage in any transaction not expressly contemplated by this
Agreement in which the General Partner has an actual or potential conflict of
interest with the Limited Partner or the Special Limited Partner;
(d) contract away the fiduciary duty owed to the Limited Partner and
the Special Limited Partner at common law;
(e) take any action which would cause the Apartment Housing to fail to
qualify, or which would cause a termination or discontinuance of the
qualification of the Apartment Housing, as a "qualified low income housing
project" under Section 42(g)(1) of the Code, as amended, or any successor
thereto, or which would cause the Limited Partner to fail to obtain the
Projected Tax Credits or which would cause the recapture of any LIHTC;
(f) make any expenditure of funds, or commit to make any such
expenditure, other than in response to an emergency, except as provided for in
the annual budget approved by the Special Limited Partner, as provided in
Section 14.3(i) hereof;
(g) cause the merger or other reorganization of the Partnership;
(h) dissolve the Partnership, except as provided in this Agreement;
(i) acquire any real or personal property (tangible or intangible) in
addition to the Apartment Housing the aggregate value of which shall exceed
$10,000 (other than easement or similar rights necessary or appropriate for the
operation of the Apartment Housing);
(j) become personally liable on or in respect of, or guarantee, the
Mortgage or any other indebtedness of the Partnership;
(k) pay any salary, fees or other compensation to a General Partner or
any Affiliate thereof, except as authorized by Section 9.2 and Section 9.9
hereof or specifically provided for in this Agreement;
(l) terminate the services of the Accountant, Construction Inspector,
Contractor or Management Agent, or terminate, amend or modify the Construction
Contract or any other Project Document, or grant any material waiver or consent
thereunder;
(m) cause the Partnership to redeem or repurchase all or any portion of
the Interest of a Partner, except as set forth in this Agreement;
34
(n) cause the Partnership to convert the Apartment Housing to
cooperative or condominium ownership;
(o) cause or permit the Partnership to make loans to the General
Partner or any Affiliate;
(p) bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the
Partnership;
(q) agree or consent to any material changes in the Plans and
Specifications, to any change orders in excess of $10,000 or $25,000
cumulatively, or to any other of the terms and provisions of the Construction
Contract;
(r) on behalf of the Partnership, file or cause to be filed a voluntary
petition in bankruptcy under the Federal Bankruptcy Code, or file or cause to be
filed a petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or rule; or
(s) settle any audit with the Internal Revenue Service concerning the
adjustment or readjustment of any Partnership tax item, extend any statute of
limitations, or initiate or settle any judicial review or action concerning the
amount or character of any Partnership tax item.
Section 9.7 Duties of General Partner. The General Partner agrees that it
shall at all times:
(a) diligently and faithfully devote such of its time to the business
of the Partnership as may be necessary to properly conduct the affairs of the
Partnership;
(b) file and publish all certificates, statements or other instruments
required by law for the formation and operation of the Partnership as a limited
partnership in all appropriate jurisdictions;
(c) cause the Partnership to carry Insurance from an Insurance Company;
(d) have a fiduciary responsibility for the safekeeping and use of all
funds and assets of the Partnership, whether or not in its immediate possession
or control and not employ or permit another to employ such funds or assets in
any manner except for the benefit of the Partnership;
(e) use its best efforts so that all requirements shall be met which
are reasonably necessary to obtain or achieve (1) compliance with the Minimum
Set-Aside Test, the Rent Restriction Test, and any other requirements necessary
for the Apartment Housing to initially qualify, and to continue to qualify, for
LIHTC; (2) issuance of all necessary certificates of occupancy, including all
35
governmental approvals required to permit occupancy of all of the apartment
units in the Apartment Housing; (3) compliance with all provisions of the
Project Documents and (4) a reservation and allocation of LIHTC from the State
Tax Credit Agency;
(f) make inspections of the Apartment Housing and assure that the
Apartment Housing is in decent, safe, sanitary and good condition, repair and
working order, ordinary use and obsolescence excepted, and make or cause to be
made from time to time all necessary repairs thereto (including external and
structural repairs) and renewals and replacements thereof;
(g) pay, before the same shall become delinquent and before penalties
accrue thereon all Partnership taxes, assessments and other governmental charges
against the Partnership or its properties, and all of its other liabilities,
except to the extent and so long as the same are being contested in good faith
by appropriate proceedings in such manners as not to cause any material adverse
effect on the Partnership's property, financial condition or business
operations, with adequate reserves provided for such payments;
(h) permit, and cause the Management Agent to permit, the Special
Limited Partner and its representatives: (1) to have access to the Apartment
Housing and personnel employed by the Partnership and by the Management Agent at
all times during normal business hours after reasonable notice; (2) to examine
all agreements, LIHTC compliance data and Plans and Specifications; and (3) to
make copies thereof;
(i) exercise good faith in all activities relating to the conduct of
the business of the Partnership, including the development, operation and
maintenance of the Apartment Housing, and shall take no action with respect to
the business and property of the Partnership which is not reasonably related to
the achievement of the purpose of the Partnership;
(j) make any Capital Contributions, advances or loans required to be
made by the General Partner under the terms of this Agreement;
(k) use its best efforts to establish and maintain all reserves
required to be established and maintained under the terms of this Agreement;
(l) cause the Management Agent to manage the Apartment Housing in
such a manner that the Apartment Housing will be eligible to receive LIHTC
with respect to 100% of the apartment units in the Apartment Housing. To that
end, the General Partner agrees, without limitation: (1) to make all elections
requested by the Special Limited Partner under Section 42 of the Code to allow
the Partnership or its Partners to claim the Tax Credit; (2) to file Form 8609
with respect to the Apartment Housing as required, for at least the duration of
the Compliance Period; (3) to operate the Apartment Housing and cause the
Management Agent to manage the Apartment Housing so as to comply with the
requirements of Section 42 of the Code, as amended, or any successor thereto,
36
including, but not limited to, Section 42(g) and Section 42(i)(3) of the Code,
as amended, or any successors thereto; (4) to make all certifications required
by Section 42(l) of the Code, as amended, or any successor thereto; and (5) to
operate the Apartment Housing and cause the Management Agent to manage the
Apartment Housing so as to comply with all other Tax Credit Conditions;
(m) have the Architect of Record perform contract administrative
services during the course of construction, including but not limited to a
monthly review and certification of the Contractor's application for payment
(form G702 and G703); to review and take action on requests for change orders;
and oversee all changes in the contract documents, addendum, shop drawings and
supplements;
(n) perform such other acts as may be expressly required of it under
the terms of this Agreement; and
(o) maintain on it's staff during construction and rent-up a trained
and experienced project manager who is responsible for the development and
construction of the Improvements, and responsible for obtaining Completion of
Construction. In lieu of this employee, or if the project manager position
remains vacant for twenty-one days, the General Partner shall retain the
services of a construction management firm, which firm shall be pre-approved by
the Special Limited Partner.
Section 9.8 Obligations to Repair and Rebuild Apartment Housing. With the
approval of any lender, if such approval is required, any Insurance proceeds
received by the Partnership due to fire or other casualty affecting the
Apartment Housing will be utilized to repair and rebuild the Apartment Housing
in satisfaction of the conditions contained in Section 42(j)(4) of the Code and
to the extent required by any lender. Any such proceeds received in respect of
such event occurring after the Compliance Period shall be so utilized or, if
permitted by the Project Documents and with the Consent of the Special Limited
Partner, shall be treated as Sale or Refinancing Proceeds.
Section 9.9 Partnership Expenses.
(a) All of the Partnership's expenses shall be billed directly to and
paid by the Partnership to the extent practicable. Reimbursements to the General
Partner, or any of its Affiliates, by the Partnership shall be allowed only for
the Partnership's Cash Expenses unless the General Partner is obligated to pay
the same as an Operating Deficit during the Operating Deficit Guarantee Period,
and subject to the limitations on the reimbursement of such expenses set forth
herein. For purposes of this Section, Cash Expenses shall include fees paid by
the Partnership to the General Partner or any Affiliate of the General Partner
permitted by this Agreement and the actual cost of goods, materials and
37
administrative services used for or by the Partnership, whether incurred by the
General Partner, an Affiliate of the General Partner or a nonaffiliated Person
in performing the foregoing functions. As used in the preceding sentence,
"actual cost of goods and materials" means the actual cost of goods and
materials used for or by the Partnership and obtained from entities which are
not Affiliates of the General Partner, and actual cost of administrative
services means the pro rata cost of personnel (as if such persons were employees
of the Partnership) associated therewith, but in no event to exceed the amount
which would be charged by nonaffiliated Persons for comparable goods and
services.
(b) Reimbursement to the General Partner or any of its Affiliates of
operating cash expenses pursuant to Subsection (a) hereof shall be subject to
the following:
(1) no such reimbursement shall be permitted for services for
which the General Partner or any of its Affiliates is entitled to compensation
by way of a separate fee; and
(2) no such reimbursement shall be made for (A) rent or
depreciation, utilities, capital equipment or other such administrative items,
and (B) salaries, fringe benefits, travel expenses and other administrative
items incurred or allocated to any "controlling person" of the General Partner
or any Affiliate of the General Partner. For the purposes of this Section
9.9(b)(2), "controlling person" includes, but is not limited to, any Person,
however titled, who performs functions for the General Partner or any Affiliate
of the General Partner similar to those of: (i) chairman or member of the board
of directors; (ii) executive management, such as president, vice president or
senior vice president, corporate secretary or treasurer; (iii) senior
management, such as the vice president of an operating division who reports
directly to executive management; or (iv) those holding 5% or more equity
interest in such General Partner or any such Affiliate of the General Partner or
a person having the power to direct or cause the direction of such General
Partner or any such Affiliate of the General Partner, whether through the
ownership of voting securities, by contract or otherwise.
Section 9.10 General Partner Expenses. The General Partner or Affiliates of
the General Partner shall pay all Partnership expenses which are not permitted
to be reimbursed pursuant to Section 9.9 and all expenses which are unrelated to
the business of the Partnership.
Section 9.11 Other Business of Partners. Any Partner may engage
independently or with others in other business ventures wholly unrelated to the
Partnership business of every nature and description, including, without
limitation, the acquisition, development, construction, operation and management
of real estate projects and developments of every type on their own behalf or on
behalf of other partnerships, joint ventures, corporations or other business
ventures formed by them or in which they may have an interest, including,
38
without limitation, business ventures similar to, related to or in direct or
indirect competition with the Apartment Housing. Neither the Partnership nor any
Partner shall have any right by virtue of this Agreement or the partnership
relationship created hereby in or to such other ventures or activities or to the
income or proceeds derived therefrom. Conversely, no Person shall have any
rights to Partnership assets, incomes or proceeds by virtue of such other
ventures or activities of any Partner.
Section 9.12 Covenants, Representations and Warranties. The General Partner
covenants, represents and warrants that the following are presently true, will
be true at the time of each Capital Contribution payment made by the Limited
Partner and will be true during the term of this Agreement, to the extent then
applicable.
(a) The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner and the Special Limited Partner.
(b) The Partnership Agreement and the Project Documents are in full
force and effect and neither the Partnership nor the General Partner are in
breach or violation of any provisions thereof.
(c) To the best of its ability the Improvements will be completed in a
timely and workerlike manner in accordance with all applicable requirements of
all appropriate governmental entities and the Plans and Specifications of the
Apartment Housing.
(d) The Apartment Housing will be operated in accordance with standards
and procedures which are prudent and customary for the operation of properties
similar to the Apartment Housing.
(e) All conditions to the funding of the Construction Loan have been
met.
(f) No Partner has or will have any personal liability with respect to
or has or will have personally guaranteed the payment of the Mortgage, except as
otherwise provided in Article VI.
(g) The Partnership is in compliance with all construction and use
codes applicable to the Apartment Housing and is not in violation of any zoning,
environmental or similar regulations applicable to the Apartment Housing.
(h) All appropriate public utilities, including sanitary and storm
sewers, water, gas and electricity, are currently available and will be
operating properly for all units in the Apartment Housing at the time of first
occupancy and throughout the term of the Partnership.
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(i) All roads necessary for the full utilization of the Improvements
have either been completed or the necessary rights of way therefore have been
acquired by the appropriate governmental authority or have been dedicated to
public use and accepted by said governmental authority.
(j) The Partnership has obtained Insurance written by an Insurance
Company.
(k) The Partnership owns the fee simple interest in the Apartment
Housing.
(l) The Construction Contract has been entered into between the
Partnership and the Contractor; no other consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.
(m) The General Partner will require the Accountant to depreciate
Partnership items in accordance with Exhibit "G" attached hereto and
incorporated herein by this reference.
(n) To the best of the General Partner's knowledge: (1) no Hazardous
Substance has been disposed of, or released to or from, or otherwise now exists
in, on, under or around, the Apartment Housing and (2) no aboveground or
underground storage tanks are now or have ever been located on or under the
Apartment Housing. The General Partner will not install or allow to be installed
any aboveground or underground storage tanks on the Apartment Housing. The
General Partner covenants that the Apartment Housing shall be kept free of
Hazardous Substance and shall not be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce or process
Hazardous Substance, except in connection with the normal maintenance and
operation of any portion of the Apartment Housing. The General Partner shall
comply, or cause there to be compliance, with all applicable Federal, state and
local laws, ordinances, rules and regulations with respect to Hazardous
Substance and shall keep, or cause to be kept, the Apartment Housing free and
clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. The General Partner must promptly notify the Limited Partner and
the Special Limited Partner in writing (3) if it knows, or suspects or believes
there may be any Hazardous Substance in or around any part of the Apartment
Housing, any Improvements constructed on the Apartment Housing, or the soil,
groundwater or soil vapor, (4) if the General Partner or the Partnership may be
subject to any threatened or pending investigation by any governmental agency
under any law, regulation or ordinance pertaining to any Hazardous Substance,
and (5) of any claim made or threatened by any Person, other than a governmental
agency, against the Partnership or General Partner arising out of or resulting
from any Hazardous Substance being present or released in, on or around any part
of the Apartment Housing.
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(o) The General Partner has not executed and will not execute any
agreements with provisions contradictory to, or in opposition to, the provisions
of this Agreement.
(p) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits, or the Revised Projected Tax Credits, if applicable.
(q) No charges, liens or encumbrances exist with respect to the
Apartment Housing other than those which are created or permitted by the Project
Documents or Mortgage or are noted or excepted in the Title Policy.
(r) The Partnership shall retain the Architect of Record and ensure
that the Architect of Record's responsibilities include, but are not limited to,
preparing and overseeing the construction close-out procedures upon completion;
inspecting for and overseeing resolution of the Contractor's final punch list
items; receive and approve operation and maintenance manuals; collect, review,
approve and forward to the Partnership all warranties, check key count and key
schedules; and confirm turnover of spare parts and materials.
(s) The buildings on the Apartment Housing site constitute or shall
constitute a "qualified low-income housing project" as defined in Section 42(g)
of the Code, and as amplified by the Treasury Regulations thereunder. In this
connection, not later than December 31 of the first year in which the Partners
elect the LIHTC to commence in accordance with the Code, the Apartment Housing
will satisfy the Minimum Set-Aside Test.
(t) All accounts of the Partnership required to be maintained under the
terms of the Project Documents, including, without limitation, any reserves in
accordance with Article VIII hereof, are currently funded, or are on a
satisfactory program to achieve full funding to required levels, including
levels required by any authority.
(u) The General Partner has not lent or otherwise advanced any funds to
the Partnership other than its Capital Contribution, or Operating Deficit Loan,
if applicable, and the Partnership has no unsatisfied obligation to make any
payments of any kind to the General Partner or any Affiliate thereof.
(v) To the best of its knowledge, no event has occurred which
constitutes a default under any of the Project Documents.
(w) No event has occurred which has caused, and the General Partner has
not acted in any manner which will cause (1) the Partnership to be treated for
federal income tax purposes as an association taxable as a corporation, (2) the
Partnership to fail to qualify as a limited partnership under the Act, or (3)
the Limited Partner to be liable for Partnership obligations; provided however,
41
the General Partner shall not be in breach of this representation if all or a
portion of a Limited Partner's agreed upon Capital Contributions are used to
satisfy the Partnership's obligations to creditors of the Partnership and such
action by the General Partner is otherwise authorized under this Agreement and;
provided further,however the General Partner shall not be in breach of this
representation if the action causing the Limited Partner to be liable for the
Partnership obligations is undertaken by the Limited Partner.
(x) To the best of its knowledge, no event or proceeding, including,
but not limited to, any legal actions or proceedings before any court,
commission, administrative body or other governmental authority, and acts of any
governmental authority having jurisdiction over the zoning or land use laws
applicable to the Apartment Housing, has occurred the continuing effect of which
has: (1) materially or adversely affected the operation of the Partnership or
the Apartment Housing; (2) materially or adversely affected the ability of the
General Partner to perform its obligations hereunder or under any other
agreement with respect to the Apartment Housing; or (3) prevented the Completion
of Construction of the Improvements in substantial conformity with the Project
Documents, other than legal proceedings which have been bonded against (or as to
which other adequate financial security has been issued) in a manner as to
indemnify the Partnership against loss; provided, however, the foregoing does
not apply to matters of general applicability which would adversely affect the
Partnership, the General Partner, Affiliates of the General Partner or the
Apartment Housing only insofar as they or any of them are part of the general
public.
(y) Neither the Partnership nor the General Partner has any
liabilities, contingent or otherwise, which have not been disclosed in writing
to the Limited Partner and the Special Limited Partner and which in the
aggregate affect the ability of the Limited Partner to obtain the anticipated
benefits of its investment in the Partnership.
(z) Upon signing of the Construction Loan and receipt of the
Construction Lender's written start order, the General Partner will cause
construction of the Improvements to commence and thereafter will cause the
Contractor to diligently proceed with construction of the Improvements according
to the Plans and Specifications so that the Improvements can be completed by the
Completion Date.
(aa) The Partnership will maintain a Debt Service Coverage of not less
than 1.15 and will close on a permanent loan or refinance a Mortgage loan if the
Debt Service Coverage would fall below 1.15.
(bb) The General Partner will use its best efforts to ensure that any
Architect retained by the Partnership or General Partner will have a policy of
professional liability insurance in an amount not less than five hundred
thousand dollars, which policy should remain in force for a period of at least
two years after the closing and funding of the Mortgage.
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(cc) The General Partner has and shall maintain a net worth equal to at
least $1,000,000 computed in accordance with generally accepted accounting
principles.
(dd) The Partnership is in compliance with and will maintain compliance
with the requirements of the federal Fair Housing Act of 1968 (42 U.S.C. 3600 et
seq.) as amended, with respect to the Apartment Housing.
The General Partner shall be liable to the Limited Partner for any
costs, damages, loss of profits, diminution in the value of its investment in
the Partnership, or other losses, of every nature and kind whatsoever, direct or
indirect, realized or incurred by the Limited Partner as a result of any
material breach of the representations and warranties set forth in this Section
9.12, provided the same is not caused by or arises out of a Force Majeure or
Unavoidable Event.
ARTICLE X
ALLOCATIONS OF INCOME, LOSSES AND CREDITS
Section 10.1 General. All items includable in the calculation of Income or
Loss not arising from a Sale or Refinancing, and all Tax Credits, shall be
allocated 99.980.9998% to the Limited Partner, 0.010.0001% to the Special
Limited Partner and 0.010.0001% to the General Partner.
Section 10.2 Allocations From Sale or Refinancing. All Income and Losses
arising from a Sale or Refinancing shall be allocated between the Partners as
follows:
(a) As to Income:
(1) first, an amount of Income equal to the aggregate negative
balances (if any) in the Capital Accounts of all Partners having negative
Capital Accounts (prior to taking into account the Sale or Refinancing and the
Distribution of the related Sale or Refinancing Proceeds, but after giving
effect to Distributions of Net Operating Income and allocations of other Income
and Losses pursuant to this Article X up to the date of the Sale or Refinancing)
shall be allocated to such Partners in proportion to their negative Capital
Account balances until all such Capital Accounts shall have zero balances; and
(2) the balance, if any, of such Income shall be allocated to
the Partners in the proportion necessary so that the Partners will receive the
amount to which they are entitled pursuant to Section 11.2 hereof.
(b) Losses shall be allocated 99.980.9998% to the Limited Partner,
0.010.0001% to the Special Limited Partner and 0.010.0001% to the General
Partner.
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(c) Notwithstanding the foregoing provisions of Section 10.2(a) and
(b), in no event shall any Losses be allocated to the Limited Partner or the
Special Limited Partner if and to the extent that such allocation would create
or increase an Adjusted Capital Account Deficit for the Limited Partner or the
Special Limited Partner. In the event an allocation of 99.980.9998% or
0.010.0001% of each item includable in the calculation of Income or Loss not
arising from a Sale or Refinancing, would create or increase an Adjusted Capital
Account Deficit for the Limited Partner or the Special Limited Partner,
respectively, then so much of the items of deduction other than projected
depreciation shall be allocated to the General Partner instead of the Limited
Partner or the Special Limited Partner as is necessary to allow the Limited
Partner or the Special Limited Partner to be allocated 99.980.9998% and
0.010.0001%, respectively, of the items of Income and Apartment Housing
depreciation without creating or increasing an Adjusted Capital Account Deficit
for the Limited Partner or the Special Limited Partner, it being the intent of
the parties that the Limited Partner and the Special Limited Partner always
shall be allocated 99.980.9998% and 0.010.0001%, respectively, of the items of
Income not arising from a Sale or Refinancing and 99.980.9998% and 0.010.0001%,
respectively, of the Apartment Housing depreciation.
Section 10.3 Special Allocations. The following special allocations shall
be made in the following order.
(a) Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership Minimum Gain during any Partnership fiscal year,
each Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, notwithstanding any other provision of this Article X, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership fiscal year, each Person who
has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items of Partnership
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Person's share of the net decrease in Partner
44
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(b) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.
(c) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible, provided that an allocation
pursuant to this Section 10.3(c) shall be made if and only to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 10.3 have been tentatively made as if
this Section 10.3(c) were not in the Agreement.
(d) In the event any Partner has a deficit Capital Account at the end
of any Partnership fiscal year which is in excess of the sum of (i) the amount
such Partner is obligated to restore, and (ii) the amount such Partner is deemed
to be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 10.3(d) shall be made if and only to the extent that such Partner would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 10.3 have been tentatively made as if this Section
10.3(d) and Section 10.3(c) hereof were not in the Agreement.
(e) Nonrecourse Deductions for any fiscal year shall be specially
allocated 99.980.9998% to the Limited Partner, 0.010.0001% to the Special
Limited Partner and 0.010.0001% to the General Partner.
(f) Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).
(g) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
45
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event that Treasury Regulations
Section 1.704-1 (b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event that Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) To the extent the Partnership has taxable interest income with
respect to any promissory note pursuant to Section 483 or Section 1271 through
1288 of the Code:
(1) such interest income shall be specially allocated to the
Limited Partner to whom such promissory note relates; and
(2) the amount of such interest income shall be excluded from
the Capital Contributions credited to such Partner's Capital Account in
connection with payments of principal with respect to such promissory note.
(i) To the extent the Partnership has taxable interest income with
respect to deposits of Capital Contribution payments, such interest income shall
be specially allocated to the General Partner.
(j) In the event the adjusted tax basis of any investment tax credit
property that has been placed in service by the Partnership is increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the Partners (as an item in the nature of income or gain) in the same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.
(k) Any reduction in the adjusted tax basis (or cost) of Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same proportions as the basis (or cost) of such property is allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).
(l) Any income, gain, loss or deduction realized as a direct or
indirect result of the issuance of an interest in the Partnership by the
Partnership to a Partner (the "Issuance Items") shall be allocated among the
Partners so that, to the extent possible, the net amount of such Issuance Items,
46
together with all other allocations under this Agreement to each Partner, shall
be equal to the net amount that would have been allocated to each such Partner
if the Issuance Items had not been realized.
(m) If any Partnership expenditure treated as a deduction on its
federal income tax return is disallowed as a deduction and treated as a
distribution pursuant to Section 731(a) of the Code, there shall be a special
allocation of gross income to the Partner deemed to have received such
distribution equal to the amount of such distribution.
(n) Interest deduction on the Partnership indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.
(o) In the event all or part of the Incentive Management Fee or the Tax
Credit Compliance Fee is disallowed by the Internal Revenue Service, then any
interest or income chargeable to the Partnership for such disallowance shall be
allocated to the General Partner.
(p) If the General Partner provides an Operating Loan to pay an
Operating Deficit, then the Partnership shall allocate Operating Losses to the
General Partner in an amount not to exceed the Operating Loan.
Section 10.4 Curative Allocations. The allocations set forth in Sections
10.2(c), 10.3(a), 10.3(b), 10.3(c), 10.3(d), 10.3(e), 10.3(f), and 10.3(g)
hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of the Treasury Regulations. It is the intent of the Partners that,
to the extent possible, all Regulatory Allocations shall be offset either with
other Regulatory Allocations or with special allocations of other items of
Partnership income, gain, loss, or deduction pursuant to this Section 10.4.
Therefore, notwithstanding any other provision of this Article X (other than the
Regulatory Allocations), with the Consent of the Special Limited Partner, the
General Partner shall make such offsetting special allocations of Partnership
income, gain, loss, or deduction in whatever manner the General Partner, with
the Consent of the Special Limited Partner, determines appropriate so that,
after such offsetting allocations are made, each Partner's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Partner would have had if the Regulatory Allocations were not part of the
Agreement and all Partnership items were allocated pursuant to Sections 10.1,
10.2(a), 10.2(b), 10.3(h), 10.3(i), 10.3(j), 10.3(k), 10.3(l), 10.3(m) and 10.5.
In exercising its authority under this Section 10.4, the General Partner shall
take into account future Regulatory Allocations under Section 10.3(a) and
10.3(b) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 10.3(e) and 10.3(f).
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Section 10.5 Other Allocation Rules.
(a) The basis (or cost) of any Partnership investment tax credit
property shall be allocated among the Partners in accordance with Treasury
Regulations Section 1.46-3(f)(2)(i). All Tax Credits (other than the investment
tax credit) shall be allocated among the Partners in accordance with applicable
law. Consistent with the foregoing, the Partners intend that LIHTC will be
allocated 99.980.9998% to the Limited Partner, 0.010.0001% to the Special
Limited Partner and 0.010.0001% to the General Partner.
(b) In the event Partnership investment tax credit property is disposed
of during any taxable year, profits for such taxable year (and, to the extent
such profits are insufficient, profits for subsequent taxable years) in an
amount equal to the excess, if any, of (1) the reduction in the adjusted tax
basis (or cost) of such property pursuant to Code Section 50(c), over (2) any
increase in the adjusted tax basis of such property pursuant to Code Section
50(c) caused by the disposition of such property, shall be excluded from the
profits allocated pursuant to Section 10.1 and Section 10.2(a) hereof and shall
instead be allocated among the Partners in proportion to their respective shares
of such excess, determined pursuant to Section 10.3(i) and 10.3(j) hereof. In
the event more than one item of such property is disposed of by the Partnership,
the foregoing sentence shall apply to such items in the order in which they are
disposed of by the Partnership, so the profits equal to the entire amount of
such excess with respect to the first such property disposed of shall be
allocated prior to any allocations with respect to the second such property
disposed of, and so forth.
(c) For purposes of determining the Income, Losses, or any other items
allocable to any period, Income, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partner with the Consent of the Special Limited Partner, using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.
(d) Solely for purposes of determining a Partner's proportionate share
of the "excess nonrecourse liabilities" of the Partnership within the meaning of
Treasury Regulations Section 1.752-3(a)(3), the Partners' interests in
Partnership profits are as follows: Limited Partner: 99.980.9998%; Special
Limited Partner: 0.010.0001%; General Partner: 0.010.0001%.
(e) To the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the General Partner shall endeavor to treat Distributions as having
been made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse
Debt only to the extent that such Distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner who is not a General Partner.
48
(f) In the event that the deduction of all or a portion of any fee paid
or incurred out of Net Operating Income by the Partnership to a Partner or an
Affiliate of a Partner is disallowed for federal income tax purposes by the
Internal Revenue Service with respect to a taxable year of the Partnership, the
Partnership shall then allocate to such Partner an amount of gross income of the
Partnership for such year equal to the amount of such fee as to which the
deduction is disallowed.
Section 10.6 Tax Allocations: Code Section 704(c). In accordance with Code
Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and
deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 1.37(a) hereof).
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.37(b) hereof, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the General Partner with the Consent of the Special Limited Partner in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 10.6 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Person's Capital Account or share of Income, Losses, other
items, or distributions pursuant to any provision of this Agreement.
Section 10.7 Allocation Among Limited Partners. In the event that the
Interest of the Limited Partner hereunder is at any time held by more than one
Limited Partner all items which are specifically allocated to the Limited
Partner for any month pursuant to this Article X shall be apportioned among such
Persons according to the ratio of their respective profit-sharing interests in
the Partnership at the last day of such month.
Section 10.8 Allocation Among General Partners. In the event that the
Interest of the General Partner hereunder is at any time held by more than one
General Partner all items which are specifically allocated to the General
Partner for any month pursuant to this Article X shall be apportioned among such
Persons in such percentages as may from time to time be determined by agreement
among them without amendment to this Agreement or consent of the Limited Partner
or Consent of the Special Limited Partner.
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Section 10.9 Modification of Allocations. The provisions of Articles X and
XI and other provisions of this Agreement are intended to comply with Treasury
Regulations Section 1.704 and shall be interpreted and applied in a manner
consistent with such section of the Treasury Regulations. In the event that the
General Partner determines, in its sole discretion, that it is prudent to modify
the manner in which the Capital Accounts of the Partners, or any debit or credit
thereto, are computed in order to comply with such section of the Treasury
Regulations, the General Partner may make such modification, but only with the
Consent of the Special Limited Partner, to the minimum extent necessary, to
effect the plan of allocations and Distributions provided for elsewhere in this
Agreement. Further, the General Partner shall make any appropriate
modifications, but only with the Consent of the Special Limited Partner, in the
event it appears that unanticipated events (e.g., the existence of a Partnership
election pursuant to Code Section 754) might otherwise cause this Agreement not
to comply with Treasury Regulation Section 1.704.
ARTICLE XI
DISTRIBUTION
Section 11.1 Distribution of Net Operating Income. Except as otherwise
provided, Net Operating Income for each fiscal year shall be distributed within
seventy-five (75) days following each calendar year and shall be applied in the
following order of priority:
(a) to pay the Deferred Management Fee (for the current fiscal year or
any past fiscal years), if any;
(b) to pay the balance of the current Asset Management Fee and then to
pay any accrued Asset Management Fees which have not been paid in full from
previous years;
(c) to pay the principal then interest on the Development Fee;
(d) to pay the Operating Loans, if any, as referenced in Section 6.3 of
this Agreement, limited to 50% of the Net Operating Income remaining after
reduction for the payments made pursuant to subsections (a) through (c) of this
Section 11.1;
(e) to pay the Incentive Management Fee;
(f) to pay the Tax Credit Compliance Fee; and
(g) the balance, 20% to the Limited Partner and 80% to the General
Partner.
Section 11.2 Distribution of Sale or Refinancing Proceeds. Sale or
Refinancing Proceeds shall be distributed in the following order:
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(a) to the payment of the Mortgage and other matured debts and
liabilities of the Partnership, other than accrued payments, debts or other
liabilities owing to Partners or former Partners;
(b) to any accrued payments, debts or other liabilities owing to the
Partners or former Partners, including, but not limited to, accrued Asset
Management Fees and Operating Loans, to be paid prorata if necessary;
(c) to the establishment of any reserves which the General Partner,
with the Consent of the Special Limited Partner, shall deem reasonably necessary
for contingent, unmatured or unforeseen liabilities or obligations of the
Partnership;
(d) thereafter, 20% to the Limited Partner and 80% to the General
Partner.
ARTICLE XII
TRANSFERS OF LIMITED
PARTNER'S INTEREST IN THE PARTNERSHIP
Section 12.1 Assignment of Interests. The Limited Partner and the Special
Limited Partner shall have the right to assign all or any part of their
respective Interests to any other Person, whether or not a Partner, upon
satisfaction of the following:
(a) a written instrument in form and substance satisfactory to the
General Partner and its counsel, setting forth the name and address of the
proposed transferee, the nature and extent of the Interest which is proposed to
be transferred and the terms and conditions upon which the transfer is proposed
to be made, stating that the Assignee accepts and agrees to be bound by all of
the terms and provisions of this Agreement, and providing for the payment of all
reasonable expenses incurred by the Partnership in connection with such
assignment, including but not limited to the cost of preparing any necessary
amendment to this Agreement; and
(b) upon consent of the General Partner to such assignment, which
consent shall not be unreasonably withheld; and
(c) upon receipt by the General Partner of the Assignee's written
representation that the Partnership Interest is to be acquired by the Assignee
for the Assignee's own account for long-term investment and not with a view
toward resale, fractionalization, division or distribution thereof.
(d) Notwithstanding any provision to the contrary, the Limited Partner
may assign its Interest to an Affiliate or assign its Interest to USbank or its
successors as collateral to secure a capital contribution loan without
satisfying the conditions of Sections 12.1(a) and (b) above.
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THE LIMITED PARTNER INTEREST AND THE SPECIAL LIMITED PARTNER INTEREST
DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED OR UNDER ANY STATE SECURITIES LAW. THESE INTERESTS MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Section 12.2 Effective Date of Transfer. Any assignment of a Limited
Partner's Interest or Special Limited Partner's Interest pursuant to Section
12.1 shall become effective as of the first day of the calendar month in which
the last of the conditions to such assignment are satisfied.
Section 12.3 Invalid Assignment. Any purported assignment of an Interest of
the Limited Partner or the Special Limited Partner otherwise than in accordance
with Section 12.1 or Section 12.6 shall be of no effect as between the
Partnership and the purported assignee and shall be disregarded by the General
Partner in making allocations and Distributions hereunder.
Section 12.4 Assignee's Rights to Allocations and Distributions. An
Assignee shall be entitled to receive allocations and Distributions from the
Partnership attributable to the Interest acquired by reason of any permitted
assignment from the effective date of transfer as determined in Section 12.2
above. The Partnership and the General Partner shall be entitled to treat the
assignor of such Partnership Interest as the absolute owner thereof in all
respects, and shall incur no liability for allocations and Distributions made in
good faith to such assignor, until such time as the written instrument of
assignment has been received by the Partnership.
Section 12.5 Substitution of Assignee as Limited Partner or Special Limited
Partner.
(a) An Assignee shall not have the right to become a Substitute Limited
Partner or Substitute Special Limited Partner in place of his assignor unless
the written consent of the General Partner to such substitution shall have been
obtained, which consent, in the General Partner's absolute discretion, may be
withheld; except that an Assignee which is an Affiliate of the Limited Partner
or Special Limited Partner, or USbank or its successors, may become a Substitute
Limited Partner or Substitute Special Limited Partner without the consent of the
General Partner.
(b) A nonadmitted transferee of the Limited Partner's Interest or the
Special Limited Partner's Interest in the Partnership shall only be entitled to
receive that share of allocations, Distributions and the return of Capital
Contribution to which its transferor would otherwise have been entitled with
52
respect to the Interest transferred, and shall have no right to obtain any
information on account of the Partnership's transactions, to inspect the
Partnership's books and records or have any other of the rights and privileges
of a Limited Partner or Special Limited Partner, provided, however, that the
Partnership shall, if a transferee and transferor jointly advise the General
Partner in writing of a transfer of an Interest in the Partnership, furnish the
transferee with pertinent tax information at the end of each fiscal year of the
Partnership.
(c) The General Partner may elect to treat a transferee of a
Partnership Interest who has not become a Substitute Limited Partner or
substitute Special Limited Partner as a Substitute Limited Partner or substitute
Special Limited Partner, as the case may be, in the place of its transferor
should the General Partner determine in its absolute discretion that such
treatment is in the best interest of the Partnership.
Section 12.6 Death, Bankruptcy, Incompetency, etc. of a Limited Partner.
Upon the death, dissolution, adjudication of bankruptcy, or adjudication of
incompetency or insanity of the Limited Partner or Special Limited Partner, such
Partner's executors, administrators or legal representatives shall have all the
rights of its predecessor-in-interest for the purpose of settling or managing
such Partner's estate, including such power as such Partner possessed to
constitute a successor as a transferee of its Interest in the Partnership and to
join with such transferee in making the application to substitute such
transferee as a Partner. However, such executors, administrators or legal
representatives will not have the right to become Substitute Limited Partners or
Substitute Special Limited Partners in the place of their respective
predecessors-in-interest unless the General Partner shall so consent.
ARTICLE XIII
WITHDRAWAL, REMOVAL AND REPLACEMENT OF
GENERAL PARTNER
Section 13.1 Withdrawal of General Partner.
(a) The General Partner may not Withdraw (other than as a result of an
Involuntary Withdrawal) without the Consent of the Special Limited Partner
including but not limited to any Person who has by merger, consolidation or
otherwise, acquired substantially all of the General Partner's assets or stocks
and continued its business or terminate its business immediately after said
merger, consolidation or otherwise. Withdrawal shall be conditioned upon the
agreement of the Special Limited Partner to be admitted as a successor General
53
Partner, or if the Special Limited Partner declines to be admitted as a
successor General Partner then on the agreement of one or more Persons who
satisfy the requirements of Section 13.5 of this Agreement to be admitted as
successor General Partner(s).
(b) Each General Partner shall indemnify and hold harmless the
Partnership and all Partners from its Withdrawal in violation of Section 13.1(a)
hereof. Each General Partner shall be liable for damages to the Partnership
resulting from its Withdrawal in violation of Section 13.1(a).
Section 13.2 Removal of General Partner.
(a) The Special Limited Partner or the Limited Partner, or both of
them, may remove the General Partner for cause if such General Partner, its
officers or directors, if applicable, has:
(1) been subject to Bankruptcy;
(2) committed any fraud, willful misconduct, breach of
fiduciary duty or other negligent conduct in the performance of its duties under
this Agreement;
(3) been convicted of, or entered into a plea of guilty to, a
felony;
(4) been disbarred from participating in any federal or state
housing program;
(5) made personal use of Partnership funds or properties
unless otherwise permitted under the Agreement;
(6) violated the terms of the Mortgage and such violation
prompts Fidelity Bank to issue a default letter or acceleration notice to the
Partnership or General Partner;
(7) failed to provide any loan, advance, Capital Contribution
or any other payment to the Partnership, the Limited Partner or the Special
Limited Partner required under this Agreement;
(8) breached any representation, warranty or covenant
contained in this Agreement;
(9) caused the Projected Tax Credits to be allocated to the
Partners for a term longer than the Tax Credit Period unless the provisions of
Section 7.4(e) of this Agreement apply;
(10) failed to provide, or to cause to be provided, the
construction monitoring documents required in Section 14.3(a) of this Agreement;
54
(11) violated any federal or state tax law which causes a
recapture of LIHTC, so long as such recapture is not caused by or the result of
an Unavoidable Event;
(12) violated the terms of the Construction Loan and such
violation prompts Fidelity Bank to issue a default letter or acceleration notice
to the Partnership or General Partner;
(13) failed to ensure that the Construction Budget is
In-Balance;
(14) failed to obtain the consent of a Partner where such
consent is required pursuant to this Agreement;
(15) failed to place the Apartment Housing in service by
12/1/02, so long as such failure is not caused by an Unavoidable Event;
(16) failed to achieve 90% occupancy of the Apartment Housing
by April 1, 2003, so long as such failure is not caused by an Unavoidable Event;
(17) failed to obtain Permanent Mortgage Commencement by April
1, 2003, so long as such failure is not caused by an Unavoidable Event; or
(18) failed during any consecutive six-month period during the
Compliance Period to rent 85% or more of the total apartment units in the
Apartment Housing to Qualified Tenants; notwithstanding, if such failure is the
result of Force Majeure or Unavoidable Event, or unless if such failure is cured
within 120 days after the end of the six-month period, then this removal
provision shall not apply.
(b) Written notice of the removal for cause of the General Partner
("Removal Notice") shall set forth the reasons for removal and shall be served
by the Special Limited Partner or the Limited Partner, or both of them, upon the
General Partner in accordance with Section 17.3 of this Agreement. If Section
13.2(a)(2), (6), (7), (8), (12) or (13) is the basis for the removal for cause,
then the General Partner shall have thirty days from receipt of the Removal
Notice in which to cure the removal condition; except that in regard to the
Mortgage or Construction Loan the cure period shall be the sooner of thirty days
or ten days prior to the expiration of the cure period referenced in the loan
documents, if any. If the condition for the removal for cause is not cured
within the thirty day cure period then the General Partner's removal shall
become effective on the first day following the expiration of the cure period,
or, thirty-one days from the General Partner's receipt of Removal Notice and
upon approval of a majority of the Partner's Interest (as specified in Section
10.1 of this Agreement) at a Partner's meeting held in accordance with Section
17.2 of this Agreement. If the removal for cause is for a condition referenced
in Sections 13.2(a)(1), (3), (4), (5), (9), (10), (11), (14), (15), (16), (17)
55
or (18) then the removal shall become effective upon the General Partner's
receipt of the Removal Notice and approval of a majority of the Partner's
Interest (as specified in Section 10.1 of this Agreement) at a Partner's meeting
held in accordance with Section 17.2 of this Agreement. Upon the General
Partner's removal, the General Partner shall deliver to the Special Limited
Partner within five business days of the Partner's meeting confirming the
General Partner's removal all Partnership books and records including all bank
signature cards and an authorization to change the signature on the signature
cards from the General Partner to the Special Limited Partner, or a successor
general partner so nominated by the Limited Partner and Special Limited Partner.
The Partner's recognize and acknowledge that if the General Partner fails to
provide the Partnership books and records upon the General Partner's removal
then the remaining Partners may suffer irreparable injury. Therefore, in the
event the General Partner does not adhere to the provisions of this Section
13.2(b), and in addition to other rights or remedies which may be provided by
law and equity or this Agreement, the Limited Partner and/or Special Limited
Partner shall have the right to specific performance to compel the General
Partner to perform its obligation under this Section and the Limited Partner
and/or Special Limited Partner may bring such action, and other actions to
enforce the removal, by way of temporary and/or permanent injunctive relief.
Section 13.3 Effects of a Withdrawal. In the event of a Withdrawal, the
entire Interest of the Withdrawing General Partner shall immediately and
automatically terminate on the effective date of such Withdrawal, and such
General Partner shall immediately cease to be a General Partner, shall have no
further right to participate in the management or operation of the Partnership
or the Apartment Housing or to receive any allocations or Distributions from the
Partnership or any other funds or assets of the Partnership, except as
specifically set forth below. In the event of a Withdrawal, any or all executory
contracts, including but not limited to the Management Agreement, between the
Partnership and the Withdrawing General Partner or its Affiliates may be
terminated by the Partnership, with the Consent of the Special Limited Partner,
upon written notice to the party so terminated. Furthermore, notwithstanding
such Withdrawal, the Withdrawing General Partner shall be and shall remain,
liable as a General Partner for all liabilities and obligations incurred by the
Partnership or by the General Partner prior to the effective date of the
Withdrawal, or which may arise upon such Withdrawal. Any remaining Partner shall
have all other rights and remedies against the Withdrawing General Partner as
provided by law or under this Agreement. The General Partner agrees that in the
event of its Withdrawal it will indemnify and hold the Limited Partner and the
Special Limited Partner harmless from and against all losses, costs and expenses
incurred in connection with the Withdrawal, including, without limitation, all
legal fees and other expenses of the Limited Partner and the Special Limited
Partner in connection with the transaction. The following additional provisions
shall apply in the event of a Withdrawal.
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(a) In the event of a Withdrawal which is not an Involuntary
Withdrawal, or is not an Involuntary Withdrawal in accordance with Section
13.2(a), the Withdrawing General Partner shall have no further right to receive
any future allocations or Distributions from the Partnership or any other funds
or assets of the Partnership, nor shall it be entitled to receive or to be paid
by the Partnership any further payments of fees (including fees which have been
earned but are unpaid) or to be repaid any outstanding advances or loans made by
it to the Partnership or to be paid any amount for its former Interest. From and
after the effective date of such Withdrawal, the former rights of the
Withdrawing General Partner to receive or to be paid such allocations,
Distributions, funds, assets, fees or repayments shall be assigned to the other
General Partner or General Partners (which may include the Special Limited
Partner), or if there is no other general partner of the Partnership at that
time, to the Special Limited Partner.
(b) In the event of an Involuntary Withdrawal, except as provided in
the preceding paragraph or Section 13.3(c) below, the Withdrawing General
Partner shall have no further right to receive any future allocations or
Distributions from the Partnership or any other funds or assets of the
Partnership, provided that accrued and payable fees (i.e., fees earned but
unpaid as of the date of Withdrawal) owed to the Withdrawing General Partner,
and any outstanding loans of the Withdrawing General Partner to the Partnership,
shall be paid to the Withdrawing General Partner in the manner and at the times
such fees and loans would have been paid had the Withdrawing General Partner not
Withdrawn. The Interest of the General Partner shall be purchased as follows.
(1) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), the
Partnership, with the Consent of the Special Limited Partner, may, but is not
obligated to, purchase the Interest of the Withdrawing General Partner. The
purchase price of such Interest shall be its Fair Market Value as determined by
agreement between the Withdrawing General Partner and the Special Limited
Partner, or, if they cannot agree, by arbitration in accordance with the then
current rules of the American Arbitration Association. The cost of such
arbitration shall be borne equally by the Withdrawing General Partner and the
Partnership. The purchase price shall be paid by the Partnership by delivering
to the General Partner or its representative the Partnership's non-interest
bearing unsecured promissory note payable, if at all, upon liquidation of the
Partnership in accordance with Section 11.2(b). The note shall also provide that
the Partnership may prepay all or any part thereof without penalty.
(2) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), and if the
57
Partnership does not purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital, then the Withdrawing General
Partner shall retain its Interest in such items, but such Interest shall be held
as a special limited partner.
(c) Notwithstanding the provisions of Section 13.3(b), if the
Involuntary Withdrawal arises from removal for cause as set forth in Section
13.2(a) hereof, the Withdrawn General Partner shall have no further right to
receive any future allocations or Distributions from the Partnership or any
other funds or assets of the Partnership, nor shall it be entitled to receive
any payment for its Interest, nor shall it be entitled to receive or to be paid
by the Partnership or any Partners or successor partners, any further payments
of fees (including fees which have been earned but remain unpaid) or to be
repaid any outstanding advances or loans made by it to the Partnership.
Notwithstanding the foregoing provisions of this Section 13.3(c), in the event
the General Partner is owed accrued and payable fees or Operating Loans then, at
the discretion of the Special Limited Partner, the Partnership may repay the
General Partner the fees or loans, provided the Limited Partner has not advanced
funds to the Partnership in an amount equal to or greater than the amount owed
to the General Partner. If the Special Limited Partner determines the General
Partner is owed funds in accordance with the prior sentence, then the funds
shall be paid by the Partnership by delivering to the General Partner the
Partnership's non-interest bearing unsecured promissory note payable upon
liquidation of the Partnership in accordance with Section 11.2(b).
Section 13.4 Successor General Partner. Upon the occurrence of an event
giving rise to a Withdrawal of a General Partner, any remaining General Partner,
or, if there be no remaining General Partner, the Withdrawing General Partner or
its legal representative, shall promptly notify the Special Limited Partner of
such Withdrawal (the "Withdrawal Notice"). Whether or not the Withdrawal Notice
shall have been sent as provided herein, the Special Limited Partner shall have
the right to become a successor General Partner (and to become the successor
managing General Partner if the Withdrawing General Partner was previously the
managing General Partner). In order to effectuate the provisions of this Section
13.4 and the continuance of the Partnership, the Withdrawal of a General Partner
shall not be effective until the expiration of 120 days from the date on which
occurred the event giving rise to the Withdrawal, unless the Special Limited
Partner shall have elected to become a successor General Partner as provided
herein prior to expiration of such 120-day period, whereupon the Withdrawal of
the General Partner shall be deemed effective upon the notification of all the
other Partners by the Special Limited Partner of such election.
Section 13.5 Admission of Additional or Successor General Partner. No
Person shall be admitted as an additional or successor General Partner including
but not limited to a change in the General Partner organizational structure
because of merger, consolidation, asset sale, stock sale or swap, or otherwise
unless (a) such Person shall have agreed to become a General Partner by a
58
written instrument which shall include the acceptance and adoption of this
Agreement; (b) the Consent of the Special Limited Partner to the admission of
such Person as a substitute General Partner, which consent may be withheld in
the discretion of the Special Limited Partner; and (c) such Person shall have
executed and acknowledged any other instruments which the Special Limited
Partner shall reasonably deem necessary or appropriate to affect the admission
of such Person as a substitute General Partner. If the foregoing conditions are
satisfied, this Agreement shall be amended in accordance with the provisions of
the Act, and all other steps shall be taken which are reasonably necessary to
effect the Withdrawal of the Withdrawing General Partner and the substitution of
the successor General Partner. Nothing contained herein shall reduce the Limited
Partner's Interest or the Special Limited Partner's Interest in the Partnership.
Section 13.6 Transfer of Interest. Except as otherwise provided herein, the
General Partner may not Withdraw from the Partnership, or enter into any
agreement as the result of which any Person shall acquire an Interest in the
Partnership, without the Consent of the Special Limited Partner.
Section 13.7 No Goodwill Value. At no time during continuation of the
Partnership shall any value ever be placed on the Partnership name, or the right
to its use, or to the goodwill appertaining to the Partnership or its business,
either as among the Partners or for the purpose of determining the value of any
Interest, nor shall the legal representatives of any Partner have any right to
claim any such value. In the event of a termination and dissolution of the
Partnership as provided in this Agreement, neither the Partnership name, nor the
right to its use, nor the same goodwill, if any, shall be considered as an asset
of the Partnership, and no valuation shall be put thereon for the purpose of
liquidation or distribution, or for any other purpose whatsoever.
ARTICLE XIV
BOOKS AND ACCOUNTS, REPORTS,
TAX RETURNS, FISCAL YEAR AND BANKING
Section 14.1 Books and Accounts.
(a) The General Partner shall cause the Partnership to keep and
maintain at its principal executive office full and complete books and records
which shall include each of the following:
(1) a current list of the full name and last known business or
residence address of each Partner set forth in alphabetical order together with
the Capital Contribution and the share in Income and Losses and Tax Credits of
each Partner;
59
(2) a copy of the Certificate of Limited Partnership and all
certificates of amendment thereto, together with executed copies of any powers
of attorney pursuant to which any certificate has been executed;
(3) copies of the Partnership's federal, state and local
income tax information returns and reports, if any, for the six most recent
taxable years;
(4) copies of the original of this Agreement and all
amendments thereto;
(5) financial statements of the Partnership for the six most
recent fiscal years;
(6) the Partnership's books and records for at least the
current and past three fiscal years; and
(7) in regard to the first tenants to occupy the apartment
units in the Apartment Housing, copies of all tenant files including completed
applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, and income
certification forms (LIHTC specific).
(b) Upon the request of the Limited Partner, the General Partner shall
promptly deliver to the Limited Partner, at the expense of the Partnership, a
copy of the information set forth in Section 14.1(a) above. The Limited Partner
shall have the right upon reasonable request and during normal business hours to
inspect and copy any of the foregoing, or any of the other books and records of
the Partnership or the Apartment Housing, at its own expense.
Section 14.2 Accounting Reports.
(a) By February 20 of each calendar year the General Partner shall
provide to the Limited Partner and the Special Limited Partner all tax
information necessary for the preparation of their federal and state income tax
returns and other tax returns with regard to the jurisdiction(s) in which the
Partnership is formed and in which the Apartment Housing is located.
Notwithstanding, the General Partner shall deliver to the Limited Partner and
the Special Limited Partner a draft copy of the information requested herein at
least ten days prior to the above referenced due date.
(b) By March 1 of each calendar year, including the year(s) during
construction of the Apartment Housing, the General Partner shall send to the
Limited Partner and the Special Limited Partner an audited financial statement
for the Partnership, which shall include, but is not limited to: (1) a balance
sheet as of the end of such fiscal year and statements of income, Partners'
equity and changes in cash flow for such fiscal year prepared in accordance with
generally accepted accounting principles; (2) a report of any Distributions made
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at any time during the fiscal year, separately identifying Distributions from
Net Operating Income for the fiscal year, Net Operating Income for prior years,
Sale or Refinancing Proceeds, and reserves; and (3) a report setting forth the
amount of all fees and other compensation and Distributions and reimbursed
expenses paid by the Partnership for the fiscal year to the General Partner or
Affiliates of the General Partner and the services performed in consideration
therefor, which report shall be verified by the Partnership's Accountants.
Notwithstanding, the General Partner shall use its best efforts to cause the
Accountants to deliver to the Limited Partner and the Special Limited Partner a
draft copy of the information requested herein at least ten days prior to the
above referenced due date.
(c) Within 60 days after the end of each fiscal quarter in which a Sale
or Refinancing of the Apartment Housing occurs, the General Partner shall send
to the Limited Partner and the Special Limited Partner a report as to the nature
of the Sale or Refinancing and as to the Income and Losses for tax purposes and
proceeds arising from the Sale or Refinancing.
Section 14.3 Other Reports. The General Partner shall provide to the
Limited Partner and the Special Limited Partner the following reports:
(a) during construction, on a regular basis, but in no event less than
once a month, a copy of the Construction Inspector's report and other
construction reports including, but not limited to, (1) the name of each person
performing work on the Improvements or providing materials for the Improvements,
the work performed or materials supplied by said person and the code number
corresponding to the line item in the Construction Budget which the person will
be paid, (2) an original AIA Document G702, or similar form acceptable to the
Special Limited Partner, (3) if not included in the Construction Inspector's
report or the AIA Document G702, a line item break-down of the Construction
Budget (which shall include, description of work to be performed or materials to
be supplied; total dollar amount of the work or materials; dollar amount of work
previously completed and paid or materials supplied and paid; dollar amount of
work or materials to be paid per the current disbursement request; dollar amount
of materials stored; total dollar amount of work completed and stored as of the
current disbursement date; percentage of completion; dollar amount of work or
materials needed to complete the line item; and retainage), (4) a reconciliation
of the sources and uses to determine that the Construction Budget is In-Balance
and there are sufficient funds to complete the construction of the Improvements,
and (5) copies of lien releases, or waivers, from the Contractor and all
sub-contractors or material suppliers who were paid the previous month;
(b) during the rent-up phase, and continuing until the end of the first
six-month period during which the Apartment Housing has a sustained occupancy of
95% or better, by the twentieth day of each month within such period a copy of
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the previous month's rent roll (through the last day of the month) and a tenant
LIHTC compliance worksheet similar to the monthly initial tenant certification
worksheet included in Exhibit "H" attached hereto and incorporated herein by
this reference;
(c) a quarterly tax credit compliance report similar to the worksheet
included in Exhibit "H" due on or before April 30 of each year for the first
quarter, July 31 of each year for the second quarter, October 31 of each year
for the third quarter and January 31 of each year for the fourth quarter. In
order to verify the reliability of the information being provided on the
compliance report the Special Limited Partner may request a sampling of tenant
files to be provided. The sampling will include, but not be limited to, copies
of tenant applications, certifications and third party verifications used to
qualify tenants. If any inaccuracies are found to exist on the tax credit
compliance report or any items of noncompliance are discovered then the sampling
will be expanded as determined by the Special Limited Partner;
(d) a quarterly report on operations, in the form attached hereto as
Exhibit "H", due on or before April 30 of each year for the first quarter of
operations, July 31 of each year for the second quarter of operations, October
31 of each year for the third quarter of operations and January 31 of each year
for the fourth quarter of operations which shall include, but is not limited to,
an unaudited income statement showing all activity in the reserve accounts
required to be maintained pursuant to Section VIII of this Agreement, statement
of income and expenses, balance sheet, rent roll as of the end of each calendar
quarter of each year, and third party verification of current utility allowance;
(e) by September 15 of each year, an estimate of LIHTC for that year;
(f) if the Apartment Housing receives a reservation of LIHTC in one
year but will not complete the construction and rent-up until a later year, an
audited cost certification together with the Accountant's work papers verifying
that the Partnership has expended the requisite 10% of the reasonably expected
cost basis to meet the carryover test provisions of Section 42 of the Code. Such
certification shall be provided to the Limited Partner and Special Limited
Partner by the later of December 31 of the year during which the reservation was
received or six months after the date of the carryover allocation if permitted
by the State Tax Credit Agency. Furthermore, if materials and supplies are
purchased to meet the 10% requirement then the General Partner shall provide to
the Limited Partner an opinion of counsel that title to the materials and
supplies pass to the Partnership and that the Partnership bears the risk of loss
of the materials and supplies;
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(g) during the Compliance Period, no later than the day any such
certification is filed, copies of any certifications which the Partnership must
furnish to federal or state governmental authorities administering the Tax
Credit program including, but not limited to, copies of all annual tenant
recertifications required under Section 42 of the Code;
(h) by the annual renewal date each and every year, an executed
original or certified copy of each and every Insurance policy or certificate
required by the terms of this Agreement;
(i) by the payment date of the real estate property taxes each and
every year verification that the same has been paid in full;
(j) on or before March 15th of each calendar year, a copy of the
General Partner's updated financial statement as of December 31 of the previous
year;
(k) on or before November 1 of each calendar year, a copy of the
following year's proposed operating budget. Each such Budget shall contain all
the anticipated Cash Expenses of the Partnership. Such Budget shall only be
adopted with the Consent of the Special Limited Partner, which consent shall not
be unreasonably withheld; and
(l) notice of the occurrence, or of the likelihood of occurrence, of
any event which has had a material adverse effect upon the Apartment Housing or
the Partnership, including, but not limited to, any breach of any of the
representations and warranties set forth in Section 9.12 of this Agreement, and
any inability of the Partnership to meet its cash obligations as they become
payable, within ten days after the occurrence of such event.
Section 14.4 Late Reports. If the General Partner does not fulfill its
obligations under Section 14.2 within the time periods set forth therein, the
General Partner, using its own funds, shall pay as damages the sum of $100 per
week (plus interest at the rate established by Section 6.3 of this Agreement) to
the Limited Partner until such obligations shall have been fulfilled. If the
General Partner does not fulfill its obligations under Section 14.3 within the
time periods set forth therein, the General Partner, using its own funds, shall
pay as damages the sum of $100.00 per week (plus interest at the rate
established by Section 6.3 of this Agreement) to the Limited Partner until such
obligations shall have been fulfilled. If the General Partner shall so fail to
pay, the General Partner and its Affiliates shall forthwith cease to be entitled
to any fees hereunder (other than the Development Fee) and/or to the payment of
any Net Operating Income or Sale or Refinancing Proceeds to which the General
Partner may otherwise be entitled hereunder. Payments of fees and Distributions
shall be restored only upon payment of such damages in full.
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Section 14.5 Annual Site Visits. The Limited Partner, at the Limited
Partner's expense, has the right, upon reasonable notice to the General Partner,
to conduct a site visit which will include, in part, an inspection of the
property, a review of the office and tenant files and an interview with the
property manager.
Section 14.6 Tax Returns. The General Partner shall cause income tax
returns for the Partnership to be prepared and timely filed with the appropriate
federal, state and local taxing authorities.
Section 14.7 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year or such other period as may be approved by the Internal Revenue
Service for federal income tax purposes.
Section 14.8 Banking. All funds of the Partnership shall be deposited in a
separate bank account or accounts as shall be determined by the General Partner
with the Consent of the Special Limited Partner. All withdrawals therefrom shall
be made upon checks signed by the General Partner or by any person authorized to
do so by the General Partner. The General Partner shall provide to any Partner
who requests same the name and address of the financial institution, the account
number and other relevant information regarding any Partnership bank account.
Section 14.9 Certificates and Elections.
(a) The General Partner shall file the First Year Certificate within 90
days following the close of the taxable year during which Completion of
Construction occurs and thereafter shall timely file any certificates which the
Partnership must furnish to federal or state governmental authorities
administering the Tax Credit programs under Section 42 of the Code.
(b) The General Partner, with the Consent of the Special Limited
Partner, may, but is not required to, cause the Partnership to make or revoke
the election referred to in Section 754 of the Code, as amended, or any similar
provisions enacted in lieu thereof.
ARTICLE XV
DISSOLUTION, WINDING UP, TERMINATION
AND LIQUIDATION OF THE PARTNERSHIP
Section 15.1 Dissolution of Partnership. The Partnership shall be dissolved
upon the expiration of its term or the earlier occurrence of any of the
following events.
(a) The effective date of the Withdrawal or removal of the General
Partner, unless (1) at the time there is at least one other General Partner
(which may be the Special Limited Partner if it elects to serve as successor
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General Partner under Section 13.4 hereof) who will continue as General Partner,
or (2) within 120 days after the occurrence of any such event the Limited
Partner elects to continue the business of the Partnership.
(b) The sale of the Apartment Housing and the receipt in cash of the
full amount of the proceeds of such sale.
Notwithstanding the foregoing, however, in no event shall the
Partnership terminate prior to the expiration of its term if such termination
would result in a violation of the Mortgage or any other agreement with or rule
or regulation of any Mortgage lender to which the Partnership is subject.
Section 15.2 Return of Capital Contribution upon Dissolution. Except as
provided in Sections 7.3 and 7.4 of this Agreement, which provide for a
reduction or refund of the Limited Partner's Capital Contribution under certain
circumstances, and which shall represent the personal obligations of the General
Partner under certain circumstances, as well as the obligations of the
Partnership, each Partner shall look solely to the assets of the Partnership for
all Distributions with respect to the Partnership (including the return of its
Capital Contribution) and shall have no recourse therefor (upon dissolution or
otherwise) against any General Partner. No Partner shall have any right to
demand property other than money upon dissolution and termination of the
Partnership, and the Partnership is prohibited from such a distribution of
property absent the Consent of the Special Limited Partner.
Section 15.3 Distribution of Assets. Upon a dissolution of the Partnership,
the General Partner (or, if there is no General Partner then remaining, such
other Person(s) designated as the liquidator of the Partnership by the Special
Limited Partner or by the court in a judicial dissolution) shall take full
account of the Partnership assets and liabilities and shall liquidate the assets
as promptly as is consistent with obtaining the fair value thereof.
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership pursuant to Section
11.2(a) through and including 11.2(c), the remaining assets of the Partnership
shall be distributed to the Partners in accordance with the positive balances in
their Capital Accounts, after taking into account all allocations under Article
X hereof.
(b) In the event that a General Partner has a deficit balance in its
Capital Account following the liquidation of the Partnership or its Interest, as
determined after taking into account all Capital Account adjustments for the
Partnership taxable year in which such liquidation occurs, such General Partner
shall pay to the Partnership the amount necessary to restore such deficit
balance to zero in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(3).
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(1) The deficit reduction amount shall be paid by the General
Partner by the end of such taxable year (or, if later, within 90 days after the
date of Liquidation) and shall, upon liquidation of the Partnership, be paid to
creditors of the Partnership or distributed to other Partners in accordance with
their positive Capital Account balances.
(c) With respect to assets distributed in kind to the Partners in
liquidation or otherwise:
(1) unrealized appreciation or unrealized depreciation in the
values of such assets shall be deemed to be Income and Losses realized by the
Partnership immediately prior to the liquidation or other Distribution event;
and
(2) such Income and Losses shall be allocated to the Partners
in accordance with Section 10.2 hereof, and any property so distributed shall be
treated as a Distribution of an amount in cash equal to the excess of such Fair
Market Value over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered.
(d) For the purposes of Section 15.3(c), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the Fair Market
Value of such assets, taking into account the Fair Market Value of the
associated financing but subject to Section 7701(g) of the Code, and the asset's
Gross Asset Value. Section 15.3(c) is merely intended to provide a rule for
allocating unrealized Income and Losses upon liquidation or other Distribution
event, and nothing contained in Section 15.3(c) or elsewhere in this Agreement
is intended to treat or cause such Distributions to be treated as sales for
value. The Fair Market Value of such assets shall be determined by an
independent appraiser to be selected by the General Partner.
Section 15.4 Deferral of Liquidation. If at the time of liquidation the
General Partner or other liquidator shall determine that an immediate sale of
part or all of the Partnership assets could cause undue loss to the Partners,
the liquidator may, in order to avoid loss, but only with the Consent of the
Special Limited Partner, either defer liquidation and retain all or a portion of
the assets or distribute all or a portion of the assets to the Partners in kind.
In the event that the liquidator elects to distribute such assets in kind, the
assets shall first be assigned a value (by appraisal by an independent
appraiser) and the unrealized appreciation or depreciation in value of the
assets shall be allocated to the Partners' Capital Accounts, as if such assets
had been sold, in the manner described in Section 10.2, and such assets shall
then be distributed to the Partners as provided herein. In applying the
preceding sentence, the Apartment Housing shall not be assigned a value less
than the unamortized principal balance of any loan secured thereby.
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Section 15.5 Liquidation Statement. Each of the Partners shall be
furnished with a statement prepared or caused to be prepared by the General
Partner or other liquidator, which shall set forth the assets and liabilities of
the Partnership as of the date of complete liquidation. Upon compliance with the
distribution plan as outlined in Sections 15.3 and 15.4, the Limited Partner and
Special Limited Partner shall cease to be such and the General Partner shall
execute, acknowledge and cause to be filed those certificates referenced in
Section 15.6.
Section 15.6 Certificates of Dissolution; Certificate of Cancellation of
Certificate of Limited Partnership.
(a) Upon the dissolution of the Partnership, the General Partner shall
cause to be filed in the office of the Secretary of State, and on a form
prescribed by the Secretary of State of Kansas, a certificate of dissolution.
The certificate of dissolution shall set forth the Partnership's name, the
Secretary of State's file number for the Partnership, the event causing the
Partnership's dissolution and the date of the dissolution.
(b) Upon the completion of the winding up of the Partnership's affairs,
the General Partner shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State of Kansas, a certificate of cancellation
of the Certificate of Limited Partnership. The certificate of cancellation of
the Certificate of Limited Partnership shall set forth the Partnership's name,
the Secretary of State's file number for the Partnership, and any other
information which the General Partner determines to include therein.
ARTICLE XVI
AMENDMENTS
This Agreement may be amended by a majority consent of the Partners
after a meeting of the Partners, which meeting shall be held after proper notice
as provided in Section 17.2 of this Agreement. For purposes of this Article XVI,
a Partner shall grant its consent to a proposed amendment unless such Partner
reasonably determines that the proposed amendment is adverse to the Partner's
Interest.
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ARTICLE XVII
MISCELLANEOUS
Section 17.1 Voting Rights.
(a) The Limited Partner shall have no right to vote upon any matters
affecting the Partnership, except as provided in this Agreement.
Notwithstanding, at a meeting of the Partnership, the Limited Partner may vote:
(1) to approve or disapprove the Sale or Refinancing of the
Apartment Housing prior to such Sale or Refinancing;
(2) to remove the General Partner and elect a substitute
General Partner as provided in this Agreement;
(3) to elect a successor General Partner upon the Withdrawal
of the General Partner;
(4) to approve or disapprove the dissolution of the
Partnership;
(5) subject to the provisions of Article XVI hereof, to amend
this Agreement;
(6) to approve or disapprove the refinancing of the Mortgage
prior to such refinancing; or
(7) on any other matter permitted in this Agreement.
(b) On any matter where the Limited Partner has the right to vote,
votes may only be cast at a duly called meeting of the Partnership or through
written action without a meeting.
(c) The Special Limited Partner shall have the right to consent to
those actions or inactions of the Partnership and/or General Partner as
otherwise set forth in this Agreement, and the General Partner is prohibited
from any action or inaction requiring such consent unless such consent has been
obtained.
Section 17.2 Meeting of Partnership. Meetings of the Partnership may be
noticed either (a) at any time by the General Partner; or (b) by the Limited
Partner or the Special Limited Partner. The notice for a meeting shall specify
the purpose of such meeting, and the time and the place of such meeting (which
shall be by telephone conference or at the principal place of business of the
Partnership). Any Partner calling a Partners meeting shall provide written
notice to all Partners. The meeting shall not be held less than 15 days nor more
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than 30 days from the Partners' receipt of the notice. All meetings and actions
of the Limited Partner shall be governed in all respects, including matters
relating to proxies, record dates and actions without a meeting, by the
applicable provisions of the Act, as it shall be amended from time to time.
Section 17.3 Notices. Any notice given pursuant to this Agreement may be
served personally on the Partner to be notified, or may be sent by overnight
courier, or may be mailed, first class postage prepaid, or by certified mail, to
the following address, or to such other address as a party may from time to time
designate in writing:
To the General Partner: ERC Properties, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
To the Limited Partner: WNC Holdings, LLC
c/o WNC & Associates, Inc.
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
To the Special
Limited Partner: WNC Housing, L.P.
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
Section 17.4 Successors and Assigns. All the terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Partners.
Section 17.5 Recording of Certificate of Limited Partnership. If the
General Partner should deem it advisable to do so, the Partnership shall record
in the office of the County Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited Partnership, or any amendment thereto, after such Certificate or
amendment has been filed with the Secretary of State of Kansas.
Section 17.6 Amendment of Certificate of Limited Partnership.
(a) The General Partner, or any successor general partner, shall cause
to be filed, within 30 days after the happening of any of the following events,
an amendment to the Certificate of Limited Partnership reflecting the occurrence
of any of the following:
(1) a change in the name of the Partnership;
(2) a change in the street address of the Partnership's
principal executive office;
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(3) a change in the address, or the Withdrawal, of a General
Partner, or a change in the address of the agent for service of process, or
appointment of a new agent for service of process;
(4) the admission of a General Partner and that Partner's
address; or
(5) the discovery by the General Partner of any false or
erroneous material statement contained in the Certificate of Limited Partnership
or any amendment thereto.
(b) The Certificate of Limited Partnership may also be amended in
conformity with this Agreement at any time in any other respect that the General
Partner determines.
(c) The General Partner shall cause the Certificate of Limited
Partnership to be amended, when required or permitted as aforesaid, by filing a
certificate of amendment thereto in the office of, and on a form prescribed by,
the Secretary of State of Kansas. The certificate of amendment shall set forth
the Partnership's name, the Secretary of State's file number for the Partnership
and the text of the amendment.
(d) In the event of a Withdrawal or Involuntary Withdrawal of the
General Partner, and if such General Partner does not file an amendment to the
Certificate of Limited Partnership as specified in this Section 17.6, then the
Special Limited Partner is hereby granted the specific authority to sign and
file such amendment.
Section 17.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument which may sufficiently be
evidenced by one counterpart.
Section 17.8 Captions. Captions to and headings of the Articles, Sections
and subsections of this Agreement are solely for the conveniences of the
Partners, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.
Section 17.9 Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
Section 17.10 Certain Provisions. If the operation of any provision of this
Agreement would contravene the provisions of applicable law, or would result in
the imposition of general liability on any Limited Partner or Special Limited
Partner, such provisions shall be void and ineffectual.
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Section 17.11 Tax Matters Partner. All the Partners hereby agree that the
General Partner shall be the "Tax Matters Partner" pursuant to the Code and in
connection with any review or examination of the federal income tax returns of
the Partnership. At the time of a review, examination, or otherwise, the Tax
Matters Partner shall inform the IRS that a copy of all correspondence shall be
provided to the Limited Partner.
(a) The Tax Matters Partner shall furnish or cause to be furnished to
each Partner notice and information with respect to the following: closing
conference with an examining agent; proposed adjustments, rights of appeal, and
requirements for filing a protest; time and place of any appeals conference;
acceptance by the Internal Revenue Service of any settlement offer; consent to
the extension of the period of limitation with respect to all Partners; filing
of a request for administrative adjustment on behalf of the Partnership; filing
by the Tax Matters Partner or any other Partner of any petition for judicial
review; filing of any appeal with respect to any judicial determination; and a
final judicial redetermination.
(b) If the Tax Matters Partner shall determine to litigate any
administrative determination relating to federal income tax matters, then the
Tax Matters Partner shall obtain the Consent of the Special Limited Partner to
litigate such matter in such court as the Tax Matters Partner shall decide in
its sole discretion.
(c) In discharging its duties and responsibilities, the Tax Matters
Partner shall act as a fiduciary (1) to the Limited Partner (to the exclusion of
the other Partners) insofar as tax matters related to the Tax Credits are
concerned, and (2) to all of the Partners in other respects.
(d) The Partners consent and agree that in connection with any audit,
review, examination, or otherwise of the Partnership, or if the Tax Matters
Partner withdraws from the Partnership or the Tax Matters Partner becomes
Bankrupt, then the Special Limited Partner may become, in its sole discretion, a
special general partner, and become the Tax Matters Partner. The Limited Partner
will make no claim against the Partnership in respect of any action or omission
by the Tax Matters Partner during such time as the Special Limited Partner acts
as the Tax Matters Partner.
(e) Nothing herein shall be construed as a waiver by the Limited
Partner of any of its rights under Chapter 631 of the Code. The General Partner
shall not enter into any settlement agreement purporting to bind the Limited
Partner without the Limited Partner's consent.
Section 17.12 Expiration of Compliance Period.
(a) Notwithstanding any provision hereof to the contrary (other than
this Section 17.12), the Special Limited Partner shall have the right at any
time after the beginning of the last year of the Compliance Period to require,
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by written notice to the General Partner, that the General Partner promptly
submit a written request to the applicable State Tax Credit Agency pursuant to
Section 42(h) of the Code (or any successor provision) that such agency endeavor
to locate within one year from the date of such written request a purchaser for
the Apartment Housing who will continue to operate the Apartment Housing as a
qualified low income property, at a purchase price that is not less than the
minimum amount set forth in Section 42(h)(6) of the Code (or any successor
provision). In the event that the State Tax Credit Agency obtains an offer
satisfying the conditions of the preceding sentence, the General Partner shall
promptly notify the Special Limited Partner in writing with respect to the terms
and conditions of such offer, and, if the Special Limited Partner notifies the
General Partner that such offer should be accepted, the General Partner shall
cause the Partnership promptly to accept such offer and to proceed to sell the
Apartment Housing pursuant to such offer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Special Limited Partner shall have the right at any time after the
end of the Compliance Period to require, by written notice to the General
Partner (the "Required Sale Notice"), that the General Partner promptly use its
best efforts to obtain a buyer for the Apartment Housing on the most favorable
terms then available. The General Partner shall submit the terms of any proposed
sale to the Special Limited Partner for its approval in the manner set forth in
Section 17.12(a) hereof. If the General Partner shall fail to so obtain a buyer
for the Apartment Housing within six months of receipt of the Required Sale
Notice or if the Consent of the Special Limited Partner in its sole discretion
shall be withheld to any proposed sale, then the Special Limited Partner shall
have the right at any time thereafter to obtain a buyer for the Apartment
Housing on terms acceptable to the Special Limited Partner (but not less
favorable to the Partnership than any proposed sale previously rejected by the
Special Limited Partner). In the event that the Special Limited Partner so
obtains a buyer, it shall notify the General Partner in writing with respect to
the terms and conditions of the proposed sale and the General Partner shall
cause the Partnership promptly to sell the Apartment Housing to such buyer.
(c) A sale of the Apartment Housing prior to the end of the Compliance
Period may only take place if the conditions of Section 42(j)(6) of the Code (or
any successor provision) will be satisfied upon such sale by having the
purchaser of the Apartment Housing post the required bond on behalf of the
Partnership.
Section 17.13 Number and Gender. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the Person or Persons may require.
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Section 17.14 Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
all prior understandings and agreements between the parties, written or oral,
respecting this transaction are merged in this Agreement.
Section 17.15 Governing Law. This Agreement and its application shall be
governed by the laws of the State.
Section 17.16 Attorney's Fees. If a suit or action is instituted in
connection with an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to recover, in addition to costs, such sums
as the court may adjudge reasonable as attorney's fees, including fees on any
appeal.
Section 17.17 Receipt of Correspondence. The Partners agree that the
General Partner shall send to the Limited Partner and the Special Limited
Partner within five days of receipt a copy of any correspondence relative to the
Apartment Housing's noncompliance with the Mortgage, relative to the Apartment
Housing's noncompliance with the Tax Credit rules or regulations, relative to
the acceleration of the Mortgage and/or relative to the disposition of the
Apartment Housing.
Section 17.18 Security Interest. As security for the performance of the
respective obligations to which any Partner may be subject under this Agreement,
the Partnership shall have (and each Partner hereby grants to the Partnership) a
security interest in their respective Interests of such Partner and in all funds
distributable to said Partner to the extent of the amount of such obligation.
IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership of XxXxxxxxx Housing Associates Limited Partnership, a Kansas
limited partnership, is made and entered into as of the 1st day of September,
2001.
GENERAL PARTNER
ERC Properties, Inc.
By: /s/ XXX XXXXX
Xxx X. Xxxxx,
Executive Vice President
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WITHDRAWING ORIGINAL LIMITED PARTNER
ERC Properties, Inc.
By: /s/ XXX XXXXXXX
Xxx Xxxxxxx,
President
/s/ XXX XXXXXXX
Xxx Xxxxxxx
LIMITED PARTNER
WNC Holding, LLC
By: WNC & Associates, Inc.
Managing Member
By: /s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx,
Executive Vice President
SPECIAL LIMITED PARTNER
WNC Housing, L.P.
By: WNC & Associates, Inc.,
General Partner
By: /s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx,
Executive Vice President
74
EXHIBIT A TO PARTNERSHIP AGREEMENT
LEGAL DESCRIPTION
A tract of land in the Southeast Quarter of Section Seventeen (17), Township
Nineteen (19) South, Range Three (3) West of the Sixth Principal Meridian
described as follows:
Commencing at the Northeast corner of the Southeaster Quarter of Section
Seventeen (17), Township Nineteen (19) South, Range Three (3) West of the Sixth
Principal Meridian; thence west along the north line of said Southeast Quarter
40.00 feet to the west right-of-way line of extended North Main Street and old
81 Highway; thence with a deflection angle 90(Degree) 15'21" left-South along
the west right-of-way line of extended North Main Street and parallel with the
East line of said Southeast Quarter 378.95 feet to the point of beginning;
Thence continuing along the west right-of-way of extended North Main Street
518.75 feet; thence with a deflection angle 90(Degree) 15'21" right-West,
parallel with the North line of said Southeast Quarter 1013.41 feet to the
Easterly right-of-way line of U.S. Highway 81; thence with deflection angle
124(Degree) 43'27" right-along said east right-of-way 116.45 feet to a point of
curvature; thence along a curve to the left having a radius of 5789.65 and
following the arc of said curve Northeasterly along the east right-of-way line
of said Highway 500.36 feet; thence with a deflection angle 60(Degree)13'39"
right-East (measured from tangent of said curve) parallel with the north line of
said Southeast Quarter a distance of 677.86 feet to the point of beginning
containing ten (10.00) Acres in XxXxxxxxx County, Kansas, subject to any
easements of record.
A-1
EXHIBIT B TO PARTNERSHIP AGREEMENT
FORM OF LEGAL OPINION
WNC Holdings, LLC
c/o WNC & Associates, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
RE: XxXxxxxxx Housing Associates Limited Partnership
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the investment by WNC Holdings, LLC, a California limited
partnership (the "Limited Partner") in XxXxxxxxx Housing Associates Limited
Partnership (the "Partnership"), a Kansas limited partnership formed to own,
develop, (construct/-rehabilitate) finance and operate an apartment complex for
low-income persons (the "Apartment Complex") in McPherson, XxXxxxxxx County,
Kansas.
The general partner(s) of the Partnership (is/are) ERC Properties,
Inc., (the "General Partner(s)").
In rendering the opinions stated below, we have examined and relied
upon the following:
(i) [Certificate of Limited Partnership];
(ii) [Agreement of Limited Partnership] (the "Partnership
Agreement");
(iii) A preliminary reservation letter from [State
Allocating Agency] (the "State Agency") dated
_________, 200___ conditionally awarding
$_______________ in Federal tax credits annually for
each of ten years and $_______________ in California
tax credits annually for each of four years for the
Apartment Complex; and
(iv) Such other documents, records and instruments as we
have deemed necessary in order to enable us to render
the opinions referred to in this letter.
For purposes of rendering the opinions stated below we have assumed
that, in those cases in which we have not been involved directly in the
preparation, execution or the filing of a document, that (a) the document
reviewed by us is an original document, or a true and accurate copy of the
original document, and has not been subsequently amended, (b) the signatures on
each original document are genuine, and (c) each party who executed the document
had proper authority and capacity.
Based on the foregoing we are of the opinion that:
(a) ________________________, one of the General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of _____________________ and has full power and authority to enter into
B-1
WNC Holdings, LLC
c/o WNC & Associates, Inc.
_____________, 200__
Page 2
and perform its obligations under the Partnership Agreement. __________________,
one of the other General Partners, is a [corporation/partnership] duly formed
and validly existing under the laws of the State of __________________ and has
full power and authority to enter into and perform its obligations under the
Partnership Agreement.
(b) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Kansas.
(c) The Partnership is validly existing under and subject to the laws
of Kansas with full power and authority to own, develop,
[construct/rehabilitate], finance and operate the Apartment Complex and to
otherwise conduct business under the Partnership Agreement.
(d) Execution of the Partnership Agreement by the General Partner(s)
has been duly and validly authorized by or on behalf of the General Partner(s)
and, having been executed and delivered in accordance with its terms, the
Partnership Agreement constitutes the valid and binding agreement of the General
Partner(s), enforceable in accordance with its terms.
(e) The execution and delivery of the Partnership Agreement by the
General Partner(s) does not conflict with and will not result in a breach of any
of the terms, provisions or conditions of any agreement or instrument known to
counsel to which any of the General Partner(s) or the Partnership is a party or
by which any of them may be bound, or any order, rule, or regulation to be
applicable to any of such parties of any court or governmental body or
administrative agency having jurisdiction over any of such parties or over the
property.
(f) To the best of counsel's knowledge, after due inquiry, there is no
litigation or governmental proceeding pending or threatened against, or
involving the Apartment Complex, the Partnership or any General Partner which
would materially adversely affect the condition (financial or otherwise) or
business of the Apartment Complex, the Partnership or any of the Partners of the
Partnership.
(g) The Limited Partner and the Special Limited Partner have been
admitted to the Partnership as limited partners of the Partnership under
__________ law and are entitled to all of the rights of limited partners under
the Partnership Agreement. Except as described in the Partnership Agreement, no
person is a partner of or has any legal or equitable interest in the
Partnership, and all former partners of record or known to counsel have validly
B-2
WNC Holdings, LLC
c/o WNC & Associates, Inc.
_____________, 200__
Page 3
withdrawn from the Partnership and have released any claims against the
Partnership arising out of their participation as partners therein.
(h) Liability of the Limited Partner for obligations of the Partnership
is limited to the amount of the Limited Partner's capital contributions required
by the Partnership Agreement.
(i) Neither the General Partner(s) of the Partnership nor the Limited
Partner nor the Special Limited Partner will have any liability for the Mortgage
represented thereby (as those terms are defined in the Partnership Agreement,
and the lender of the Mortgage Loan will look only to its security in the
Apartment Complex for repayment of the Mortgage Loan.
(j) The Partnership owns a fee simple interest in the Apartment
Complex.
(k) To the best of our actual knowledge and belief, after due inquiry,
the Partnership has obtained all consents, permissions, licenses, approvals, or
orders required by all applicable governmental or regulatory agencies for the
development, [construction/rehabilitation] and operation of the Apartment
Complex, and the Apartment Complex conforms to all applicable Federal, state and
local land use, zoning, health, building and safety laws, ordinances, rules and
regulations.
(l) The Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") from the State Agency. The final allocation
of the LIHTC and ultimately eligibility of the Apartment Complex for such final
allocation are subject to a series of requirements which must be met, performed
or achieved at various times prior to and after such final allocation. Assuming
all such requirements are met, performed or achieved at the time or times
provided by applicable laws and regulations, the Apartment Complex will qualify
for LIHTC.
All of the opinions set forth above are qualified to the extent that
the validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the covenants, warranties or other provisions contained in any agreement. We
have not examined, and we express no opinion with respect to, the applicability
of, or liability under, any Federal, state or local law, ordinance or regulation
governing or pertaining to environmental matters, hazardous wastes, toxic
substances or the like.
B-3
WNC Holdings, LLC
c/o WNC & Associates, Inc.
_____________, 200__
Page 4
We express no opinion as to any matter except those set forth above.
These opinions are rendered for use by the Limited Partner and its legal counsel
which will rely on this opinion in connection with federal income tax opinions
to be rendered by that firm. This opinion may not be delivered to or relied upon
by any other person or entity without our express written consent.
Sincerely,
--------------------
B-4
EXHIBIT C TO PARTNERSHIP AGREEMENT
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of the date written below by
XxXxxxxxx Housing Associates Limited Partnership, a Kansas limited partnership
(the "Partnership"); ERC Properties, Inc., (collectively referred to as the
"General Partner"); and Xxx Xxxxxxx and ERC Properties, Inc. (collectively
referred to as the "Original Limited Partner") for the benefit of WNC Holdings,
LLC, a California limited partnership (the "Investment Partnership"), and WNC &
Associates, Inc. ("WNC").
WHEREAS, the Partnership proposes to admit the Investment Partnership
as a limited partner thereof pursuant to an Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), in
accordance with which the Investment Partnership will make substantial capital
contributions to the Partnership; and
WHEREAS, the Investment Partnership and WNC have relied upon certain
information and representations described herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Partnership Agreement and become a limited partner of the Partnership, and for
$1.00 and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Partnership, the General Partner and the
Original Limited Partner hereby agree as follows for the benefit of the
Investment Partnership and WNC.
1. Representations, Warranties and Covenants of the Partnership,
the General Partner and the Original Limited Partner
The Partnership, the General Partner and the Original Limited Partner
jointly and severally represent, warrant and certify to the Investment
Partnership and WNC that, with respect to the Partnership, as of the date
hereof:
1.1 The Partnership is duly organized and in good standing as
a limited partnership pursuant to the laws of the state of its formation with
full power and authority to own its apartment complex (the "Apartment Complex")
and conduct its business; the Partnership, the General Partner and the Original
Limited Partner have the power and authority to enter into and perform this
Certification and Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the General Partner and the Original Limited
Partner have been duly and validly authorized by all necessary action; the
execution and delivery of this Certification and Agreement, the fulfillment of
its terms and consummation of the transactions contemplated hereunder do not and
will not conflict with or result in a violation, breach or termination of or
constitute a default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which the Partnership or
any General Partner or Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Partnership or any General Partner
or Original Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and binding agreement of the
Partnership, the General Partner and the Original Limited Partner, enforceable
against each of them in accordance with its terms.
1.2 The General Partner has delivered to the Investment
Partnership, WNC or their affiliates all documents and information requested by
them or their advisors which would be material to a prudent investor in deciding
whether to invest in the Partnership. To the best of the General Partner's
knowledge, all factual information provided to the Investment Partnership, WNC
or their affiliates either in writing or orally, did not, at the time given, and
does not, on the date hereof, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they are made.
1.3 Each of the representations and warranties contained in
the Partnership Agreement is true and correct as of the date hereof.
1.4 Each of the covenants and agreements of the Partnership
and the General Partner contained in the Partnership Agreement has been duly
performed to the extent that performance of any covenant or agreement is
required on or prior to the date hereof.
1.5 All conditions to admission of the Investment Partnership
as the investment limited partner of the Partnership contained in the
Partnership Agreement have been satisfied.
1.6 No default has occurred and is continuing under the
Partnership Agreement or any of the Project Documents (as such term is defined
in the Partnership Agreement) for the Partnership.
1.7 The Partnership will allocate to the Limited Partner the
Projected Annual Tax Credits, or the Revised Projected Tax Credits, if
applicable.
1.8 The General Partner agrees to take all actions necessary
to claim the Projected Tax Credit, including, without limitation, the filing of
Form(s) 8609 with the Internal Revenue Service.
C-2
1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.
1.10 The Partnership has the sole responsibility to pay all
maintenance and operating costs, including all taxes levied and all insurance
costs, attributable to the Apartment Complex.
1.11 The Partnership, except to the extent it is protected by
insurance and excluding any risk borne by lenders, bears the sole risk of loss
if the Apartment Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.
1.12 No person or entity except the Partnership has the right
to any proceeds, after payment of all indebtedness, from the sale, refinancing,
or leasing of the Apartment Complex.
1.13 No General Partner is related in any manner to the
Investment Partnership, nor is any General Partner acting as an agent of the
Investment Partnership.
1.14 No event has occurred which would have a material adverse
change to the Limited Partner's investment.
2. Miscellaneous
2.1 This Certification and Agreement is made solely for the
benefit of the Investment Partnership and WNC, and their respective successors
and assignees, and no other person shall acquire or have any right under or by
virtue of this Agreement.
2.2 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, all of
which together shall constitute one and the same instrument.
2.3 Capitalized terms used but not defined in this
Certification Agreement shall have the meanings given to them in the Partnership
Agreement.
C-3
IN WITNESS WHEREOF, this Certificate and Agreement is made and entered
into as of the day of ____________, 2000.
PARTNERSHIP
XxXxxxxxx Housing Associates Limited Partnership
ERC Properties, Inc.
General Partner
By: ___________________
Xxx X. Xxxxx,
Executive Vice President
GENERAL PARTNER
ERC Properties, Inc.
By: ___________________
Xxx Xxxxxxx
President
C-4
EXHIBIT D TO PARTNERSHIP AGREEMENT
FORM OF COMPLETION CERTIFICATE
(to be used when construction [rehabilitation] completed)
COMPLETION CERTIFICATE
The undersigned, an architect duly licensed and registered in the State of
Kansas, has reviewed the final working plans and detailed specifications for
McPherson Housing Associates Limited Partnership, a Kansas limited partnership
(the "Partnership") in connection with the construction [rehabilitation] of
improvements on certain real property located in McPherson, XxXxxxxxx County,
Kansas. (the "Improvements").
The undersigned hereby certifies (i) that the Improvements have been completed
in accordance with the aforesaid plans and specifications, (ii) that a permanent
certificate of occupancy and all other permits required for the continued use
and occupancy of the Improvements have been issued with respect thereto by the
governmental agencies having jurisdiction thereof, (iii) that the Improvements
are in compliance with all requirements and restrictions of all governmental
authorities having jurisdiction over the Improvements, including, without
limitation, all applicable zoning, building, environmental, fire, and health
ordinances, rules and regulations and (iv) that all contractors, subcontractors
and workmen who worked on the Improvements have been paid in full except for
normal retainages and amounts in dispute.
____________________________
Apartment Housing Architect
Date: ____________________________
Confirmed by:
____________________________
General Partner
Date: ____________________________
D-1
EXHIBIT E TO THE PARTNERSHIP
[ACCOUNTANT'S CERTIFICATE]
[Accountant's Letterhead]
_______________, 200____
WNC Holdings, LLC
c/o WNC & Associates, Inc.
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
RE: Partnership
Certification as to Amount
of Eligible Tax Credit Base
Gentlemen:
In connection with the acquisition by WNC Holdings, LLC (the "Limited Partner")
of a limited partnership interest in XxXxxxxxx Housing Associates Limited
Partnership, a Kansas limited partnership (the "Partnership") which owns a
certain parcel of land located in McPherson, XxXxxxxxx County, Kansas and
improvements thereon (the "Apartment Housing"), the Limited Partner has
requested our certification as to the amount of low-income housing tax credits
("Tax Credits") available with respect to the Apartment Housing under Section 42
of the Internal Revenue Code of 1986, as amended (the "Code"). Based upon our
review of [the financial information provided by the Partnership] of the
Partnership, we are prepared to file the Federal information tax return of the
Partnership claiming annual Tax Credits in the amount of $_______________, which
amount is based on an eligible basis (as defined in Section 42(d) of the Code)
of the Apartment Housing of $________________, a qualified basis (as defined in
Section 42(c) of the Code) of the Apartment Housing of $_________________ and an
applicable percentage (as defined in Section 42(b) of the Code) of _____%.
Sincerely,
-------------------------
E-1
EXHIBIT F TO THE PARTNERSHIP AGREEMENT
[CONTRACTOR'S CERTIFICATE]
[Contractor's Letterhead]
_______________, 200____
WNC Holdings, LLC
c/o WNC & Associates, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Re: XxXxxxxxx Housing Associates Limited Partnership
Dear Ladies and Gentlemen:
The undersigned ERC Construction Group, LLC, (hereinafter referred to as
"Contractor"), has furnished or has contracted to furnish labor, services and/or
materials (hereinafter collectively referred to as the "Work") in connection
with the improvement of certain real property known as Chapel Ridge located in
McPherson, XxXxxxxxx County, Kansas (hereinafter known as the "Apartment
Housing").
Contractor makes the following representations and warranties regarding Work at
the Apartment Housing.
o Work on said Apartment Housing has been performed and completed in
accordance with the plans and specifications for the Apartment Housing.
o Contractor acknowledges that all amounts owed pursuant to the contract for
Work performed for XxXxxxxxx Housing Associates Limited Partnership is paid
in full.
o Contractor acknowledges that XxXxxxxxx Housing Associates Limited
Partnership is not in violation with terms and conditions of the
contractual documents related to the Apartment Housing.
o Contractor warrants that all parties who have supplied Work for improvement
of the Apartment Housing have been paid in full.
o Contractor acknowledges the contract to be paid in full and releases any
lien or right to lien against the above property.
The undersigned has personal knowledge of the matters stated herein and is
authorized and fully qualified to execute this document on behalf of the
Contractor.
(NAME OF COMPANY)
By:_________________________________________
Title:______________________________________
F-1
EXHIBIT G TO THE PARTNERSHIP AGREEMENT
DEPRECIATION SCHEDULE
Real Property: Use Modified Accelerated Cost Recovery System ("MACRS") 27.5 year
straight-line depreciation using the mid month convention or use MACRS
Alternative-Depreciation System ("ADS") 40 year straight-line depreciation if
required pursuant to the Agreement. Real Property includes buildings and
building improvements.
Personal property: Use 5-year recovery period using mid-year 200% declining
balance, if it relates to residential real estate or use MACRS Alternative
Depreciation System ("ADS") 12 year straight-line depreciation if required
pursuant to the Agreement. Personal property related to commercial space must
use a 7-year recovery period using mid year 200% declining balance.
The following costs have a 5-year recovery period:
o Removable appliances (not central climate control system equipment or water
heaters)
o Draperies, blinds and shades, if they would be reusable if removed
o Carpeting, if its removal would not destroy the underlying floor
o Vinyl flooring, if its removal would be easy and not destroy the underlying
floor
o Common area furnishings
o Photocopy equipment
o Calculators, adding machines
o Typewriters
o Computers
o Wall coverings, if their removal would not destroy the underlying wall
o Exit signs
o Security systems (not fire protection system, sprinkler system, smoke
detectors, or fire escapes)
o Outdoor security lighting (not parking lot lighting)
o Fire extinguishers
o Decorative lighting and sconces (not light fixtures for central lighting)
o Outdoor decorative lighting, such as that lighting signs
o Telephone systems
o Corridor handrails (not bathroom or stairway)
o Raised floors to accommodate wirings in computer rooms
The following costs have a 7-year recovery period with a mid year 200% declining
balance:
G-1
o Office furnishings
o Cabinets and shelving
o Bulletin boards
o Conference or meeting room movable partitions
A percentage of the development fee is also allowed in personal property. The
percentage is calculated by taking the ratio of personal property cost,
excluding development fee, to total development costs and multiplying the
development fee by the calculated ratio.
Land improvements Cost Recovery - Use 15-year recovery period using mid-year
150% declining balance or use MACRS Alternative Depreciation System ("ADS") 20
year straight-line depreciation if required pursuant to the Agreement. The
following costs have a 15-year recovery period. Items allowed in this section
are costs attributable to excavation, grading, and removing soil necessary to
the proper setting of buildings. Other costs allowable in this section are as
follows:
o Roads and sidewalks
o Concrete work (curb and gutter)
o Fencing
o Landscaping (including, but not limited to, trees and shrubs) around the
building which would be destroyed if the building were replaced
o Decorative walls which are part of the landscaping
o Parking lot (resurfacing it later is deducted as an expense)
o Initial parking lot striping (restriping it later is deducted as an expense)
o Street lights and signs
o Signs which identify the property or provide directions
o Parking lot lighting (not outdoor security lighting)
o Playground equipment
o Basketball court and backboard
o Tennis courts
o Swimming pools
o Jogging trails
o Flag pole
o Wastewater treatment plant and lift station to handle raw sewage
o Interest expense capitalized and related to any of the above costs
o The prorata portion of the general contractor/construction company profit,
overhead, and general requirements and conditions allocable to items with a
15-year cost recovery period
o The prorata portion of the developer fee, profit and overhead allocable to
items with a 15-year cost recovery period
G-2
Recovery of costs of sanitary sewer system and water utility/distribution
system, including the sewer system outside the buildings - the following costs
have a 20-year recovery period - 150% declining balance mid-year convention.
o Fire hydrants
o Manhole rings and covers
o Watermeter
o Gate valves
o Flushing hydrants
o Cast iron fittings
o Valve boxes
o Air release valves
o Tapping sleeves
o PVC water pipe (outside)
o PVC sewer pipe (outside)
o PVC sewer fittings
G-3
EXHIBIT H TO THE PARTNERSHIP AGREEMENT
REPORT OF OPERATIONS
QUARTER ENDED: ____________________, 200X
------------------------------------- -----------------------------------
LOCAL PARTNERSHIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
GENERAL PARTNER:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
FIRM NAME:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PROPERTY NAME:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
-----------------------------------
------------------------------------- -----------------------------------
RESIDENT MANAGER:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ACCOUNTANT:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
FIRM:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------ -----------------------------------
MANAGEMENT COMPANY
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CONTACT:
------------------------------------- -----------------------------------
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(6) OCCUPANCY INFORMATION
A. Number of Apartment Units_____ Number of RA Units_____
Number of Section 8 Tenants ____
B. Occupancy for the Quarter has: Increased ____ Decreased_____
Remained the Same _____
C. Number of: Move-Ins ______ Move-Outs __________ % of Occupancy ______
D. Average length of tenant residency: 1-6 months ______ 6-12 months ______
1-3 years ______ Over 4 years_____
E. Number of Basic rent qualified applicants on waiting list: ________
F. If the apartments are less than 90% occupied, please explain why and
describe what efforts are being made to lease-up remaining units.
___________________________________________________________________________
G. On site manager: Full Time__________ Part Time____________.
If part-time, the number of hours per week_____________.
H-1
OPERATIONAL INFORMATION
Rent Schedule and Increases from Previous Quarter
Number Monthly Rent Rent Increases Effective
of Units Basic / Market Amount Percent Date
1 Bedroom ________ ______________ _________________ ________
2 Bedroom ________ ______________ _________________ ________
3 Bedroom ________ ______________ _________________ ________
PROPOSED MAINTENANCE
Completed Funded by
Type Description or Operations or Amount
Planned Reserves
------------------------------------------------------------------------------
Interior Painting
------------------------------------------------------------------------------
Exterior Painting
------------------------------------------------------------------------------
Siding
------------------------------------------------------------------------------
Roofing
------------------------------------------------------------------------------
Drainage
------------------------------------------------------------------------------
Paving
------------------------------------------------------------------------------
Landscaping
------------------------------------------------------------------------------
Playground
------------------------------------------------------------------------------
Community Room
------------------------------------------------------------------------------
Laundry Room
------------------------------------------------------------------------------
Common Areas
------------------------------------------------------------------------------
Carpet
------------------------------------------------------------------------------
Appliances
------------------------------------------------------------------------------
Lighting
------------------------------------------------------------------------------
Other
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Please describe in detail any major repairs:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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H-2
CONDITION OF PROPERTY
THE OVERALL APPEARANCE OF THE BUILDING(S) IS:
Excellent Good Fair Bad
THE OVERALL APPEARANCE OF THE GROUNDS IS:
Excellent Good Fair Bad
EXTERIOR CONDITION (Please Check Appropriate Box)
------------------------------------------------------------------------------
Type of Condition Excellent Good Fair Problems/Comments
------------------------------------------------------------------------------
Signage
-------------------------------------------------------------------------------
Parking Lots
-------------------------------------------------------------------------------
Office/Storage
-------------------------------------------------------------------------------
Equipment
-------------------------------------------------------------------------------
Community Building
-------------------------------------------------------------------------------
Laundry Room
-------------------------------------------------------------------------------
Benches/Playground
-------------------------------------------------------------------------------
Lawns, Plantings
-------------------------------------------------------------------------------
Drainage, Erosion
-------------------------------------------------------------------------------
Carports
-------------------------------------------------------------------------------
Fences
-------------------------------------------------------------------------------
Walks/Steps/Guardrails
-------------------------------------------------------------------------------
Lighting
-------------------------------------------------------------------------------
Painting
-------------------------------------------------------------------------------
Walls/Foundation
-------------------------------------------------------------------------------
Roof/Flashing/Vents
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Gutters/Splashblocks
-------------------------------------------------------------------------------
Balconies/Patios
-------------------------------------------------------------------------------
Doors Windows/Screens
-------------------------------------------------------------------------------
Elevators
-------------------------------------------------------------------------------
INTERIOR CONDITION
-------------------------------------------------------------------------------
Stairs
-------------------------------------------------------------------------------
Flooring
-------------------------------------------------------------------------------
Doors/Cabinets/Hardware
-------------------------------------------------------------------------------
Drapes/Blinds
-------------------------------------------------------------------------------
Interior Painting
-------------------------------------------------------------------------------
Refrig/Stoves/Sinks
-------------------------------------------------------------------------------
Bathroom/Tubs/Showers
Toilets
-------------------------------------------------------------------------------
H-3
FINANCIAL STATUS
A. Replacement Reserve is: Fully-funded Under-funded Amount
(complete attached schedule)
Tax/Insurance Escrow is: Fully-funded Under-funded Amount
(complete attached schedule)
Property is operating at a: Surplus Deficit Amount
If deficit, General Partner funding? Yes No Amount
Mortgage Payments are: On Schedule Delinquent Amount
Are the taxes current? Yes No
(please provide copy of paid tax xxxx)
Is the insurance current? Yes No Renewal Date
(please provide copy of yearly renewal)
B. Please note and explain any significant changes in the following:
Administrative Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Repairs/Maintenance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Utility Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Taxes/Insurance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
C. Do you anticipate making a return to owner distribution? Yes No
Explanation:
------------------------------------------------------------------------
------------------------------------------------------------------------
D. Please explain in detail any change in the financial condition:
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Any insurance claims files? Yes______ No______
If yes, please explain:
------------------------------------------------------------------------
------------------------------------------------------------------------
H-4
SCHEDULE OF RESERVES
Replacement Tax & Insurance Other Total
Beginning Balance: ----------- ---------- ------- -------
Deposits:
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
Total Deposits ----------- ---------- ------- -------
Authorized Disbursements: ----------- ---------- ------- -------
Description:
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
Total Disbursements: ----------- ---------- -------- ------
Ending Balance: (1) ----------- ---------- -------- ------
Required Balance: ----------- ---------- -------- ------
Over/under funding: ----------- ---------- -------- ------
Prepared By: Date:
-------------------------------------------------------------------------------
Firm: Telephone:
-------------------------------------------------------------------------------
Reminder: Please include the following documents:
1. Completed Report of Operations
2. Balance Sheet
3. Statement of Income & Expenses
4. Rent roll for quarter ending
5. Tax Credit Compliance Report
H-5
INITIAL TENANT CERTIFICATIONS
Partnership Name:-------------------
Fund: ------------------- Tax Credit Set-Asides Information: Loan/Regulatory
Property Name: ---------- [ ] 20/50 or [ ] 40/60 Election Set-Asides:
Address: ---------------- Does the 51% average apply?
---------------- [ ] Y [ ] N
---------------- Deeper Set-Aside __% @ 50% AMI
County: ----------------
[ ] Multi-Family [ ] Elderly Management Company:--------------------
[24]Number of Apartment Units Contact Person:------------------------
----Number of Exempt Units Phone #:-------------------------------
----LIHTC Apartment Housing #
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Gross
Unit First Time Move-in # of # in Income Move-In
# Tenant Name Date Bdrms Sq.Ft. Set-Aside Unit Move-In Limits
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BIN # Certificate of Occupancy Date:
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BIN # Certificate of Occupancy Date:
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BIN # Certificate of Occupancy Date:
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INITIAL TENANT CERTIFICATIONS
Partnership Name:-------------------
(CONTINUED)
Tenant Tenant
Income Income Asset Unit Less Rent Tenant Utility
Qualified Verification Verification Rent Subsidy Payment Allowance
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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YES
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INITIAL TENANT CERTIFICATIONS
Partnership Name:-------------------
(CONTINUED)
Tenant Tenant Overall
Gross Maximum Rent Tenant
Rent Rent Qualified Eligible
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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YES YES
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H-6
QUARTERLY TAX CREDIT COMPLIANCE REPORT
Property Name:----------------------
Quarter Ending: --------- Tax Credit Set-Asides Information: Loan/Regulatory
[ ] 20/50 or [ ] 40/60 Election Set-Asides:
Address: ---------------- Does the 51% average apply?
---------------- [ ] Y [ ] N
---------------- Deeper Set-Aside __(List Details)
County: ----------------
Allocation: Management Company:-------------
Pre-1990 (Rent based on -------------
number of persons) Contact Person: -------------
[ ] Multi-Family Elected to change
[ ] Elderly # Bedrooms Phone #: -------------
---Number of Post-1989 (Based on
Apartment Units number of Bedroom) Fax #: -------------
---Number of Prepared by: -------------
Exempt Units
---LIHTC Apartment Housing #
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Gross Annual
Unit Tenant Move-in # Of Inc. Set- # in Annual Income
# Name Date Bdrms % Aside Unit Income Limits
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QUARTERLY TAX CREDIT COMPLIANCE REPORT
Property Name:----------------------
(CONTINUED)
Annual Tenant Less
Recert. Income Income Assets Unit Rent Tenant
Date Qualified Verified Verified Rent Subsidy Payment
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QUARTERLY TAX CREDIT COMPLIANCE REPORT
Property Name:----------------------
(CONTINUED)
Tenant Tenant Overall
Utility Gross Maximum Rent Tenat
Allow. Rent Rent Qualified Eligible
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H-7
TENANT TAX CREDIT COMPLIANCE AUDIT
Document Transmittal Checklist
Unit Number Property Name Date
Tenant Name Completed By:
Initial [ ] Annual [ ]
Check Box for Type of Certification Management Company
This Section For WNC Use Only
Check Documents Being Sent
Received. Reviewed
___Internal Checklist or worksheet [ ] [ ] ----------
___Initial - Rental Application/Rental Agreement [ ] [ ] ----------
___Initial - Questionnaire of Income/Assets [ ] [ ] ----------
___Recertification - Questionnaire of Income/Assets [ ] [ ] ----------
___Recertification - Addendum to Lease [ ] [ ] ----------
___Employment Verification [ ] [ ] ----------
___Employment Termination Verification [ ] [ ] ----------
___Military Verification [ ] [ ] ----------
___Verification of Welfare Benefits [ ] [ ] ----------
___Verification of Social Security Benefits [ ] [ ] ----------
___Verification of Disability Benefits [ ] [ ] ----------
___Unemployment Verification [ ] [ ] ----------
___Verification of Unemployment Compensation [ ] [ ] ----------
___Verification Worksmen Compensation [ ] [ ] ----------
___Retirement/Annuities Verification [ ] [ ] ----------
___Verification of Veterans Pension [ ] [ ] ----------
___Verification of Child Support [ ] [ ] ----------
___Verification of Alimony Support [ ] [ ] ----------
___Disposed of Assets Last 2 years [ ] [ ] ----------
___Real Estate [ ] [ ] ----------
___Investment [ ] [ ] ----------
___Assets Verifications (savings, stocks etc.) [ ] [ ] ----------
___Trusts/with Current Tax Return [ ] [ ] ----------
___Lump Sum Settlements [ ] [ ] ----------
___Notarized Affidavit of Support [ ] [ ] ----------
___Certification of Handicap [ ] [ ] ----------
___Notarized Self-Employed-Tax Return [ ] [ ] ----------
___Notarized statement of no income [ ] [ ] ----------
___Tenant Certification [ ] [ ] ----------
This Section For WNC Use Only
YES NO
[ ] [ ] Are all required forms completed?
[ ] [ ] Are all required forms dated?
[ ] [ ] Did the Manager and Tenant sign all documents?
[ ] [ ] Third party verification of income completed?
[ ] [ ] Third party verification of assets completed?
[ ] [ ] Are verifications completed for all members 18 years and
over?
[ ] [ ] Did all the members of the household 18 yrs. and
[ ] [ ] over sign all documents?
[ ] [ ] Is lease completed with a minimum of six months/ SRO
monthly?
[ ] [ ] Addendum completed?
[ ] [ ] Tenant Certification completed?
[ ] [ ] Are all members of the household full-time students?
[ ] [ ] Is utility allowance correct?
[ ] [ ] Is correct income limit being used?
[ ] [ ] Is correct rent limit being used?
For tenants with no income
[ ] [ ] Was notarized statement of no income obtained with tax
return?
[ ] [ ] or Were all sources verified (AFDC, Unemployment,
Soc. Sec., Disability)?
H-8
TAX CREDIT COMPLIANCE MONITORING:
ANNUAL CERTIFICATION
As General Partner of XxXxxxxxx Housing Associates Limited Partnership,
I hereby certify as to the following:
1. XxXxxxxxx Housing Associates Limited Partnership owns a 72 unit
project ("Apartment Housing") in McPherson, XxXxxxxxx County, Kansas.
2. An annual income certification (including supporting documentation)
has been received from each tenant. The income certification reflects that the
tenant's income meets the income limitation applicable to the Apartment Housing
pursuant to Section 42(g)(1) of the Internal Revenue Code ("Code").
3. The Apartment Housing satisfies the requirements of the applicable
minimum set aside test as defined in Section 42(g)(1) of the Code.
4. Each unit within the Apartment Housing is rent restricted as defined
in Section 42(g)(2)of the Code.
5. Each unit in the Apartment Housing is available for use by the
general public and not for use on a transient basis.
6. Each building in the Apartment Housing is suitable for occupancy in
accordance with local health, safety, and building codes.
7. During the preceding calendar year, there had been no change in the
eligible basis, as defined in Section 42(d)of the Code, of any building within
the Apartment Housing.
8. All common area facilities included in the eligible basis of the
Apartment Complex are provided to the tenants on a comparable basis without a
separate fee to any tenant in the Apartment Housing.
9. During the preceding calendar year when a unit in the Apartment
Housing became vacant reasonable attempts were made to rent that unit to tenants
whose incomes met the income limitation applicable to the Apartment Housing
pursuant to Section 42(g)(1) of the Code and while that unit was vacant no units
of comparable or smaller size were rented to tenants whose income did not meet
the income limitation applicable to the Apartment Housing pursuant to Section
42(g)(1) of the Code.
10. If the income of a tenant in a unit increased above the limit
allowed in Section 42 (g)(2)(D)(ii), then the next available unit of comparable
or smaller size was rented to tenants whose incomes met the income limitation
applicable to the Apartment Housing pursuant to Section 42(g)(1) of the Code.
IN VERIFICATION OF THE FOREGOING ENCLOSED HEREWITH IS A COPY OF THE ANNUAL
INCOME CERTIFICATION RECEIVED FROM EACH TENANT IN THE PROJECT. UPON REQUEST I
WILL PROVIDE COPIES OF ALL DOCUMENTATION RECEIVED FROM THE TENANT TO SUPPORT
THAT CERTIFICATION.
I declare under penalty of perjury under the law of the State of Kansas
that the foregoing is true and correct.
Executed this day of at , .
--- ---------- ------------- ----------------
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H-9
Calculation of Debt Service Coverage
Month 1 Month 2 Month 3
------------ ------------ ------------
INCOME
Gross Potential Rent
Other Income
Vacancy Loss ------------ ------------ ------------
Adjusted Gross Income ------------ ------------ ------------
OPERATING EXPENSES
Utilities
Maintenance
Management Fee
Administration
Insurance
Real Estate Taxes
Other Expenses ------------ ------------ ------------
Total Operating Expenses ------------ ------------ ------------
Net Operating Income (1)
Accrual adjustments for:
R/E Taxes
Insurance
Tax/ Accounting
Other
Replacement Reserves
------------ ------------ ------------
Income for DSC Calculation ============ ============ ============
Stabilized Debt Service
------------ ------------ ------------
Debt Service Coverage (2)
------------ ------------ ------------
Please submit this form along with the following supporting documentation:
Monthly Financial Reports (income statement, balance sheet, general ledger and
rent rolls)
Operating Budget
Copies of bank statements.
(1) This number should reconcile easily with the monthly financial statements.
(2) The ratio between the Income for DSC calculation and Stabilized Debt
Service. As example, a 1.15 DSC means that for every $1.00 of Stabilized Debt
Service required to be paid there must be $1.15 of Net Operating Income
available.
H-10
GUARANTY AGREEMENT
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of the agreement of ERC Properties, Inc.,
(the "Developer") to permit deferral of the $362,942 due from XxXxxxxxx Housing
Associates Limited Partnership, a Kansas limited partnership ("Debtor") to the
Developer, the undersigned Guarantor(s), hereby unconditionally guarantees the
full and prompt payment when due, whether by acceleration or otherwise of that
certain Developer Fee from Debtor to the Developer, evidenced by the Development
Fee Agreement dated the even date herewith, and incorporated herein by this
reference. The foregoing described debt is referred to hereinafter as the
"Liabilities" or "Liability."
The undersigned further agree to pay all expenses paid or incurred by
the Debtor or Developer in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing the Liabilities or this Guaranty Agreement (including
reasonable attorneys' fees if collected or enforced by law or through an
attorney-at-law). The undersigned hereby represents and warrants that the
extension of credit or other financial accommodations by the Developer to Debtor
will be to the interest and advantage of the undersigned, and acknowledges that
this Guaranty Agreement is a substantial inducement to the Developer to extend
credit to Debtor and that the Developer would not otherwise extend credit to
Debtor.
Debtor or Developer may, from time to time, without notice to or
consent of the undersigned, (a) retain or obtain a security interest in any
property to secure any of the Liabilities or any obligation hereunder, (b)
retain or obtain the primary or secondary liability of any party or parties, in
addition to the undersigned, with respect to any of the Liabilities and (c)
resort to the undersigned for payment of any of the Liabilities, whether or not
the Debtor or Developer shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or shall have preceded against any other
party primarily or secondarily liable on any of the Liabilities.
Debtor and Developer must mutually agree to (a) extend or renew for any
period this Agreement (whether or not longer than the original period) or alter
any of the Liabilities, (b) release or compromise any Liability of the
undersigned hereunder or any Liability of any other party or parties primarily
or secondarily liable on any of the Liabilities, or (c) release, compromise or
subordinate its title or security interest, or any part thereof, if any, in all
or any property now or hereafter securing any of the Liabilities or any
obligation hereunder, and permit any substitution or exchange for any such
property.
1
The undersigned hereby expressly waives: (a) notice of the existence or
creation of all or any of the Liabilities, (b) notice of any amendment or
modification of any of the instruments or documents evidencing or securing the
Liabilities, (c) presentment, demand, notice of dishonor and protest, (d) all
diligence in collection or protection of or realization upon the Liabilities or
any thereof, any obligation hereunder, or any security for any of the foregoing,
and (e) the right to require the Developer to proceed against Debtor on any of
the Liabilities, though nothing herein shall prevent the Developer from
proceeding against Debtor on any of the Liabilities.
In the event any payment of Debtor to the Developer is held to
constitute a preference under the bankruptcy laws, or if for any other reason
the Developer is required to refund such payment or pay the amount thereof to
any other party, such payment by Debtor to the Developer shall not constitute a
release of Guarantor from any Liability hereunder, but Guarantor agrees to pay
such amount to the Developer upon demand and this Guaranty shall continue to be
effective or shall be reinstated, as the case may be, to the extent of any such
payment or payments.
No delay or failure on the part of the Developer in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Developer of any right or remedy shall preclude other or future
exercise thereof or the exercise of any other right or remedy. No action of the
Developer permitted hereunder shall in any way impair or affect this Guaranty
Agreement. For the purpose of this Guaranty Agreement, the Liabilities of Debtor
to the Developer are guaranteed notwithstanding any right or power of Debtor or
anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
impair or affect the obligations of the undersigned hereunder.
Any payment from Guarantor directly to Developer in accordance with
this Agreement shall be classified and booked as a non-refundable cost overrun
payment from Guarantor to Debtor in consideration of this Guaranty Agreement and
then a payment by Debtor to Developer in consideration of the Development Fee
Agreement.
This Guaranty Agreement shall be binding upon the undersigned, and upon
the legal representatives, heirs, successors and assigns of the undersigned, and
may be enforced against them by the Debtor or Developer or their legal
representatives, heirs, successors and assigns.
This Guaranty Agreement has been made and delivered in the state of
Kansas and shall be construed and governed under Kansas law.
Whenever possible, each provision of the Guaranty Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
2
such prohibition of invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty Agreement.
Whenever the singular or plural number, masculine or feminine or neuter
is used herein, it shall equally include the other where applicable. In the
event this Guaranty Agreement is executed by more than one guarantor, this
Guaranty Agreement and the obligations hereunder are the joint and several
obligation of all the undersigned.
Guarantor consents to the jurisdiction of the courts in the State of
Kansas and/or to the jurisdiction and venue of any United States District Court
in the State of Kansas having jurisdiction over any action or judicial
proceeding brought to enforce, construe or interpret this Guaranty. Guarantor
agrees to stipulate in any such proceeding that this Guaranty is to be
considered for all purposes to have been executed and delivered within the
geographical boundaries of the State of Kansas, even if it was, in fact,
executed and delivered elsewhere.
IN WITNESS WHEREOF, the undersigned have hereunto caused this Guaranty
Agreement to be executed as of _______________________, 2000.
Signed, sealed and delivered GUARANTOR:
in the presence of:
ERC Properties, Inc.
---------------------------- --------------------------
Witness Xxx Xxxxxxx,
President
Address for Guarantor:
---------------------
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
----------------------------
Notary Public
My Commission Expires: ___________________
----------------------------
(NOTARY SEAL)
3
DEVELOPMENT, CONSTRUCTION AND
OPERATING BUDGET AGREEMENT
This Development, Construction and Operating Budget Agreement
("Agreement") is entered into as of the date written below by and between
XxXxxxxxx Housing Associates Limited Partnership, a Kansas limited Partnership
("Owner"), ERC Properties, Inc., ("General Partner"), WNC Holdings, LLC, a
California limited Partnership ("Limited Partner") and WNC Housing, L.P., a
California limited Partnership ("Special Limited Partner"). Owner, General
Partner, Limited Partner and Special Limited Partner collectively may be
referred to as the "Parties" or individually may be referred to as a "Party".
RECITALS
A. Owner has acquired 10 acres of land in McPherson, XxXxxxxxx County,
Kansas. (the "Real Property").
B. Owner intends to develop on the Real Property a 72 unit low-income
rental housing complex and other related improvements for family units, which
is intended to qualify for federal low-income housing tax credits (the
"Apartment Housing").
C. On the even date herewith a Partnership agreement for Xxxxxxxxx
Housing Associates Limited Partnership ("Partnership Agreement") was entered
into by and between ERC Properties, Inc., WNC Holdings, LLC as the limited
partner and WNC Housing, L.P. as the special limited partner (the Partnership
Agreement is incorporated herein by this reference as if the same were
reproduced in full and any capitalized terms not defined in this Agreement
shall have the meaning as defined in the Partnership Agreement).
D. The Parties recognize and acknowledge that the final construction
cost determination involves substantial negotiations with lenders, contractors
and governmental authorities.
E. The Parties recognize and acknowledge that a final operating budget
involves substantial negotiations with lenders and governmental authorities.
F. Limited Partner's and Special Limited Partner's decision to execute
the Partnership Agreement is based, in part, on their acceptance of the sources
of funds available to develop the Apartment Housing, the cost of construction
to build the Apartment Housing and the operating budget necessary to provide a
positive Debt Service Coverage.
1
Now therefore, in consideration of the foregoing recitals which are a
part of this Agreement, the mutual promises and undertakings in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows.
1. Source of Funds. Attached hereto as Exhibit "A" and incorporated
herein by this reference is the Apartment Housing Source of Funds. The Source of
Funds have been specified in the Partnership Agreement as the Construction Loan,
the Mortgage, the Capital Contribution of the General Partner, the Capital
Contribution of the Limited Partner and the Capital Contribution of the Special
Limited Partner. Unless expressly permitted in the Partnership Agreement,
Consent of the Special Limited Partner is required for any change to the Source
of Funds.
2. Development Budget. Attached hereto as Exhibit "B" and incorporated
herein by this reference is the Development Budget in an amount equal to
$4,244,867. Owner acknowledges and represents that the attached Development
Budget includes the total costs and expenses to acquire, develop and construct
the Real Property and the Apartment Housing.
3. Construction Proforma. Attached hereto as Exhibit "C" and
incorporated herein by this reference is the Construction Proforma. Owner
acknowledges and represents that the attached Construction Proforma has been
reviewed by and approved by the Construction Lender, Mortgage lender if
applicable and any governmental authorities if applicable. The Construction
Proforma contains a list, by name, of all subcontractors and material suppliers
who will account for five percent or more of the cost of construction of the
Apartment Housing. Also included is a trade payment breakdown specifying the
cost of each classification of construction requirements pursuant to Plans and
Specifications and the other Project Documents. In accordance with the
Partnership Agreement, if the construction costs exceed the sum of the Capital
Contributions, the proceeds of the Mortgage and the Development Fee then the
General Partner shall be responsible for and shall be obligated to pay such
deficiencies.
4. Operating Proforma. Attached hereto as Exhibit "D" and incorporated
herein by this reference is the Operating Proforma. Owner acknowledges and
represents that the attached Operating Proforma has been reviewed by and
approved by the Construction Lender, the Mortgage lender and any governmental
authorities if applicable.
5. Notices. Any notice given pursuant to this Agreement may be served
personally on the Party to be notified, or may be mailed, first class postage
prepaid, to the following address, or to such other address as a Party may from
time to time designate in writing:
2
To the General Partner: ERC Properties, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
To the Limited Partner: WNC Holdings, LLC
c/o WNC & Associates
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
To the Special
Limited Partner: WNC Housing, L.P.
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
6. Successors and Assigns. All the terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Parties.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument which may sufficiently be
evidenced by one counterpart.
8. Captions. Captions to and headings of the Sections of this Agreement
are solely for the conveniences of the Parties, are not a part of this
Agreement, and shall not be used for the interpretation or determination of the
validity of this Agreement or any provision hereof.
9. Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
10. Governing Law. This Agreement and its application shall be governed
by the laws of Kansas.
11. Attorney's Fees. If a suit or action is instituted in connection
with an alleged breach of any provision of this Agreement, the prevailing Party
shall be entitled to recover, in addition to costs, such sums as the court may
adjudge reasonable as attorney's fees, including fees on any appeal.
3
In Witness Whereof, this Development, Construction and Operating Budget
Agreement is made and entered into as of _________, 2000.
GENERAL PARTNER
ERC Properties, Inc.
By: _________________________
Xxx X. Xxxxx,
Executive Vice President
LIMITED PARTNER
WNC Holdings, LLC
By: WNC & Associates, Inc.
General Partner
By: _________________________
Xxxxx X. Xxxxxx,
Executive Vice President
SPECIAL LIMITED PARTNER
WNC Housing, L.P.
By: WNC & Associates, Inc.,
General Partner
By: _______________________________
Xxxxx X. Xxxxxx,
Executive Vice President
4
EXHIBIT A
TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT
SOURCE OF FUNDS
A
EXHIBIT B
TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT
DEVELOPMENT BUDGET
B
EXHIBIT C
TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT
CONSTRUCTION PROFORMA
C
EXHIBIT D
TO DEVELOPMENT, CONSTRUCTION AND OPERATING BUDGET AGREEMENT
OPERATING PROFORMA
D
