AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MIDDLEBURY ELKHART, L.P.
By and Among
PRAIRIE VILLAGE - HOMES FOR AMERICA, INC.
as the General Partner
and
HOMES FOR AMERICA HOLDINGS, INC.
as the Preexisting Limited Partner
and
ALLIANT TAX CREDIT V, INC.,
a Florida corporation,
as the Administrative Limited Partner
and
ALLIANT TAX CREDIT FUND V LIMITED PARTNERSHIP, a Massachusetts limited
partnership, as the Investor Limited Partner
Dated as of December 1, 1998
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS.....................................................5
ARTICLE 2 GENERAL 20
Section 2.1 Continuation of the Partnership.............................20
Section 2.2 Principal Office............................................21
Section 2.3 Principal Place of Business; Resident Agent.................21
Section 2.4 Term........................................................21
Section 2.5 Purpose.....................................................21
ARTICLE 3 CAPITAL CONTRIBUTIONS; CLOSINGS; DEFAULT BY LIMITED PARTNER......22
Section 3.1 General Partners............................................22
Section 3.2 Withdrawal of Preexisting Limited Partners..................22
Section 3.3 Admission of Administrative Limited Partner.................23
Section 3.4 Admission of Limited Partners...............................23
Section 3.5 Treatment of Other Advances.................................23
Section 3.6 Capital Accounts; Interest; Withdrawal......................24
Section 3.7 Liability of Limited Partners...............................24
Section 3.8 Tax Credit Protection; Adjustment of Interests..............24
Section 3.9 Closing.....................................................26
Section 3.10 Satisfaction of Conditions.................................27
Section 3.11 Mortgage Loan Commitment...................................27
Section 3.13 Payment....................................................29
Section 3.14 Additional Low Income Housing Tax Credit Certificates......29
Section 3.15 Loan Defaults..............................................30
ARTICLE 4 COMPLIANCE WITH CREDIT AGENCY REQUIREMENTS;
PARTNERSHIP BORROWINGS.....................................................30
Section 4.1 Credit Agency Requirements..................................30
Section 4.2 Loans.......................................................30
ARTICLE 5 RIGHTS, POWERS AND OBLIGATIONS OF THE GENERAL PARTNERS AND
LIMITATIONS THEREON........................................................31
Section 5.1 Exercise of Management......................................31
Section 5.2 Authority and Duties of General Partners....................31
Section 5.3 Delegation of General Partner Authority;
Tax Matters Partner.........................................34
Section 5.4 Lease, Conveyance or Refinancing of Assets
of the Partnership..........................................35
Section 5.5 Restrictions on Authority...................................36
Section 5.6 Activities of Partners......................................37
Section 5.7 Dealing with Affiliates.....................................38
Section 5.8 Indemnification and Liability of the Partners...............38
Section 5.9 Construction of the Apartment Complex; Development Deficits;
Rental Achievement; Operating Deficits....................39
Section 5.10 Supervisory and Incentive Management Agreement.............41
Section 5.11 Additional Covenants of General Partners...................41
Section 5.12 Obligation to Repair and Rebuild Apartment Complex.........41
ARTICLE 6 REPRESENTATIONS AND WARRANTIES...................................41
Section 6.1 Organization and Authorization..............................41
Section 6.2 Consents Required...........................................42
Section 6.3 Liens, Pledges or Encumbrances..............................43
Section 6.4 Litigation..................................................43
Section 6.5 Agreements Affecting the Apartment Complex..................43
Section 6.6 Other Matters Affecting the Apartment Complex...............44
Section 6.7 Administrative, Zoning and Environmental Compliance.........46
Section 6.8 Financial Statements........................................48
Section 6.9 Absence of Undisclosed Liabilities..........................48
Section 6.10 Housing Tax Credits........................................48
Section 6.11 Qualified Nonrecourse and Commercial Financing; Fees.......49
Section 6.12 Prior Activities...........................................50
Section 6.13 Tax Matters................................................50
Section 6.14 Untrue or Misleading Statements............................50
Section 6.15 Scope of Representations...................................50
ARTICLE 7 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.......................51
Section 7.1 Management of the Partnership...............................51
Section 7.2 Limitation on Liability of Investor Limited Partners........51
Section 7.3 Other Activities............................................51
Section 7.4 Rescission..................................................52
Section 8.1 Designation of Management Agent.............................52
Section 8.2 Management Fee..............................................53
Section 8.3 Absence of Management Agent.................................53
Section 8.4 Rights of Administrative Limited Partner....................53
ARTICLE 9 DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES; TAX CREDITS....54
Section 9.1 Profits, Losses and Housing Tax Credits.....................54
Section 9.2 Distribution and Application of Cash Flow and Sale or Refinancing
Transaction Proceeds........................................59
ARTICLE 10 TRANSFER OF PARTNER INTERESTS...................................60
Section 10.1 Assignment of Limited Partner Interests....................60
Section 10.2 Substituted Partners; Admission............................61
Section 10.3 Withdrawal.................................................61
ARTICLE 11 WITHDRAWAL OF GENERAL PARTNER; NEW GENERAL PARTNER..............62
Section 11.1 Withdrawal.................................................62
Section 11.2 Effect of Withdrawal; Election to Continue Business........63
Section 11.3 Continuation of Partnership................................63
Section 11.4 Special Removal Rights.....................................64
Section 11.5 Additional General Partner.................................66
Section 11.6 Amendment of Schedule and Agreement........................66
Section 11.7 Survival of Liabilities....................................66
ARTICLE 12 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP..................66
Section 12.1 Events Which Cause a Dissolution...........................66
Section 12.2 Actions of Liquidating Agent Upon Dissolution..............67
Section 12.3 Statements on Termination..................................67
Section 12.4 Priority on Liquidation; Distribution of
Non-Liquid Assets..........................................67
Section 12.5 Orderly Liquidation........................................68
ARTICLE 13 ACCOUNTING, REPORTS, BOOKS AND BANK ACCOUNTS....................68
Section 13.1 Bank Accounts..............................................68
Section 13.2 Books of Account...........................................69
Section 13.3 Reports....................................................69
Section 13.4 Other Reports..............................................70
Section 13.5 Tax Returns and Tax Treatment..............................70
Section 13.6 Asset Management Fee.......................................71
ARTICLE 14 FOREIGN PARTNERS................................................71
Section 14.1 Certification of Non-Foreign Status........................71
Section 14.2 Withholding of Certain Amounts Attributable to Interests
of Foreign Partners........................................72
ARTICLE 15 MISCELLANEOUS...................................................72
Section 15.1 Law Governing..............................................72
Section 15.2 Power of Attorney..........................................72
Section 15.3 Counterparts...............................................73
Section 15.4 Separability of Provisions.................................73
Section 15.5 Address and Notice.........................................73
Section 15.6 Computation of Time........................................74
Section 15.7 Titles and Captions........................................74
Section 15.8 Entire Agreement...........................................74
Section 15.9 Agreement Binding..........................................74
Section 15.10 Parties in Interest.......................................74
Section 15.11 Amendments; Other Actions.................................75
Section 15.12 Survival of Representations, Warranties and Agreements....75
Section 15.13 Further Assurances........................................75
Section 15.14 Remedies Cumulative.......................................75
Section 15.15 Attorneys'Fees............................................75
Section 15.16 Meetings..................................................75
Section 15.17 Enforceability............................................76
EXHIBIT A -- LEGAL DESCRIPTION.............................................84
EXHIBIT B -- PERSONALTY....................................................85
EXHIBIT C -- COMPLETION CERTIFICATE........................................86
EXHIBIT D -- DUE DILIGENCE DOCUMENTS.......................................87
EXHIBIT E -- CERTIFICATE...................................................91
EXHIBIT F -- GUARANTY AGREEMENT............................................92
EXHIBIT G -- LOW INCOME HOUSING TAX CREDIT CERTIFICATE.....................99
EXHIBIT H -- LITIGATION...................................................106
EXHIBIT I -- SUPERVISORY MANAGEMENT AND INCENTIVE AGREEMENT...............107
EXHIBIT J -- PROJECT BUDGET...............................................110
EXHIBIT K -- PERMITTED ENCUMBRANCES.......................................111
EXHIBIT L -- TITLE INSURANCE REQUIREMENTS.................................112
MIDDLEBURY ELKHART, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement") of Middlebury Elkhart, L.P. an Indiana limited partnership (the
"Partnership"), dated as of December 1, 1998 is by and among the parties set
forth on the cover page of this Agreement.
W I T N E S S E T H:
WHEREAS, the Partnership was formed as a limited partnership under the
laws of the State of Indiana pursuant to an Agreement of Limited Partnership
dated as of July 21, 1997 and the Original Certificate, and
WHEREAS, (i) the Preexisting Limited Partners agreed to withdraw from
the Partnership, (ii) the Investor Limited Partner, in exchange for the Investor
Limited Partner Contribution, is to be admitted into the Partnership, and (iii)
the Administrative Limited Partner, in exchange for its Capital Contribution, is
to be admitted into the Partnership as the Administrative Limited Partner, all
as of the Closing; and
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for, among other things, (i) the continuation of the Partnership, (ii)
the admission of the Investor Limited Partner and the Administrative Limited
Partner into the Partnership, (iii) the withdrawal of the Preexisting Limited
Partners from the Partnership, (iv) the payment of the Investor Limited Partner
Contribution by the Investor Limited Partner and the payment of a Capital
Contribution by the Administrative Limited Partner to the Partnership, (v) the
reallocation of Profits, Losses, credits and distributions of Cash Flow and
other proceeds of the Partnership among the Partners, (vi) the respective
rights, obligations and interests of the Partners to each other and to the
Partnership, and (vii) certain other matters.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree that the Original Partnership
Agreement is hereby amended and restated in its entirety to read as follows:
ARTICLE 1 DEFINED TERMS
Capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article 1. Certain
additional defined terms may be set forth elsewhere in this Agreement. Each
definition or pronoun herein shall be deemed to refer to the singular, plural,
masculine, feminine or neuter as the context requires. Words such as "herein,"
"hereinafter," "hereof," "hereto" and "hereunder," when used with reference to
this Agreement, refer to this Agreement as a whole, unless the context otherwise
requires.
"Accountants" means the firm so identified in the Schedule, or such
other firm or firms of independent certified public accountants as may be
selected by the General Partners with the Consent of the Administrative Limited
Partner, which shall not be unreasonably withheld.
"Actual Credit" means, as of any point in time, 99.9% of the total
amount of the Housing Tax Credits reported and claimed by the Partnership as a
whole on its federal information and income tax returns, as amended if
applicable, and not disallowed by any Final Determination of the applicable
taxing authority and actually available to the Limited Partners.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(i) Crediting to such Capital Account all amounts which such
Partner is obligated to restore or is deemed to be obligated to restore
pursuant to Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
(ii) Debiting from such Capital Account the items described in
paragraphs (4), (5) and (6) of Section 1.704-1(b)(2)(ii)(d) of the
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 Regulations
and shall be interpreted consistently therewith.
"Administrative Limited Partner" means Alliant Tax Credit V, Inc., a
Florida corporation, and its successors and assigns.
"Affiliate" of a specified Person means (i) any Person directly or
indirectly controlling, controlled by or under common control with the Person
specified, (ii) any Person owning or controlling 10% or more of the outstanding
voting securities or beneficial interests of the Person specified, (iii) any
officer, director, partner, trustee or member of the immediate family of the
Person specified, (iv) if the Person specified is an officer, director, general
partner or trustee, any corporation, partnership or trust for which that Person
acts in that capacity or (v) any Person who is an officer, director, general
partner, trustee or holder of 10% or more of the outstanding voting securities
or beneficial interests of any Person described in clauses (i) through (iv). The
term "control" (including the term "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended from time to time.
"Apartment Complex" means, collectively, the Land, the Improvements
and the Personalty.
"Architect" means the firm so identified in the Schedule as the
architect for the Apartment Complex, and its or his successors and assigns.
"Asset Management Fee" means the annual fee payable by the Partnership
to the Investor Limited Partner pursuant to Section 13.6.
"Asset Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
(ii) The Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as
determined by the General Partners, with the Consent of the
Administrative Limited Partner (such Consent not to be unreasonably
withheld), as of the following times: (a) 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; and (b)
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; provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the General Partners
reasonably determine, with the Consent of the Administrative Limited
Partner, that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Partners in the Partnership;
(iii) The Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the
date of distribution; and
(iv) The Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted bases of such
assets pursuant to Section 734(b) or 743(b) of the Code, but only to
the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations and Section 9.1D(vii) hereof; provided, however, that Asset
Values shall not be adjusted pursuant to this subparagraph (iv) to the
extent the General Partners determine, with the Consent of the
Administrative Limited Partner (such Consent not to be unreasonably
withheld), that an adjustment pursuant to subparagraph (ii) hereof is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (iv).
If the Asset Value of any asset has been determined or adjusted pursuant to
subparagraphs (i), (ii), or (iv) hereof, such Asset Value shall thereafter
be adjusted by the Depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses.
"Assignment" means a valid sale, exchange, transfer or other
disposition of all or any portion of an Interest.
"Assignor" means a Partner who makes an Assignment and "Assignee" means
a Person who receives an Assignment.
"Bankruptcy" or "Bankrupt" means, with respect to any Partner, such
Partner making an assignment for the benefit of creditors, becoming a party to
any liquidation or dissolution action or proceeding with respect to such Partner
or any bankruptcy, reorganization, insolvency or other proceeding for the relief
of financially distressed debtors with respect to such Partner, or the
appointment of a receiver, liquidator, custodian or trustee for such Partner or
a substantial part of such Partner's assets and, if any of the same occur
involuntarily, the same not being dismissed, stayed or discharged within 60
days; or the entry of an order for relief against such Partner 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.
"Bonds" means the bonds issued by the City of Elkhart, Indiana,
denominated "City of Elkhart, Indiana Multifamily Housing Mortgage Revenue
Refunding Bonds Series 1998 (GNMA Collateralized - Prairie Village Apartments
Project)" in two subseries: (a) tax exempt first lien Series A Bonds in the
principal amount of $2,380,000, and (b) taxable second lien Series B Bonds in
the principal amount of $850,000, from the proceeds of both of which the
Mortgage Loan will be made.
"Break-Even" shall be deemed to have occurred in any month for which
the Accountants have determined that the cash receipts from rents and other
revenues of a recurring nature from operation of the Apartment Complex
(excluding any tenant in a Tax Credit Apartment Unit who does not qualify as low
income under the requirements of Section 42 of the Code and the Project
Documents), together with any amounts actually received in such month from
housing assistance payments under the National Housing Act of 1937 or equivalent
government subsidy program, equal or exceed all operating obligations of the
Partnership. All such operating obligations will be computed on the accrual
basis of accounting and include, without limitation, payments of principal and
interest due on any Mortgage Note and any other loans encumbering the Apartment
Complex and all other indebtedness of the Partnership, real estate taxes,
insurance premiums, accounting fees, mortgage insurance premiums (if any),
management fees, reserves for repairs and replacements (which reserves to the
extent not required by a Lender shall require the Consent of the Administrative
Limited Partner), reserves which have been required by any Lender or any Credit
Agency, reserves for all taxes or payments in lieu of taxes, capital
expenditures to the extent not covered by insurance proceeds or releases from
reserves, compliance monitoring fees charged by the Credit Agency or any other
Governmental Agency relating to allocation of the Housing Tax Credits and any
other expenses which were incurred during that period. Real estate taxes,
insurance premiums, accounting fees and all material costs and expenses which
are seasonal, including, but not limited to, fuel or other utility costs, shall
be annualized so as to reflect on a monthly basis the average of expenses so
incurred. With respect to tenants who have been granted rent concessions,
rebates and other rental incentives, rental receipts shall be adjusted to
reflect the average monthly rent over the term of such tenant's lease, with the
concessions, rebates and other incentives being spread ratably over the term of
the lease. Without limiting the generality of the foregoing, the Partnership's
revenues for purposes of determining Break-Even shall not include Capital
Contributions, tenant security deposits, the proceeds of Partnership borrowings
or loans, interest or any other income earned on investment of Partnership
funds, casualty insurance proceeds or Sale or Refinancing Transaction Proceeds,
and the Partnership's operating obligations shall not include any obligations
which are funded from such sources. Notwithstanding anything herein contained to
the contrary, for purposes of determining whether the Partnership has attained
Break-Even, in addition to the other items set forth above, real property taxes
shall be included in operating obligations in an amount which reflects a full
assessment of the Apartment Complex as fully completed.
"Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited
such Partner's Capital Contributions, such Partner's distributive share
of Profits and any items in the nature of income or gain which are
specially allocated pursuant to Sections 9.1D, 9.1E and 9.1F hereof,
and the amount of all Partnership liabilities assumed by such Partner
or which are secured by any property distributed to such Partner;
(ii) To each Partner's Capital Account there shall be debited
the amount of cash and the Asset Value of any property distributed to
such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Sections
9.1D, 9.1E or 9.1F hereof, and the amount of all liabilities of such
Partner assumed by the Partnership or which are secured by any property
contributed by such Partner to the Partnership;
(iii) In the event all or a portion of an Interest in the
Partnership is transferred 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; and
(iv) In determining the amount of any liability for purposes
of subparagraphs (i) and (ii) hereof, there shall be taken into account
Section 752(c) and any other applicable provisions of the Code and
Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Sections
1.704-1(b) and 1.704-2 of the Regulations, and shall be interpreted and applied
in a manner consistent with such Regulations. In the event the General Partners
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are secured by contributed or
distributed property or which are assumed by the Partnership or Partners) are
computed in order to comply with such Regulations, the General Partners may make
such modifications, provided that the Administrative Limited Partner shall
Consent thereto (such Consent not to be unreasonably withheld) and it is not
likely to have a material effect on the amounts distributable to any Partner
pursuant to Sections 9.2 or 12.4 hereof upon the dissolution of the Partnership.
The General Partners also shall, to the extent permitted by Section
1.704-1(b)(2)(iv)(q) of the Regulations and with the Consent of the
Administrative Limited Partner, not to be unreasonably withheld, (i) make all
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners on the one hand and the amount of Partnership
capital reflected on the Partnership's balance sheet, as computed for book
purposes, on the other hand, and (ii) make all appropriate modifications in the
event unanticipated events might otherwise cause this Agreement not to comply
with Section 1.704-1(b) of the Regulations.
"Capital Contribution" means the total amount of cash contributed to
the Partnership by each Partner. Any reference in this Agreement to the Capital
Contribution of a party which is a Partner shall include the contributions to
the capital of the Partnership made by any predecessor in interest of such
Partner.
"Cash Expenditures" means all disbursements of cash determined on an
accrual basis during the Fiscal Year (excluding distributions to Partners),
including, without limitation, payment of operating expenses, payment of
principal and interest of the Partnership's indebtedness (excluding payments of
principal and interest of Voluntary Loans and Operating Loans), mortgage
insurance premiums (if any), cost of repair, replacement and restoration of the
Apartment Complex, amounts allocated to reserves by the General Partners with
the Consent of the Administrative Limited Partner, and the payment of the fees
set forth in Article 5 hereof. In addition, the net increase during the year in
any escrow account or reserve maintained by or for the Partnership shall be
considered a cash expenditure during the year so long as the increase is not the
result of accrued interest earned on monies in escrow deposit. Cash Expenditures
payable to Partners or Affiliates of Partners shall be paid after Cash
Expenditures payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash Expenditures.
Cash Flow shall be determined separately for each Fiscal Year or portion
thereof.
"Cash Receipts" means all cash receipts of the Partnership from
whatever source derived, including, without limitation, cash from operations and
from net insurance recoveries, but not including proceeds from title insurance
recoveries, Sale or Refinancing Transaction Proceeds and Capital Contributions.
In addition, the net reduction in any year in the amount of any escrow account
or reserve maintained by or for the Partnership shall be considered a cash
receipt of the Partnership for such year. Notwithstanding the foregoing, Cash
Receipts received within 30 days prior to the close of a Fiscal Year and
intended for use in meeting the Partnership's obligations (including the cost of
acquiring assets or paying debts or expenses) in the subsequent Fiscal Year may,
in the discretion of the Administrative Limited Partner, be deemed to be
received in such subsequent Fiscal Year.
"Certificate" means the Original Certificate or any other instrument
filed in the Filing Office as the Certificate of Limited Partnership of the
Partnership in accordance with the Uniform Act, as amended from time to time.
"Class" means a specific class or grouping of Partners (i.e., the
General Partners, the Investor Limited Partner or the Administrative Limited
Partner).
"Closing," "Closing Documents," and "Closing Date" are defined in
Section 3.9.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.
"Completion" means the later of the date when (i) lien-free completion
of 100% of the Construction pursuant to all federal, state and local law
requirements and the approved Plans and Specifications in a good and workmanlike
manner without any known defects in materials or workmanship, whether latent or
otherwise, has taken place and the Architect has delivered the Completion
Certificate to the Administrative Limited Partner and (ii) certificates of
occupancy for all of the units in the Apartment Complex from any local
government body or agency having jurisdiction have been obtained sufficient to
permit lawful occupancy of such units with only "punch list" type items
remaining to be completed. For purposes hereof, "lien-free completion" shall be
deemed to have occurred notwithstanding the pendency of any lien claims, so long
as such claims are bonded, insured over or a corresponding amount of funds is
placed in escrow in a manner reasonably satisfactory to the Administrative
Limited Partner by a bonding company or the issuer of the Title Policy.
"Completion Date" means the date designated as such set forth in the
Schedule.
"Completion Certificate" means the form of completion certificate which
is attached hereto as Exhibit C.
"Compliance Period" shall have the meaning provided in Section 42(i)(1)
of the Code.
"Consent" of a specified Partner means the prior written consent or
approval of such Partner.
"Construction" means the construction or, if applicable as shown
on the Schedule, the rehabilitation of the Improvements.
"Construction Agreements" means the construction agreements for the
Construction between the Partnership and the Contractor, as they may be amended
from time to time, a true, complete and current list of which agreements is
identified in the Schedule.
"Contractor" means the licensed general contractor for the Apartment
Complex identified in the Schedule, and its or his successors and assigns.
"Cost Certification" means the date upon which the Investor Limited
Partner shall have received the written certification of the Accountants, in a
form and in substance satisfactory to the Administrative Limited Partner, as to
the itemized amounts of the construction and development costs of the Apartment
Complex and the "eligible basis" and "applicable percentage" (as defined in
Section 42 of the Code) pertaining to each building in the Apartment Complex.
"CPI Adjustment" means the ratio of (a) the Consumer Price Index most
recently published prior to the specified date the CPI Adjustment is to be
determined, divided by (b) the Consumer Price Index most recently published
prior to the Closing Date. "Consumer Price Index" means the Consumer Price Index
for All Urban Consumers, All Cities, for All Items (base 1982-84 = 100)
published by the United States Bureau of Labor Statistics. In the event such
index is not in existence when any determination relying on such index under
this Agreement is to be made, the most comparable governmental index published
in lieu thereof shall be substituted therefor.
"Credit Agency" means (i) any applicable housing finance authority or
other agency authorized to issue bonds or other evidence of indebtedness to
finance residential housing development and (ii) the housing credit agency (as
defined in Section 42(h)(7)(A) of the Code) of the State having jurisdiction
over the Apartment Complex. To the extent applicable, Credit Agency shall also
mean HUD or any other governmental body or agency having jurisdiction over the
operations of the Apartment Complex.
"Credit Allocation" means a final allocation for the Partnership of
Housing Tax Credits pursuant to Section 42 of the Code in the amount set forth
in the Schedule.
"Credit Period" means, with respect to Housing Tax Credits attributable
to a building, the period of ten taxable years beginning with the taxable year
in which such building is placed in service or, at the election of the General
Partners with the Consent of the Administrative Limited Partner, the succeeding
taxable year, provided that such building is eligible for Housing Tax Credits as
of the close of the first year of such period.
"Credit Year" means the year for which the Credit Agency issued the
Credit Allocation, as identified in the Schedule.
"Depreciation" means, for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such year
or other period, except that if the 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 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, that 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 Asset
Value using any reasonable method selected by the General Partners, with the
Consent of the Administrative Limited Partner.
"Development Deficits" means all funds in excess of (a) the proceeds of
the Mortgage Loan, (b) operating income of the Apartment Complex realized prior
to funding of the Mortgage Loan, and (c) that portion or portions of the
Investor Limited Partner Contribution payable at or prior to closing of the
Mortgage Loan which are required to (i) complete the Construction, including
paying all amounts due under and pursuant to the Construction Agreements, and
any construction cost overruns and the cost of any change orders which have been
approved by the Lender and which are not funded from proceeds of the Mortgage
Loan, as applicable, but not including any portion of the Development Fee which
may be deferred pursuant to the Development Services Agreement; (ii) achieve
commencement of the Permanent Financing Phase, and satisfy any escrow deposit
requirements which are conditions thereto, including, without limitation, any
amounts necessary for local taxes, utilities, mortgage insurance premiums,
casualty and liability insurance premiums and any additional reserves or
insurance required under this Agreement, and any other amounts which are
required pursuant to the Mortgage Loan; (iii) pay any applicable loan assessment
fees, discounts or other expenses incurred by the Partnership as a result of the
commencement of the Permanent Financing Phase; and (iv) pay any Operating
Deficits incurred by the Partnership prior to Rental Achievement.
"Development Fee" means the fee to be paid by the Partnership
pursuant to the Development Services Agreement.
"Development Services Agreement" means the agreement so described in
the Schedule.
"Draw Requests" means each request for disbursement made by the
Partnership under the Loan Agreement, including all backup documentation
accompanying such request, including at a minimum interim mechanics' lien
waivers, contractors' and owners' sworn statements, and architects'
certifications as to the stage of completion.
"Due Diligence Documents" means the documents described in Exhibit D
hereto, together with any additional documents provided to the Investor Limited
Partners in connection with their review of the transaction reflected herein.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2.
"Filing Office" means the Secretary of State, the office in which
certificates of limited partnership are properly filed under the Uniform Act as
enacted in the State.
"Final Determination" means (i) a decision of a court of competent
jurisdiction from which no appeal (other than an appeal to the United States
Supreme Court) is available or which is not appealed by the Partnership within
90 days, (ii) a binding agreement between the Partnership or the Investor
Limited Partner or any other Partner (or any partner of the Investor Limited
Partner) and the IRS with respect to such issue, or (iii) a final ruling or
administrative determination by the IRS, from which no appeal is available or is
not appealed by the Partnership within 90 days.
"Fiscal Year" means the twelve-month period which begins on the first
day of January and ends on the thirty-first day of December of each calendar
year (or ends on the date of final dissolution for the year in which the
Partnership is wound up and dissolved).
"Foreign Partner" means a Partner who at the time of acquisition of
such Partner's Interest is a Foreign Person.
"Force Majeure" means strikes, acts of God, governmental restrictions,
severe or unusual shortages of labor or materials, enemy action, riot, civil
commotion, fire, unavoidable casualty, unusually severe or abnormal weather
conditions or other causes beyond the reasonable control of a party. Lack of
funds shall not be deemed a cause beyond the control of a party.
"Foreign Person" means a non-resident alien, foreign corporation,
foreign partnership, foreign trust or foreign estate, within the meaning of
Sections 897 and 1445 of the Code.
"General Partners" means the parties so identified as such on the cover
page of this Agreement, including, without limitation, such parties and any
Person or Persons who, at the time of reference thereto, have been admitted as
additional or successor General Partners. At any and all times where there is
only one General Partner, the term "General Partners" shall mean such sole
General Partner.
"Governmental Agreements" means all agreements between the Partnership
and any Credit Agency with respect to the Apartment Complex and relating to
insuring, supplementing, subsidizing, endorsing or otherwise affecting the
Mortgage Loan or the Apartment Complex or the Housing Tax Credits, and all such
agreements with respect to bond financing secured by a Mortgage, including
without limitation any regulatory agreement, Rental Assistance Contract, and all
applications to and agreements with the Credit Agency with respect to Housing
Tax Credits, as the same may be modified after the date of this Agreement with
the Consent of the Administrative Limited Partner.
"Guarantor" means Homes for America Holdings, Inc., a Nevada
corporation.
"Guaranty Agreement" means the Guaranty Agreement of even date with
this Agreement pursuant to which the Guarantor has guaranteed for the benefit of
the Investor Limited Partner the performance of certain specified obligations of
the General Partners.
"Housing Tax Credits" means any low-income housing tax credits under
Section 42 of the Code.
"HUD" means the United States Department of Housing and Urban
Development, or any successor federal agency.
"Improvements" means those certain 6 residential buildings containing
120 apartment units and the ancillary and appurtenant facilities located upon
the Land or to be constructed or rehabilitated (as set forth in the Schedule)
thereon pursuant to the Construction Agreements.
"Initial Lease" means, with respect to each dwelling unit in the
Apartment Complex, the lease entered into by the initial occupant thereof
following the placement in service of the Apartment Complex following the
allocation thereto of any Housing Tax Credits.
"Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in allocations of the Profits and Losses, distributions of Cash Flow, Sale or
Refinancing Transaction Proceeds, its rights with respect to approvals and
consents and its interest in its Capital Account and any and all benefits to
which a Partner may be entitled as provided in this Agreement, together with the
obligations of such Partner to comply with all terms and provisions of this
Agreement.
"Interest Rate" means a rate per annum (compounded annually on December
31 of each calendar year) equal to the greater of 12% or 2% over the Prime Rate,
but in no event more than the maximum rate of interest permitted by law.
"Investor Limited Partner" means Alliant Tax Credit Fund V Limited
Partnership, a Massachusetts limited partnership, and its successors and
assigns.
"Investor Limited Partner Contribution" means the gross investment of
the Investor Limited Partner in the Partnership as set forth in Article 3
hereof, plus any supplemental amounts paid in addition to that provided for in
this Agreement, as the same may be reduced pursuant to the provisions hereof
(including without limitation any adjustments or returns of Capital
Contributions made pursuant to Section 3.8).
"Involuntary Withdrawal" means, as to any General Partner, any
Withdrawal caused by Bankruptcy, death, adjudication of insanity or
incompetence.
"IRS" means the Internal Revenue Service.
"Land" means that certain parcel of real property owned by the
Partnership on which the Improvements are or are to be located, which parcel is
identified in Exhibit A hereto.
"Lender" means any lender or lenders under any Mortgage Loan (as
identified in the Schedule).
. "Limited Partner" means either or both of the Investor
Limited Partner and the Administrative Limited Partner.
"Liquidating Agent" means that Person conducting and supervising the
liquidation of the Partnership in accordance with the terms of Section 12.2
hereof.
"Loan Agreement" means the Loan Agreement entered into by the
Partnership and the Lender pertaining to the Mortgage Loan.
"Low Income Housing Tax Credit Certificate" means the certificate so
designated in the form annexed hereto as Exhibit G, together with any updates or
modifications thereof delivered in accordance with Sections 3.9B and 3.12B
hereof.
"Major Default" means the happening of any one of the events set
forth under Section 11.4A hereof.
"Majority in Interest" means with respect to each Class, those Partners
holding more than one-half of the Interests held by such Class.
"Management Agent" means the Person, approved by each Credit Agency (to
the extent such approval is required) and Consented to by the Administrative
Limited Partner, selected to provide management services to the Apartment
Complex from time to time in accordance with Article 8 hereof.
"Management Agreement" means the agreement between the Partnership and
the Management Agent in connection with management of the Apartment Complex
entered into pursuant to the authority granted by Article 8 hereof.
"Mortgage" means any mortgage or deed of trust securing an indebtedness
of the Partnership evidenced by a Mortgage Note and encumbering the Apartment
Complex, as such indebtedness may be increased, decreased or refinanced in
accordance with this Agreement and the Project Documents. Where the context
permits, the term "Mortgage" shall include any mortgage, deed, deed of trust,
note, regulatory agreement, security agreement, assumption agreement or other
instrument executed in connection with a Mortgage Note which is binding on the
Partnership; and in case any Mortgage is replaced or supplemented by any
subsequent document, the term "Mortgage" shall refer to any such subsequent
document. If the Apartment Complex is encumbered by more than one such document,
all such documents shall be deemed collectively to be "the Mortgage."
"Mortgage Loan" means the construction/permanent loan in the
anticipated principal amount set forth in the Schedule to be made to the
Partnership by the Lender identified in the Schedule at the Closing, which is to
be (a) evidenced by a promissory note given by the Partnership to the Lender at
the Closing, (b) secured by a first mortgage and other related security
documents and financing statements, and (c) funded from the proceeds of the sale
of the Bonds.
"Mortgage Note" means any promissory note held by a Lender evidencing
Mortgage Loan indebtedness.
"Nonrecourse Debt" has the meaning given to the term
"nonrecourse liability" in Section 1.704-2(b)(3) of the Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for each
Fiscal Year shall equal the excess, if any, of the net increase, if any, in the
amount of Partnership Minimum Gain during that Fiscal Year over the aggregate
amount of any distributions during that Fiscal Year of proceeds of a Nonrecourse
Debt that are allocable to an increase in Partnership Minimum Gain, determined
in accordance with the provisions of Section 1.704-2(c) of the Regulations.
"Occupancy" means lawful occupancy of apartment units in the Apartment
Complex under leases (i) having a term of not less than six months, (ii) under
which full rental payments have commenced at rental rates which are (in the case
of the Tax Credit Apartment Units) consistent with the definition of "rent
restricted unit" under Section 42(g)(2) of the Code, or at such lower rental
rates as may be prescribed under any applicable restrictions contained in the
Project Documents, but in no event at rates which are less than 90% of the
maximum rents which can be charged to tenants of rent restricted units under
Section 42(g)(2) (unless any Project Document prescribes a lower rent, in which
case at rates which are less than 90% of such lower rents), (iii) to tenants
actually occupying the apartment unit and who (in the case of the Tax Credit
Apartment Units) meet the income requirements of Section 42(g) of the Code and
the Project Documents ("Qualified Tenants"), and (iv) on such other terms as are
commercially reasonable and customary under residential apartment leasing
practices observed in the area in which the Apartment Complex is located. An
apartment unit shall not be considered "Occupied" unless and until each of the
foregoing criteria has been complied with. A unit which was deemed Occupied and
which is later vacated shall continue to be considered Occupied so long as it is
held out for rent to Qualified Tenants and the next available unit is lawfully
occupied at the same or lower rental rates to a Qualified Tenant. At the
election of the Administrative Limited Partner, Occupancy may be certified by an
internal audit or by independent accountants selected by the Administrative
Limited Partner. "Occupancy" at a specified percentage means Occupancy of the
specified percentage of the total number of apartment units in the Apartment
Complex.
"Operating Deficit" means, for any specified period of time, the amount
by which the actual collected receipts on a cash basis (including government
subsidies actually received during such period) by the Partnership of revenues
from rental income and other related income (such as laundry machine revenue or
similar amounts paid by tenants for goods or services) from the Apartment
Complex, at the required low-income rates as provided in Section 42 of the Code
and the Project Documents, is less than the amount necessary to meet all
operating obligations of the Partnership (except for payment of the Asset
Management Fee). Such operating obligations will be computed on the same basis
and include those payments set forth under "Break-Even," above. Without limiting
the generality of the foregoing, the Partnership's revenues for purposes of
calculating any Operating Deficit shall not include tenant security deposits,
interest or other income earned on Partnership funds, Capital Contributions, the
proceeds of Partnership borrowings or loans, casualty insurance proceeds or Sale
or Refinancing Transaction Proceeds, nor shall the Partnership's operating
obligations include amounts paid from any of the foregoing sources.
"Operating Deficit Guaranty Period" means the period described in the
Schedule during which the General Partners is obligated to fund Operating
Deficits.
"Operating Loans" means loans made to the Partnership pursuant to
Section 5.9C hereof to fund Operating Deficits occurring during the Operating
Deficit Guaranty Period, which loans do not bear interest and are repayable only
as provided in Article 9.
"Original Agreement" means the Agreement of Limited Partnership of the
Partnership as the same may have been amended prior to the date hereof, as set
forth in the Schedule.
"Original Certificate" means the Certificate of Limited Partnership
for the Partnership, as identified on the Schedule.
"Original Partnership Agreement" means, collectively, the Original
Certificate and the Original Agreement.
"Partner" or "Partners" means any or all of the General Partners, the
Administrative Limited Partner and the Investor Limited Partner.
"Partner Information Schedule" means the schedule so designated which
is annexed to this Agreement.
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Section 1.704-2(i)(2) of the Regulations and shall be determined in accordance
with Section 1.704-2(i)(3) of the Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(i)(2) of the Regulations. The amount of Partner Nonrecourse Deductions
with respect to a Partner Nonrecourse Debt for a Partnership Fiscal Year equals
the excess, if any, of the net increase, if any, in the amount of Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during
that Fiscal Year over the aggregate amount of any distributions during that
Fiscal Year to the Partner that bears the economic risk of loss for such Partner
Nonrecourse Debt to the extent that such distributions are from the proceeds of
such Partner Nonrecourse Debt which are allocable to an increase in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined according to the provisions of Section 1.704-2(i)(2) of the
Regulations.
"Partnership" means the limited partnership governed by this Agreement,
as such Agreement may from time to time be amended or reconstituted.
"Partnership Minimum Gain" has the meaning set forth in
Section 1.704-2(d) of the Regulations.
"Permanent Financing Phase" means the period of time beginning on the
last to occur of each of the following: (a) Completion; (b) satisfaction on a
timely basis of all construction and development requirements pursuant to the
Mortgage Loan; and (c) commencement of regularly scheduled monthly debt service
payments amortizing the principal balance of the Mortgage Loan.
"Permitted Encumbrances" is defined in Section 6.6.
"Person" means any individual or entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person as
the context may require.
"Personalty" means, collectively, all fixtures, appliances and personal
property required in connection with the use, operation and maintenance of the
Improvements and all other property and rights more particularly described in
Exhibit B attached hereto.
"Plans and Specifications" means the plans and specifications for the
Apartment Complex stamped with the seal of the Architect, which have received
the Consent of the Administrative Limited Partner (including any change orders
made in compliance with Section 5.5C).
"Preexisting Limited Partners" means, collectively, all existing
limited partners so identified on the cover page of this Agreement, who are
hereby withdrawing from the Partnership simultaneously with the admission of the
Investor Limited Partner as the sole limited partner therein. At any and all
times where there is only one Preexisting Limited Partner, the term "Preexisting
Limited Partners" shall mean such sole Preexisting Limited Partner.
"Prime Rate" means the rate of interest publicly announced from time to
time by The Chase Manhattan Bank, N.A., as its prime rate.
"Profits" and "Losses" means, 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 Section 703(a) of the Code (and for this
purpose all items of income, gain, loss, or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code for such year or period
shall be included in the determination of such taxable income or loss), with the
following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations, and not otherwise taken into account in computing Profits
or Losses, shall be subtracted from such taxable income or loss;
(iii) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by reference to the
Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Asset Value;
(iv) In the event of a distribution of Partnership assets to a
Partner (whether in connection with a liquidation or otherwise), or in
the event the Asset Value of any Partnership asset is adjusted upon the
acquisition of an additional interest in the Partnership, unrealized
income, gain, loss and deduction inherent in such distributed or
adjusted assets (not previously reflected in Capital Accounts) shall be
allocated pursuant to Section 9.1 hereof as if there had been a taxable
disposition of such distributed or adjusted assets at fair market
value;
(v) 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 in accordance with the definition of
Depreciation herein; and
(vi) Notwithstanding any other provision of this definition of
Profits and Losses, any items that are allocated pursuant to Sections
9.1D or 9.1E hereof shall not be taken into account in computing
Profits or Losses.
"Project Documents" means the Governmental Agreements, the Management
Agreement, the Mortgage, the Mortgage Note and other Mortgage Loan
documentation, and any other document related to the financing, development,
rehabilitation or operation of the Apartment Complex, as any such document may
be amended from time to time.
"Projected Credits" means Housing Tax Credits described in the
Schedule, which the General Partners has projected to be the total amount of the
Housing Tax Credits which will be allocated to the Investor Limited Partners by
the Partnership, constituting 99.9% of the Housing Tax Credits which are
projected to be available to the Partnership. The Projected Credits as of the
date hereof are allocated to the following Fiscal Years in the following
respective amounts (subject to adjustment if the Projected Credits are revised
pursuant to Section 3.8B):
1999: $33,230
2000: $124,750
2001 through 2008: $129,330 per year
2009: $100,680
"Qualified Units" means those low-income apartment units in the
Apartment Complex which meet the requirements of Section 42(i)(3) of the Code.
"Regulations" means the Income Tax Regulations (whether temporary or
final) promulgated under the Code as such regulations may be amended from time
to time (including corresponding provisions of succeeding regulations).
"Rental Achievement" means the date that all of the following
conditions have been fulfilled: (i) commencement of the Permanent Financing
Phase; (ii) all governmental approvals necessary for legal occupancy of all
units in the Apartment Complex have been obtained; and (iii) 90% Occupancy
(based solely on actual occupancy) of the Apartment Complex has occurred during
each of three consecutive months (but no earlier than the three consecutive
months immediately preceding the commencement of the Permanent Financing Phase),
and which produces a cumulative debt service coverage ratio of 1.15 to 1.00 (the
ratio of net income remaining after the subtraction of all operating expenses
and reserve deposits, all such income, expenses and reserve deposits to be
calculated on the same basis as provided in the calculation of Break Even).
"Rental Assistance Contract" means the contract if any between the
Partnership and HUD providing for annual rental subsidies for the Apartment
Complex.
"Revised Projected Credits" is defined in Section 3.8A.
"Sale or Refinancing Transaction" means any of the following items or
transactions not in the ordinary course of business: a sale, transfer, exchange
or other disposition of all or substantially all of the assets of the
Partnership, a condemnation of the Apartment Complex or any part thereof,
recoveries of damage awards and insurance proceeds (other than business or
rental interruption insurance proceeds), the refinancing of any Mortgage Loan or
other indebtedness of the Partnership and any similar item or transaction;
provided, however, that neither distributions which are deemed returns of
capital for federal income tax purposes nor the payment of Capital Contributions
shall be included within the meaning of the term "Sale or Refinancing
Transaction."
"Sale or Refinancing Transaction Proceeds" means all cash receipts of
the Partnership arising from a Sale or Refinancing Transaction (including
principal and interest received on a debt obligation received as consideration,
in whole or in part, on a Sale or Refinancing Transaction) less the following:
(i) the amount of cash paid or to be paid in connection with or as an expense of
such Sale or Refinancing Transaction, and, with regard to damage recoveries or
insurance or condemnation proceeds (other than for temporary loss of use), cash
paid or to be paid for repairs, replacements or renewals resulting from damage
to or partial condemnation of the affected property; and (ii) the amount
necessary for the payment of all debts and obligations of the Partnership due
upon the occurrence of the particular Sale or Refinancing Transaction.
"Schedule" means the Schedule annexed hereto.
"State" means the state in which the Apartment Complex is located.
"Substituted Partner" means any transferee of an Interest who is
admitted to the Partnership as a successor partner.
"Tax Credit Apartment Units" means the 120 apartment units in the
Apartment Complex which are to be occupied by tenants in a manner which will
qualify such units for Housing Tax Credits and which will permit the Partnership
to claim an "applicable fraction", pursuant to Section 42(c)(1)(B) of the Code
with respect to the Housing Tax Credits, of 100%.
"Tax Credit Percentage" is the percentage set forth in the Schedule.
"Tax Credit Recapture Event" means an event, evidenced by a
determination thereof by the Accountants or as a result of a Final
Determination, which results in a recapture with respect to all or any portion
of the Partnership's Housing Tax Credits under Section 42(j) of the Code or
which results in a disallowance of any Housing Tax Credits previously claimed by
the Partnership.
"Tax Credit Shortfall" means any reduction in Housing Tax Credits
allocable to the Limited Partners as a result of (a) Actual Credits being less
than the Credit Allocation or the Projected Credit (or, if applicable, the
Revised Projected Credits), or (b) as a result of a Tax Credit Recapture Event,
evidenced by a determination thereof by the Accountants or as a result of a
Final Determination.
"Tax Credit Shortfall Payment" means any amounts payable by reason of
the provisions of Section 3.8 hereof as a result of a Tax Credit Shortfall.
"Tax Matters Partner" means the Partner designated from time to time as
the Tax Matters Partner of the Partnership pursuant to Section 5.3B hereof.
"Uniform Act" means the Uniform Limited Partnership Act, or its
equivalent, as it may be adopted or amended from time to time by the State, or
any successor statute governing the operation of limited partnerships.
"United States Real Property Interest" means any direct or indirect
interest in United States real property as defined in Section 897(c) of the Code
and the Regulations promulgated thereunder.
"Voluntary Loan" means a voluntary, unsecured interest-bearing loan by
any Partner to the Partnership as described in Section 4.2 hereof.
"Withdrawing" or "Withdrawal" (including the verb form "Withdraw" and
the adjectival form "Withdrawn") means, as to any General Partner, the
occurrence of the death, adjudication of insanity or incompetence, Bankruptcy,
dissolution or liquidation of such Partner, or the withdrawal, removal or
retirement from the Partnership of such Partner for any reason, including any
Assignment of its 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
term of this Agreement.
ARTICLE 2 GENERAL
Section 2.1 Continuation of the Partnership
A. The Partnership shall be continued as a limited partnership pursuant
to this Agreement. The name of the Partnership shall continue to be the name set
forth at the beginning of this Agreement or such other name selected by the
General Partners, with the Consent of the Administrative Limited Partner, as may
be acceptable to the Filing Office.
B. As soon after the execution of this Agreement as is practicable, the
General Partners shall (if, to the extent and in the manner required under the
Uniform Act) file this Agreement and/or a certificate related hereto in the
Filing Office. The General Partners shall from time to time take all such other
actions as may be deemed to be necessary or appropriate, including the
preparation and filing of such amendments to this Agreement and any other
certificate, document or instrument as may be required under the laws of the
State, to (i) effectuate and permit the continuation of the Partnership as a
limited partnership under the laws of the State, (ii) enable the Partnership to
do business in the State, and (iii) protect the limited liability of the Limited
Partners under the laws of the State. The Partners shall execute such
certificates, documents and instruments and take such other action as may be
necessary to enable the General Partners to fulfill their responsibilities under
this Section 2.1B. The power of attorney granted in Section 15.2 hereof may be
exercised by the Administrative Limited Partner to effect the provisions of this
Section 2.1B. In the event the General Partners fail to comply with this Section
2.1B, the Administrative Limited Partner is authorized to do so on behalf of the
General Partners.
Section 2.2 Principal Office
The principal office of the Partnership shall be located at the
location set forth in the Schedule. The General Partners may maintain such other
offices on behalf of the Partnership in the State as it may from time to time
deem advisable. The Partnership's books and records and other documents,
agreements and information will be made available at its principal office in
accordance with the Uniform Act. The principal office of the Partnership may be
changed by the General Partners to any place in the continental United States,
in which event prior written notice thereof shall be given by the General
Partners to all the other Partners.
Section 2.3 Principal Place of Business; Resident Agent
The principal place of business of the Partnership shall be at the
location of the Apartment Complex. The party so identified in the Schedule, at
the aforementioned address, has been appointed the Partnership's resident agent
for the service of process in the State.
Section 2.4 Term
The Partnership shall continue in full force and effect until the
dissolution and termination of the Partnership pursuant to Article 12 hereof.
Section 2.5 Purpose
A. The specific business and purpose of the Partnership is investment
in real property and the provision of low income housing through the
construction, renovation, rehabilitation, operation (including conversion to
cooperative or condominium form of ownership and the sale of apartment units, if
permitted) and leasing of the Apartment Complex and any commercial space located
therein, and in connection therewith, subject to and in accordance with the
permission of each applicable Credit Agency and all Governmental Agreements, to
make and perform contracts and other undertakings and to engage in any and all
activities and transactions as may be necessary or advisable in connection
therewith, including, but not limited to, the purchase, transfer, mortgage,
pledge and exercise of all other rights, powers, privileges and other incidences
of ownership with respect to the Apartment Complex and to borrow or raise money
without limitation as to amount or manner and to carry on any and all activities
related to any of the foregoing.
B. In order to carry out its business and purpose under Section 2.5A
hereof and subject to the limitations set forth elsewhere in this Agreement, the
Partnership is hereby authorized to:
(i) Acquire, construct, renovate, rehabilitate, own,
maintain and operate the Apartment Complex;
(ii) Mortgage, refinance, lease, transfer and exchange or
otherwise convey and encumber, with the Mortgage Loan or otherwise with
the Consent of the Administrative Limited Partner, the Apartment
Complex (including conversion to cooperative or condominium form of
ownership and the sale of apartment units) in furtherance of any and
all of the objectives of the business of the Partnership;
(iii) Enter into, perform and carry out contracts of any kind
necessary to, or in connection with or incidental to, the acquisition,
renovation, rehabilitation, ownership, financing, maintenance and
operation of the Apartment Complex, including, but not by way of
limitation, any contracts with any Credit Agency which may be desirable
or necessary to comply with the requirements of such Credit Agency,
including any agreements relating to regulations or restrictions
contained in any mortgages as to rents, sales, charges, capital
structure, rate of return and methods of operation;
(iv) Rent dwelling units and commercial space, if any, therein
from time to time in accordance with applicable federal, state and
local regulations, in such a manner so as to qualify for the Housing
Tax Credits, collect the rents therefrom, pay the expenses incurred in
connection therewith, and distribute the net proceeds to the Partners,
subject to any requirements which may be imposed by any Credit Agency;
and
(v) Carry on any and all activities incidental and appropriate
to effectuate the purposes of the Partnership.
ARTICLE 3 CAPITAL CONTRIBUTIONS; CLOSINGS; DEFAULT BY LIMITED PARTNER
-----------------------------------------------------------
Section 3.1 General Partners
The Capital Contribution of the General Partners is set forth in the
Partner Information Schedule annexed hereto. In addition, if the Development Fee
has not been paid in full by the tenth anniversary of the occurrence of
Completion, the General Partners will make a loan within 10 days thereafter in
an amount sufficient for payment of any unpaid balance of the Development Fee.
Such loan shall bear no interest and shall be payable solely as provided in
Section 9.2 hereof
Section 3.2 Withdrawal of Preexisting Limited Partners
Each of the Preexisting Limited Partners hereby withdraws from the
Partnership. Each of the Preexisting Limited Partners acknowledges that it has
no further interest in the Partnership as of the Closing and shall be deemed to
have withdrawn as a limited partner in the Partnership as of such date. The
Preexisting Limited Partners shall have no further rights, liabilities,
interests or obligations of a limited partner hereunder.
Section 3.3 Admission of Administrative Limited Partner
The Administrative Limited Partner is hereby admitted into the
Partnership as of the Closing. Subject to compliance with the terms of this
Agreement and all agreements related thereto, the Administrative Limited Partner
shall be obligated to contribute $100 to the capital of the Partnership.
Section 3.4 Admission of Limited Partners
The Investor Limited Partner is hereby admitted into the Partnership as
of the Closing. The Investor Limited Partner has, concurrently with the
execution hereof, contributed the sum of $100 to the capital of the Partnership.
Subject to compliance with the terms of this Agreement and all agreements
related thereto, the Investor Limited Partner shall contribute further to the
capital of the Partnership the Investor Limited Partner Contribution. Subject to
Section 3.12 hereof, the Investor Limited Partner Contribution shall be made in
the following manner and amounts (subject to adjustment as described in Section
3.8 hereof):
A. $848,408 shall be payable upon the later to occur of (i)
Closing, including, but not limited to, the receipt of all required
federal, state and local governmental approvals concerning the
Apartment Complex, the acquisition of the Interests by the Investor
Limited Partner and the Administrative Limited Partner and (ii)
commencement of funding of the Mortgage Loan on terms approved by the
Administrative Limited Partner, which approval shall not be
unreasonably withheld, with such funds to be used solely for site
acquisition, development and rehabilitation costs; provided, however,
that the Investor Limited Partner shall withhold $350,000 from the
amount payable under this Paragraph A, and shall pay such withheld
amount directly to the Lender on January 5, 1999 to fund reserves.
B. $212,098 shall be payable upon the last to occur of (i)
satisfaction of all conditions precedent to the payment set forth in
Paragraph A above, (ii) Completion by the Completion Date and delivery
of a Completion Certificate in the form annexed hereto as Exhibit C
executed by the Architect (including all commercial space, if any),
(iii) issuance of certificates of occupancy for all units in the
Apartment Complex after completion of rehabilitation thereof (if such
certificates of occupancy are not final, then, to the extent of any
"punchlist" construction items, the Investor Limited Partner shall
withhold an amount equal to 125% of the cost reasonably estimated to
complete such items, and such withheld funds shall be disbursed to the
Partnership upon issuance of final certificates of occupancy), (iv)
Cost Certification, (v) issuance of Forms 8609 for the entire Apartment
Complex and computation of the internal rate of return as provided in
Section 3.8A, and (vi) the attainment of Rental Achievement.
Section 3.5 Treatment of Other Advances
If any Partner or Affiliate shall advance funds to the Partnership
other than the amount of its Capital Contribution, the amount of such advance
shall not be considered a contribution to the capital of the Partnership. Unless
otherwise expressly indicated to the contrary elsewhere in this Agreement, any
such advance shall be considered a Voluntary Loan in accordance with Section 4.2
below.
Section 3.6 Capital Accounts; Interest; Withdrawal
No Partner shall have the right to demand a return of its Capital
Contribution, except as otherwise provided in this Agreement. No Partner shall
have priority over any other Partner, either as to return of its Capital
Contribution or as to Profits, Losses or distributions, except as otherwise
specifically provided in this Agreement. Except as specifically otherwise
provided in this Agreement, no General Partner shall be personally liable for
the return of the Investor Limited Partner Contribution, or any portion thereof,
it being expressly understood that any such return shall be made solely from
assets of the Partnership. No interest shall be paid on any Capital Account or
Capital Contribution. No Partner shall have the right to demand or receive
property other than cash for its Interest. Each of the Partners does hereby
agree to, and does hereby, waive any right such Partner may otherwise have to
cause any asset of the Partnership to be partitioned or to file a complaint or
institute any proceeding at law or in equity seeking to have any such asset
partitioned.
Section 3.7 Liability of Limited Partners
No Limited Partner shall be liable for any debts, liabilities,
contracts or obligations of the Partnership, except as provided by law. Each
Limited Partner shall be liable only to make its Capital Contribution as and
when due under this Agreement and otherwise to comply with its obligations
hereunder.
Section 3.8 Tax Credit Protection; Adjustment of Interests
A. It is intended that the Investor Limited Partner Contribution will
be adjusted to an amount such that the internal rate of return ("IRR") to the
Investor Limited Partner for its investment in the Partnership shall not fall
below 10.0%. Accordingly, upon the issuance by the Credit Agency of Treasury
Forms 8609 for all of the buildings comprising the Apartment Complex, the
Investor shall compute its IRR based on the same assumptions and projections of
the amount and timing of Capital Contributions paid by, and Housing Tax Credit
and Partnership Profits and Losses allocable to, the Investor Limited Partner as
applied at the Closing, but modified to reflect those events which (1) actually
occurred between the Closing and the date of IRR computation and (2) any changes
in future assumptions and projections which are reasonably appropriate based on
information then available at the date of IRR computation (including, without
limitation, any changed amount of Housing Tax Credit reflected on such Forms
8609). In the event such IRR computation results in an IRR of less than 10.0%,
then the Investor Limited Partner Contribution shall be reduced, in the manner
provided by Section 3.8D hereof, by a Tax Credit Shortfall Payment in an amount
such that the IRR shall increase to 10.0% when computed after such Tax Credit
Shortfall Payment is taken into account. After such Investor Limited Partner
Contribution reduction has been determined, then no future installment thereof
shall be payable any sooner than the specific date assumed in computing such IRR
at 10.0%.
B. If at any time the Accountants determine that, for any Fiscal Year
or portion thereof during the Partnership's operation, by reason of any event
other than an event described in Section 3.8A or 3.8C hereof, there is a Tax
Credit Shortfall because the Actual Credit for such Fiscal Year or portion
thereof is less than the Projected Credit, or the Revised Projected Credit, if
applicable, for such Fiscal Year or portion thereof, for any reason, including,
without limitation, a reduction in the Credit Allocation as set forth in Section
3.8A hereof, the Apartment Complex not being placed in service during the second
calendar year after the Credit Year or the failure of the Partnership to operate
the Apartment Complex so as to have 100% of the Tax Credit Apartment Units
therein eligible for the Housing Tax Credits (but not including a change in law
or a transfer by the Investor Limited Partner of its Interest or other action of
the Investor Limited Partner), or upon the occurrence of a Tax Credit Recapture
Event, the Investor Limited Partner Contribution shall be reduced, in the manner
set forth in Section 3.8D, by a Tax Credit Shortfall Payment equal to the
product of such Tax Credit Shortfall multiplied by the Tax Credit Percentage. In
the case of a Tax Credit Recapture Event, the Tax Credit Shortfall Payment shall
include all additions to the tax of the Limited Partners, and all penalties and
interest assessed against the Limited Partners or any of their partners as a
result of such occurrence..
C. Notwithstanding the provisions of Section 3.8B, in the event that
there is a Tax Credit Shortfall because the Actual Credits for 1999 or 2000 are
less than the Projected Credits for such year (or if applicable the Revised
Projected Credits for such year) solely by reason that the applicable fraction
for such year with respect to any buildings in the Apartment Complex was, by
reason of the application of Section 42(f)(2) of the Code, lower than projected
in the Projected Credits (or Revised Projected Credits, if applicable), the
Investor Limited Partner Contribution, shall be reduced, in the manner provided
by Section 3.8D hereof, by a Tax Credit Shortfall Payment equal to the product
of such Tax Credit Shortfall for such year multiplied by the Tax Credit
Percentage. In the event that the Actual Credits for 1999 or 2000 are greater
than the Projected Credits for such year (or if applicable the Revised Projected
Credits for such year), giving rise to a "Credit Excess," then, at the Investor
Limited Partner's option, (x) the Investor Limited Partner Contribution shall be
increased proportionately by increasing pro rata the unpaid installments of the
Investor Limited Partner Contribution by an amount equal to the Tax Credit
Percentage multiplied by the Credit Excess for the year in question, and/or (y)
the Interest of the Investor Limited Partner shall be reduced so that the
Investor Limited Partner shall be in the same economic position as if the
Housing Tax Credits had not increased; provided, however, that the foregoing
option to reduce the Investor Limited Partner's Interest shall only be available
if and to the extent that the Investor Limited Partner Contribution would, by
reason of the increase in the Actual Credits, increase by more than 5% of the
Investor Limited Partner Contribution set forth herein. Any adjustment in the
Investor Limited Partner Contribution effectuated by this provision shall be
made in accordance with Section 3.8D.
D. Whenever in this Section 3.8 it is provided that the Investor
Limited Partner Contribution shall be modified, each remaining installment of
the Investor Limited Partner Contribution then outstanding shall be reduced or
increased, pro rata, so that the aggregate contributions, when made, will total
the new amount of the Investor Limited Partner Contribution. If the outstanding
balance of the Investor Limited Partner Contribution has been reduced to zero by
reason of the aforesaid adjustments to the Investor Limited Partner Contribution
and/or payments previously made thereon or offsets applied thereto, then the
General Partners shall immediately make a Capital Contribution to the
Partnership in the amount owed to the Investor Limited Partner (including
without limitation interest under Section 3.8E), from its own funds, and shall
cause the Partnership to pay such amount to the Investor Limited Partner.
Notwithstanding the foregoing, if and to the extent that a Tax Credit Shortfall
arises by reason of an event not covered in Section 3.8A or Section 3.8C and is
an event of non-compliance or an event which occurs after the end of the
Operating Deficit Guaranty Period, any amounts which are not recoverable by a
reduction of the Investor Limited Partner Contribution shall be recoverable only
out of Cash Flow as provided in Section 9.2A, or, to the extent still unpaid,
from Sale or Refinancing Transaction Proceeds as provided in Section 9.2B
hereof.
E. Any amount owing to the Partnership or the Investor Limited Partner
under this Section 3.8 shall be increased by an amount equal to the Interest
Rate from the date such amount is determined to be due until the date such
payment is made.
F. If all or a portion of the Investor Limited Partner Contribution is
returned to it under this Section 3.8, the General Partners shall promptly file
an amendment to this Agreement and/or the Certificate.
Section 3.9 Closing
A. The initial closing of the transactions contemplated hereunder (the
"Closing") shall take place on the "Closing Date" designated in the Schedule.
B. At the Closing and as a condition thereof, the following documents
(collectively, the "Closing Documents"), all in form and substance reasonably
satisfactory to the Investor Limited Partner, shall be delivered and/or executed
by all necessary parties:
(i) a title insurance policy meeting the requirements
of Exhibit L (the "Title Policy");
(ii) an opinion of the General Partners' counsel confirming
such tax and corporate matters, and in such form, as the Investor
Limited Partner or its counsel may reasonably request. Such opinion
shall expressly permit reliance thereon by the Investor Limited Partner
and counsel engaged by the Investor Limited Partner in connection with
the admission of the Investor Limited Partner and the Administrative
Limited Partner to the Partnership;
(iii) a certificate in the form of Exhibit E annexed hereto,
duly executed by the General Partners;
(iv) a Development Services Agreement between the Partnership
and the party described in the Schedule, as Developer, in form
reasonably acceptable to the Investor Limited Partner, pursuant to
which the Developer will be paid a Development Fee as described in the
Schedule;
(v) the Guaranty in the form of Exhibit F annexed hereto;
(vi) the Low Income Housing Tax Credit Certificate in the form
of Exhibit G annexed hereto and the Low Income Housing Credit
Allocation certification (Treasury Form 8609), if issued;
(vii) an ALTA survey certified to the Partnership, the
Investor Limited Partner and the Administrative Limited Partner;
(viii) a true and correct copy of each Initial Lease existing
as of the date of the Closing;
(ix) the written determinations of the issuer of the Bonds
necessary to comply with Section 42(m)(2)(D) of the Code;
(x) a bonded construction contract in an amount
approved by the Investor Limited Partner; and
(xi) the Due Diligence Documents.
After the General Partners have delivered, or caused to be delivered, on behalf
of itself and the Partnership, the Closing Documents, and so long as the
representations and warranties referred to in Article 6 are in fact true and
correct on the Closing Date and all other conditions set forth in Section 3.4A
have been met, the Investor Limited Partner shall pay to the Partnership the
initial installment of the Investor Limited Partner Contribution described in
Section 3.4A.
Section 3.10 Satisfaction of Conditions
If all conditions precedent to the Closing have not been satisfied on
or before the Closing Date and the Closing Date has not been extended with the
Consent of the Administrative Limited Partner after written request therefor by
the General Partners, the Investor Limited Partner and the Administrative
Limited Partner shall be entitled to rescind and terminate all of their
obligations under this Agreement and any documents or agreements executed
pursuant hereto and to receive a refund of any sums which have previously been
paid as a Investor Limited Partner Contribution to the General Partners or for
the benefit of the Partnership. Upon the refund to the Limited Partners of the
sums paid by them, the General Partners and the Partnership shall have not
further obligation or liability to the Limited Partners; provided, however, that
the General Partners shall indemnify the Limited Partners from any liability
they may have incurred as a result of their participation in the Partnership. In
the event that a General Partner has breached any covenant, representation or
warranty, the Investor Limited Partner and the Administrative Limited Partner
shall also be entitled to exercise all other rights and remedies which may arise
as a result thereof.
Section 3.11 Mortgage Loan Commitment
The obligation of the Investor Limited Partner to make its Capital
Contribution is further predicated on the General Partners having obtained the
Mortgage Loan. At the Investor Limited Partner's election, any and all fees paid
to the General Partners and their Affiliates from the Investor Limited Partner's
Capital Contribution shall be returned to the Partnership and the transactions
contemplated by this Agreement shall be rescinded if the General Partners are in
default under this Section 3.11.
Section 3.12 Subsequent Closing(s)
A. There shall be subsequent closing(s) (individually referred to as a
"Subsequent Closing") which shall be held 20 days after the respective date(s)
on which all of the conditions precedent to the payment of each of the
installments of the Capital Contribution referred to in Section 3.4B
(hereinafter referred to as a "Subsequent Closing Date"). It shall be a
condition to the Investor Limited Partner's obligation for the installment of
its Capital Contribution that there shall be no defaults under any of the
Project Documents.
B. At each Subsequent Closing and as a condition thereof, the General
Partners on behalf of themselves and the Partnership shall deliver the following
documents (collectively, the "Subsequent Closing Documents") to the Investor
Limited Partner, all in form and substance reasonably satisfactory to the
Investor Limited Partner:
(i) A date down certificate or endorsement to the Title Policy
("Bring Down Certificate"), dated as of such Subsequent Closing Date,
at the Partnership's expense, insuring (in an amount equal to the sum
of the Investor Limited Partner Contribution and the principal amount
of the Mortgage Loan) the Partnership's ownership of the Apartment
Complex, showing that the Apartment Complex is subject to no mortgage,
deed of trust, lien, encumbrance, easement, covenant, restriction or
charge other than the exceptions set forth on the Title Policy (and, if
applicable, such other matters as may be approved by the Investor
Limited Partner in writing);
(ii) A survey of the Apartment Complex (to the extent any
conditions which would be disclosed by an updated survey have not been
shown on the latest survey previously delivered);
(iii) A certificate of the General Partners, dated as of such
Subsequent Closing Date, certifying on behalf of themselves and the
Partnership that the warranties and representations set forth in
Article 6 hereof continue to be true, correct and in force as of such
date;
(iv) A "comfort letter" from the General Partners' counsel,
stating that nothing has come to its attention which affects adversely
the matters addressed in its opinion delivered at the Closing;
(v) An estoppel certificate from the holder of each Mortgage,
dated no earlier than 30 days prior to such Subsequent Closing Date;
(vi) An updated (as of such Subsequent Closing Date) Low
Income Housing Tax Credit Certificate, and the Low Income Housing
Credit Allocation certification (Forms 8609), if not previously
delivered;
(vii) An unaudited balance sheet of the Partnership, dated no
earlier than 30 days prior to such Subsequent Closing Date, certified
by the General Partners as true, complete and correct;
(viii) A true and correct copy of each Initial Lease executed
after the Closing and each prior Subsequent Closing; and
(ix) Such other documents as the Investor Limited Partner
determines are reasonably necessary to clarify any matter disclosed by
the documents described above or a fact or circumstance which has the
Investor Limited Partner has discovered and/or has occurred since the
date of the Closing and is reasonably required to evidence the
fulfillment of the conditions precedent for the portion of the Capital
Contribution to be made at that time.
In addition to the foregoing, at the Subsequent Closing it shall be an
additional condition precedent to the payment of the Capital Contribution then
due that the Investor Limited Partner and the Administrative Limited Partner
receive a report from the construction consultant to the Investor Limited
Partner that all design, site, construction and finishing work necessary for the
completion of the Apartment Complex and any necessary utilities have been
finished in a good and workmanlike manner, free from defects in design and
construction and substantially in accordance with the Plans and Specifications.
The consultant shall complete its inspection and report prior to the date which
is 10 days after the date on which all of the other Subsequent Closing Documents
for that Subsequent Closing have been delivered to the Investor Limited Partner
as required under this Section 3.12. The Investor Limited Partner shall cause
its consultant to deliver a copy of its report (or the pertinent portions
thereof) promptly to the General Partners if there are any construction or other
development items which the Investor Limited Partner claims are unsatisfactory
based upon the findings in the report.
The General Partners shall promptly notify the Administrative Limited
Partner and the Investor Limited Partner if the General Partners become aware of
the existence of any fact or circumstance which makes untrue or misleading in
any material respect any of the statements or information contained in and/or
covered by the Subsequent Closing Documents. As a condition to the delivery (as
further described below) of the installment of the Investor Limited Partner
Contribution due at a Subsequent Closing, the General Partners shall certify
that none of them has any knowledge of any such fact or circumstance. After the
General Partners has delivered or caused to be delivered on behalf of themselves
and the Partnership the Subsequent Closing Documents (including, without
limitation, the confirmation described in the immediately preceding sentence),
and so long as (i) no General Partner has defaulted in any of its obligations
under the terms of this Agreement or any other document executed by a General
Partner pursuant to this Agreement, which default is continuing, and (ii) the
warranties and representations referred to in Article 6 are in fact true and
correct at such time, the Investor Limited Partner shall deliver at each
Subsequent Closing for the account of the Partnership that portion of the
Investor Limited Partner Contribution payable on the applicable Subsequent
Closing Date.
The Investor Limited Partner and/or the Administrative Limited Partner
shall have twenty days with respect to the Subsequent Closing for the
installment of the Capital Contribution described in Section 3.4B (such twenty
days is hereinafter referred to as the "Response Period") after receipt of (A) a
request from the General Partners for the payment of the Capital Contribution
corresponding to such Subsequent Closing and (B) copies of what the General
Partners believe to be all of the Subsequent Closing Documents required at such
Subsequent Closing to send a notice (a "Deficiency Notice") to the General
Partners stating the reasons why any of such Subsequent Closing Documents do not
satisfy the requirements set forth above and/or that there is additional
information reasonably required by Investor Limited Partner and/or the
Administrative Limited Partner to verify the accuracy and/or completeness of
such Subsequent Closing Documents. If a Deficiency Notice is sent to the General
Partners and the General Partners respond, the Investor Limited Partner and/or
the Administrative Limited Partner shall have five business days to approve the
Subsequent Closing Documents and, if applicable, any supplemental or additional
documentation and/or other information provided by or for the benefit of the
General Partners. If the Investor Limited Partner or the Administrative Limited
Partner fails to send a Deficiency Notice within the applicable Response Period,
the Subsequent Closing Documents shall be deemed approved and the applicable
Capital Contribution shall be due and payable within twenty days after the date
on which Investor Limited Partner received such Subsequent Closing Documents and
any supplemental or additional documentation and other information from the
General Partners.
Section 3.13 Payment
The portion of the Investor Limited Partner Contribution due to be paid
at the Closing or any Subsequent Closing shall be paid either by a cashier's
check or by federal funds wired or otherwise transferred to a federally insured
bank account of the Partnership, as directed by the Partnership by a written
notice to the Investor Limited Partner at least three business days prior to the
Closing or Subsequent Closing.
Section 3.14 Additional Low Income Housing Tax Credit Certificates
The General Partners shall deliver to the Investor Limited Partner an
updated Low Income Housing Tax Credit Certificate dated as of the last day of
the first taxable year of the Credit Period within 30 days after said date and
at such other times as may be reasonably required by the Investor Limited
Partner.
Section 3.15 Loan Defaults
If there is a default or if events which with notice or the passage of
time, or both, would constitute a default, which events result in an
acceleration of any Mortgage, the Investor Limited Partner shall have the right,
in addition to any other remedies available to it hereunder or at law or equity,
to terminate this Agreement, without any further liability, and to rescind this
Agreement under Section 7.4.
ARTICLE 4 COMPLIANCE WITH CREDIT AGENCY REQUIREMENTS; PARTNERSHIP BORROWINGS
Section 4.1 Credit Agency Requirements
The following provisions shall apply at all times: (i) each of the
provisions of this Agreement shall be subject to, and the General Partners
covenant to act in accordance with, the Project Documents and all applicable
federal, state, and local laws and regulations; (ii) such documents, laws and
regulations, as amended or supplemented, shall govern the rights and obligations
of the Partners, their heirs, executors, administrators, successors and assigns;
(iii) upon any dissolution of the Partnership or any transfer of the Apartment
Complex, no title or right to the possession and control of the Apartment
Complex and no right to collect rent therefrom shall pass to any person who is
not, or does not become, bound by the Governmental Agreements in a manner
satisfactory to each Credit Agency; (iv) no amendment of this Agreement shall
affect the rights of any Credit Agency under any of the Project Documents
without the prior written consent of such Credit Agency; (v) any conveyance or
transfer of title to all or any portion of the Apartment Complex required or
permitted under this Agreement shall in all respects be subject to any and all
conditions, approvals and other requirements of the rules and regulations of any
Credit Agency applicable thereto; and (vi) the General Partners shall at no time
do or cause to be done any act directly or indirectly affecting the Apartment
Complex except with the prior approval or pursuant to the requirements of each
Credit Agency and each Lender, if such approval is required. Specifically,
without limiting the generality of the foregoing, the General Partners shall
cause 120 apartment units to be held for persons whose income is below 50% of
the area median income, and shall provide any home ownership incentive programs
and any and all other programs, services and amenities described in its Housing
Tax Credit application applicable to the Apartment Complex.
Section 4.2 Loans
All borrowings by the Partnership shall be subject to the terms of this
Agreement, the Project Documents and applicable rules, regulations and
directives of any Credit Agency. To the extent borrowings are permitted they may
be made from any source, including any Partner or an Affiliate thereof;
provided, however, that any borrowings from the General Partners or its
Affiliates shall, except to the extent that such borrowings are required to be
made by the Partnership hereunder, require the Consent of the Administrative
Limited Partner. The Administrative Limited Partner and the Investor Limited
Partner shall make loans to the Partnership only with the Consent of the General
Partners. Except as may be otherwise specifically set forth in this Agreement,
if any Partner or Affiliate thereof shall lend any monies to the Partnership,
such loan shall be unsecured and the amount of any such loan shall not be an
increase of such Partner's Capital Contribution nor affect in any way such
Partner's share of the Profits and Losses or distributions of the Partnership.
Any loan by a Partner or its Affiliate, other than an Operating Loan or a loan
made pursuant to Section 3.1, shall be a "Voluntary Loan," shall bear interest
per annum at a rate equal to the Interest Rate and shall be repayable as set
forth in Article 9 hereof (to the extent permitted by each Credit Agency);
provided, however, that any Voluntary Loan shall be made solely for the benefit
of the Partnership. No Voluntary Loan by the General Partners or its Affiliates
may be made to the Partnership in substitution of its obligation to make
Operating Loans to the Partnership.
ARTICLE 5 RIGHTS, POWERS AND OBLIGATIONS OF THE GENERAL PARTNERS
AND LIMITATIONS THEREON
Section 5.1 Exercise of Management
A. The overall management and control of the business, assets and
affairs of the Partnership shall be vested in the General Partners and, subject
to the specific limitations and restrictions set forth in this Article 5, the
General Partners, in extension of and not in limitation of the powers given them
by law, shall have full, exclusive and complete charge of the management of the
business of the Partnership in accordance with its purpose stated in Section 2.5
hereof, except as otherwise set forth in this Agreement. Neither the
Administrative Limited Partner nor the Investor Limited Partner shall take part
in the management or control of the business of the Partnership or have
authority to bind the Partnership.
B. If at any time more than one Person constitutes the General
Partners, then the General Partners shall act by vote of a all such Persons.
C. Any General Partner, to the extent of its authorization, may from
time to time, by an instrument in writing, delegate all or any of its powers or
duties hereunder to another General Partner. Such writing shall fully authorize
such other General Partner to act alone without requirement of any other act or
signature of the delegating General Partner, to take any action of any type and
to do anything and everything which the delegating General Partner may be
authorized to take or do hereunder except insofar as said delegation may be
limited to certain acts or activities; provided, however, that any such
delegation shall not relieve the delegating General Partner of its obligations
or liabilities under this Agreement.
D. Each obligation of the General Partners under this Agreement shall
be the joint and several obligation of each General Partner and each such
obligation shall survive any withdrawal of a General Partner pursuant to Article
11 hereof.
Section 5.2 Authority and Duties of General Partners
A. Except as otherwise set forth in this Agreement, the General
Partners are hereby fully authorized to take any action of any type and to do
anything and everything which a general partner of a limited partnership
organized under the Uniform Act may be authorized to take or do thereunder, and
specifically, without limitation of such authority, to execute, sign, seal and
deliver in the name and on behalf of the Partnership:
(i) Any note, mortgage or other instrument or document in
connection with the Mortgage Loan or any Governmental Agreement, and
all other agreements, contracts, certificates, instruments and
documents required by any Credit Agency and/or any Lender in connection
therewith or with the acquisition, improvement, operation or leasing of
the Apartment Complex or otherwise required by any Credit Agency and/or
any Lender;
(ii) Any deed, lease, mortgage note, xxxx of sale, contract or
any other instrument purporting to convey or encumber the real or
personal property of the Partnership;
(iii) Any rent supplement or leasing or other contract or
agreement providing for public or non-public financial assistance,
directly or indirectly, to tenants of the Apartment Complex;
(iv) Any and all agreements, contracts, documents,
certificates and instruments whatsoever involving the acquisition,
improvement, management, maintenance, leasing or operation of the
Apartment Complex, including the employment of such Persons as may be
necessary therefor; and
(v) Any and all instruments, agreements, contracts,
certificates and documents requisite to carrying out the intention and
purpose of this Agreement, including, without limitation, the filing of
all business certificates, this Agreement and all amendments thereto,
and documents required pursuant to the Project Documents or by any
Credit Agency and/or any Lender in connection with any financing.
B. Every contract, agreement, certificate, document or other instrument
executed by a General Partner shall be conclusive evidence in favor of every
Person relying thereon or claiming thereunder that, at the time of the delivery
thereof, the Partnership was in existence; secondly, that this Agreement had not
been terminated or canceled or amended in any manner so as to restrict such
authority (except as shown in any instrument duly filed in the Filing Office);
and thirdly, that the execution and delivery thereof was duly authorized by the
General Partners. Any Person dealing with the Partnership or a General Partner
may always rely on a certificate signed by a General Partner:
(i) As to the identity of the Partners;
(ii) As to the existence or nonexistence of any fact or facts
which constitute conditions precedent to acts by any General Partner or
are in any other manner germane to the affairs of the Partnership;
(iii) As to who is authorized to execute and deliver any
instrument, contract, agreement, certificate or document for the
Partnership;
(iv) As to the authenticity of any copy of this
Agreement and amendments thereto; or
(v) As to any act or failure to act by the Partnership or as
to any other matter whatsoever involving the Partnership or the
Apartment Complex.
C. The Partners hereby consent to the exercise by the General Partners
of the powers conferred on them by this Agreement.
D. The General Partners shall devote to the Partnership such time as
may be necessary for the proper performance of the duties of the General
Partners. The General Partners shall have the fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in their immediate possession or control. The General Partners shall not employ,
or permit another to employ, such funds or assets in any manner except for the
exclusive benefit of the Partnership. The signature of a General Partner shall
be needed on any instrument, document or agreement to bind the Partnership, and
third parties may rely fully on any such instrument, document or agreement
signed by a General Partner. The General Partners are authorized and directed
to:
(i) Take all action that may be necessary or
appropriate to carry out the purposes of the Partnership as described in
this Agreement;
(ii) Make inspections of the Apartment Complex and assure that
the Apartment Complex is being properly maintained and necessary
repairs are being made;
(iii) Prepare or cause to be prepared in conformity with good
business practice all reports required to be furnished to the Partners
or required by taxing bodies or other governmental agencies, including
operations reports of the Apartment Complex and the financial
statements and reports referred to in Section 7.3 hereof;
(iv) Cause the property of the Partnership at all times to be
insured in a manner similar to other property of like kind in the same
locality and in such amounts and on such terms as will fully and
adequately protect the Partnership (provided that such insurance must
be in an amount at least sufficient to repair and rebuild the Apartment
Complex under the circumstances and in the manner described in Section
5.12 hereof), including (if customary for properties in the vicinity of
the Apartment Complex) wind insurance.
(v) Obtain and maintain in force or cause to be obtained and
maintained in force Worker's Compensation Insurance and such other
insurance as may be required by applicable law or governmental
regulation;
(vi) Obtain and maintain in force or cause to be obtained and
maintained in force adequate public liability insurance, the amount of
coverage to be at least $2,000,000 per occurrence, together with any
and all insurance required hereunder; and
(vii) Do all other things (subject to the restrictions
contained herein) that may be necessary or desirable in order properly
and efficiently to administer and carry on the affairs, assets and
business of the Partnership, including, but not limited to, the
execution of all conveyances, deeds, notes, mortgages and other
documents.
Notwithstanding anything contained in this Agreement to the contrary, if the
Administrative Limited Partner is able to obtain insurance coverage for the
Partnership and the Apartment Complex described in subparagraphs (iv) and/or
(vi) above which is comparable in all material respects to the coverage proposed
to be obtained by the General Partners, with companies having equivalent claims
paying ability as those proposed by the General Partners and the premiums
payable by the Partnership for such insurance coverage would not exceed the
premiums payable for the insurance identified by the General Partners (or the
Administrative Limited Partner or the Investor Limited Partner is willing to pay
any excess), then, at the request of the Administrative Limited Partner, the
General Partners shall obtain such insurance policies through the Administrative
Limited Partner or its agent. At least 30 days prior to seeking to obtain any
insurance coverage, the General Partners shall furnish the Administrative
Limited Partner sufficient information to enable the Administrative Limited
Partner to obtain proposals to provide such coverage.
E. The General Partners shall cause the Apartment Complex to be
constructed, operated and managed in such a manner that (i) the Apartment
Complex complies with all Project Documents (including but not limited to those
requiring the provision of such tenant services programs and amenities as
described in the Partnership's Credit Application) and (ii) the Apartment
Complex will be eligible to receive the full amount of the Projected Credit or
the Revised Projected Credit, as applicable, with respect to 100% of the Tax
Credit Apartment Units. To that end, the General Partners agree, without
limitation, to make all elections necessary under Section 42 of the Code
(including those requested by the Administrative Limited Partner) to allow the
Partnership or its Partners to claim the Housing Tax Credits, to enter into the
extended low-income housing commitment required by Section 42(h)(6) of the Code,
and, if the Mortgage involves Bonds, to satisfy the requirements of Sections
42(m)(1)(D) and (2)(D) of the Code, to operate the Apartment Complex and cause
the Management Agent to manage the Apartment Complex so as to comply with the
requirements of Section 42 of the Code, including Sections 42(g) and (i)(3) of
the Code, and to make all certifications required by Section 42(l) of the Code,
and to operate the Apartment Complex at all times in compliance with the
requirements of the Project Documents.
F. The General Partners agree that they shall prepare or cause to be
prepared an annual budget in connection with the operations of the Apartment
Complex for the succeeding Fiscal Year of the Partnership and shall deliver the
same to the Administrative Limited Partner not later than November 1 of the
Fiscal Year preceding the Fiscal Year to which such budget relates. Such budget
shall not be adopted until the Administrative Limited Partner shall have
approved the same in writing; provided, however, if the Administrative Limited
Partner has not approved the proposed annual budget within 20 days after the
receipt thereof from the General Partners, such proposed annual budget shall be
deemed approved by the Administrative Limited Partner. If the General Partners
and the Administrative Limited Partner are unable to agree on a budget, then (i)
the General Partners can operate the Partnership using the most current budget
and (ii) the General Partners and the Administrative Limited Partner shall
cooperate in good faith to resolve such dispute and, if unable to do so, submit
the same to binding arbitration as expeditiously as practical. Notwithstanding
anything to the contrary contained herein, the Partnership shall not make any
expenditure of funds, or commit to make any such expenditure (other than in
response to an emergency), except as provided for in an annual budget so
approved by the Administrative Limited Partner or if such expenditure or
commitment, individually and together with all of the other unapproved
expenditures and commitments for such Fiscal Year, does not represent a material
deviation from the annual budget approved for the previous Fiscal Year and is
for a purpose consistent with the provisions of this Agreement.
Section 5.3 Delegation of General Partner Authority; Tax Matters
Partner
A. Each General Partner may delegate all or any of its powers, rights
and obligations hereunder, and may appoint, employ, contract or otherwise deal
with any Person for the transaction of the business of the Partnership, which
Person may, under the supervision of the General Partners, perform any acts or
services for the Partnership as the General Partners may approve and in
accordance with the terms of this Agreement, provided, however, such delegation
shall not relieve the General Partners of any of their obligations hereunder.
B. All of the Partners hereby agree that the General Partner shall be
the Tax Matters Partner pursuant to the Code and in connection with any audit of
the federal income tax returns of the Partnership; provided, however, that if
such General Partner shall withdraw from the Partnership, become Bankrupt or be
dissolved, the Administrative Limited Partner shall thereafter be the Tax
Matters Partner. The Tax Matters Partner shall promptly, after receipt thereof,
provide to the Investor Limited Partner all notices and other communications
received from or sent to the IRS. The Tax Matters Partner shall provide the
Investor Limited Partner with reasonable notice of all meetings or conferences
with the IRS, and the Investor Limited Partner shall have the right to attend
all such meetings or conferences. The Investor Limited Partner shall have the
right to require the Tax Matters Partner to commence a judicial action with
respect to a federal income tax matter and to appeal any adverse determination
of a judicial tribunal. Without the prior written Consent of the Investor
Limited Partner, the Tax Matters Partner shall not (i) commence a judicial
action (including filing a petition) as contemplated in Section 6226(a)(2) or
6228 of the Code with respect to a federal income tax matter or appeal any
adverse determination of a judicial tribunal, or (ii) enter into a settlement
agreement with the IRS which purports to bind the Investor Limited Partner;
(iii) intervene in any action as contemplated in Section 6226(b) of the Code;
(iv) file any request contemplated in Section 6227(b) of the Code; or (v) enter
into an agreement extending the period of limitations as contemplated in Section
6229(b)(1)(B) of the Code. The Partnership shall indemnify the Tax Matters
Partner from and against any claim, liability and expense (including attorneys'
fees) it may incur in connection with its duties as Tax Matters Partner.
Section 5.4 Lease, Conveyance or Refinancing of Assets of the
Partnership
A. Except as may be otherwise expressly provided in Section 4.1 hereof
and elsewhere in this Agreement, the General Partners, with the approval of each
Credit Agency (if required), are hereby authorized to sell, lease, exchange,
refinance or otherwise transfer, convey or encumber all or substantially all of
the assets of the Partnership; provided, however, that notwithstanding any other
provision of this Agreement (other than Section 5.4B and Section 5.4C hereof),
the terms of any such sale, exchange, refinancing or other transfer, conveyance
or encumbrance must receive the Consent of the Administrative Limited Partner
and the Consent of the Investor Limited Partner before such transaction is
consummated, except that neither the Consent of the Administrative Limited
Partner nor the Consent of the Investor Limited Partner shall be required for
the leasing of apartment units to tenants or leases or concessions of facilities
in the Apartment Complex in the normal course of operations.
B. Notwithstanding any provision of this Agreement to the contrary,
other than the requirements of Section 4.1 hereof, the Administrative Limited
Partner shall have the right at any time after the end of the fourteenth year of
the Compliance Period to require, by notice to the General Partners that the
General Partners submit a written request (the "Termination of the Extended Use
Notice") to the Credit Agency to find a person to acquire the Partnership's
interest in the low-income portion of the Apartment Complex pursuant to the
provisions of the extended low-income housing commitment agreement entered into
by and between the Partnership and such Credit Agency (the "Extended Use
Agreement") and in accordance with the provisions of Section 42(h)(6) of the
Code, unless the Partnership has waived its right to do so. If the General
Partners shall fail to submit the Termination of the Extended Use Notice within
ten days of the Administrative Limited Partner's request therefor, then the
Administrative Limited Partner shall have the right at any time thereafter to
submit the Termination of the Extended Use Notice to such Credit Agency. If
within one year of the Credit Agency's receipt of the Termination of the
Extended Use Notice, the housing credit agency presents a "qualified contract",
as said term is defined in Section 42(h)(6)(F) of the Code (hereinafter
"Qualified Contract"), for the acquisition of the Apartment Complex, then the
General Partners shall cause the Partnership promptly to sell the Apartment
Complex in accordance with the terms of said Qualified Contract.
C. Notwithstanding any provision of this Agreement to the contrary
other than the requirements of Section 4.1, at any time after the later of: (i)
the end of the Compliance Period, or (ii) the expiration of one year after the
date upon which the Termination of the Extended Use Notice was submitted to the
Credit Agency (if such Notice was delivered prior to the end of the Compliance
Period), the Administrative Limited Partner shall have the right to require, by
notice to the General Partners (the "Required Sale Notice"), that the General
Partners promptly use commercially reasonable efforts to obtain a buyer for the
Apartment Complex on the most favorable terms then obtainable. The General
Partners shall submit the terms of any proposed sale to the Administrative
Limited Partner and the Investor Limited Partner for their approval as provided
in Section 5.4A hereof. If the General Partners shall fail to so obtain a buyer
for the Apartment Complex within twelve months of the Required Sale Notice or if
the Administrative Limited Partner and/or the Investor Limited Partner in
its/their sole discretion shall withhold its/their Consent to any proposed sale
to such buyer, then the Administrative Limited Partner shall have the right at
any time thereafter to obtain a buyer for the Apartment Complex on terms most
favorable then obtainable and otherwise acceptable to the Administrative Limited
Partner (but not less favorable to the Partnership than any proposed sale
previously rejected by the Administrative Limited Partner). In the event that
the Administrative Limited Partner so obtains a buyer, it shall notify the
General Partners and the Investor Limited Partner in writing with respect to the
terms and conditions of the proposed sale, and, provided the Investor Limited
Partner approves, in its sole discretion, the terms of such sale, the General
Partners shall cause the Partnership promptly to sell the Apartment Complex to
such buyer. In the event that the Investor Limited Partner fails to approve any
such sale proposed by the General Partners, the General Partners shall have the
right to purchase the Interests of the Administrative Limited Partner and the
Investor Limited Partner for a price equal to the greater of (i) the then fair
market value of the Apartment Complex or (ii) the amount which they would have
received (giving effect to reasonable estimates of closing costs which would
have been incurred) in liquidation of the Partnership had such sale been
consummated. In the event that the General Partners fail to exercise such right
or, having exercised the same, to consummate the purchase of such Interests
within 90 days after the disapproval by the Investor Limited Partner of the
proposed sale, the Investor Limited Partner shall have the right to purchase the
Interest of the General Partners for a price equal to the greater of (i) the
then fair market value of the Apartment Complex or (ii) the amount it would have
received (giving effect to reasonable estimates of closing costs which would
have been incurred) in liquidation of the Partnership had the sale which was not
approved been consummated.
D. A sale of the Apartment Complex prior to the end of the Compliance
Period may only take place with the Consent of the Administrative Limited
Partner (which may be withheld in its sole discretion).
Section 5.5 Restrictions on Authority
Notwithstanding any other provisions of this Agreement:
A. No General Partner shall have authority to perform any act in
violation of any applicable law or regulation, the Project Documents or any
agreement between the Partnership and any Credit Agency or any Lender, or to
take any action which under the Uniform Act or this Agreement requires the
approval, ratification or Consent of some or all of the Partners without first
obtaining such approval, ratification or Consent, as the case may be.
B. No General Partner shall have any authority to do any of the
following acts on behalf of the Partnership, except with the Consent of the
Administrative Limited Partner and the approval, to the extent required, of any
Credit Agency and any Lender:
(i) Acquire any real or personal property (tangible or
intangible) except to the extent approved in an approved annual budget;
(ii) Acquire, become personally liable on or in respect of, or
guarantee, directly or indirectly (or allow any person related to any
General Partner within the meaning of Section 752 of the Code to
acquire, become liable on or guaranty), all or any portion of a
Mortgage Note or a Mortgage or, except as otherwise contemplated herein
or in the Development Services Agreement, any other indebtedness of the
Partnership;
(iii) Pay any salary, fees or other compensation to a General
Partner or its Affiliates, except as authorized by Section 5.7, or
Articles 6 and 8 hereof, or as otherwise specifically provided for in
this Agreement;
(iv) Sell all or any portion of the Apartment Complex or
modify, prepay or refinance the Mortgage Loan or incur any indebtedness
for borrowed money except in accordance with Section 5.4 hereof;
(v) Terminate the services of the Accountants or the
Management Agent (the Consent of the Administrative Limited Partner
shall not be unreasonably withheld) or amend or modify any Project
Document;
(vi) Make any capital improvement to the Apartment Complex the
aggregate value of which shall exceed $25,000 (or any other amount
approved in an annual budget) in any Fiscal Year (other than in
response to an emergency); or
(vii) make any election or take any other action which could
result in the Partnership being taxed as an entity other than a
partnership for federal income tax purposes.
C. No General Partner shall have any authority to submit any Draw
Request for Mortgage Loan proceeds to any Lender and/or approve any change order
except with the Consent of the Administrative Limited Partner (which will not
unreasonably be withheld), provided that Consent of the Administrative Limited
Partner shall not be required for any change order where the addition or
reduction to the total construction cost resulting from such change order plus
any other change orders related to the same modification to the Plans and
Specifications does not in total exceed $25,000. All Draw Requests payable from
Capital Contributions shall be subject to the approval of the Administrative
Limited Partner, which shall not unreasonably be withheld; provided, however, if
the Administrative Limited Partner does not notify the General Partners within
five calendar days after receipt of such request or proposed change order of the
Administrative Limited Partner's disapproval, together with a reasonably
detailed explanation of the reasons for such disapproval, then the request
and/or change order shall be deemed approved.
D. The Administrative Limited Partner will designate a representative
for the review of all construction draw requests. No draw shall be obtained by
the General Partners without the approval of such representative, which will not
unreasonably be withheld or delayed.
Section 5.6 Activities of Partners
It is understood that each General Partner is and will be engaged in
other activities and occupations unrelated to the Partnership, and each General
Partner shall be required to devote only so much of its time as shall be
necessary to the proper conduct of the affairs of the Partnership. Any Partner
may engage in and have an interest in other business ventures of every nature
and description, independently or with others, including, but not limited to,
the ownership, financing, leasing, operating, construction, rehabilitation,
renovation, improvement, management and development of real property whether or
not such real property is directly or indirectly in competition with the
Apartment Complex; provided, however, that nothing herein shall be construed to
relieve a General Partner of any of its fiduciary obligations with respect to
the management of the Apartment Complex. Neither the Partnership nor any other
Partner shall have any rights by virtue of this Agreement in and to such
independent ventures or the income or profits derived therefrom, regardless of
the location of such real property and whether or not such venture was presented
to such Partner as a direct or indirect result of its connection with the
Partnership or the Apartment Complex.
Section 5.7 Dealing with Affiliates
Without the prior written Consent of the Administrative Limited
Partner, no General Partner may enter into, for, in the name of or on behalf of,
the Partnership, agreements or contracts for performance of services for the
Partnership as an independent contractor with itself or its Affiliates or pay
compensation for and on account of any such services. The Administrative Limited
Partner shall not withhold its Consent to any such contract so long as the same
is not less favorable in any material respect than the Partnership could obtain
from a non-Affiliate of the General Partners engaged in the business of
providing the services sought from the Affiliate.
Section 5.8 Indemnification and Liability of the Partners
A. The Partnership, its receiver or its trustee, shall indemnify and
hold harmless the Limited Partners, the General Partners and their Affiliates
from any liability, loss or damage incurred by them by reason of any act
performed or omitted to be performed by them on behalf of the Partnership,
including costs and reasonable attorneys' fees (which attorneys' fees may be
paid as incurred) and any amount expended in the settlement of any claim of
liability, loss or damage; provided, however, that (i) if such liability, loss
or damage arises out of any action or inaction of any Affiliate, such action or
inaction must have occurred while such party was engaged in activities which
could have been engaged in by the Limited Partners or the General Partners in
its capacity as such; (ii) if such liability, loss or damage arises out of
action or inaction of Limited Partners or the General Partners or their
Affiliates, (a) such party(ies) must have reasonably determined, in good faith,
that such course of conduct was in the best interests of the Partnership, and
such party(ies) must have been acting on behalf of or performing services for
the Partnership, and (b) such course of conduct must not have constituted fraud,
gross negligence, misrepresentation, breach of any material provision of this
Agreement or misconduct by such party(ies); and (iii) any such indemnification
shall be recoverable only from the assets of the Partnership and not from the
assets of any Partner. All judgments against the Partnership, the Limited
Partners or the General Partners or their Affiliates, wherein such party(ies)
is/are entitled to indemnification, must first be satisfied from Partnership
assets before such party(ies) is/are responsible for these obligations;
provided, however, that notwithstanding the foregoing, in no event shall the
Partnership be required to sell the Apartment Complex, or any part thereof or
any interest therein which would result in a loss or recapture of Housing Tax
Credits to satisfy its indemnification obligation to the Limited Partners or the
General Partners or their Affiliates. The Partnership shall not pay for any
insurance covering liability of the Limited Partners or the General Partners or
their Affiliates for actions or omissions for which indemnification is not
permitted hereunder; provided, however, that nothing contained herein shall
preclude the Partnership from purchasing and paying for such types of insurance,
including extended coverage liability and casualty and workers' compensation, as
would be customary for any person owning comparable assets and engaged in
similar business, or from naming such party(ies) as additional insured parties
thereunder, if such addition does not add to the premiums payable by the
Partnership. Nothing contained herein shall constitute a waiver by a Limited
Partner of any right which it may have against any party under federal or state
securities laws nor a waiver of the fiduciary duty owed to it by the General
Partners or their Affiliates under common law. The provision of advances from
the Partnership to the Limited Partners or the General Partners or their
Affiliates for legal expenses and other costs incurred as a result of a legal
action potentially subject to indemnification is permissible if the following
three conditions are satisfied: (x) the legal action relates to the performance
of duties or services by such indemnified party(ies) on behalf of the
Partnership; (y) the legal action is initiated by a third party who is not a
Partner or an Affiliate; and (z) such indemnified party(ies) undertake in
writing to repay to the Partnership the funds so advanced in cases in which they
would not be entitled to indemnification hereunder, together with interest at
the Interest Rate. Notwithstanding anything to the contrary contained herein, in
no event shall any indemnity under this Section 5.8A be applicable to any
expenditure or obligation of the Limited Partners or the General Partners or
their Affiliates which is the subject of a separate obligation to or agreement
with the Partnership or the Limited Partners by such party(ies).
B. Notwithstanding the provisions of Section 5.8A hereof, the General
Partners and their Affiliates shall not be indemnified or held harmless from any
liability, loss or damage incurred by them in connection with, and shall
indemnify and hold harmless the Partnership and the other Partners from and
against any liability, loss or damage incurred by them by reason of, (i) any
liability of such party arising under this Agreement or any agreement entered
into pursuant to this Agreement or the Development Services Agreement or any
certificate or other document delivered pursuant hereto which is attributable to
the breach of any representation, warranty or covenant set forth therein; or
(ii) any claim or settlement involving allegations that federal or state
securities laws associated with the offer and sale of an Interest were violated
by such party(ies) unless: (a) the indemnitee is successful in defending such
action on the merits of each count involving securities laws violations and such
indemnification is specifically approved by a court of competent jurisdiction;
(b) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction and the court specifically approves such indemnification;
or (c) a court of competent jurisdiction approves a settlement of the claims
against the entity seeking indemnification involving securities law violations
and specifically finds that indemnification of the settlement and related costs
should be made. Any person seeking indemnification shall apprise the court as to
the current position of the Securities and Exchange Commission and other
applicable state securities administrators regarding indemnification for
violations of securities law.
Section 5.9 Construction of the Apartment Complex;
Development Deficits; Rental Achievement; Operating Deficits
A. The General Partners shall perform all functions necessary or
advisable for the Construction and guarantee Completion on or before the
Completion Date set forth in the Schedule. In the event that the Administrative
Limited Partner shall give notice to the General Partners that the
Administrative Limited Partner has reasonably determined that Completion is
unlikely to occur by the Completion Date, then on the 30th day following the
date on which such notice is given the General Partners shall be in default
hereunder unless, within said 30-day period, the General Partners shall have
taken all steps necessary to assure, to the reasonable satisfaction of the
Administrative Limited Partner, that Completion will in fact occur by the
Completion Date.
B. The General Partners covenant that they will pay any Development
Deficit. Development Deficits shall be funded first from any Net Cash Flow
arising through Completion after paying operating obligations and thereafter any
payments required pursuant to this Section 5.9B shall be made and funded on a
current basis in fulfillment of the obligations of the General Partners to the
Partnership, the Investor Limited Partner, and the Administrative Limited
Partner, and shall be deemed a capital contribution to the Partnership by the
General Partners. Notwithstanding the foregoing, the General Partners shall be
entitled to advance sums for completion of Construction and shall be entitled to
the repayment of such advances to the extent that there are proceeds of the
Mortgage Loan or Investor Limited Partner Contributions available, after paying
all other obligations of the Partnership incurred in connection with such
Construction and the establishment of all required reserves or escrow accounts
under the Project Documents, to repay such advances. Any such advances which are
not so repaid shall be deemed a capital contribution by the General Partners.
C. The General Partners hereby covenant to lend to the Partnership any
amounts required to fund Operating Deficits incurred by the Partnership during
the Operating Deficit Guaranty Period and not obtainable from the Operating
Deficit Reserve Account described in Section 5.9D. Any loans required pursuant
to this Paragraph C shall be made and funded by the General Partners when the
operating obligations of the Partnership giving rise to the Operating Deficit
are due (or, if no due date is specified, by the earlier of (a) the end of the
calendar year in which incurred, or (b) within 30 days after presentation of
each invoice to the Partnership) in fulfillment of the obligations of the
General Partners to the Partnership, the Investor Limited Partner and the
Administrative Limited Partner. In the event payments due hereunder are not paid
by the General Partners within ten days, the Partnership, the Investor Limited
Partner and/or the Administrative Limited Partner (the "Advancing Party"), has
the right but not the obligation, to advance any such amounts required to be
paid by the General Partners (provided that no such advance shall be deemed to
cure the default by the General Partners in making such payment). Such advances
shall at the election of the Advancing Party be deemed a loan to the General
Partners and, in addition to all other rights and remedies available to the
Advancing Party, the General Partners shall reimburse the Advancing Party the
full amount of such funds advanced by it plus interest in such amount from the
date so advanced at the rate per annum equal to the Interest Rate. In the event
there is any Cash Flow and/or Sale or Refinancing Transaction Proceeds which
would otherwise be payable to the General Partners pursuant to Sections 9.2A or
Section 9.2B hereof, the Partnership shall first apply such funds to any unpaid
amounts owed the Administrative Limited Partner and/or the Investor Limited
Partner as the Advancing Party hereunder.
D. The General Partners shall establish and at all times maintain an
operating deficit reserve (the "Operating Deficit Reserve Account") in the
amount of $120,000, which shall be funded from Bond proceeds. The Operating
Deficit Reserve Account shall be held by the lender of the Mortgage Loan, in
accordance with terms and conditions of the Mortgage Loan Commitment, as the
same exists as of the date hereof.
E. On the Closing Date, the General Partners agree to cause the
Partnership to fund, in a separate Partnership bank account, a repair and
replacement reserve in the amount of $200,000 and the General Partners agree
cause the Partnership to deposit $12,948 annually thereafter into such account.
At all times, the balance of the account shall remain in excess of $60,000. The
General Partners shall be entitled to withdraw funds from such account to
effectuate repairs and personal property replacements required from time to
time; provided, however, that the Administrative Limited Partner shall approve,
which approval shall not be unreasonably withheld, any expenditures in excess of
$10,000 from such account, either in an approved annual budget for the Apartment
Complex or, if not so approved, upon the request of the General Partners;
provided, however, if the Administrative Limited Partner has not approved or
disapproved of the proposed expenditure within 5 calendar days after the receipt
thereof from the General Partners, such proposed expenditure shall be deemed
approved by the Administrative Limited Partner.
Section 5.10 Supervisory and Incentive Management Agreement
The Partnership has entered into a Supervisory and Incentive Management
Agreement in the form attached hereto as Exhibit I, with the General Partners or
an Affiliate thereof of even date herewith for services in managing the business
of the Partnership for the period from the date hereof throughout the term of
the Partnership. Payment of fees pursuant to the Supervisory and Incentive
Management Agreement shall be in accordance with any applicable requirements of
the Mortgage Loan.
Section 5.11 Additional Covenants of General Partners
The General Partners shall permit the Administrative Limited Partner,
the Investor Limited Partner and their respective representatives, upon
reasonable prior notice, to have access to the Apartment Complex at all
reasonable times during normal business hours and to examine all agreements and
plans and specifications and shall deliver copies and such reports as may
reasonably be required by the Administrative Limited Partner. The General
Partners shall promptly provide the Administrative Limited Partner and the
Investor Limited Partner with copies of all correspondence, notices and reports
sent pursuant to and received under the Project Documents or from any Credit
Agency with respect to the Apartment Complex, together with copies of all other
correspondence which a prudent investor would wish to examine in connection with
a similar transaction.
Section 5.12 Obligation to Repair and Rebuild Apartment Complex
With the approval of any Lender and any Credit Agency, if such approval
is required, and the Administrative Limited Partner, all insurance proceeds
received by the Partnership due to fire or other casualty affecting the
Apartment Complex will be utilized to repair and rebuild the Apartment Complex
in accordance with Section 42(j)(4)(E) of the Code and to the extent required by
any Lender and any Credit Agency. The General Partner shall have no obligation
to furnish any funds to the Partnership to accomplish such repair and rebuilding
except to the extent that such insurance proceeds are insufficient due to the
failure of the General Partner to maintain insurance policies for the
Partnership in compliance with the requirements of this Agreement.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
As a material inducement to the Investor Limited Partner's and the
Administrative Limited Partner's entering into this Agreement, the General
Partners hereby represent and warrant that the following are true and correct on
the date hereof and will be true and correct as of the Closing Date and each
Subsequent Closing Date:
Section 6.1 Organization and Authorization
A. Organization of the Partnership. The Partnership is a limited
partnership duly organized, validly existing and in good standing under the laws
governing limited partnerships, as adopted in the state of its formation. The
Partnership has taken all requisite action in order to conduct lawfully its
business in the state in which the Apartment Complex is situated, and is not
qualified or licensed to do business and is not required to be so qualified or
licensed in any other jurisdiction. The Partnership has the full power and
authority to carry on its business, including without limitation, to own, lease,
develop and operate the Apartment Complex, and the properties and assets to be
acquired, or now owned or operated by the Partnership and has full power and
authority to enter into this Agreement and any other agreement, document or
instrument contemplated under this Agreement. The Partnership has complied with
all recording, filing and other requirements with the proper authorities
necessary to establish and maintain the limited liability of the Limited
Partners. The filing or recordation of an amendment to the Original Certificate
shall not affect the validity of the organization, formation or qualification of
the Partnership, or its right to transact business as a limited partnership in
any jurisdiction.
B. Partnership Agreement. The General Partners have previously provided
a true, complete and current copy of the Original Partnership Agreement to the
Investor Limited Partner which reflects all agreements among the current
Partners of the Partnership pertaining to the subject matter of the Partnership.
The Original Partnership Agreement has not been altered or amended except as
expressly disclosed in writing, and is in full force and effect. There are no
oral modifications, amendments or waivers by or among any of the Partners
pertaining to the subject matter of the Original Partnership Agreement.
C. Due Authorization. The execution and delivery of this Agreement and
each of the other documents and agreements described in or contemplated by this
Agreement by the General Partners, the Preexisting Limited Partners and the
Partnership, as appropriate, and the performance of the transactions
contemplated by each of such documents have been duly authorized by all
requisite corporate and/or partnership actions and proceedings, and will not
violate or result in a breach of, or default under, any instrument or agreement
to which the any General Partner, Preexisting Limited Partner or the Partnership
is a party or is bound or to which their respective properties are subject, or
any law, administrative rule, regulation or decree of any court, governmental
body or administrative agency applicable to any of them or their respective
properties. The Preexisting Limited Partners, as of the Closing Date (but not
any Subsequent Closing Date), are the only limited partners of the Partnership
and together with the General Partners are the only Partners of the Partnership.
The documents used or to be used to solicit the Consent of the Preexisting
Limited Partners do not and will not contain a misstatement of a material fact
or omit to state a material fact required to be so stated therein in order to
make the statements therein not misleading. If any General Partner or
Preexisting Limited Partner is a corporation or partnership, it is duly
organized, validly existing and in good standing under the laws of the state of
its formation and in the state where the Apartment Complex is located, with
power to enter into this Agreement and to consummate the transactions
contemplated hereby.
D. Enforceability. As of the Closing Date and each Subsequent Closing
Date, this Agreement and each of the other documents and agreements described in
or contemplated by this Agreement are binding upon and enforceable against the
Partnership and each of the General Partners and the Preexisting Limited
Partners, as appropriate, in accordance with their respective terms.
Section 6.2 Consents Required
Except as set forth in this Agreement, no consent, approval, or
authorization of, or registration or declaration with, any federal, state or
local governmental agency, authority or body is required in connection with the
execution of this Agreement or any other agreement, instrument or document
contemplated under this Agreement.
Section 6.3 Liens, Pledges or Encumbrances
The Interests are not subject to any lien, pledge or encumbrance of any
nature whatsoever and the Investor Limited Partner and the Administrative
Limited Partner shall acquire the same free of any rights or claims thereto by
any other party.
Section 6.4 Litigation
Except as set forth in Exhibit H, there is no litigation, action,
proceeding, investigation or claim pending or, to the best of the General
Partners' knowledge, threatened against or involving the Apartment Complex, the
Partnership or any of the General Partners, or to the best of the General
Partners' knowledge, after due inquiry, the Preexisting Limited Partners'
interests in the Partnership, or which questions the validity of this Agreement
or any instrument, document or agreement contemplated under this Agreement, and,
to the best of each General Partner's knowledge, after due inquiry, there is no
fact or circumstance which could give rise to any such litigation, action,
proceeding, investigation or claim. The Partnership does not have any liability
or obligation that is not disclosed in this Agreement or any Exhibit or Schedule
attached hereto and which was not incurred in the ordinary course of business.
No statutory or other lien, other than liens arising out of construction of the
Improvements or for taxes not yet due and payable, exists with respect to the
Partnership, the Apartment Complex, or the General Partners or any property of
any of the foregoing. None of the General Partners or the Partnership have
received any notice of taking, condemnation, betterment or assessment, actual or
proposed, with respect to the Apartment Complex; no such taking, condemnation,
betterment or assessment has occurred; and none of the General Partners have any
reason to believe that any such taking, condemnation, betterment or assessment
has been proposed or is under consideration.
Section 6.5 Agreements Affecting the Apartment Complex
A. Agreements Affecting Ownership or Operation. There is no contract or
agreement, written or oral, affecting the ownership or operation of the
Apartment Complex other than the Project Documents, the Construction Agreements,
the Mortgage Note, Mortgage and related documents evidencing the Mortgage Loan
and the Governmental Agreements, including without limitation the Extended Use
Agreement to be recorded in accordance with the requirements of Section 42 of
the Code; no party to any of such contract or agreement is (or, with notice or
the passage of time or both, would be) in default thereunder and all conditions
to the effectiveness or continuing effectiveness thereof required to be
satisfied by the date hereof have been satisfied. Except for certain provisions
of the documents evidencing the Mortgage Loan, there is no contract or
agreement, written or oral, which would prohibit the prepayment of the Mortgage
Loan or restrict the refinancing, sale or other disposition of the Apartment
Complex. Except for the Management Agent and the developer under the Development
Services Agreement, no Affiliate of any General Partner is a party to any
contract or agreement with the Partnership.
B. Default or Acceleration of Obligations. No event of default by the
Partnership has occurred and is continuing under a Mortgage, or any other
agreement, instrument or document to which the Partnership or any Affiliate of
any General Partner is a party or by which the Apartment Complex is bound and,
to the best knowledge of the General Partners, after due inquiry, there is no
default by the Partnership or any Affiliate of any General Partner or state of
facts or events which with notice or the passage of time, or both, would
constitute a default under a Mortgage or under any other agreement or document
to which the Partnership is a party or otherwise bound, directly or indirectly.
The execution and delivery of this Agreement and the other agreements,
instruments and documents contemplated under this Agreement, and the performance
of the transactions contemplated thereby, will not permit any party to any
Mortgage Loan or any other obligation evidenced as an exception in the Title
Policy or any Bring Down Certificate to accelerate the payment thereof, to
declare a default (or declare a default after giving notice or the passage of
time or both), to require payment of any penalty or other charge, to alter,
modify or amend any term thereof, or to impose any other requirement,
restriction or charge of any kind on the Apartment Complex or the Partnership or
any Partner therein.
C. Mortgage Loan. The General Partners have heretofore provided to the
Investor Limited Partner true, complete and current copies of the documents
constituting the Mortgage Loan described in the Schedule; the Schedule contains
a true and accurate description of the Mortgage Loan; all payments and other
charges due and payable under the Mortgage Loan to date have been paid. The
entire indebtedness intended to be secured by the Mortgage Loan has been or will
be advanced and utilized for the purposes set forth therein.
D. Agreements Regarding Interests in the Partnership. None of the
Partnership, the General Partners, the Apartment Complex or, to the best of the
General Partners' knowledge, after due inquiry, the Preexisting Limited
Partners, is subject to any outstanding agreement with any third party pursuant
to which any such party has or may acquire any interest in the Apartment Complex
(other than by virtue of foreclosure of a lien securing the Mortgage Loan), in
any General Partner or in the Partnership.
E. Budget and Construction Agreements. Annexed hereto as Exhibit J is a
true, complete and current copy of the budget for the construction of the
Improvements and the furnishing of all Personalty (the "Construction Budget").
True, complete and current copies of all documents constituting the Construction
Agreements have been previously provided to the Investor Limited Partner and a
current list of such documents is set forth in the Schedule. The Construction
Agreements include a completion bond in favor of the Partnership insuring
Completion in accordance with the Construction Budget. The Partnership has
sufficient funds available to it, from the proceeds of the Investor Limited
Partner Contribution due prior to Completion and the proceeds of the Mortgage
Loan, to complete the Construction in accordance with the Budget and to pay all
obligations of the Partnership anticipated to be incurred through Completion.
F. Development Services. The Partnership has entered into the
Development Services Agreement with Homes for America Holdings, Inc. as
developer pursuant to which such developer will perform various development
services in connection with the acquisition of the Apartment Complex and the
construction thereof, and the Development Services Agreement is in full force
and effect. In light of their experience in real estate matters and the
acquisition and development of real property, the General Partners believe and
represent that each of the fees set forth in the Development Services Agreement
constitutes reasonable compensation for the services for which such fee is
payable.
Section 6.6 Other Matters Affecting the Apartment Complex.
A. Title to the Apartment Complex. The Partnership has, prior to the
admission of the Investor Limited Partner into the Partnership, and thereafter
will continue to have, good and clear record, marketable, insurable and
indefeasible fee simple title to the Apartment Complex, free from all easements,
rights-of-way, liens, security interests, encumbrances, defects, purchase
options, rights of first refusal and other title exceptions of any kind, except
for the exceptions (the "Permitted Encumbrances") attached hereto as Exhibit K
and the Mortgage Loan. Except for the Apartment Complex, the Housing Tax
Credits, and the contractual rights referred to herein, the Partnership owns no
other property, tangible or intangible, real or personal. Except as set forth in
the Title Policy, all real estate taxes, personal property taxes, assessments,
water and sewer charges and other municipal charges relating to the Apartment
Complex, to the extent due and owing, have been paid in full.
B. Insurance. The amount of insurance which will be maintained by the
Partnership against a casualty loss (as defined in Section 42(j)(4)(E) of the
Code) with respect to the Apartment Complex will be sufficient to permit full
replacement of the Apartment Complex within a reasonable period of time
following any such casualty. Each of the policies effectuating such insurance is
in full force and effect, and all premiums due and payable thereunder have been
paid. No notice has been received by the General Partners or the Partnership
from the insurance company which issued any of such policies stating in effect
that any of such policies is not in full force and effect, will not be renewed
or will be renewed only upon satisfaction of other specified conditions.
X. Xxxxx Plain Insurance. If the Apartment Complex is located in a
federal flood plain (as such term is defined in HUD rules and/or regulations),
the Partnership has obtained or will obtain prior to Closing and maintain at all
times flood plain insurance; provided, however, if the Apartment Complex ceases
to be so located in a federal flood plain, such insurance shall no longer be
required.
D. Fire Damage. As of the date of the Closing, the Apartment Complex
has not been damaged by fire or other casualty except for possible minor damage
which has been fully repaired and restored prior to the date of this Agreement.
In the event any such damage occurs in the future, the Partnership will promptly
undertake to repair the same and complete such repair within a reasonable time.
E. Management Agent. The identity of the management agent (the
"Management Agent") which the General Partners have retained to manage the
Apartment Complex is set forth in the Schedule, and such party is not an
Affiliate of the General Partners. The General Partners have furnished to the
Investor Limited Partner a true, correct and complete copy of the management
agreement (the "Management Agreement") pursuant to which the Management Agent
will manage the Apartment Complex. The Management Agreement as in effect from
and after the Closing provides that the Management Agent shall certify annually
that all aspects of the Apartment Complex, and each of the tenants occupying a
Tax Credit Apartment Unit is in compliance with all regulations and requirements
required to qualify the Partnership to receive the full amount of the Projected
Credits, or the Revised Projected Credits, as applicable.
F. Adequacy of Funds. The Construction Budget indicates that the
Partnership has sufficient funds to pay in full all costs and expenses related
to Completion in accordance with the approved Plans and Specifications from the
following sources: (i) the proceeds of the Mortgage Loan; (ii) net rental income
of the Apartment Complex prior to Completion; and (iii) the portions of the
Investor Limited Partner Contribution that are due and payable in cash at or
prior to Completion.
G. Utilities. All utility services necessary for the construction of
the Improvements and the operation of the Apartment Complex for its intended
purpose, including water supply, storm and sanitary sewer facilities, gas,
electric and telephone facilities, are available at the boundaries of the Land
and either reach the Land through adjoining public streets or if they pass
through adjoining private land do so in accordance with valid, permanent,
non-terminable public or private easements; there is no impediment or
restriction with respect to connecting any utilities to the Improvements and
there is no charge required therefor that has not been specifically provided for
in the Construction Budget.
H. Roads. All roads necessary for the full utilization of the
Improvements for their intended purposes have either been completed or the
necessary rights of way therefor have been acquired by the appropriate
governmental authority or have been dedicated to public use and accepted by said
governmental authority.
I. Contractors and Liens. All contractors and subcontractors have been
paid all amounts due them to date. Neither the General Partners nor the
Partnership have made any contract or commitment, the performance of which could
give rise to a lien against the Apartment Complex, except with a person or
entity which has given a lien waiver with respect thereto and except as set
forth in the Title Policy.
J. Construction. The General Partners will cause the construction of
the Improvements to be completed in a timely, workmanlike and lien-free manner
in accordance with applicable requirements and regulations of all appropriate
governmental entities and in accordance with the approved Plans and
Specifications which have been or will be delivered to the Investor Limited
Partner, such compliance to be certified by the Architect in the Completion
Certificate. The Improvements (i) lie within the perimeter of the Land, (ii) are
being (or have been) constructed in accordance with the Plans and Specifications
for the Improvements which have been prepared by the Architect and revised
pursuant to change orders only to the extent approved as provided in Section
5.5C, (iii) are being (or have been) constructed in compliance with all
restrictive covenants applicable thereto, and (iv) to the best of the knowledge
of the General Partners, contain no structural or other substantial defect
(latent or otherwise).
K. Construction Warranties. The General Partners have received for the
benefit of the Partnership complete standard written construction and
manufacturers' warranties with respect to the Improvements and all components
thereof, including without limitation a general contractor's warranty regarding
(and if any General Partner or any Affiliate thereof has acted as the Contractor
for the Apartment Complex, the General Partners hereby warrant) the defect-free
Construction in accordance with the Plans and Specifications and all other
Construction Agreements, and in accordance with all applicable building codes,
and other laws, rules and regulations. Furthermore, the General Partners hereby
expressly assign to the Partnership any and all contractor's or manufacturer's
warranties (written, oral or otherwise).
Section 6.7 Administrative, Zoning and Environmental Compliance
A. Compliance With Law. The Construction and the operation of the
business of the Partnership comply with all applicable laws, rules,
restrictions, orders and regulations of all governmental authorities. All
governmental certificates, authorizations, permits and licenses required to
construct, operate and occupy (except for certificates of occupancy, which shall
be obtained upon Completion) the Improvements (the "Governmental Permits") have
been obtained, and true, complete and current copies thereof have been
previously provided to the Investor Limited Partner, a true, complete and
current list of which is set forth in the Schedule (or will be timely obtained).
No violation of any requirement of any governmental authority exists with
respect to the Improvements and the anticipated and actual use and operation
thereof complies with applicable planning, building, zoning, environmental and
other laws, ordinances, regulations and restrictive covenants affecting the
Land. No notice of violation of any statute, code, law, ordinance, regulation,
or permit has been noted or given by any governmental authority having
jurisdiction over the development of the Apartment Complex which notice has not
been heretofore complied with in all respects, or the defects specified therein
remedied to the satisfaction of the governmental authority, or both.
B. Environmental Compliance. To the best of the General Partners'
actual knowledge, after due inquiry and based in part upon information contained
in the Phase I environmental report delivered to the Limited Partners (the
"Environmental Report"), the Apartment Complex is not in violation of any
federal, state or local law, ordinance or regulation relating to industrial
hygiene or to the environmental conditions on, under or about the Apartment
Complex including, but not limited to, soil and groundwater conditions. To the
best of the General Partners' actual knowledge, after due inquiry and based in
part upon information contained in the Environmental Report, no Hazardous
Substance has been used, generated, manufactured, stored or disposed of on,
under or about the Apartment Complex or transported to or from the Apartment
Complex. The term "Hazardous Substance" means any substance defined as a
hazardous substance, hazardous material, hazardous waste, toxic substance or
toxic waste in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Hazardous Materials Transportation Act, as amended, 39 U.S.C. Section 1801
et al; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 et seq.; or any similar applicable state or local law; or in any regulation
adopted or publication promulgated pursuant to any said law. In connection with
the acquisition of the Apartment Complex, the Partnership obtained a "phase I"
environmental survey of the Apartment Complex consistent with good commercial
practice and, to the best of the General Partners' knowledge, such inquiry was
sufficient for the Partnership to successfully establish an innocent landowner
defense pursuant to Section 101(35) of CERCLA. Further, none of the Partnership,
the General Partners nor any of their Affiliates has given any waiver or release
of liability pursuant to CERCLA or any of the aforementioned statutes or any
similar applicable state or local law to any person or entity in the chain of
title of the Land or the Apartment Complex. Each of the General Partners hereby
agrees to indemnify and hold harmless Investor Limited Partner, the
Administrative Limited Partner, the Partnership and their respective partners,
directors, officers, employees and agents (collectively "Indemnitees"), from and
against any and all monetary liability, including all foreseeable and
unforeseeable consequential damages, including, without limitation, the cost of
any required or necessary repair, cleanup or detoxification, and the preparation
of all closure and other required plans, whether such action is required or
necessary prior to or following the Closing, directly or indirectly arising out
of the use, generation, manufacture, storage or disposal of Hazardous Substance
on, under or about the Apartment Complex. The foregoing indemnification
obligation of the General Partners shall survive the Closing, the Subsequent
Closing and the dissolution and termination of the Partnership; provided,
however, such indemnification obligation shall not be for the benefit of any
purchaser of the Apartment Complex. Promptly upon any Indemnitee acquiring
knowledge of any matter as to which the General Partners shall be required to
indemnify hereunder, such Indemnitee shall notify the General Partners thereof,
and the General Partners shall have the right, with counsel reasonably
acceptable to the Indemnitee, to defend any such matter. Any settlement of any
matter as to which indemnification is required hereunder shall require the
Consent of the General Partners.
C. Default. To the best of the General Partners' knowledge, after due
inquiry, none of the General Partners or the Partnership is in default with
respect to any law, administrative rule, regulation, judgment, decision, order,
writ, injunction, decree or demand of any court or any governmental authority,
and the consummation of the transactions contemplated herein will not conflict
with, or constitute a breach of or default under, any of the foregoing or any
agreement or instrument applicable to the Partnership, any General Partner or
the Apartment Complex.
D. Regulatory Scheme. The Apartment Complex is not subject to any
federal, state or local regulatory scheme, other than as will be provided for in
the Governmental Agreements, which does not generally affect all rental
properties in the locality in which the Apartment Complex is located.
Section 6.8 Financial Statements
The financial statements of the General Partners for the most recent
fiscal year, which have previously been delivered to the Investor Limited
Partner, are true, complete and correct as of the date thereof, and fully and
accurately reflect the financial condition and results of operations of the
General Partners; there has been no material adverse change in the financial
condition of the General Partners since the date thereof.
Section 6.9 Absence of Undisclosed Liabilities
Except for liabilities and obligations of the Partnership in connection
with this Agreement, the Mortgage Loan or arising in the ordinary course of
business, none of which individually or in the aggregate are materially adverse,
and except for liens for taxes not yet due, the Partnership does not have, and
none of its assets is subject to, any debt, liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise. There is no fact
known to the General Partners which might reasonably serve as the basis, in
whole or in part, for the assertion of any liability or obligation against the
Partnership.
Section 6.10 Housing Tax Credits
For purposes of Housing Tax Credits and Section 42 of the Code:
A. The General Partners have provided the Investor Limited Partner with
true, complete and correct copies of all material correspondence and contracts
with, applications to, and allocation certifications, if any, from any Credit
Agency concerning Housing Tax Credits allocated or otherwise available to the
Apartment Complex. The Credit Allocation is binding and in full force and effect
in accordance with its terms.
B. The General Partners have delivered to the Investor Limited Partner
a true, complete and correct Low Income Housing Tax Credit Certificate, and will
update and redeliver such Certificate as required under this Agreement. The
General Partners have attached (or will attach when applicable) to the Low
Income Housing Tax Credit Certificate a true, complete and correct certified
rent roll revealing each tenant of the Apartment Complex, including certified
incomes for each such tenant necessary to establish which apartment units of the
Apartment Complex are Qualified Units, and such rent roll evidences compliance
with all laws and regulations necessary to establish and maintain the
availability of Housing Tax Credits for the entire Apartment Complex.
C. The Partnership has or will have the right to receive annual reports
from tenants of the Apartment Complex concerning their incomes and family sizes.
If required by a Governmental Agency, the Partnership shall provide income
certifications on a form provided by such Governmental Agency and acknowledged
by the tenants.
D. Unless otherwise agreed to by the Administrative Limited Partner and
the Investor Limited Partner (not to be unreasonably withheld), the Partnership
will elect under Section 42(f)(1) of the Code to have the Credit Period with
respect to each building in the Apartment Complex commence with the taxable year
of the Partnership set forth in the Schedule.
E. No portion of the Apartment Complex shall fail to qualify for the
accelerated cost recovery system under Section 168 of the Code, as amended, on
account of any federal income tax election of the Partnership, exemption or
other provision by or relating to the direct or indirect partners in the
Partnership, other than the Administrative Limited Partner, the Investor Limited
Partner or any direct or indirect partners of the Investor Limited Partner.
F. All costs incurred in connection with the rehabilitation of the
Apartment Complex will be includible in the eligible basis pursuant to Section
42(d)(1) and 42(d)(4) of the Code.
G. No portion of the Apartment Complex will be depreciable under
Section 168(g) of the Code.
Section 6.11 Qualified Nonrecourse and Commercial Financing; Fees
A. All of the debt secured or contemplated to be secured by the
Apartment Complex, including without limitation, the Mortgage Loan (the
"Apartment Complex Debt"), is (except for prior to commencement of the Permanent
Financing Phase) nonrecourse as to the Partnership and no person has any
personal liability with respect to such Apartment Complex Debt (excluding for
this purpose, however, any form of credit enhancement provided by a financial
institution which is not a "related person" (as defined in Section 465(b)(3)(C)
of the Code) with respect to the Partnership, any of its Partners or any of its
former partners) and otherwise conforms with Treasury Regulations ss.1.752-2(d).
None of the Apartment Complex Debt is convertible into equity of any kind.
B. Each component of the Apartment Complex Debt (i) represents a loan
from a federal, state or local government or instrumentality thereof, or is
guaranteed by a federal state or local government, or (ii) is borrowed from a
person or entity which is actively and regularly engaged in the business of
lending money and which is not (1) a "related person" (as defined in Section
49(a)(1)(D)(v) of the Code) with respect to the Partnership or any of its
present or former Partners, (2) a person or entity from which the Partnership
acquired the Land or the Apartment Complex, (3) a person or entity which has
received or will receive a fee with respect to the Partnership's investment in
the Apartment Complex, or (4) a "related person" (as defined in Section
49(a)(1)(D)(v) of the Code) with respect to any person or entity described in
the foregoing clause (2) or (3).
C. Each component of the Apartment Complex Debt which does not
represent a loan from a federal, state or local government or instrumentality
thereof (or a loan guaranteed by a federal, state or local government) is
borrowed from a "qualified person" (as defined in Section 49(a)(1)(D)(iv) of the
Code) and constitutes "qualified commercial financing" (as defined in Section
49(a)(1)(D)(ii) of the Code) as modified by Section 42(k) of the Code and
"qualified nonrecourse financing" (as defined in Section 465(b)(6)(B) of the
Code), in each case with respect to the Partnership, each of its Partners and
each of its former partners and otherwise conforms with Treasury Regulations
ss.1.752-2(d).
D. The documentation evidencing each component of the Apartment Complex
Debt requires that a copy of each notice to be given to the Partnership or to
any Partners shall also be given to the Administrative Limited Partner at its
address for notices determined pursuant to Section 15.5B hereof.
E. The fees charged or to be charged by a Partner or Affiliate thereof
and by the Management Agent are consistent with those paid in commercial
transactions of a similar nature, are reasonable in amount in light of the
services to be performed, and are not in excess of other fees that would be
payable to qualified unrelated parties pursuant to negotiations held at arm's
length.
Section 6.12 Prior Activities
None of the General Partners, nor any present or former Affiliate, has
ever sought the protection of or been subject to any proceeding under any
bankruptcy or insolvency or debtor's relief provision of state or federal law.
Neither any lender nor any governmental agency has ever instituted foreclosure
proceedings, judicial or non-judicial, with respect to any loan or any subsidy
agreement secured by any housing or other project in which any General Partner
or any Affiliate has or had an interest. Except as otherwise disclosed to the
Investor Limited Partner, none of the General Partners or any Affiliate has ever
been indicted for any criminal activity, including criminal fraud or for any
similar crime, or had a complaint filed against it alleging violation of any
anti-fraud provision of state or federal securities law or alleging violation of
any registration or reporting provision of state or federal securities law, nor
has any such person or entity ever had a judgment rendered against it as a
defendant (or admitted to liability) in any action based upon civil fraud or
misrepresentation.
Section 6.13 Tax Matters
The Partnership has timely filed all federal and state tax returns
required to be filed by it as of the date of the making of this representation.
No governmental authority has initiated any inquiry, investigation, audit or
other administrative action questioning any tax return which has been filed by
the Partnership. The General Partners will at all times take such actions
necessary to permit the Partnership to be treated as a partnership for federal
income tax purposes, and will refrain from making any election or taking any
action which would adversely affect such treatment.
Section 6.14 Untrue or Misleading Statements
The documents delivered to the Investor Limited Partner and/or the
Administrative Limited Partner hereunder or annexed hereto as Exhibits or
Schedules and all Closing Documents and Due Diligence Documents and any other
documents delivered to the Investor Limited Partner by the General Partners and
their Affiliates constitute true, correct and complete copies of the instruments
which they purport to be as of the date delivered, and, with respect to each of
such documents, there is no other document of the same sort or amendment or
other related agreement which has been executed by the parties thereto. All of
the representations and warranties contained in any documents delivered to the
Investor Limited Partner and/or the Administrative Limited Partner hereunder or
annexed hereto as Exhibits or Schedules shall be true and correct as of their
respective dates and as of the Closing Date and any Subsequent Closing Date, as
if made on such dates. No fact necessary to make the information and statements
contained in this Article 6 not misleading has been omitted therefrom, and to
the best of the General Partners' knowledge, no material fact concerning the
Apartment Complex or the Housing Tax Credits, the General Partners, the
Partnership or the Preexisting Limited Partners has been withheld from the
Investor Limited Partner and/or the Administrative Limited Partner and no
material document has not been delivered to the Investor Limited Partner. All of
the covenants, representations and warranties contained herein shall survive the
Closing and every Subsequent Closing.
Section 6.15 Scope of Representations
The Investor Limited Partner's due diligence review of the Apartment
Complex, the Partnership and the General Partners shall not diminish the scope
or enforceability of any of the foregoing representations and warranties. For
purposes of this Article 6, the term "General Partners' knowledge" shall include
the knowledge of the General Partners and all Affiliates of the General
Partners.
ARTICLE 7 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 7.1 Management of the Partnership
Except as otherwise provided herein, no Investor Limited Partner shall
take part in the management or control of the business of the Partnership nor
transact any business in the name of the Partnership. Except as otherwise
expressly provided in this Agreement, the Investor Limited Partner shall not
have the power or authority to bind the Partnership or to sign any agreement or
document in the name of the Partnership. The Investor Limited Partner shall not
have any power or authority with respect to the Partnership except insofar as
the Consent of the Investor Limited Partner shall be expressly required and
except as otherwise expressly provided in this Agreement.
Section 7.2 Limitation on Liability of Investor Limited Partners
The Investor Limited Partner shall not be liable for any debts,
liabilities, contracts or obligations of the Partnership except to the extent
the Investor Limited Partner shall specifically undertake such liability
pursuant to a separate written instrument. The Investor Limited Partner shall be
liable to the Partnership only to make payments of the Investor Limited Partner
Contribution as and when due hereunder, and, after the Investor Limited Partner
Contribution shall be fully paid, the Investor Limited Partner shall not, except
as otherwise required by the Uniform Act, be required to make any further
capital contribution or lend any funds to the Partnership.
Section 7.3 Other Activities
The Investor Limited Partner may engage in or possess interests in
other business ventures of every kind and description for its own account,
including without limitation, serving as general or limited partner of other
partnerships which own, either directly or through interests in other
partnerships, government-assisted housing projects similar to the Apartment
Complex. Neither the Partnership nor any of the Partners shall have any right by
virtue of this Agreement in or to such other business ventures to the income or
profits derived therefrom.
Section 7.4 Rescission
A. At the Investor Limited Partner's election, a rescission of
its investment in the Partnership shall occur in accordance with Subparagraph
B. below if:
(i) Completion does not occur on or before the Completion
Date, or
(ii) prior to the Completion of the Apartment Complex, there
is a default uncured after the expiration of any applicable cure period
under a Mortgage Loan which results in an acceleration thereof, or an
event of default existing after the expiration of any applicable cure
period which prevents commencement of the Permanent Financing Phase
(unless such Mortgage Loan is replaced with other indebtedness no less
favorable to the Partnership from a responsible and reputable
institutional lender within 90 days), or a foreclosure action is
commenced against the Apartment Complex, or
(iii) the Permanent Financing Phase does not commence on or
before the deadlines set forth in the Mortgage Loan documents, or
(iv) Forms 8609 are not issued for all buildings in the
Apartment Complex on or before December 31, 2000 (subject to delays in
issuance thereof solely due to inaction of the Credit Agency), or
(v) Occupancy with respect to all apartment units in the
Apartment Complex does not occur on or before April 30, 2000, or
(vi) Rental Achievement does not occur on or before May 30,
2000, or
(vii) a right of rescission arises in favor of the Investor
Limited Partner under any of Sections 3.8A, 3.11 or 3.15 hereof.
If Completion of the Apartment Complex is delayed due to Force Majeure, the
Completion Date may be extended for the period of time that such Force Majeure
causes the delay, but in no event so long as to result in the loss or recapture
of any Housing Tax Credits by the Partnership.
B. If any of the grounds for rescission described in Paragraph A,
above, arises, the General Partners shall notify the Investor Limited Partner
and the Administrative Limited Partner within 10 days thereafter, which notice
(the "Rescission Notice") shall also automatically constitute an offer by the
General Partners and their Affiliates to return the Investor Limited Partner
Contribution to the Investor Limited Partner (together with interest thereon at
the Prime Rate from the date on which the Rescission Notice was or should have
been delivered). If the Limited Partners wish to accept the foregoing offers
(collectively, the "Offer"), the Investor Limited Partner shall send written
acceptance of the Offer to the General Partners by the later of 60 days after
such notice or before Completion or Rental Achievement occurs, in which event
the General Partners and the Partnership shall fulfill their obligations under
the Offer within ten days after acceptance of the Offer. Furthermore, if the
General Partners fail to give the Rescission Notice as required above, the
Investor Limited Partner may, at its option, at any time after acquiring notice
of the event giving rise to the right of rescission, unilaterally give written
notice of its election to rescind, which shall be deemed acceptance of the Offer
that the General Partners were required to make. Upon acceptance of the Offer,
the Investor Limited Partner and the Administrative Limited Partner shall have
no further liability to the Partnership or the General Partners and upon the
return of the Investor Limited Partner Contribution, the Interests shall
terminate and the General Partners shall forthwith cause an amendment to the
Original Certificate to be filed reflecting the withdrawal of the Investor
Limited Partner and the Administrative Limited Partner.
ARTICLE 8 MANAGEMENT AGENT
Section 8.1 Designation of Management Agent
The General Partners shall have the responsibility for managing the
Apartment Complex and obtaining a management agent (the "Management Agent"), the
choice of which (other than the party designated in the Schedule or the General
Partners if serving as interim Management Agent during any period between the
termination of a Management Agent and the engagement of a successor thereto)
shall require the Consent of the Administrative Limited Partner. The Management
Agent at the Closing shall be the party so designated in the Schedule. After the
expiration of the Operating Deficit Guaranty Period, the General Partners shall
have the right to designate a different Management Agent, subject to the Consent
of the Administrative Limited Partner.
Section 8.2 Management Fee
The Management Agent shall receive a management fee payable by the
Partnership on an annual basis in an amount not to exceed 5.0% of the gross
rental receipts from the Apartment Complex for management services in accordance
with the Management Agreement as approved by each Credit Agency (if such
approval is required) and the Administrative Limited Partner. Any Management
Agreement shall be for a term not to exceed one year and shall be renewable for
additional one year terms unless terminated by written notice of either party to
the other. No payment or penalty shall be payable by the Partnership for failure
to renew any such agreement. The Management Agreement shall be terminable
without penalty (a) if there exists any building code violation (which is not
timely cured within 7 days), or (b) if the Management Agent fails to comply with
any applicable compliance rule and/or reporting requirement under Section 42 of
the Code (which is not timely cured within 30 days), or (c) if any Unit ceases
to be a Qualified Unit, or (d) on account of the Management Agent's willful
misconduct or gross negligence, or (e) if, after the expiration of the Operating
Deficit Guaranty Period, there occurs an Operating Deficit for any six-month
consecutive period, or (f) upon the removal of any General Partner in accordance
with the terms hereof.
Section 8.3 Absence of Management Agent
The General Partners will have the duty to manage the Apartment Complex
during any period when there is no Management Agent and the Partnership will pay
the General Partners for such services an annual management fee equal to such
amount as each Credit Agency and the Administrative Limited Partner shall
approve from time to time or, if no approval is required, a fee equal to the
amounts set forth in Section 8.2 hereof. If at any time prior to the expiration
of the Operating Deficit Guaranty Period the present Management Agent shall
cease to act as the Management Agent, the General Partners shall be authorized,
subject to the Consent of the Administrative Limited Partner and the approval of
each Credit Agency and Lender (if required), to retain and to enter into a
Management Agreement with a different Management Agent on terms at least as
favorable to the Partnership as the terms and conditions of the Management
Agreement with the present Management Agent.
Section 8.4 Rights of Administrative Limited Partner
Subject to the approval of each Credit Agency, if required, and
notwithstanding any longer term of any Management Agreement or other contract,
the Administrative Limited Partner shall have the right in the event a General
Partner is removed pursuant to this Agreement, to terminate the Management
Agreement and every other contract, except for the Development Services
Agreement, between the Partnership and the General Partners and/or Affiliates of
any General Partner by notice, effective simultaneously with such removal. The
General Partners hereby represent and warrant to the other Partners that all
existing contracts between the Partnership and any of the General Partners or
Affiliates of any of the General Partners have been amended to contain this
right and the General Partners covenant not to enter any future contract with
the Partnership or cause the Partnership to enter into any future contract with
any of their Affiliates which does not contain such right.
ARTICLE 9 DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES; TAX CREDITS
Section 9.1 Profits, Losses and Housing Tax Credits
A. Profits and Losses Other Than from Sale or Refinancing Transaction
(i) Profits. Profits other than from Sale or Refinancing Transaction
for any taxable year shall be allocated 99.89% to the Investor Limited Partner,
0.01% to the Administrative Limited Partner and 0.1% to the General Partners.
(ii) Losses. Losses other than from Sale or Refinancing Transaction for
any taxable year shall be allocated 99.89% to the Investor Limited Partner,
0.01% to the Administrative Limited Partner and 0.1% to the General Partners.
B. Profits and Losses From Sale or Refinancing Transaction
(i) Profits. Profits from Sale or Refinancing Transaction for any
taxable year shall be allocated as follows:
(A) First, an amount of Profits from Sale or Refinancing
Transaction equal to the aggregate negative balances (if any) in the
Capital Accounts of all Partners having negative Capital Account
balances shall be allocated to the Partners having negative Capital
Account balances in proportion to their negative Capital Account
balances until all such Capital Accounts have a zero balance; and
(B) The balance, to the Partners in a manner so as to cause
the positive Capital Account balance of each Partner to be equal to the
amount that would have been distributable to such Partner if an amount
equal to the sum of (i) the positive Capital Account balances of all
Partners, determined prior to any allocation under this Section
9.1B(i)(B) with respect to such Sale or Refinancing Transaction, plus
(ii) the Profits to be allocated among the Partners pursuant to this
Section 9.1B(i)(B) with respect to such Sale or Refinancing
Transaction, were distributed among the Partners pursuant to clauses
iii, iv and vii of Section 9.2B hereof.
.
(ii) Losses. Losses from Sale or Refinancing Transaction for any
taxable year shall be allocated in the following order and priority:
(A) First, an amount of Losses from Sale or Refinancing
Transaction equal to the aggregate positive balances (if any) in the
Capital Accounts of all Partners having positive Capital Account
balances shall be allocated to the Partners having positive Capital
Account balances in proportion to their positive Capital Account
balances until all such Capital Accounts have a zero balance; and
(B) The balance, if any, to those Partners who bear the
Economic Risk of Loss.
(iii) For purposes of the allocations of Profits and Losses from a Sale
or Refinancing Transaction, a Partner's Capital Account shall be determined
immediately prior to the event giving rise to the Profits and Losses as if, at
such time, the books of the Partnership had been closed as though at the end of
the taxable year. If, in any taxable year, there is a sale of a portion but less
than substantially all of the Partnership property, then solely for purposes of
allocating Profits or Losses from a Sale or Refinancing Transaction each
Partner's Capital Account shall be deemed to be credited with such Partner's
share of Partnership Minimum Gain and/or Partner Nonrecourse Debt Minimum Gain
remaining after any allocation of Profit or Loss pursuant to Section 9.1D
attributable to such sale.
C. Limitation on Allocation of Losses
The aggregate Losses allocated to the Partners pursuant to Section
9.1A(ii) or 9.1B(ii) shall not exceed the maximum amount of Losses that can be
so allocated without causing any Partner to have an Adjusted Capital Account
Deficit at the end of any fiscal year. In the event some but not all of the
Partners would have Adjusted Capital Account Deficits as a consequence of an
allocation pursuant to Section 9.1A(ii) or 9.1B(ii), the limitation set forth in
this Section 9.1C shall be applied on a Partner-by-Partner basis so as to
allocate the maximum permissible Losses to each Partner who is not a General
Partner under Section 1.704-1(b)(2)(ii)(d) of the Regulations.
D. Special Allocations
The following special allocations shall be made in the following order
and priority:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 9.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership fiscal year or other
period, each Partner shall be specially allocated items of Partnership
income and gain for such year or other period (and, if necessary,
subsequent years) in an amount equal to such Partner's share of the net
decrease in Partnership Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g)(2). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required
to be allocated to the various Partners pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations
Section 1.704-2(f)(6). This Section 9.1D(i) is intended to comply with
the minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith. To the
extent permitted by such Section of the Regulations and for purposes of
this Section 9.1D(i) only, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to
this Section 9.1D with respect to such fiscal year or other period.
(ii) Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Section 9.1 except Section
9.1D(i), if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to a Partner Nonrecourse Debt during any Partnership
fiscal year or other period, each Partner with 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) shall be
specially allocated items of Partnership income and gain for such year
or other period (and, if necessary, subsequent years) in an amount
equal to such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with 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 the various Partners
pursuant thereto. The items to be so allocated shall be determined in
accordance with Section 1.704-2(i)(4) of the Regulations. This Section
9.1D(ii) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(i)(4) of the Regulations and shall be
interpreted consistently therewith. Solely for purposes of this Section
9.1D(ii), each Partner's Adjusted Capital Account Deficit shall be
determined prior to any other allocations pursuant to this Section 9.1D
with respect to such fiscal year or other period, other than
allocations pursuant to Section 9.1D(i) hereof.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations, or distributions
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 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 Regulations, the Adjusted Capital Account Deficit of
such Partner as quickly as possible, provided that an allocation
pursuant to this Section 9.1D(iii) shall be made only if and to the
extent that such Partner would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Section 9.1 have been
tentatively made as if this Section 9.1D(iii) were not in this
Agreement.
(iv) Gross Income Allocation. In the event any Partner has a
deficit Capital Account at the end of any Partnership fiscal year that
is in excess of the sum of (i) the amount such Partner is obligated to
restore pursuant to any provision of this Agreement, and (ii) the
amount such Partner is deemed to be obligated to restore pursuant to
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 9.1D(iv) shall be made only if and
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 9.1 have been tentatively made as if this Section 9.1D(iv) and
Section 9.1D(iii) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other period shall be specially allocated 99.89% to the
Investor Limited Partner, 0.01% to the Administrative Limited Partner
and 0.1% to the General Partners.
(vi) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any fiscal year or other period shall be allocated, in
accordance with Section 1.704-2(i)(1), to the Partner that bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable.
(vii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Code Section 734(b) or 743(b) is required to be taken into account
in determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), 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 a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the
Regulations.
(viii) Basis Increases. In the event the adjusted tax basis of
any investment 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.
(ix) Basis Reductions. Any reduction in the adjusted tax basis
(or cost) of Partnership investment 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
Regulations Section 1.46-3(f)(2)(i).
E. Curative Allocations
The "Regulatory Allocations" consist of (x) allocations made to a
Partner (or predecessor) under Section 9.1D(iii) and Section 9.1D(iv),
allocations to be made to a Partner (or predecessor) under Section 9.1D(i) to
the extent the cumulative amount of such allocations exceeds the cumulative
amount of Nonrecourse Deductions allocated to such Partner (or predecessor), and
(y) allocations made to a Partner (or predecessor) under Section 9.1D(ii) to the
extent the cumulative amount of such Allocations exceeds the cumulative amount
of Partner Nonrecourse Deductions allocated to such Partner (or predecessor).
Notwithstanding any other provisions of this Section 9.1 (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into account
in allocating other items of income, gain, loss and deduction among the Partners
so that, to the extent possible, the net amount of such allocations of other
items and the Regulatory Allocations to each Partner shall be equal to the net
amount that would have been allocated to each such Partner if the Regulatory
Allocations had not occurred.
F. Other Allocation Rules
(i) For purposes of computing the Profits, Losses or any other items
allocable to any period, Profits, Losses and any other such items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partners using any permissible method under Code Section 706 and the Regulations
thereunder.
(ii) For purposes of determining a Partner's proportionate share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3) (or the equivalent sections of any earlier
Regulations which may be determined to be applicable), the Partners' interests
in Partnership Profits shall be allocated 0.1% to the General Partners, 0.01% to
the Administrative Limited Partner and 99.89% to the Investor Limited Partner.
(iii) To the extent permitted by Sections 1.704-2(h) and 1.704-2(i)(6)
of the Regulations, the General Partners shall endeavor to treat distributions
of Cash Flow and Sale or Refinancing Transaction Proceeds as having been made
from proceeds of Nonrecourse Debt or Partner Nonrecourse Debt only to the extent
that such distributions would have otherwise caused or increased an Adjusted
Capital Account Deficit for any Partner.
(iv) The basis (or cost) of any Partnership investment credit property
shall be allocated among the Partners in accordance with Regulations Section
1.46-3(f)(2)(i).
(v) In the event Partnership investment 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 (i) the reduction in the adjusted tax basis (or
cost) of such property pursuant to Code Section 50(c), over (ii) 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 Sections 9.1A and 9.1B hereof and shall instead be allocated among
the Partners in proportion to their respective shares of such excess, determined
pursuant to Sections 9.1D(viii) and 9.1D(ix) 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 that 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.
G. Tax Allocations
(i) In General. Except as otherwise provided in this Agreement, all
items of Partnership income, gain, loss, deduction, and any other allocations
not otherwise provided for shall be allocated among the Partners for tax
purposes in the same proportions as they are allocated Profits or Losses or
items thereof pursuant to Section 9.1 hereof for such year. Any elections or
other decisions relating to such allocations shall be made by the General
Partners in any manner that reasonably reflects the purpose and intention of
this Agreement. Allocations pursuant to this Section 9.1G 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
Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.
(ii) Code Section 704(c). In accordance with Code Section 704(c) and
the Regulations thereunder, income, gain, loss, and deduction with respect to
any property contributed to the capital of the Partnership or owned by the
Partnership upon the occurrence of any of the events described in Regulations
Section 1.704-1(b)(2)(iv)(f)(5) shall, solely for tax purposes (and not for
purposes of determining Capital Accounts or allocating Profits, Losses or items
thereof), be allocated among the Partners so as to take into account any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and (i) its Asset Value at the time of the
contribution or as adjusted for the occurrence pursuant to paragraph (ii) of the
definition of Asset Value set forth herein, as the case may be, or (ii) its fair
market value at the time of the occurrence if the Asset Value is not adjusted
pursuant to said paragraph. Notwithstanding the foregoing, no allocation shall
be made pursuant to clause (ii) of this Section 9.1(G)(ii) if an equivalent
allocation has been made pursuant to Section 9.1(G)(i) in connection with a
transaction that would otherwise result in an allocation pursuant to this
Section 9.1(G)(ii). The foregoing provision is intended to comply with Section
704(c) of the Code and with Regulations Section 1.704-1(b). To the extent
permitted by the Code and Regulations, any variation referred to in this Section
9.1G(ii) shall be taken into account by allocations of gain from a Disposition
and not through allocations of depreciation.
(iii) Recapture. Gain from the disposition of Partnership assets which
is allocated to a Partner for tax purposes shall include, to the extent
possible, ordinary income consisting directly or indirectly of recaptured
deductions (for depreciation or otherwise) to the same extent and in the same
proportion as such deductions were previously allocated to such Partner.
(iv) Section 751 Assets. In the event that a Partner (other than a
Partner who becomes a Partner by purchasing the Interest in the Partnership of
another Partner) is admitted (an "Admission") to the Partnership after the date
hereof or in the event that a Partner's interest in Profits or Losses is
increased (an "Increase") after the date hereof, the Partner so admitted shall
obtain no interest, or the Partner so increased shall obtain no greater interest
than prior to the Increase, in the Partnership's "unrealized receivables" (as
defined in Section 751(c) of the Code), determined immediately prior to such
Admission or Increase. As the respective interests in such "unrealized
receivables" of the Partners who were Partners prior to such Admission or such
Increase are not reduced thereby, the Partner so admitted or so increased shall,
to the extent required, obtain a greater than proportionate interest in the
Partnership's other assets (including the assets contributed by such Partner),
determined after giving effect to such Admission or Increase.
(v) Housing Tax Credits.
(A) Pursuant to Regulations Section 1.704-1(b)(4)(ii), Housing
Tax Credits shall be allocated among the Partners in accordance with
their respective shares of Partnership expenditures that give rise to
such Housing Tax Credits in the taxable year to which such Housing Tax
Credits relate. Because the allocations of Nonrecourse Deductions,
Losses and Profits (and related items of income and deductions) provide
for allocations of expenditures which give rise to Housing Tax Credits
in the ratio of 99.89% to the Investor Limited Partner, 0.01% to the
Administrative Limited Partner and 0.1% to the General Partners, the
Partners intend that Housing Tax Credits shall be allocated 99.89% to
the Investor Limited Partner, 0.01% to the Administrative Limited
Partner and 0.1% to the General Partners.
(B) In the event there occurs a Tax Credit Recapture Event,
then, pursuant to Section 42(j)(1) of the Code, Housing Tax Credits
shall be recaptured by the Partners who originally claimed said Housing
Tax Credits, in proportion to the ratio in which such recaptured
Housing Tax Credits were claimed.
H. Order of Priority
The allocation and distribution provisions of this Agreement will be
applied in such order as may be determined by the Accountants, with the approval
of the Investor Limited Partner, to be in accordance with the Code and otherwise
reflective of the economic effect of the provisions of this Agreement.
Section 9.2 Distribution and Application of Cash Flow and
Sale or Refinancing Transaction Proceeds
Except as otherwise provided by this Agreement or required by law
(including all applicable rules, directives and regulations of each Credit
Agency), cash distributions shall be made to the Partners on the following bases
within 90 days after the end of each calendar quarter:
A. Cash Flow shall be applied in the following order of priority:
(i) To the Investor Limited Partner in an amount
equal to the unpaid Tax Credit Shortfall Payment;
(ii) To pay interest on any loans, including Voluntary Loans,
from Partners or their Affiliates provided for herein, pro rata in
accordance with the amount of interest accrued as of the date of such
distribution;
(iii) To repay principal of any loans, including Voluntary
Loans, payable to Partners or their affiliates, pro rata in accordance
with the amount of the principal balances as of the date of such
distribution;
(iv) To pay in full any unpaid Asset Management Fees;
(v) To pay in full any unpaid Development Fee;
(vi) To pay the fees due pursuant to the Supervisory Agent and
Incentive Management Agreement; and
(vii) The balance to be paid 80.0% to the General Partners,
0.01% to the Administrative Limited Partner and 19.99% to the Investor
Limited Partner.
B. Subject to Section 12.4 hereof, Sale or Refinancing Transaction
Proceeds shall be applied in the following order of priority:
(i) To the payment of liabilities of the Partnership
then due and owing to Persons other than the Partners;
(ii) To establish such reserves as the General Partners, with
the Consent of the Administrative Limited Partner, determine to be
reasonably necessary for any contingent or foreseeable liability or
obligation of the Partnership; provided, however, that the balance of
any such reserve remaining at such time as the General Partners, with
the Consent of the Administrative Limited Partner, shall determine that
such reserve is no longer necessary shall be distributed in accordance
with the following subparagraphs of this Section 9.2B;
(iii) To the Investor Limited Partner in an amount equal to
the unpaid Tax Credit Shortfall Payment;
(iv) To pay interest on any loans from Partners or their
Affiliates provided for herein, pro rata in accordance with the amount
of interest accrued as of the date of such distribution;
(v) To repay principal of any loans, including Voluntary
Loans, payable to Partners or their affiliates, pro rata in accordance
with the amount of the principal balances as of the date of such
distribution;
(vi) To pay in full any unpaid Asset Management Fees; and
(vii) The balance, if any, 29.9% to the Investor Limited
Partner, 0.1% to the Administrative Limited Partner and 70% to the
General Partners.
C. Except as otherwise provided in this Section 9.2, each Partner shall
share in distributions in accordance with this Section 9.2 from the date on
which such Partner is admitted to the Partnership.
ARTICLE 10 TRANSFER OF PARTNER INTERESTS
Section 10.1 Assignment of Limited Partner Interests
The Investor Limited Partner and the Administrative Limited Partner
shall have the right at any time to make an Assignment of their Interests
without the Consent or approval of the General Partners or any other Partners,
subject to the approval of each Lender, to the extent required. The General
Partners shall cooperate with the Investor Limited Partner and the
Administrative Limited Partner in facilitating such Assignment by promptly
furnishing complete and accurate financial and other relevant data regarding the
Partnership, the Apartment Complex, the General Partners and the Affiliates of
the General Partners and any other matters reasonably necessary in the judgment
of the Administrative Limited Partner to facilitate and effect such Assignment,
but only to the extent such information is readily available to the General
Partners either (a) at no or at nominal cost or (b) the Limited Partners shall
reimburse the General Partners for the reasonable cost thereof. The Investor
Limited Partner and the Administrative Limited Partner shall notify the General
Partners as to any proposed Assignment.
Section 10.2 Substituted Partners; Admission
A. The General Partners may not admit any additional partner to the
Partnership without the Consent of the Administrative Limited Partner.
B. An Assignee of a Limited Partner Interest shall be admitted as a
Substituted Partner but only if (i) the Assignee expressly agrees to be bound,
to the same extent as the Assignor, by the provisions of this Agreement, the
Project Documents and any other documents required in connection therewith and
to assume the obligations of the Assignor hereunder, and (ii) the Assignee shall
have agreed to pay all reasonable expenses and legal fees relating to the
Assignment and its admission as a Substituted Partner.
C. Upon the admission of a Substituted Partner, the Partner Information
Schedule shall be amended to reflect the name and address of such Substituted
Partner and to eliminate the name and address of the Assignor, and an amendment
to this Agreement and/or the Certificate reflecting such admission shall be
filed in accordance with the Uniform Act. No Consent or approval of the Investor
Limited Partner (other than the Assignor and the Assignee) shall be required.
Section 10.3 Withdrawal
A. Any Person who acquires in any manner whatsoever any Interest,
irrespective of whether such Person has accepted and adopted in writing the
terms and provisions of this Agreement, shall be deemed by the acceptance of the
benefit of the acquisition thereof to have agreed to be subject to and bound by
all the obligations of this Agreement that any predecessor in interest of such
Person was subject to or bound by. A person acquiring an Interest, including the
personal representatives and heirs of a deceased Partner, shall have only such
rights, and shall be subject to all the obligations, as are set forth in this
Agreement; and, without limiting the generality of the foregoing, such Person
shall not have any right to have the value of his Interest ascertained or
receive the value of such Interest or, in lieu thereof, profits attributable to
any right in the Partnership, except as herein set forth.
B. Any Assignee pursuant to an Assignment satisfying the conditions of
this Article 10 who does not become a Substituted Partner in accordance with
this Article 10 shall have the right to receive the same share of the Profits
and Losses and distributions of the Partnership to which his Assignor would have
been entitled, but shall have no voting or consent rights to which the Assignor
was entitled under this Agreement or any of the other Project Documents. If such
Assignee desires to make an Assignment of his Interest, he shall be subject to
all the provisions of this Article 10 to the same extent and in the same manner
as any Partner desiring to make an Assignment.
C. Any Partner who shall Assign all of his Interest shall cease to be a
Partner and shall no longer have any rights or privileges of a Partner except
that, unless and until his Assignee is admitted to the Partnership as a
Substituted Partner in accordance with this Article 10, such Assignor shall
retain all rights and be subject to all obligations under the Uniform Act and
this Agreement. No assignment shall itself operate to relieve the assignor of
any such obligation.
D. In the event of an Assignment, the obligation of the Assignor to
make Capital Contributions or loans hereunder shall be extinguished only by and
to the extent of Capital Contributions or loans actually made by him or his
Assignee.
E. In the event that an Assignment shall be made, there shall be filed
with the Partnership a duly executed and acknowledged counterpart of the
instrument effecting such Assignment. Such instrument must evidence the written
acceptance of the Assignee to all the terms and provisions of this Agreement. If
such instrument is not so filed, the Partnership need not recognize any such
purported Assignment for any purpose.
ARTICLE 11 WITHDRAWAL OF GENERAL PARTNER; NEW GENERAL PARTNER
Section 11.1 Withdrawal.
A. No General Partner may Withdraw (other than an Involuntary
Withdrawal) from the Partnership or assign, pledge or encumber all or any part
of its Interest without the Consent of the Administrative Limited Partner, and,
to the extent required, the consent of each Credit Agency and each Lender. The
Consent of the Investor Limited Partner shall not be required.
B. In the event of a Withdrawal of a General Partner or the pledge or
encumbrance of any part of its Interest in violation of Section 11.1A hereof or
the removal of a General Partner pursuant to Section 11.4 (any such Withdrawal
hereinafter referred to as a "(Voluntary Withdrawal"), the Interest of the
General Partner shall immediately and automatically terminate on the effective
date of such Withdrawal (or the effective date of such Assignment, pledge,
encumbrance or removal) and such General Partner shall have no further right to
participate in the management or operation of the Partnership or to receive any
future allocations of Profits and Losses, any 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. From and after the effective
date of such Withdrawal, pledge or encumbrance, the rights of such Withdrawing
General Partner to receive or to be paid such allocations, distributions, funds,
assets, fees or repayments shall be reallocated to the other General Partners,
or if there is no other General Partner at that time, to the Administrative
Limited Partner. Notwithstanding such Withdrawal, pledge, encumbrance or
removal, and loss of any right to receive such allocations, distributions,
funds, assets, fees and repayments, such Withdrawing General Partner shall
remain liable to the Partnership and the other Partners for all obligations
theretofore incurred by it under this Agreement, or which may arise upon or
following such Withdrawal, pledge, encumbrance or removal. Notwithstanding
anything herein to the contrary, any remaining Partner shall have all other
rights and remedies against such Withdrawing General Partner as provided by law.
C. Upon the Involuntary Withdrawal of a General Partner, such
Withdrawing General Partner shall remain liable for obligations incurred by it
under this Agreement through the effective date of its Withdrawal, and its
Interest shall automatically convert to an Interest of a limited partner, but it
shall not be entitled to participate in the management of the Partnership's
business or to participate in any allocation of Profits or Losses or
distributions payable to the Investor Limited Partner or the Administrative
Limited Partner. Subject to the provisions of Section 11.3B hereof, such limited
partner or its successors shall be entitled to share in the Profits and Losses
and distributions at the same times and in the same manner as such Withdrawing
General Partner would have otherwise received as a General Partner reduced by an
amount reasonably necessary to compensate the remaining General Partners or any
successor general partner for assuming the obligations of the Withdrawing
General Partner.
Section 11.2 Effect of Withdrawal; Election to Continue Business
Upon the occurrence of an event giving rise to Withdrawal of a General
Partner (i) any remaining General Partners, if any, or, if there be no remaining
General Partners, such Withdrawing General Partner or its legal representative
shall promptly notify the Investor Limited Partner of such Withdrawal (the
"Withdrawal Notice"), (ii) the Administrative Limited Partner shall have the
right to appoint and cause the admission to the Partnership as a General Partner
of itself, its Affiliates or another Person to succeed such Withdrawing General
Partner, and (iii) the Partnership shall be dissolved and terminated unless the
then remaining General Partners or the Administrative Limited Partner or the
Investor Limited Partner, pursuant to the provisions of Section 11.3, elects to
continue the business of the Partnership. If the Investor Limited Partner so
elects, Withdrawal of a General Partners shall not be deemed to be effective
until the expiration of 90 days from the day on which the Withdrawal Notice has
been mailed to the Investor Limited Partner. .
Section 11.3 Continuation of Partnership
A. Upon the occurrence of an event giving rise to the Withdrawal of a
General Partner, if there is then no other General Partner or, if there is then
one or more other General Partners but the remaining General Partners or the
Administrative Limited Partner do not elect to continue the business of the
Partnership pursuant to Section 11.2 hereof, the Investor Limited Partner may
elect within 90 days thereafter to continue the Partnership on substantially
identical terms to those of this Agreement, to carry on the business of the
Partnership and to designate a successor general partner to serve in place of
such Withdrawing General Partner with the approval of each Credit Agency and
each Lender, if such approval is required.
B. If the Investor Limited Partner shall designate a successor general
partner and obtain all necessary approvals therefor where the Withdrawal is
Involuntary, the Investor Limited Partner at its option may require that the
Interest of such Withdrawing General Partner be transferred to the successor
general partner upon its written assumption of the obligations of such
Withdrawing General Partner under this Agreement (except for any obligations of
such Withdrawing General Partner under this Agreement specifically excepted by
the Administrative Limited Partner). In such event, the successor general
partner shall pay to such Withdrawing General Partner or its legal
representative as the purchase price for its Interest an amount to be agreed
upon between them. If such Withdrawing General Partner and the successor general
partner cannot agree upon the consideration for the transfer of such Interest
within 60 days after such Withdrawal, consideration therefor shall be the fair
market value of such Interest as determined by a committee of three qualified
real estate appraisers, one selected by such Withdrawing General Partner, one
selected by the Administrative Limited Partner and a third selected by the other
two real estate appraisers (or, if the first two real estate appraisers cannot
agree upon the third real estate appraiser within 30 days such third appraiser
shall be selected by the American Arbitration Association). The purchase of such
Withdrawing General Partner's Interest under this Section 11.3B shall take place
within ten days after the purchase price is determined (whether by agreement or
appraisal), and the closing shall take place at the office of the Administrative
Limited Partner. The purchase price for such Interest shall be payable by a
promissory note bearing interest at a rate equal to the Prime Rate and payable
solely out of Sale or Refinancing Transaction Proceeds payable with respect to
the Interest being purchased, shall be secured by the Interest being purchased
and shall otherwise be without recourse to the maker.
C. Unless any other General Partner shall agree to continue the
Partnership pursuant to Section 11.2 hereof, the Interest of such other General
Partners other than such Withdrawing General Partner shall be converted into and
shall be deemed to be that of a limited partner with the same Interest in the
Partnership as such General Partners had as general partners prior to the
Withdrawal, reduced by an amount reasonably necessary to compensate the
successor general partner for assuming the obligations of such other General
Partners. Such Interest shall be purchased by the successor general partner
concurrently with the purchase of such Withdrawing General Partner's Interest in
accordance with and on the same terms and conditions as set forth in Section
11.3B hereof.
Section 11.4 Special Removal Rights
A. Notwithstanding any other provision of this Agreement to the
contrary, the following events shall be considered a Major Default under the
terms of this Agreement:
(i) Any General Partner shall:
(A) materially violate its fiduciary
responsibilities as a General Partner of the Partnership;
(B) violate the Completion guaranty set forth in
Section 5.9A hereof;
(C) be in material breach of any provision (other
than Section 5.9A) of this Agreement (including any Low Income
Housing Tax Credit Certificate or update thereof), the
Development Services Agreement or any other document for 15
days after notice thereof has been given by the Administrative
Limited Partner; provided, however, that if such breach is of
the type that cannot reasonably be cured within 30 days, the
Administrative Limited Partner shall not have the right to
remove a General Partner under this Section 11.4A(i)(B) with
respect to such breach for a 75-day period after such notice
is given so long as such General Partner is diligently
pursuing a cure of such breach at all times during such 75-day
period and accomplishes such cure within such 75-day period;
(D) willfully violate any law, regulation or order
applicable to the Partnership which has or is likely to have a
material adverse effect on the Partnership or the Apartment
Complex; or
(E) become Bankrupt; or
(ii) The Partnership shall:
(A) be in material breach of any Project Document or
any other material agreement or document (including any Low
Income Housing Tax Credit Certificate or update thereof)
affecting the Partnership, which breach has failed to have
been cured within any applicable cure or grace period;
(B) at any time after Rental Achievement, incur an
Operating Deficit with respect to any period of six
consecutive months which Operating Deficits are not funded by
Voluntary Loans made or caused to be made by the General
Partners; or
(C) be in any situation where the annual amount of
the Housing Tax Credits which the Partnership is entitled to
claim under Section 42 of the Code is less than 82% of the
annual amount of Housing Tax Credits set forth in the
Schedule; or
(iii) Completion shall not have occurred by the Completion
Date set forth in the Schedule (provided, however, that if Completion
is delayed due to Force Majeure, such date may be extended for the
period of time that such Force Majeure cause a delay in Completion to
occur, but in no event so long as to result in any loss of Housing Tax
Credits by the Partnership; or
(iv) Prior to Completion, (a) a default occurs and remains
uncured after the expiration of all applicable cure periods under any
material agreement or commitment entered into by the Partnership or
binding thereon, or any such agreement or commitment shall have expired
or shall have been terminated by any of the parties thereto and shall
not have been extended, or (b) any Lender shall have commenced
foreclosure proceedings against the Apartment Complex; or
(v) The guarantor pursuant to the Guaranty Agreement shall
default thereunder or become Bankrupt.
Upon a Major Default, the Administrative Limited Partner shall have (in addition
to any other rights the Limited Partners may have against the General Partners
at law or in equity) the right, but not the obligation, in the sole discretion
of the Administrative Limited Partner, upon ten days' prior notice to such
General Partner, to remove such General Partner (and, if the Administrative
Limited Partner so elects) all other General Partners who are Affiliates of such
General Partner and to appoint itself or any of its Affiliates or any other
Person to succeed such General Partner(s) as a General Partner in accordance
with the provisions of Section 11.2 hereof.
B. The General Partners agree to indemnify and hold the Investor
Limited Partner and the Administrative Limited Partner harmless from and against
all losses, costs and expenses incurred in connection with a Major Default
(other than pursuant to Section 11.4A(ii)(B) hereof) and the exercise of the
remedies provided above, including, without limitation, all reasonable legal
fees and other reasonable expenses of the Investor Limited Partner and
Administrative Limited Partner in connection therewith.
C. The removal of a General Partner pursuant to Section 11.4A hereof
(other than pursuant to Section 11.4A(i)(D) hereof) shall be treated for
purposes of this Agreement as a Voluntary Withdrawal of such General Partner
subject to the provisions of Section 11.1B.
D. If a Major Default occurs, and the Administrative Limited Partner
does not exercise its right to remove the General Partner(s), the Investor
Limited Partner, upon the vote of a Majority in Interest of the limited partners
of the Investor Limited Partner, shall cause the Administrative Limited Partner
to remove such General Partner(s) upon thirty days' prior written notice to such
General Partners and to appoint the Administrative Limited Partner or any of its
Affiliates to succeed such General Partner(s) as a General Partner of the
Partnership in accordance with the provisions of Section 11.2 hereof.
Section 11.5 Additional General Partner
At any time, the General Partners, with the Consent of the
Administrative Limited Partner (but the Consent of the Investor Limited Partner
shall not be necessary), and subject to any applicable approvals of each
Authority and each Lender, may admit an additional general partner to the
Partnership with such share of the aggregate General Partners' Interest as shall
be agreed upon between the General Partners and the additional general partner.
Any additional general partner, as a condition of receiving any Interest, shall
agree to be bound by the terms of this Agreement, the Project Documents and any
other document required in connection therewith to the same extent and on the
same terms as the General Partners. Except in the event of a Withdrawal of a
General Partner or the pledge or encumbrance of any part of its Interest in
violation of Section 11.1A hereof or the removal of a General Partner pursuant
to Section 11.4 hereof, the Administrative Limited Partner shall not have the
right to admit an additional General Partner.
Section 11.6 Amendment of Schedule and Agreement
Upon the admission of a successor or additional general partner or the
Withdrawal of a General Partner, the Partner Information Schedule attached
hereto shall be amended to reflect such admission or Withdrawal and such
amendment and/or Certificate of Amendment shall be filed as required by the
Uniform Act.
Section 11.7 Survival of Liabilities
It is expressly understood that no Withdrawal, Assignment, pledge or
encumbrance of a General Partner's Interest, even if it results in the
substitution of the Assignee as a Partner, shall release the Withdrawing General
Partner from any liability to the Partnership attributable to the period prior
to the Withdrawal, all of which shall survive such Withdrawal, Assignment,
pledge or encumbrance as and to the extent provided in this Agreement.
ARTICLE 12 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP
Section 12.1 Events Which Cause a Dissolution
The Partnership shall continue in full force and effect until December
31, 2040, except that the Partnership shall be dissolved prior thereto upon the
happening of any of the following events:
A. An election to dissolve the Partnership made in
writing by the Partners;
B. The Withdrawal of a General Partner, if the
Partnership is not continued in accordance with Sections 11.2 or 11.3 hereof;
C. Any event which shall make it unlawful for
the existence of the Partnership to be continued;
D. The sale or other disposition of all or
substantially all of the assets of the Partnership; or
E. Upon the vote of the General Partners and a Majority in
Interest of the limited partners of the Investor Limited Partner.
Section 12.2 Actions of Liquidating Agent Upon Dissolution
Upon the dissolution of the Partnership, the Partnership shall be
liquidated in accordance with this Article 12 and the Uniform Act. The
liquidation shall be conducted and supervised by the General Partners or, if
there is no remaining General Partner, by the Administrative Limited Partner
(the General Partners or Administrative Limited Partner, as the case may be,
being hereinafter referred to as the "Liquidating Agent"). The Liquidating Agent
shall have all of the rights in connection with the liquidation and termination
of the Partnership that a general partner would have with respect to the assets
and liabilities of the Partnership during the term of the Partnership, and the
Liquidating Agent is hereby expressly authorized and empowered to effectuate the
liquidation and termination of the Partnership and the transfer of any assets
and liabilities of the Partnership. The Liquidating Agent shall have the right
from time to time, by revocable powers of attorney, to delegate to one or more
persons any or all of such rights and powers and the authority and power to
execute documents in connection therewith, and to fix the reasonable
compensation of each such person, which compensation shall be charged as an
expense of liquidation. The Liquidating Agent is also expressly authorized to
distribute the Partnership's property to the Partners subject to liens.
Section 12.3 Statements on Termination
Each Partner shall be furnished with a statement prepared by the
Liquidating Agent which shall set forth the assets and liabilities of the
Partnership as of the date of complete liquidation, and each Partner's share
thereof. Upon compliance with the distribution plan set forth in Section 12.4
hereof, the Investor Limited Partner and the Administrative Limited Partner
shall each cease to be a partner of the Partnership, and the Liquidating Agent
shall execute, acknowledge and cause to be filed a certificate of termination of
the Partnership and any other certificates regarding the dissolution and
termination of the Partnership as required by the Uniform Act.
Section 12.4 Priority on Liquidation; Distribution of Non-Liquid Assets
A. The Liquidating Agent shall, to the extent feasible, liquidate the
assets of the Partnership as promptly as shall be practicable. To the extent the
proceeds are sufficient therefor, as the Liquidating Agent shall deem
appropriate, the proceeds of such liquidation shall be applied in accordance
with the provisions of Sections 9.2B(i) through (v) hereof, and the balance of
the assets of the Partnership shall be distributed by the Liquidating Agent,
subject to Section 12.4C in compliance with Section 1.704-1(b)(2)(ii)(b)(2) of
the Regulations, to the Partners with positive balances in their Capital
Accounts, in accordance with the ratio of such positive Capital Account
balances, after giving effect to all contributions, distributions, allocations
and adjustments required hereunder, for all periods, in the order of priority
established pursuant to Section 9.1H hereof. Any distribution described in the
preceding sentence to be made to the General Partners which will cause the
General Partners to have a contribution requirement described in the second
paragraph of Section 12.4B (or will increase such contribution requirement)
shall not be made and shall instead be deemed to have first been distributed to
the General Partners and then contributed by the General Partners to the
Partnership. Thereafter, such amount shall be distributed in the manner
described in this Section 12.4A as if it constituted additional assets of the
Partnership.
B. In the event the Partnership is "liquidated" within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations, if the General Partners'
Capital Accounts have a deficit balance in the aggregate (after giving effect to
all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), the General Partners
shall contribute to the capital of the Partnership an amount equal to the lesser
of (i) the amount necessary to restore such deficit balance to zero, or (ii) an
amount equal to the excess of (a) 0.101% of the Capital Contributions of the
Investor Limited Partner over (b) the Capital Contributions previously made by
the General Partners, in compliance with Section 1.704-1(b)(2)(ii)(b)(3) of the
Regulations. Any amount required to be contributed by the General Partners
pursuant to the preceding sentence shall be contributed by the General Partners
in proportion to their respective deficit Capital Account balances, if any.
C. If the Liquidating Agent, shall determine, in its sole discretion,
that it is not feasible to liquidate all or part of the assets of the
Partnership or that an immediate sale of all or part of such assets would cause
an undue loss to the Partners, the Liquidating Agent may distribute those assets
in kind to the Partners or to a liquidation trust or similar vehicle for the
purpose of the orderly liquidation of such assets at the earliest possible time
for the benefit of, and in the best interests of the Partners. Any distribution
of assets in kind shall be distributed on the basis of the fair market value
thereof (which shall be determined by independent appraisal) and any Partner
entitled to any interest in such assets shall receive such interest therein as a
tenant-in-common with all other Partners so entitled. If the Liquidating Agent,
in its sole discretion, deems it not feasible to distribute to each Partner an
aliquot share of each asset, the Liquidating Agent may allocate and distribute
specific assets to one or more Partners as tenants-in-common as the Liquidating
Agent shall determine to be fair and equitable, taking into consideration, inter
alia, the basis for tax purposes of each asset distributed and the effect of
crediting or charging the Capital Accounts for any unrealized appreciation or
unrealized depreciation.
Section 12.5 Orderly Liquidation
A reasonable time shall be allowed for the orderly liquidation of the
assets of the Partnership and the discharge of liabilities so as to minimize the
losses normally attendant upon a liquidation.
ARTICLE 13 ACCOUNTING, REPORTS, BOOKS AND BANK ACCOUNTS
Section 13.1 Bank Accounts
The bank accounts of the Partnership shall be maintained in such
banking institutions authorized to do business in the State or such other states
as permitted by each Credit Agency and as the General Partners shall determine,
and withdrawals shall be made on such signature or signatures as the General
Partners shall determine. The General Partners shall notify the Administrative
Limited Partner of the location of all bank accounts of the Partnership from
time to time. The Partnership's funds shall not be commingled with the funds of
any other Person and shall not be used except for the business of the
Partnership. All deposits (including security deposits and other funds required
by any Credit Agency or Lender to be placed in escrow and other funds not needed
in the operation of the Partnership's business) shall be deposited, to the
extent permitted by each Credit Agency or Lender, in interest-bearing accounts
or invested in obligations of or guaranteed by the United States, any state
thereof, or any agency, municipality or other political subdivision of any of
the foregoing, commercial paper (investment grade), certificates of deposit and
time deposits in commercial banks with capital in excess of $50,000,000 and in
mutual (money market) funds investing in any or all of the foregoing; provided,
however, that any funds required to be placed in escrow by any Credit Agency or
Lender shall be controlled by such Credit Agency or Lender and the General
Partners shall not be permitted to make any withdrawal from such funds without
the express written consent of such Credit Agency or Lender to the extent
required.
Section 13.2 Books of Account
Complete and accurate books of account, in which shall be entered,
fully and accurately, each and every transaction of the Partnership, shall be
kept or caused to be kept by the General Partners. The books shall be kept on an
accrual basis of accounting. All of the Partnership's books of account, together
with an executed copy of this Agreement and copies of such other instruments as
the General Partners may execute hereunder, including amendments thereto, shall
at all times be kept at the principal office of the Partnership and shall be
available during normal business hours for inspection and copying by any Partner
or its duly authorized representative or, at the expense of any Partner, for
audit by such Partner or its duly authorized representative.
Section 13.3 Reports
A. The General Partners shall, within five days after acquiring
knowledge that any of the following specified events occurs, notify the Investor
Limited Partner of any correspondence from or communications with the Credit
Agency or the IRS relating to or referencing the Housing Tax Credits or the
Apartment Complex, any change made or proposed to the allocation of Housing Tax
Credits, any notice of an audit by the Credit Agency or any other governmental
agency, including the IRS, any material cost overruns in the construction of the
Apartment Complex, any material damage to or change in the construction of the
Apartment Complex, any notice of default under the Mortgage, breach of any
Governmental Agreement or Project Document, any non-payment of taxes, the filing
of any lien against the Apartment Complex, or non-compliance with any federal,
state, or local law, ordinance, or regulation, commencement or termination of
any lawsuit against the Partnership or any of its property, cancellation or
non-renewal of any insurance, cancellation or non-renewal of any subsidy
agreement, any material change to the Project Documents, any extraordinary item
charges or credits or any other material charges or credits to income of an
unusual nature or any material provisions for loss, any other circumstance
which, either in amount or time or otherwise materially affects the business of
the Partnership or the interest of the Partners or the Housing Tax Credits, or
any occurrence that would cause any representation or warranty of the General
Partners herein to become inaccurate in any material respect.
B. Within 30 days after the end of each calendar month, the General
Partners shall have prepared and shall deliver to each of the Partners a
detailed income and expense statement and occupancy report/updated rent roll for
such month.
C. Within 45 days after the end of each of the first three quarters of
each Fiscal Year, the General Partners shall have prepared and shall deliver to
the other Partners, commencing with the first quarterly period ending after the
Closing Date, a balance sheet and statements of income (or loss) and Cash Flow
for, or as of the end of, such quarter in such form and substance as the
Administrative Limited Partner shall reasonably request, none of which need be
audited unless required by law, together with a report of other pertinent
information regarding the Partnership and its activities during such quarter,
including, but not limited to, a statement of the amount of all fees and other
compensation paid by the Partnership during such quarter to the General Partners
or any of their Affiliates. All such balance sheets, reports and statements
provided pursuant to this Section 13.3C, other than the statement of Cash Flow
shall be prepared in accordance with generally accepted accounting principles,
consistently applied, and shall accurately reflect the information contained on
the Partnership's books and records.
D. Within 30 days after the end of each six-month fiscal period, the
General Partners shall send to the other Partners preliminary drafts of (i) the
balance sheet of the Partnership as of the end of such six-month fiscal period
and statements of income (loss), Partners' equity and cash flow of the
Partnership for such six-month fiscal period, all of which shall be prepared in
accordance with generally accepted accounting principles, consistently applied
and (ii) a statement of Cash Flow for such fiscal period (which need not be
audited), showing distributions in respect of such fiscal period, which
statement shall identify distributions from (a) Cash Flow generated during the
fiscal period, and Cash Flow generated during prior fiscal periods, (b) proceeds
from the disposition of property and investments, and (c) reserves and other
sources. Within 60 days after the end of each six-month period, the General
Partners shall send to the other Partners final drafts of each of the
aforementioned statements, which, with respect to the period of time
corresponding to the end of a Fiscal Year, shall be accompanied by an annual
report of the Accountants containing an unqualified audit opinion of the
Accountants.
E. Prior to substantial completion of the Apartment Complex, the
General Partners shall provide the Investor Limited Partner with (i) monthly
construction progress reports; (ii) a copy of each inspection report, evaluation
or similar report issued to the Partnership by the Credit Agency or any Lender
promptly upon receipt thereof; and (iii) a copy of each Tax Credit compliance
report delivered to or prepared by the Credit Agency with respect to the
Apartment Complex.
F. If the General Partners shall fail, for any reason, to deliver to
the other Partners when due any of the audited annual financial statement
described in Section 13.3D hereof and/or any of the tax returns, including,
without limitation, a copy of Schedule K-1, referred to in Section 13.5 hereof,
and such failure is not due to a matter outside the reasonable control of the
General Partners, any Affiliate or the Management Agent and/or Accountants
selected by the General Partners, (i) the Administrative Limited Partner shall
have the right, but not the obligation, to cause such reports, information or
statements to be prepared at the expense of the Partnership by such accountants
or other professionals as the Administrative Limited Partner shall designate and
(ii) after notice from the Investor Limited Partner of the failure of such
delivery, the Partnership shall pay the Investor Limited Partner, as liquidated
damages for such failure, an amount equal to $100.00 for each day that elapses
after the respective due date until such tax information or audited financial
statement has been delivered to the other Partners.
Section 13.4 Other Reports
The General Partners shall from time to time submit to the Partners
such other written reports and information regarding the operations of the
Partnership as may be required by the Investor Limited Partner to satisfy its
reporting requirement to its partners or governmental authorities. In addition,
the General Partners shall provide the Administrative Limited Partner and the
Investor Limited Partner with copies of all information, reports, and filings
pertaining to the Housing Tax Credits and/or the "qualified basis" (as defined
in Section 42 of the Code) of the Apartment Complex. The General Partners shall
provide to the Partners by November 30 of each Fiscal Year an estimate of each
Partner's share of Profits and Losses for federal and state income tax purposes
for such Fiscal Year. The Investor Limited Partner shall be entitled to receive
a list of all limited partners of the Partnership.
Section 13.5 Tax Returns and Tax Treatment
A. The General Partners shall, for each Fiscal Year, file on behalf of
the Partnership a United States Partnership Return of Income within the time
prescribed by law for such filing. The General Partners shall also file on
behalf of the Partnership such other tax returns and other documents from time
to time as may be required by the federal government or by any state or any
subdivision thereof. All tax returns shall be prepared by the Accountants.
B. The General Partners shall send to the other Partners such tax
information, including, without limitation, a copy of Schedule K-1, as shall be
reasonably necessary for inclusion by the Investor Limited Partner and the
Administrative Limited Partner in their federal income tax returns and required
state income tax and other tax returns. The General Partners shall send this
information to the Administrative Limited Partner for its review and approval
within 45 days after the end of each Fiscal Year. The General Partners hereby
acknowledge that the Investor Limited Partner considers it of paramount
importance that it file its information returns with the IRS in sufficient time
to enable all of its partners to file their tax returns by April 15 following
each Fiscal Year. Accordingly, the General Partners shall be liable to the
Investor Limited Partner, as liquidated damages, in the sum of $100.00 for each
day that such information is provided after the 45th day after the end of each
Fiscal Year. The Administrative Limited Partner shall have the right to review
and approve such information prior to the filing of the related tax returns with
the appropriate taxing authority. The Administrative Limited Partner shall have
the right to cause the Partnership to make any tax election (including, without
limitation, an election under Section 754 of the Code) which it determines to be
in the best interests of the Investor Limited Partner. At such time as the
General Partners have received the Consent of the Administrative Limited Partner
to the tax returns, the General Partners shall promptly file final tax returns
and simultaneously provide the Administrative Limited Partner with copies of
same.
Section 13.6 Asset Management Fee
Commencing on April 1, 1999 and for each year thereafter, the
Partnership shall pay to the Limited Partner a fee of $7,500 per annum, $3,500
payable on April 1st and the balance on October 1st (provided, however, that
such fee shall be payable only to the extent sufficient Cash Flow is available
pursuant to Section 9.2A, and any portion of such fee which cannot be paid shall
accrue without interest until there is sufficient Cash Flow or Sale or
Refinancing Transaction Proceeds to pay the outstanding accrued amount), for its
services in reviewing the informational reports, financial statements and tax
returns furnished to it pursuant to this Article 13. Such fee shall be adjusted
April 1 of each year thereafter by multiplying $7,500 by the CPI Adjustment as
of the adjustment date.
ARTICLE 14 FOREIGN PARTNERS
Section 14.1 Certification of Non-Foreign Status
A. Each Partner shall upon acquiring an Interest certify that he is not
a Foreign Person on forms to be provided by the General Partners at the time of
admission. At any time that an Interest is transferred or assigned, the
transferee shall certify to non-foreign status prior to the transfer or
assignment of such Interest. Such certifications shall be made on a form to be
provided by the General Partners.
B. Each Partner shall notify the General Partners if he becomes a
Foreign Person within 30 days of such change.
C. Prior to a disposition of a United States Real Property Interest or
a distribution attributable to a disposition of a United States Real Property
Interest or any other distribution by the Partnership, each Partner may be
required to certify to non-foreign status.
Section 14.2 Withholding of Certain Amounts Attributable to
Interests of Foreign Partners
A. In the event that either (i) the Partnership's actual or deemed
amount realized upon disposition of any United States Real Property Interest is
attributed to a Foreign Partner or (ii) the Partnership makes a distribution to
any Foreign Partner:
(i) Any tax required to be withheld under Sections 1445 or
1446 of the Code shall be charged to that Foreign Partner's Capital
Account as if the amount of such tax had been distributed to such
Partner;
(ii) The General Partners shall have the right to make a loan
to the Partnership in an amount equal to the amount of tax required to
be withheld pursuant to Sections 1445 or 1446 of the Code to the extent
that cash is needed to make the required withholding payment
attributable to that Foreign Partner; and
(iii) The General Partners may retain appropriate portions of
a Foreign Partner's distributions until any withholding obligations
relating to that Foreign Partner are satisfied and may apply such
distributions to repay any loan made pursuant to Section 14.2A(ii)
hereof.
B. For purposes of this Section 14.2, any Partner who fails to provide
a certification of a non-foreign status within five days after a request to do
so by the General Partners shall be treated as a Foreign Person.
ARTICLE 15 MISCELLANEOUS
Section 15.1 Law Governing
This Agreement shall be governed by and construed in accordance with
the laws of the State applicable to contracts made and to be performed entirely
therein.
Section 15.2 Power of Attorney
Each Partner hereby irrevocably constitutes and appoints the
Administrative Limited Partner and the President, Vice President and Secretary
of the Administrative Limited Partner, his true and lawful attorney-in-fact and
agent with full power and authority to act in his name, place and xxxxx to
execute, acknowledge, swear to, deliver, file, record and publish any document
requisite to carrying out the intention and purposes of the Partnership and this
Agreement, including, but not limited to, the execution, acknowledgment,
swearing to, delivery, filing, recording and publication of this Agreement and
amendments hereto, documents, conveyances, leases, contracts, loan documents
and/or counterparts thereof, the execution and filing of appropriate documents
with any Credit Agency or any Lender, and all other documents which such persons
reasonably deem necessary or appropriate:
A. To qualify or continue the Partnership as a limited
partnership;
B. To reflect an amendment of this Agreement;
C. To accomplish the purposes and carry out the powers
of the Partnership as set forth in this Agreement;
D. To reflect the dissolution and termination of the
Partnership; or
E. To effect transfers, admissions, Withdrawals and
substitutions of Partners as specifically provided under the terms of
this Agreement.
The power of attorney hereby granted is a special power of attorney coupled with
an interest and shall survive the subsequent death, incompetency, disability,
incapacity, dissolution, Bankruptcy or termination of any Partner. No Person
shall take any action as an attorney-in-fact of a Limited Partner which is not
expressly authorized by the terms of this Agreement or which would in any way
increase the liability of the Limited Partner beyond the liability expressly set
forth in this Agreement or which would otherwise materially adversely affect the
Limited Partner.
Section 15.3 Counterparts
This Agreement may be signed in any number of counterparts, each of
which shall be an original for all purposes, but all of which taken together
shall constitute only one agreement. The production of any executed counterpart
of this Agreement shall be sufficient for all purposes without producing or
accounting for any other counterpart thereof.
Section 15.4 Separability of Provisions
Each provision of this Agreement shall be considered separate and if
for any reason any provision or provisions herein (i) are determined to be
invalid or contrary to any existing or future law, such invalidity shall not
impair the operation of or affect those portions of this Agreement which are
valid or (ii) would cause the a Limited Partner to be liable for the obligations
of the Partnership (other than under the rules, directives and regulations of
any Credit Agency) under the laws of the State as the same may now or hereafter
exist, such provision or provisions shall be deemed void and of no effect.
Section 15.5 Address and Notice
All notices, demands, solicitations of consent or approval, and other
communications hereunder required or permitted shall be in writing and shall be
deemed to have been given (i) when personally delivered or telecopied, (ii) one
business day after the date when deposited with an overnight courier or (iii)
five days after the date when deposited in the United States mail and sent
postage prepaid by registered or certified mail, return receipt requested,
addressed as follows:
A. If to the Partnership and/or the General Partners, to the
intended recipient at:
Homes for America Holdings, Inc.
0000 XxXxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx XxxXxxxxxx
with a copy to:
Chernove & Associates
000 X. Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxxx, Esq.
B. If to the Investor Limited Partner and/or the Administrative Limited
Partner, to the intended recipient at:
Alliant Asset Management Company LLC
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
with a copy to:
Peabody & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, P.C.
Re: Matter 31108-12
Section 15.6 Computation of Time
In computing any period of time pursuant to this Agreement, the day of
the act, event or default from which the designated period of time begins to run
shall not be included.
Section 15.7 Titles and Captions
All article and section titles or captions contained in this Agreement
are for convenience only and shall not be deemed part of the text of this
Agreement.
Section 15.8 Entire Agreement
This Agreement, together with the Exhibits and Schedules hereto,
contains the entire understanding between and among the parties and supersedes
any prior understandings and agreements between and among them respecting the
subject matter of this Agreement.
Section 15.9 Agreement Binding
This Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives and permitted successors
and assigns of the parties hereto.
Section 15.10 Parties in Interest
Nothing herein shall be construed to be for the benefit of or
enforceable by any third party including, but not limited to, any creditor of
the Partnership.
Section 15.11 Amendments; Other Actions
A. This Agreement may not be amended except by the General Partners
with the Consent of all Partners, and, in each case, the approval, if required,
of each Credit Agency. In particular but not limiting the foregoing, all
Partners must give their Consent in writing to any amendment which would (i)
extend the term of the Partnership as set forth in Section 12.1 hereof, (ii)
amend this Section 15.11, (iii) increase or extend the liability or obligation
of the Investor Limited Partner or the Administrative Limited Partner, (iv)
increase the amount of Capital Contributions payable by the Investor Limited
Partner or the Administrative Limited Partner, (v) accelerate the date of
payment of any portion of the Investor Limited Partner Contribution, (vi) alter
the distribution or allocation to the Partners of any profits and losses and
distributions of the Partnership or (vii) alter the rights, powers and duties of
a General Partner without such General Partner's Consent.
B. Notwithstanding any other provision of this Agreement, no action may
be taken under this Agreement unless such action is taken in compliance with the
provisions of the Uniform Act.
Section 15.12 Survival of Representations, Warranties and
Agreements
All representations, warranties and agreements shall survive until the
dissolution and termination of the Partnership, except to the extent that a
representation, warranty or agreement expressly provides otherwise.
Section 15.13 Further Assurances
The Partners shall execute and deliver such further instruments and do
such further acts and things as may be required to carry out the intent and
purposes of this Agreement.
Section 15.14 Remedies Cumulative
No remedy conferred upon or reserved to the Partnership or any Partner
by this Agreement is intended to be exclusive of any other remedy. Each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given to the Partnership or any Partner hereunder or now or hereafter
existing at law or in equity or by statute.
Section 15.15 Attorneys' Fees
In the event that any court or arbitration proceeding is brought under
or in connection with this Agreement, the prevailing party in such proceeding
(whether at trial or on appeal) shall be entitled to recover from the other
party all costs, expenses, and reasonable attorneys' fees incident to any such
proceeding. The term "prevailing party" as used herein shall mean the party in
whose favor the final judgment or award is entered in any such judicial or
arbitration proceeding.
Section 15.16 Meetings
Meetings of the Partnership may be called by the General Partners, the
Administrative Limited Partner or the Investor Limited Partner for any matters
for which the Partners may vote as set forth in this Agreement or to obtain
information concerning the Partnership. A list of names and addresses of all
Partners shall be maintained as part of the books and records of the Partnership
and shall be made available upon request to any Partner or its representative at
no cost. Upon receipt of a request from any Person entitled to call a meeting
stating the purposes of the meeting, the General Partners or the Administrative
Limited Partner shall provide the Partners, within ten days after receipt of
such request, notice of a meeting and the purpose of such meeting to be held on
a date not less than 15 nor more than 60 days after receipt of such request, at
a time and place within or without the State convenient to the Partners.
Included within the notice shall be a detailed statement of the action proposed,
including a verbatim statement of the wording of any resolution proposed for
adoption by the Investor Limited Partner and any proposed amendment to this
Agreement. Said notice shall provide for proxies or written consents which
specify a choice between approval and disapproval of each matter to be acted
upon at a meeting. A Majority in Interest of Limited Partners entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting.
Section 15.17 Enforceability
It is agreed that the rights granted to the Administrative Limited
Partner and the Investor Limited Partner hereunder are of a special and unique
kind and character and that, if there is a breach by the General Partners of any
material provision of this Agreement, the Administrative Limited Partner and the
Investor Limited Partner would not have any adequate remedy at law. It is
expressly agreed, therefore, that the rights of the Administrative Limited
Partner and the Investor Limited Partner hereunder shall be enforceable by a
decree of specific performance. Such remedy shall be cumulative and not
exclusive and shall be in addition to any and all other remedies the
Administrative Limited Partner and the Investor Limited Partner may have
pursuant to this Agreement, at law, or in equity.
Section 15.18 HUD Provisions
If the loan is to be insured by HUD, acting by and through the Federal
Housing Administration ("FHA") the Partnership must comply with the HUD
requirements which can be found, in part, in the instructions to the Regulatory
Agreement and HUD Notice H 95-66 dated July 25, 1995.
In addition to being a single asset entity with a term longer than the
term of the mortgage, HUD requires that the Partnership formation documents
contain the following provisions:
A. So long as the Secretary of The Department of Housing and Urban
Development ("Secretary") or the Secretary's successors or assigns is the
insurer or holder to the note secured by the mortgage on Prairie Village
Apartments, in Elkhart, Indiana ( "Apartment Complex"), no amendment to this
Partnership Agreement that results in any of the following will have any force
or effect without the prior written consent of the Secretary:
(a) Any amendment that modified the term of the
Partnership Agreement;
(b) Any amendment that activities the requirements
that a HUD previous participation certification be obtained from any
additional partner;
(c) Any amendment that in any way affects the note, the
mortgage, the security agreement or the regulatory agreement between
HUD and the Partnership (the "Regulatory Agreement");
(d) Any amendment that would authorize any partner other than
the managing general partner to bind the Partnership for all matters
concerning the Apartment Complex which require HUD's consent or
approval;
(e) Any change in the General Partners;
(f) Any change in a Guarantor of any obligation to the
Secretary, or
(g) Any amendment of any provision which has been added to
this Partnership Agreement pursuant to HUD requirements.
B. The Partnership is authorized to execute the note, mortgage,
security agreement, Regulatory Agreement and the other loan documents required
by the Secretary.
C. Any incoming partner must as a condition of receiving an interest in
the Partnership agrees to be bound by the note, mortgage, security agreement and
Regulatory Agreement and any other document required in connection with the FHA
insured loan to the same extent and on the same terms as the other partners.
D. Notwithstanding any other provision contained herein, upon any
dissolution, no title or right to possession and control of the Apartment
Complex, and no right to collect the rents from the Project, shall pass to any
person who is not bound by the Regulatory Agreement in a manner satisfactory to
the Secretary.
E. Notwithstanding any other provision contained herein, in the event
that any provision of this Partnership Agreement conflicts with the Regulatory
Agreement, the provision of the Regulatory Agreement shall control.
F. So long as the Secretary or the Secretary's successors or assigns is
the issuer or holder of the note on the Apartment Complex, (i) the Partnership
may not voluntarily be dissolved and (ii) the General Partner may not be
voluntarily changed to a limited liability company without the prior written
consent of the Secretary.
G. All partners of the Partnership, and any assignee of a partner,
agree to be liable in their individual capacities to HUD with respect to the
following matters:
(a) For funds or property of the Apartment Complex coming into their
hands, which by the provisions of the Regulatory Agreement, they are not
entitled to retain; and
(b) For their own acts and deed, or acts and deeds of others which they
have authorized, in violation of the provisions of the Regulatory Agreement.
H. Any partner, including any incoming partner, upon assuming any of
the following positions must meet the applicable requirements for HUD previous
participation clearance: (i) general partner or (ii) limited partner with a
twenty-five percent (25%) or greater financial interest in the Partnership.
[Page 77 ends here]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
GENERAL PARTNER(S):
Prairie Village - Homes for America, Inc., an Indiana corporation
/s/ Xxxxxx X. XxxXxxxxxx
By: -------------------------------
Xxxxxx X. XxxXxxxxxx, President
PREEXISTING LIMITED PARTNER(S):
Homes For America Holdings, Inc., a Nevada corporation
/s/ Xxxxxx X. XxxXxxxxxx
By: -------------------------------------
Xxxxxx X. XxxXxxxxxx, President
INVESTOR LIMITED PARTNER:
Alliant Tax Credit Fund V Limited Partnership, a Massachusetts limited
partnership
By: Alliant V LLC, a Massachusetts limited liability company
By: Alliant, Inc., a Florida corporation, its manager
/s/ Xxxxx Xxxxxxx
By: ------------------------------
Xxxxx Xxxxxxx, President
ADMINISTRATIVE LIMITED PARTNER:
Alliant Tax Credit V, Inc., a Florida corporation
/s/ Xxxxx Xxxxxxx
By: ------------------------------
Xxxxx Xxxxxxx, President
ACKNOWLEDGMENTS
STATE OF ___________________ )
) ss.
COUNTY OF ________________ )
On ___________________, 199__ before me, the undersigned, a Notary
Public in and for said State, personally appeared Xxxxxx X. XxxXxxxxxx,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person who executed the within instrument as the President of Prairie
Village - Homes for America, Inc. the corporation that executed the within
instrument, and acknowledged to me that such corporation executed the within
instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
STATE OF ___________________ )
) ss.
COUNTY OF ________________ )
On ___________________, 199__ before me, the undersigned, a Notary
Public in and for said State, personally appeared Xxxxxx X. XxxXxxxxxx,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person who executed the within instrument as the President of Homes For
America Holdings, Inc., the corporation that executed the within instrument, and
acknowledged to me that such corporation executed the within instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY OF _________________ )
On ______________________, 199___ before me, the undersigned, a Notary
Public in and for said State, personally appeared Xxxxx Xxxxxxx, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity as (a) the President of
Alliant, Inc., which is the manager of Alliant V, LLC, which is the general
partner of Alliant Tax Credit Fund V Limited Partnership, and (b) the President
of Alliant Tax Credit V, Inc., and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
PARTNER INFORMATION SCHEDULE
TO THE
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
MIDDLEBURY ELKHART, L.P.
Name and Address Capital Contribution
General Partners:
Prairie Village - Homes for America, Inc. $100.00
0000 XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Administrative Limited Partner:
Alliant Tax Credit V, Inc. $100.00
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Investor Limited Partner:
Alliant Tax Credit Fund V Limited Partnership $1,060,506
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000 (subject to adjustment as provided
Xxx Xxxxxxx, Xxxxxxxxxx 00000 in this Agreement)
SCHEDULE TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MIDDLEBURY ELKHART, L.P.
As used in the Agreement, the following references to the following
matters set forth in the Schedule shall be to the following:
============================== =========== =====================================
Term Reference Description or Definition
in Document
============================== =========== =====================================
Accountant Definition Xxxxxx X. Xxxxxxx & Company
============================== =========== =====================================
Architect Definition CTG Associates, Inc.
============================== =========== =====================================
Bonds Definition Tax-exempt first lien Series A Bonds
issued by the City of Elkhart,
Indiana in the amount of
$2,380,000. Taxable second lien
Series B Bonds issued by the City of
Elkhart, Indiana in the amount of
$850,000.
============================== =========== =====================================
Completion Date Definition September 30, 1999
============================== =========== =====================================
Construction Definition Rehabilitation
============================== =========== =====================================
Construction Agreements Definition Dated July 17, 1998 between Homes
for America Holdings, Inc. and Mast
Construction LLC
============================== =========== =====================================
Contractor Definition Mast Construction LLC
============================== =========== =====================================
Credit Allocation Definition $129,460 annually
============================== =========== =====================================
Lender Definition The Patrician Financial Company
Limited Partnership
============================== =========== =====================================
Mortgage Loan Definition Construction/permanent financing in
the amount of $3,235,000 provided by
the Lender and funded from the
proceeds of the Bonds.
============================== =========== =====================================
Original Agreement Definition Dated July 21, 1997
============================== =========== =====================================
Original Certificate Definition Certificate of Limited Partnership
dated July 16, 1997 and filed with
the Indiana Secretary of State on
July 23, 1997.
============================== =========== =====================================
Projected Credits Definition $33,230 for 1999, $124,750 for 2000,
$129,330 per year for 2001 through
2008, and $100,680 for 2009.
============================== =========== =====================================
Tax Credit Percentage Definition 82.0%
============================== =========== =====================================
Principal Office ss.2.2 Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
============================== =========== =====================================
Resident Agent ss.2.3 CT Corporation System
============================== =========== =====================================
Capital Contribution of $100
General Partners ss.3.1
============================== =========== =====================================
Closing Date ss.3.9 December 16, 1998
============================== =========== =====================================
Development Services Agreement ss.3.9B(iv) Dated August 1, 1998
============================== =========== =====================================
Operating Deficit Guaranty ss.5.9C 36 months following the date Rental
Period Achievement is achieved
============================== =========== =====================================
Operating Deficit Reserve ss.5.9D $120,000
Amount
============================== =========== =====================================
Initial Management Agent ss.6.6E Xxxxxxx Click Revel & Xxxxx, LLC
============================== =========== =====================================
First Year of Credit Period ss.6.10D 1999
============================== =========== =====================================
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PERSONALTY
Each Tax Credit Apartment Unit will be equipped with the following:
1. electric range and oven
2. range hood
3. dishwasher
4. refrigerator/freezer
5. garbage disposal
6. kitchen cabinets
7. countertops and sink
8. air conditioning
9. carpeting
EXHIBIT C
COMPLETION CERTIFICATE
THIS CERTIFICATE is made as of ________________, 199_, by the
undersigned, an architect duly licensed and registered in the State of Indiana
who has prepared final working plans and detailed specifications for
________________ dated _____________, attached hereto as Annex C-1 and referred
to in the Partnership Agreement among Alliant Tax Credit Fund V Limited
Partnership, a Massachusetts limited partnership ("Investor Limited Partner"),
and certain other parties in connection with the construction of improvements on
certain real property (the "Improvements"), located in Elkhart, County of
Elkhart, State of Indiana, such Improvements being made to a project known as
Prairie Village (the "Apartment Complex").
The undersigned hereby certifies that (i) the Improvements have been
completed in substantial accordance with the aforesaid plans and specifications,
(ii) a permanent Certificate of Occupancy and all other permits required for the
continued use and occupancy of the Apartment Complex have been issued with
respect thereto by the governmental agencies having jurisdiction thereover, and
(iii) the Improvements are in compliance with all requirements and restrictions
of all governmental authorities having jurisdiction, including, without
limitation, all applicable zoning, building, environmental, fire, and health
ordinances, rules and regulations.
This Certificate is made as of the date first written above to induce
the Investor Limited Partner to take certain actions under the Partnership
Agreement and consummate the transactions contemplated thereby.
ARCHITECT:
CTG Associates, Inc.
By: _________________________
_________________, Principal
EXHIBIT D
DUE DILIGENCE DOCUMENTS
------------------- --------- --------------------------------------------------
Documentation/Summary
------------------- --------- --------------------------------------------------
Basic Deal Information - 100
=================== --------- --------------------------------------------------
101. Syndication Agreement/Equity Letter.
=================== --------- --------------------------------------------------
102. Development Team Information.
=================== --------- --------------------------------------------------
103. Apartment Complex Information/Executive Summary.
=================== --------- --------------------------------------------------
104. Investor Limited Partner Investment Committee
Package.
=================== --------- --------------------------------------------------
105. Investment Analysis (Final).
=================== --------- --------------------------------------------------
106. Alliant Staff Site Visit Report.
================================================================================
Partnership Information - 200
=================== --------- --------------------------------------------------
201. Initial Agreement forming Partnership.
=================== --------- --------------------------------------------------
202. Amendment to Partnership Agreement.
=================== --------- --------------------------------------------------
203. Initially filed Certificate.
=================== --------- --------------------------------------------------
204. Amendment to Certificate.
=================== --------- --------------------------------------------------
205. Evidence of qualification in foreign jurisdiction.
=================== --------- --------------------------------------------------
206. Partnership Financial Statements.
=================== --------- --------------------------------------------------
207. Partnership Tax Returns.
=================== --------- --------------------------------------------------
208. Guaranty of General Partner Obligations
=================== --------- --------------------------------------------------
209. General Partner Closing Certificate
=================== --------- --------------------------------------------------
210. Historical Audit.
=================== --------- --------------------------------------------------
211. Wire Instructions for Capital Contribution
Distributions.
=================== --------- -------------------------------------------------
212. Closing Memo.
===============================================================================
Construction Loan - 300
=================== --------- -------------------------------------------------
301. Application.
=================== --------- -------------------------------------------------
302. Commitment Letter.
=================== --------- -------------------------------------------------
303. Promissory Note.
=================== --------- -------------------------------------------------
304. Loan Agreement.
=================== --------- -------------------------------------------------
305. Mortgage/Deed of Trust.
=================== --------- -------------------------------------------------
306. Regulatory Agreement.
=================== --------- -------------------------------------------------
307. Assignment of Rents.
=================== --------- -------------------------------------------------
308. Assignment of construction, architectural
and engineering documents.
=================== --------- --------------------------------------------------
309. Security Agreement and UCC Financing Statements.
=================== --------- --------------------------------------------------
310. Loan Guaranty.
=================== --------- --------------------------------------------------
311. Legal Opinion.
=================== --------- --------------------------------------------------
312. Loan Disbursement Request.
=================== --------- --------------------------------------------------
313. Replacement Reserve & Security Agreement.
=================== --------- --------------------------------------------------
314. Buy-Sell Agreement.
=================== --------- --------------------------------------------------
315. Agreement for Amendment of Documents.
=================== --------- --------------------------------------------------
316. Representations, Warranty & Indemnity Agreement.
=================== --------- --------------------------------------------------
317. Rent Escrow Agreement.
=================== --------- --------------------------------------------------
318. Non-Transfer Agreement.
=================== --------- --------------------------------------------------
319. Assignment of Rents & Security Agreement.
=================== --------- --------------------------------------------------
320. Account Consent & Acknowledgment Agreement.
=================== --------- --------------------------------------------------
321. Indemnification Agreement.
=================== --------- --------------------------------------------------
322. Amortization Schedule.
=================== --------- --------------------------------------------------
323. Miscellaneous Documents.
================================================================================
Mortgage Loan - 400
=================== --------- --------------------------------------------------
401. Application.
=================== --------- --------------------------------------------------
402. Commitment Letter.
=================== --------- --------------------------------------------------
403. Promissory Note.
=================== --------- --------------------------------------------------
404. Loan Agreement.
=================== --------- --------------------------------------------------
405. Mortgage/Deed of Trust.
=================== --------- --------------------------------------------------
406. Regulatory Agreement.
=================== --------- --------------------------------------------------
407. Assignment of Rents.
=================== --------- --------------------------------------------------
408. Assignment of construction documents.
=================== --------- --------------------------------------------------
409. Security Agreement and UCC Financing Statement.
=================== --------- --------------------------------------------------
410. Loan Guaranty.
=================== --------- --------------------------------------------------
411. Legal Opinion.
=================== --------- --------------------------------------------------
412. Loan Disbursement Request.
=================== --------- --------------------------------------------------
413. Amortization Schedule.
=================== --------- --------------------------------------------------
414. Miscellaneous Documents.
================================================================================
Project Development, Construction Documents - 500
=================== --------- --------------------------------------------------
501. Building Construction Plans
=================== --------- --------------------------------------------------
502. Building Construction Specifications.
=================== --------- --------------------------------------------------
503. Engineer/Architect's Contract.
=================== --------- --------------------------------------------------
504. Construction Contract.
=================== --------- --------------------------------------------------
505. Payment Bond.
=================== --------- --------------------------------------------------
506. Performance Bond.
=================== --------- --------------------------------------------------
507. Development Services/Fee Agreement.
=================== --------- --------------------------------------------------
508. Environmental Phase I Assessment.
=================== --------- --------------------------------------------------
509. Desk Review of Phase I.
=================== --------- --------------------------------------------------
510. Zoning Designation and Availability of Utilities.
=================== --------- --------------------------------------------------
511. Building Permits.
=================== --------- --------------------------------------------------
512. Certificates of Completion/Occupancy.
=================== --------- --------------------------------------------------
513. Construction Cost Breakdown/Schedule.
=================== --------- --------------------------------------------------
514. Geotechnical Report.
=================== --------- --------------------------------------------------
515. Alliant Pre-Construction Analysis Report.
=================== --------- --------------------------------------------------
516. Completion Certificate (Architect).
=================== --------- --------------------------------------------------
517. Purchase and Sale Agreement.
=================== --------- --------------------------------------------------
518. Deed.
=================== --------- --------------------------------------------------
519. Settlement Statement.
=================== --------- --------------------------------------------------
520. Property Tax Xxxx.
================================================================================
Project Operating Documents - 600
=================== --------- --------------------------------------------------
601. Real Estate Tax Deferral/Abatement Agreement.
=================== --------- --------------------------------------------------
602. Property Management Agreement.
=================== --------- --------------------------------------------------
603. Property Management Plan.
=================== --------- --------------------------------------------------
604. Sources and Uses Statement.
=================== --------- --------------------------------------------------
605. Apartment Lease Form.
=================== --------- --------------------------------------------------
606. Master Lease/Operating Deficit Support Agreement.
=================== --------- --------------------------------------------------
607. Common Facilities Joint Use/Access Services
Information.
=================== --------- --------------------------------------------------
608. Pro Formas/Sources and Uses.
=================== --------- --------------------------------------------------
609. Monthly Operating Rates for the Past 12 Months.
=================== --------- --------------------------------------------------
610. Termite Inspection Report and/or Bond.
=================== --------- --------------------------------------------------
611. Current Bank Statement.
=================== --------- --------------------------------------------------
612. Current Bank Statement (Security Deposits).
=================== --------- --------------------------------------------------
613. Laundry Equipment Lease (if applicable).
================================================================================
Low-Income Tax Credit Material - 700
=================== --------- --------------------------------------------------
701. Credit Reservation Application.
=================== --------- --------------------------------------------------
702. Credit Reservation.
=================== --------- --------------------------------------------------
703. Carryover Application.
=================== --------- --------------------------------------------------
704. Carryover Allocation.
=================== --------- --------------------------------------------------
705. Evidence of 10% Costs Incurred (include
accountant's certification, invoices, checks, etc.
=================== --------- --------------------------------------------------
706. Local housing authority/public utility
determination of utility allowances.
=================== --------- --------------------------------------------------
707. Credit Allocation/Form 8609.
=================== --------- --------------------------------------------------
708. Confirmation that per building credit allocations
match actual per building low income tenant
occupancy (project less than 100% low income).
=================== --------- --------------------------------------------------
709. Election to Fix Credit Percentage.
=================== --------- --------------------------------------------------
710. Tax Credit Regulatory Agreement/Restrictive
Covenants.
=================== --------- --------------------------------------------------
711. Evidence of ten year holding period; waiver of
holding period.
=================== --------- --------------------------------------------------
712. Evidence of eligibility for 130% increase in
credit amount.
=================== --------- --------------------------------------------------
713. Evidence of participation by nonprofit sponsor.
=================== --------- --------------------------------------------------
714. Developer Cost Certification or CPA Basis
Verification.
=================== --------- --------------------------------------------------
715. Section 42 Compliance Procedures.
=================== --------- --------------------------------------------------
716. Certified Rent Roll (Section 42 rents).
=================== --------- --------------------------------------------------
717. Current Leases w/Income Verification.
=================== --------- --------------------------------------------------
718. Subsidy Agreement (if applicable).
================================================================================
Property Insurance - 800
=================== --------- --------------------------------------------------
801. Builder's Risk Insurance.
=================== --------- --------------------------------------------------
802. Casualty Insurance.
=================== --------- --------------------------------------------------
803. Liability Insurance.
================================================================================
Title Information - 900
=================== --------- --------------------------------------------------
901. Title Policy Commitment.
=================== --------- --------------------------------------------------
902. Title Policy.
=================== --------- --------------------------------------------------
903. Documents evidencing title exceptions.
=================== --------- --------------------------------------------------
904. Property survey w/flood plain certification or
As-Built Survey.
================================================================================
Property Financial Information - 1000
=================== --------- --------------------------------------------------
1001. Property Appraisal.
=================== --------- --------------------------------------------------
1002. Property Market Study.
=================== --------- --------------------------------------------------
1003. Property Development Budget.
=================== --------- --------------------------------------------------
1004. Property Operating Budget.
================================================================================
General Partners' Information - 2000
=================== --------- --------------------------------------------------
2001. Resume.
=================== --------- --------------------------------------------------
2002. Financial Statement.
=================== --------- --------------------------------------------------
2003. Questionnaire.
=================== --------- --------------------------------------------------
2004. Credit Check Authorization and Credit Report.
================================================================================
Corporate General Partners - 3000
=================== --------- --------------------------------------------------
3001. Articles of Organization.
=================== --------- --------------------------------------------------
3002. Corporate By-laws.
=================== --------- --------------------------------------------------
3003. Relevant Corporate Votes.
=================== --------- --------------------------------------------------
3004. Controlling Person Information.
================================================================================
Guarantors of Corporate General Partners' Obligations - 4000
=================== --------- --------------------------------------------------
4001. Resume.
=================== --------- --------------------------------------------------
4002. Financial Statement.
=================== --------- --------------------------------------------------
4003. Questionnaire.
=================== --------- --------------------------------------------------
4004. Credit Check Authorization and Credit Report.
================================================================================
Contractor Information - 5000
=================== --------- --------------------------------------------------
5001. Resume.
=================== --------- --------------------------------------------------
5002. Financial Statement.
=================== --------- --------------------------------------------------
5003. Questionnaire.
=================== --------- --------------------------------------------------
5004. Credit Check Authorization and Credit Report.
================================================================================
Architect Information - 6000
=================== --------- --------------------------------------------------
6001. Resume.
=================== --------- --------------------------------------------------
6002. Errors & Omissions Insurance.
================================================================================
Property Management Agent - 7000
=================== --------- --------------------------------------------------
7001. Resume.
=================== --------- --------------------------------------------------
7002. Financial Statement.
=================== --------- --------------------------------------------------
7003. Questionnaire.
=================== --------- --------------------------------------------------
7004. Credit Check Authorization and Credit Report.
=================== ========= ==================================================
7005. Fidelity Bond.
=================== ========= ==================================================
EXHIBIT E
CERTIFICATE
The undersigned is a duly authorized corporate officer of Prairie
Village - Homes for America, Inc., the General Partner of Middlebury Elkhart,
L.P., an Indiana limited partnership (the "Partnership"), and hereby certifies
to Alliant Tax Credit Fund V Limited Partnership, a Massachusetts limited
partnership ("Investor Limited Partner"), and Alliant Tax Credit V, Inc., a
Florida corporation (the "Administrative Limited Partner"), in connection with
Investor Limited Partner's and the Administrative Limited Partner's acquisition
of the Interests (as that and all other capitalized terms used herein are
defined in the Partnership Agreement (the "Partnership Agreement") by and among
the General Partners, the Investor Limited Partner, the Administrative Limited
Partner and certain other parties), as follows:
1. All action required to be taken by the General Partners prior to the
admission of the Investor Limited Partner and the Administrative Limited Partner
as Partners of the Partnership has been taken and subject to obtaining the
approvals specified in Section 4.1 of the Partnership Agreement and upon (i)
compliance with all other terms set forth in the Partnership Agreement, (ii) the
execution of the Partnership Agreement by the parties thereto, (iii) the filing
or recording such Partnership Agreement or a certificate summarizing the
provisions thereof in the appropriate jurisdiction, (iv) the payment of any
required filing fees, and (v) any publications required by the partnership laws
of the appropriate jurisdiction, then (a) the Administrative Limited Partner
will become such an administrative limited partner of the Partnership, (b) the
Investor Limited Partner will become the "Investor Limited Partner" of the
Partnership with its liability limited to the Investor Limited Partner
Contribution under the Partnership Agreement, and (c) the Investor Limited
Partner and the Administrative Limited Partner will be entitled to all the
rights of Partners under the Partnership Agreement, as such rights may be
limited by laws of the jurisdiction of organization of the Partnership.
2. All of the representations and warranties of the General Partners
set forth in the Partnership Agreement are true and correct in all respects as
of the Closing Date as if made thereon and the General Partners have performed
all covenants required to be performed by them on or before the Closing.
3. Chernove & Associates is authorized to rely upon this Certificate in
connection with the issuance of any legal and tax opinions by Chernove &
Associates to any parties associated with the Partnership.
This Certificate is made on the date hereof as a condition to Closing
under the Partnership Agreement and the Exhibits and Schedules thereto.
Dated as of _____________, 199___
Prairie Village - Homes for America,
Inc.
/s/ Xxxxxx X. XxxXxxxxxx
By:-----------------------------
Xxxxxx X. XxxXxxxxxx, President
EXHIBIT F
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is made as of December 1, 1998, is by Homes for
America Holdings, Inc. (hereinafter referred to, even if only one, as the
"Guarantors"), whose address is set forth below, for the benefit of ALLIANT TAX
CREDIT FUND V LIMITED PARTNERSHIP, a Massachusetts limited partnership (the
"Investor Limited Partner"), whose address is set forth below.
WITNESSETH:
WHEREAS, Prairie Village - Homes for America, Inc., an Indiana
corporation (hereinafter referred to, even if only one, as the "General
Partners"), is the general partner of Middlebury Elkhart, L.P., an Indiana
limited partnership (the "Partnership");
WHEREAS the Partnership is governed by its Amended and Restated
Agreement of Limited Partnership dated as of date hereof (the "Agreement");
WHEREAS, Homes for America Holdings, Inc. (the "Developer"),
a Nevada corporation, and the Partnership entered into that certain Development
Agreement dated August 1, 1998 (the "Development Services Agreement");
WHEREAS, the Investor Limited Partner has been requested to enter into
the Agreement with the General Partners;
WHEREAS, each Guarantor is an affiliate of the General Partners, and
believes it shall substantially benefit, directly or indirectly, from the
Investor Limited Partner's entering into the Agreement with the General
Partners; and
WHEREAS, as a condition to entering into the Agreement and being
admitted to the Partnership, the Investor Limited Partner has required the
Guarantors to guarantee to the Investor Limited Partner certain obligations of
the General Partners under the Agreement, and certain other items as herein set
forth;
NOW, THEREFORE, in order to induce the Investor Limited Partner to
enter into the Agreement and the Partnership in consideration of the premises
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each Guarantor hereby jointly and severally
covenants and agrees as follows:
1. Each Guarantor irrevocably and unconditionally fully guarantees the
due, prompt and complete performance of each and every one of the following
obligations:
(a) the payment and performance by the General Partners of
each and every one of the following obligations under the following
provisions of the Partnership Agreement:
(i) the obligation to effectuate Completion in accordance with the requirements
of Section 5.9A;
(ii) the obligation to pay all Development Deficits under Section 5.9B;
(iii) the obligation to fund amounts payable to the Investor Limited Partner by
reason of any Tax Credit Shortfalls as provided under Section 3.8;
(iv) the obligation to fund Operating Deficits under Section 5.9C;
(v) the obligation to indemnify against environmental risks under Section 6.7B;
and
(vi) the obligations under Section 7.4 in the event of a rescission; and
(b) the due, prompt and complete payment of all costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred by the Investor Limited
Partner in the enforcement of this Guaranty Agreement against the Guarantors.
(The obligations described in this Paragraph 1 are hereinafter collectively
referred to as the "Indebtedness").
2. Each Guarantor hereby grants to each of the Limited Partners, in the
its uncontrolled discretion, and without notice to any Guarantor, the power and
authority to deal in any lawful manner with the Indebtedness and the other
obligations guaranteed hereby, and without limiting the generality of the
foregoing, further power and authority, from time to time:
(A) to renew, compromise, extend, accelerate or otherwise
change the time or place of payment of or to otherwise change the terms
of the Indebtedness;
(B) to modify or to waive any of the terms of the Agreement,
the Development Agreement and/or any other obligations guaranteed
hereby;
(C) to take and hold security for the payment of the
Indebtedness and/or performance of the other obligations guaranteed
hereby and to impair, exhaust, exchange, enforce, waive or release any
such security;
(D) to direct the order or manner of sale of any such security
as the Limited Partners, in their discretion, may determine;
(E) to grant any indulgence, forbearance or waiver with
respect to the Indebtedness or any of the other obligations guaranteed
hereby;
(F) to release or waive rights against any one or more
Guarantors without releasing or waiving any rights against any other
Guarantor; and/or
(G) to agree to any valuation by the Limited Partners of any
collateral securing payment of any of the Indebtedness in any
proceedings under the United States Bankruptcy Code concerning either
Limited Partner or the Guarantors.
The liability of each Guarantor hereunder shall not be affected,
impaired or reduced in any way by any action taken by any Limited Partner under
the foregoing provisions or any other provision hereof, or by any delay, failure
or refusal of any Limited Partner to exercise any right or remedy it may have
against the General Partners or any other person, firm or corporation, including
other guarantors, if any, liable for all or any part of the Indebtedness or any
of the other obligations guaranteed hereby.
3. The Guarantors agree that if any of the Indebtedness is not fully
and timely paid or performed according to the tenor thereof, whether by
acceleration or otherwise, the Guarantors shall immediately, upon receipt of
written demand therefor from either Limited Partner, pay all of the Indebtedness
hereby guaranteed in like manner as if the Indebtedness constituted the direct
and primary obligation of the Guarantors. The Guarantors shall not have any
right of subrogation as a result of any payment hereunder or any other payment
made by the Guarantors or a Guarantor on account of the Indebtedness, and each
Guarantor hereby waives, releases and relinquishes any claim based on any right
of subrogation, any claim for unjust enrichment or any other theory that would
entitle a Guarantor to a claim against the General Partners based on any payment
made hereunder or otherwise on account of the Indebtedness.
4. This Guaranty Agreement and the obligations of the Guarantors
hereunder shall be continuing and irrevocable until the Indebtedness has been
satisfied in full. Notwithstanding the foregoing or anything else set forth
herein, and in addition thereto, if at any time all or any part of any payment
received by a Limited Partner from a Guarantor under or with respect to this
Guaranty Agreement is or must be rescinded or returned for any reason whatsoever
(including, but not limited to, determination that said payment was a voidable
preference or fraudulent transfer under insolvency, bankruptcy or reorganization
laws), then Guarantors' obligations hereunder shall, to the extent of the
payment rescinded or returned, be deemed to have continued in existence,
notwithstanding such previous receipt of payment by the Limited Partner, and
Guarantors' obligations hereunder shall continue to be effective or be
reinstated as to such payment, all as though such previous payment to the
Limited Partner had never been made. The provisions of the foregoing sentence
shall survive termination of this Guaranty Agreement, and shall remain a valid
and binding obligation of each Guarantor until satisfied.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty
Agreement by the Limited Partners and this Guaranty Agreement shall immediately
be binding upon each Guarantor. Any Guarantor who executes this Agreement shall
be fully bound hereby regardless of whether or not any other Guarantor
subsequently executes this Guaranty Agreement.
6. Each Guarantor hereby waives and agrees not to assert or take
advantage of:
(A) any right to require the General Partners to proceed
against any other person or to proceed against or exhaust any security
held by the General Partners at any time or to pursue any other remedy
in the General Partner's power before proceeding against any one or
more Guarantors hereunder;
(B) any right to require any Limited Partner to proceed
against the General Partners or any other person or to proceed against
or exhaust any security held by a Limited Partner at any time or to
pursue any other remedy in Limited Partner's power before proceeding
against any one or more Guarantors hereunder;
(C) the defense of the statute of limitations in any action
hereunder or in any action for the collection of the Indebtedness or
the performance of any other obligations guaranteed hereby;
(D) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any other person or persons
or the failure of a Limited Partner to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of
any other person or persons;
(E) except as otherwise provided for herein, demand,
presentment for payment, notice of non-payment, protest, notice of
protest and all other notices of any kind, including, without
limitation, notice of the existence, creation or incurring of any new
or additional indebtedness or obligation or of any action or non-action
on the part of a Limited Partner or any endorser or creditor of a
Limited Partner or any Guarantor or on the part of any other person
whomsoever under this or any other instrument in connection with any
obligation or evidence of indebtedness held by a Limited Partner or in
connection with the Indebtedness;
(F) any defense based upon an election of remedies by a
Limited Partner, the right of Guarantors to proceed against a Limited
Partner for reimbursement, or both;
(G) any election by a Limited Partner to exercise any right or
remedy it may have against the Partnership or any security held by a
Limited Partner, including, without limitation, the right to foreclose
upon any such security by judicial or nonjudicial sale, without
affecting or impairing in any way the liability of Guarantors
hereunder, except to the extent the indebtedness has been paid, and the
Guarantors waive any default arising out of the absence, impairment or
loss of any right of reimbursement, contribution or subrogation or any
other right or remedy of the Guarantors against the Partnership or any
such security whether resulting from such election by a Limited Partner
or otherwise. The Guarantors understand that if all or any part of the
liability of the Partnership to each Limited Partner for the
Indebtedness is secured by real property the Guarantors shall be liable
for the full amount of their liability hereunder, notwithstanding
foreclosure on such real property by trustee sale or any other reason
impairing the Guarantors' right to proceed against the Partnership; and
(H) all duty or obligation on the part of the Limited Partners
to perfect, protect, not impair, retain or enforce any security for the
payment of the Indebtedness or performance of any of the other
obligations guaranteed hereby.
7. All existing and future indebtedness of the General Partners to the
Guarantors or to any person controlled or owned in whole or in part by any of
the Guarantors and, the right of the Guarantors to withdraw or to cause or
permit any person controlled or owned in whole or in part by any of the
Guarantors to withdraw any capital invested by any Guarantor or such person in
the General Partners, is hereby subordinated to the Indebtedness at any time
after a default exists and continues under the Indebtedness. Furthermore,
without the prior written Consent of the Investor Limited Partner, such
subordinated indebtedness shall not be paid and such capital shall not be
withdrawn in whole or in part nor shall any Guarantor accept or cause or permit
any person controlled or owned in whole or in part by a Guarantor to accept any
payment of or on account of any such subordinated indebtedness or as a
withdrawal of capital at any time after a default exists under the Indebtedness
for as long as such default continues. Any payment received by the Guarantors in
violation of this Guaranty Agreement shall be received by the person to whom
paid in trust for the Limited Partners, and Guarantors shall cause the same to
be paid to the Limited Partners immediately on account of the Indebtedness. No
such payment shall reduce or affect in any manner the liability of the
Guarantors under this Guaranty Agreement.
8. The amount of each Guarantor's liability and all rights, powers and
remedies of the Limited Partners hereunder shall be cumulative and not
alternative and such rights, powers and remedies shall be in addition to all
rights, powers and remedies given to the Limited Partners under the Agreement,
any document or agreement relating in any way to the terms and provisions
thereof or otherwise by law. With respect to each Guarantor, this Guaranty
Agreement is in addition to and exclusive of the guaranty of any other Guarantor
executing this Guaranty Agreement or any other person or entity which guarantees
the Indebtedness and/or the other obligations guaranteed hereby.
9. The liability of each Guarantor under this Guaranty Agreement shall
be an absolute, direct, immediate and unconditional guarantee of payment and not
of collectability. The obligations of each Guarantor hereunder are independent
of the obligations of the General Partners or any other party which may be
initially or otherwise responsible for performance or payment of the obligations
hereunder guaranteed and each other Guarantor, and, in the event of any default
hereunder, a separate action or actions may be brought and prosecuted against
any one or more Guarantors, whether or not the General Partners are joined
therein or a separate action or actions are brought against the General
Partners. The Limited Partners may maintain successive actions for other
defaults. The Limited Partner's rights hereunder shall not be exhausted by its
exercise of any of its rights or remedies or by any such action or by any number
of successive actions until and unless the Indebtedness has been paid in full.
10. Each Limited Partner, in its sole discretion, may at any time enter
into agreements with the General Partners or with any other person to amend,
modify or change the Agreement or any document or agreement relating in any way
to the terms and provisions thereof, or may at any time waive or release any
provision or provisions thereof and, with reference thereto, may make and enter
into all such agreements as the Limited Partner may deem proper or desirable,
without any notice or further assent from any Guarantor and without in any
manner impairing or affecting this Guaranty Agreement or any of the rights of
the Limited Partners or each Guarantor's obligations hereunder.
11. The Guarantors hereby agree to pay to the Limited Partners, upon
demand, reasonable attorneys' fees and all costs and other expenses which the
Limited Partners expend or incur in collecting or compromising the Indebtedness
or in enforcing this Guaranty Agreement against each Guarantor whether or not
suit is filed, including, without limitation, all costs, attorneys' fees and
expenses incurred by the Limited Partners in connection with any insolvency,
bankruptcy, reorganization, arrangement or other similar proceedings involving a
Guarantor which in any way affect the exercise by the Limited Partners of their
rights and remedies hereunder. Any and all such costs, attorneys' fees and
expenses not so paid shall bear interest at an annual interest rate equal to the
lesser of (i) 18%, or (ii) the highest rate permitted by applicable law, from
the date incurred by the Limited Partners until paid by the Guarantors.
12. Should any one or more provisions of this Guaranty Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
13. No provision of this Guaranty Agreement or right of the Limited
Partners hereunder can be waived nor can any Guarantor be released from such
Guarantor's obligations hereunder except by a writing duly executed by the
Limited Partners or otherwise as expressly provided for herein. This Guaranty
Agreement may not be modified, amended, revised, revoked, terminated, changed or
varied in any way whatsoever except by the express terms of a writing duly
executed by both Limited Partners.
14. If only one party hereto constitutes "Guarantors," then the plural
context of any reference thereto herein shall be deemed to refer to the single
party which constitutes "Guarantors" herein. When the context and construction
so require, all words used in the singular herein shall be deemed to have been
used in the plural, and the masculine shall include the feminine and neuter and
vice versa. The word "person" as used herein shall include any individual,
company. firm, association, partnership, corporation, trust or other legal
entity of any kind whatsoever.
15. If any or all of the Indebtedness is assigned by the Limited
Partners, this Guaranty Agreement shall automatically be assigned therewith in
whole or in part, as applicable, without the need of any express assignment and
when so assigned, each Guarantor shall be bound as set forth herein to the
assignee(s) without in any manner affecting such Guarantor's liability hereunder
for any part of the Indebtedness retained by such Limited Partner.
16. Each Guarantor (if there is more than one Guarantor) is jointly and
severally liable with each other Guarantor.
17. This Guaranty Agreement shall inure to the benefit of and bind the
heirs, legal representatives, administrators, executors, successors and assigns
of the Limited Partners and Guarantors.
18. This Guaranty Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to principles of
conflicts of law, except to the extent that any of such laws may now or
hereafter be preempted by Federal law, in which case, such Federal law shall so
govern and be controlling. In any action brought under or arising out of this
Guaranty Agreement, each Guarantor hereby consents to the jurisdiction of any
competent court within the State of Florida and consents to service of process
by any means authorized by the laws of such state. Except as provided in any
other written agreement now or at any time hereafter in force between the
Limited Partners and any Guarantor, this Guaranty Agreement shall constitute the
entire agreement of the Guarantors with the Limited Partners with respect to the
subject matter hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding upon the Limited
Partners or any Guarantor unless expressed herein.
19. All notices, demands, requests or other communications to be sent
by one party to the other hereunder or required by law shall be in writing and
shall be deemed to have been validly given or served by delivery of same in
person to the addressee or by depositing same with Federal Express for next
business day delivery or by depositing same in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed as
follows:
Investor Limited Partner: c/o Alliant Asset Management Company, LLC
00000 Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
Guarantor: 0000 XxXxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices, demands and requests shall be effective upon such personal delivery
or upon being deposited with Federal Express or in the United States mail as
required above. However, with respect to notices, demands or requests so
deposited with Federal Express or in the United States mail, the time period in
which a response to any such notice, demand or request must be given shall
commence to run from the next business day following any such deposit with
Federal Express or, in the case of a deposit in the United States mail as
provided above, the date on the return receipt of the notice, demand or request
reflecting the date of delivery or rejection of the same by the addressee
thereof. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice, demand or request sent. By giving to the other party
hereto at least 30 days' written notice thereof in accordance with the
provisions hereof, the parties hereto shall have the right from time to time to
change their respective addresses and each shall have the right to specify as
its address any other address within the United States of America.
20. Each Guarantor hereby agrees that this Guaranty Agreement, the
Indebtedness and all other obligations guaranteed hereby, shall remain in full
force and effect at all times hereinafter until paid and/or performed in full
notwithstanding any action or undertakings by, or against, the Limited Partners,
any Guarantor, and/or any partner of the Investor Limited Partner in any
proceeding in the United States Bankruptcy Court, including, without limitation,
any proceeding relating to valuation of collateral, election or imposition of
secured or unsecured claim status upon claims by the Investor Limited Partner
pursuant to any Chapter of the Bankruptcy Code or the Rules of Bankruptcy
Procedure as same may be applicable from time to time.
21. Any married person who signs this Guaranty hereby agrees that
recourse may be had against his or her separate property for all of his or her
obligations.
22. This Guaranty Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Guaranty Agreement may be
detached from any counterpart of this Guaranty Agreement without impairing the
legal effect of any signatures thereon and may be attached to another
counterpart of this Guaranty Agreement identical in form hereto but having
attached to it one or more additional signature pages. Execution by any
Guarantor shall bind such Guarantor regardless of whether any one or more other
Guarantors execute this Guaranty Agreement.
23. In the event that Guarantors incur costs, including reasonable
legal fees and expenses, to defend any suit brought on this Guaranty Agreement
which suit results in a determination that the Limited Partners' claims were
without merit, the Limited Partners shall reimburse Guarantors for such costs.
IN WITNESS WHEREOF, the undersigned Guarantors have executed this
Guaranty Agreement as of the day and year first above written.
GUARANTORS:
HOMES FOR AMERICA HOLDINGS, INC.
/s/ Xxxxxx X. XxxXxxxxxx
By:---------------------------------
Xxxxxx X. XxxXxxxxxx, President
EXHIBIT G
LOW INCOME HOUSING TAX CREDIT CERTIFICATE
THIS CERTIFICATE is made to Alliant Tax Credit Fund V Limited
Partnership as of December 1, 1998, by Prairie Village - Homes for America, Inc.
an Indiana corporation (referred to herein, even if only one, as the "General
Partners"), the general partner of Middlebury Elkhart, L.P., an Indiana limited
partnership (the "Partnership"), with reference to the following facts:
WHEREAS:
A. The Partnership is the owner of the Prairie Village
apartment complex located in Elkhart, Indiana (the "Apartment Complex");
B. Alliant Tax Credit Fund V Limited Partnership, a Massachusetts
limited partnership ("Investor Limited Partner"), organized for the purpose,
inter alia, of acquiring limited partner interests in limited partnerships
owning housing projects that qualify for low-income housing tax credits (the
"Housing Tax Credits") under Section 42 of the Internal Revenue Code of 1986, as
amended (the "Code"), desires to acquire an investor limited partner interest
and Alliant Tax Credit V, Inc., a Florida corporation (the "Administrative
Limited Partner"), desires to acquire an administrative limited partner interest
(collectively, the "Interests") in the Partnership; and
C. Counsel to the Partnership has been requested to render a tax
opinion as to the availability of Housing Tax Credits with respect to the
Apartment Complex; and
D. All terms not defined herein shall have the meaning set forth in the
Amended and Restated Agreement of the Partnership dated as of December 1, 1998.
NOW, THEREFORE, to induce the Investor Limited Partner and the
Administrative Limited Partner to acquire the Interests and to induce counsel to
the Partnership to render a tax opinion as to the availability of Housing Tax
Credits with respect to the Apartment Complex, the General Partners hereby
certify that the following are true and correct on the date hereof and will
remain true and correct throughout the Compliance Period and that the General
Partners shall take no action which would make any of the following untrue:
1. The Apartment Complex, consisting of 6 residential buildings, is
comprised of 120 residential rental units (whether or not occupied). The
aggregate square footage of the portions of the Apartment Complex is as follows:
Type: Tax Credit Market Rate Commercial
Apartment Units Apartment Units Space
------------------------------------------------------------------------------
Number of units: 120 0 0
------------------------------------------------------------------------------
Aggregate square 99,158 0 0
feet: (121,279 inc.
common area)
------------------------------------------------------------------------------
2. Each of the Tax Credit Apartment Units will be occupied by tenants
whose income is 50% or less of area median gross income, i.e., a family or
individuals whose total income, determined in a manner consistent with the
determination of lower income families or individuals under Section 42 of the
Code and Section 8 of the United States Housing Act of 1937 ("Section 8"), does
not exceed the amount set forth in Column C below:
-------------------------- ------------------------------ ----------------
A B C
---------------- ------------------------------ -------------------------
(Family Size HUD Established Area Median 50% of HUD Established
or Number Gross Income Area Median Gross Income
of Individuals)
---------------- ------------------------------ -------------------------
1 $16,870
---------------- ------------------------------ -------------------------
---------------- ------------------------------ -------------------------
2 $19,280
---------------- ------------------------------ -------------------------
---------------- ------------------------------ -------------------------
3 $21,690
---------------- ------------------------------ -------------------------
---------------- ------------------------------ -------------------------
4 $24,100
---------------- ------------------------------ -------------------------
---------------- ------------------------------ -------------------------
5 $26,028
---------------- ------------------------------ -------------------------
---------------- ------------------------------ -------------------------
6 $27,956
---------------- ------------------------------ -------------------------
With respect to each Tax Credit Apartment Unit, the gross rent does not
exceed 30% of the income limitation indicated in Column C above for the family
size or number of individuals indicated in Column A above. For this purpose, (i)
the size of the family or number of individuals occupying a unit will be deemed
to be (a) one, if the unit does not have a separate bedroom, or (b) one and
one-half multiplied by the number of separate bedrooms, if the unit has one or
more separate bedrooms, and (ii) gross rent does not include payments made on
behalf of the tenant under Section 8 or any comparable rental assistance
program, but does include any utility allowance (other than for telephone).
The Tax Credit Apartment Units are identified as follows:
-------------- --------- --------------------- -------------- -----------------
Unit Number of Date of First Tenant's Name Income
Designation Separate Occupancy for Tax Certification
Bedrooms Credit Purposes Based On:
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
-------------- --------- --------------------- -------------- -----------------
Key to Income Certification Basis:
------------------ -------------------------------------------------------------
Section 8: Tenant receipt of Section 8 subsidies
------------------ -------------------------------------------------------------
------------------ -------------------------------------------------------------
Senior Exemption: Tenant receipt of senior citizen rent increase exemption
certificate
------------------ -------------------------------------------------------------
------------------ -------------------------------------------------------------
Public Assistance: Tenant receipt of public assistance benefits
------------------ -------------------------------------------------------------
------------------ -------------------------------------------------------------
Other: (Describe specifically: e.g., income tax return, income tax
certification, etc.)
------------------ -------------------------------------------------------------
3. The adjusted bases and fair market values of the units and the other
components of the Apartment Complex as of the last day of the first taxable year
of the "Credit Period" (as defined in Section 42(f)(1) of the Code) are
reasonably expected to be as follows:
--------------------------------- --------------------- --------------------
Property Adjusted Basis Fair Market Value
--------------------------------- --------------------- --------------------
--------------------------------- --------------------- --------------------
Residential rental units $729,000 $
--------------------------------- --------------------- --------------------
--------------------------------- --------------------- --------------------
Non-residential property $0 $
--------------------------------- --------------------- --------------------
--------------------------------- --------------------- --------------------
Depreciable property used
in common areas or provided
as comparable amenities to all
residential rental units for
which no separate charge is made $ $
--------------------------------- --------------------- --------------------
--------------------------------- --------------------- --------------------
Land $75,000 $
--------------------------------- --------------------- --------------------
--------------------------------- --------------------- --------------------
Other assets $ $
--------------------------------- --------------------- --------------------
--------------------------------- --------------------- --------------------
Total: $ $
--------------------------------- --------------------- --------------------
As of _________________, 199___, the adjusted basis of the Apartment
Complex will be at a minimum $________________.
4. Expenditures have been and are being made with respect to the
Apartment Complex which are chargeable to capital account and incurred for
property of a character subject to the allowance for depreciation in connection
with the rehabilitation of one or more buildings (but not to acquire a building
or an interest therein) in the Apartment Complex. All such expenditures will be
made during a period of 24 months or less ending on or before December 31, 1999,
by which date such construction will be completed. Such expenditures with
respect to each building during such period, as well as the adjusted basis of
each building (ignoring depreciation deductions) as of the first day of such
period, are as follows:
-------- ----------------------- ------------------ --------------
Building Expenditures Adjusted Low-Income Units Amount of
Basis of Building Rehabilitated Expenditures
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
#1 $399,560 12 $399,560
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
#2 $399,560 12 $399,560
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
#3 $600,972 18 $600,972
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
#4 $802,385 24 $802,385
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
#5 $802,385 24 $802,385
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
#6 $591,249 30 $591,249
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
-------- ----------------------- ------------------ --------------
5. No grants, federally funded or otherwise, were or will be made with
respect to the Apartment Complex or the operation thereof except as follows:
----------- --------------- ---------------------------
Grant Amount Portion Federally Funded
----------- --------------- ---------------------------
----------- --------------- ---------------------------
NONE $ $
----------- --------------- ---------------------------
----------- --------------- ---------------------------
$ $
----------- --------------- ---------------------------
6. None of the adjusted basis of the Apartment Complex is or will be
attributable to amounts as to which an election has been or will be made under
Section 167(k) of the Code.
7. The Apartment Complex has not received and will not receive any
federal loan assistance except as follows:
--------------------------- --------------------- --------------------------
Federal Loan Program Mortgage Balance Maturity Date
--------------------------- --------------------- --------------------------
--------------------------- --------------------- --------------------------
HUD 221(d)(4) $3,236,900 31.42 years
--------------------------- --------------------- --------------------------
--------------------------- --------------------- --------------------------
$
--------------------------- --------------------- --------------------------
8. The following amounts of the adjusted basis of each building were
financed either (i) by obligations, the interest on which is tax-exempt under
Section 103 of the Code, or (ii) with the proceeds of a "below-market Federal
loan" (as defined in Section 42(i)(2) (D) of the Code):
--------------------- -------------------- -------------------------
Total Adjusted Basis Financed by Tax Financed by Below
Exempt Obligations Market Federal Loan
--------------------- -------------------- -------------------------
$3,596,111 $2,380,000 NONE
--------------------- -------------------- -------------------------
9. At least 50% of the aggregate basis of each building of the
Apartment Complex and the land on which such building is or will be located, for
purposes of Section 42(h)(4) of the Code, will be financed by the proceeds of
tax-exempt bonds which were issued under the volume limitations pursuant to
Section 146 of the Code.
10. No part of the Apartment Complex nor its operation has been,
directly or indirectly, financed at any time with either (1) an obligation the
interests on which is exempt from tax under Section 103 of the Code or (2) any
loan funded in whole or in part, directly or indirectly, with federal funds
(other than funds provided pursuant to Section 106, 107 or 108 of the Housing
and Community Development Act of 1974) if the interest rate payable on such loan
is less than the applicable federal rate in effect under Section 1274(d)(1) of
the Code (as of the date on which the loan is made).
11. The construction indebtedness secured by the Apartment Complex will
consist solely of the following:
----------------------------- ----------- ------------- ------------------------
Lender Mortgage Mortgage Indicate Any Ownership
Balance Maturity Date Relationship Between
Lender and Partnership
(or its Partners)
----------------------------- ----------- ------------- ------------------------
Patrician Financial Company $3,236,900 31.42 years NONE
----------------------------- ----------- ------------- ------------------------
----------------------------- ----------- ------------- ------------------------
(converts to permanent loan)
----------------------------- ----------- ------------- ------------------------
12. The permanent indebtedness secured by the Apartment Complex will
consist solely of the following:
------------ ------------------ -------------- -----------------------------
Lender Mortgage Balance Mortgage Ownership Relationship
Maturity Date Between Lender and
Partnership (or its
Partners)
------------ ------------------ -------------- -----------------------------
------------ ------------------ -------------- -----------------------------
Same as 11
------------ ------------------ -------------- -----------------------------
------------ ------------------ -------------- -----------------------------
------------ ------------------ -------------- -----------------------------
All of the permanent indebtedness (collectively, the "Apartment Complex
Debt") is nonrecourse as to the Partnership and no person or entity has or will
have any personal liability with respect to any portion of such Apartment
Complex Debt, except as follows:
A. The Partnership Agreement provides for certain guaranties
against Operating Deficits, which may affect the nonrecourse nature of
the permanent financing.
13. None of the Apartment Complex Debt is convertible into an equity
interest in the Partnership.
14. By letter dated ________, 199___ (the "Credit Determination
Letter"), the Indiana Housing Finance Authority (the "Agency") made the
determinations under Section 42(m)(2)(D) of the Code that the Apartment Complex
is expected to be eligible for Housing Tax Credit in the annual amount of
$129,460. The Credit Determination Letter was issued based on the application
for Housing Tax Credits dated November 30, 1998 and submitted to the Agency for
the Apartment Complex, and is in full force and effect.
15. The Housing Tax Credits were reserved for (and will be allocated
to) each building of the Apartment Complex pursuant to a "qualified allocation
plan" as defined in Section 42(m)(1)(B) of the Code. Such reservation is in full
force and effect.
16. The Housing Tax Credits have not been reserved and/or allocated to
the Apartment Complex from the "nonprofit setaside" referred to in Section 42 of
the Code.
17. The Partnership has validly elected under Section 42(b)(2)(A)(i) of
the Code to apply the credit percentage determined for the month the Apartment
Complex is placed in service with respect to the qualified basis of the
Apartment Complex.
18. The Partnership has made and will make all other appropriate
low-income housing credit elections (including the election of the 40-60 set
aside test) in a timely fashion.
19. The Partnership will, only if requested to do so by the Investor
Limited Partner, elect to have the Credit Period for any building in the
Apartment Complex designated by the Investor Limited Partner commence with the
first year following the year in which such building is placed in service,
pursuant to Section 42(f)(1)(B) of the Code.
20. All Tax Credit Apartment Units will be occupied by tenants under
leases with terms of not less than six months.
21. All apartment units in the Apartment Complex will be occupied by
the general public and will be of approximately the same quality standard within
the meaning of Section 42(d)(3) of the Code. All amenities will be available to
all residents, without separate charge. There will not be any medical, nursing,
psychiatric, food or other significant additional services other than those
services provided by the Partnership to tenants of the apartment units pursuant
to the Project Documents or other agreements shown or disclosed to the Investor
Limited Partner. None of the apartments will be leased to students, except as
permitted under Section 42 of the Code. All tenants occupying Tax Credit
Apartment Units will comply with the income restrictions and other restrictions
necessary to cause such units to comply with the occupancy and rent restrictions
of Section 42 of the Code and the Project Documents.
22. All conditions contained in Section 42 of the Code, the Treasury
Regulations and IRS Notices, rulings or releases and any other governmental
authority, to the validity of the Credit Allocation have been or will be
satisfied in a timely manner.
23. The Apartment Complex does not receive assistance under the HUD
Section 8 Moderate Rehabilitation Program.
24. The fair market value of the Apartment Complex upon completion
thereof is not expected to be less than the aggregate indebtedness encumbering
the Apartment Complex at such time.
25. Rehabilitation expenditures with respect to the Apartment Complex
allocable to the Tax Credit Apartment Units during any twenty-four month period
ending on December 31, 1999 are (or will be) equal to or greater than the
greater of $3,000 per low income unit or 15% of the unadjusted basis of the
Apartment Complex.
26. No Person or Entity holds any equity interest in the Apartment
Complex other than the Partnership. 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. 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. 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.
27. The capital stock of the General Partner consists of a single class
of stock 66.67% of which is owned by the Guarantor and 33.33% of which is owned
by Mast Construction LLC. As between the Guarantor and the General Partner,
there neither exists nor is there contemplated (a) any overlap of boards of
directors to the extent that the overlapping directors possess together a
controlling voting interest in either Entity, or (b) any other direct or
indirect commonality of ownership or control. Neither the Guarantor nor Mast
Construction LLC is a "related person" with respect to any General Partner for
purposes of Treasury Regulation Section 1.752-4(b) issued pursuant to the Code.
28. Qualified rehabilitation expenditures with respect to the Apartment
Complex incurred during the 24-month period ending on the date the Apartment
Complex is placed in service will exceed the aggregate adjusted tax basis of all
persons with an ownership interest in the Apartment Complex as of the
commencement of that 24-month period or of the holding period of the Apartment
Complex, whichever is later.
29. A "qualified nonprofit organization" as defined in Section
42(h)(5)(C) of the Code will not own an interest in the Partnership.
[Page 104 ends here]
This Closing Certificate is intended to take effect as a sealed
instrument, shall inure to the benefit of the Investor Limited Partner and the
Administrative Limited Partner and their successors and assigns and shall be
binding upon each of the undersigned and each of his successors and assigns.
This Closing Certificate may be executed in any number of counterparts which
together shall constitute one instrument. This instrument, and all rights and
remedies of the parties, shall be determined as to their validity, construction,
effect and enforcement, and in all other respects of the same or different
nature, by the internal laws of the State of Indiana. The undersigned
acknowledge that tax counsel to the Partnership will rely upon the foregoing
certifications for purposes of its preparation and delivery of a tax opinion in
connection with this transaction and hereby consent to such reliance.
GENERAL PARTNERS:
Prairie Village - Homes for America,
Inc.
/s/ Xxxxxx X. XxxXxxxxxx
By:-------------------------------
Xxxxxx X. XxxXxxxxxx, President
EXHIBIT H
LITIGATION
NONE
EXHIBIT I
SUPERVISORY MANAGEMENT AND INCENTIVE AGREEMENT
This Agreement is made as of December 1, 1998, by and between
Middlebury Elkhart, L.P., an Indiana limited partnership (the "Partnership"),
and Prairie Village - Homes for America, Inc., an Indiana corporation (the
"Supervisory Agent"). This Agreement is made with reference to the following
facts:
A. The Partnership, pursuant to its Amended and Restated Agreement of
Limited Partnership of even date herewith (the "Agreement"), is engaged in the
construction/rehabilitation, ownership and operation of an apartment complex
known as Prairie Village and located in Elkhart, Indiana (the "Apartment
Complex"). (Capitalized terms used and not otherwise defined herein shall have
the respective meanings set forth in the Agreement.)
B. The Supervisory Agent is being retained to perform certain
additional management and oversight services, and the Partnership has agreed to
pay the Supervisory Agent a certain fee, all as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Services and Duties of Supervisory Agent.
(I) The Supervisory Agent shall provide consulting services to
the Partnership and the Apartment Complex. Such services are intended
to enable the Partnership to be better able to comply with all Code
requirements for the Housing Tax Credits (the "Credits"), to establish
eligibility for such Credits with respect to the entire Apartment
Complex and avoid recapture thereof during the compliance period
established under the Code and to ensure that the Partnership shall
comply with all local city, county and state laws applicable to the
business of the Partnership.
(II) The Supervisory Agent shall assist the Partnership and
the Management Agent in planning, supervising and developing a
marketing program for the Apartment Complex, including, without
limitation, the following:
(A) Assisting in (x) the supervision of such
professional copywriters, sign painting companies, artists and
agencies as may be required to develop advertising programs,
brochures, grand opening campaigns or daily newspaper
advertisements, and (y) the selection and supervision of such
decorating services as may be required to furnish model
apartment units, furnish recreation areas or develop rental
displays;
(B) Furnishing such assistance as may be required to
develop a market analysis through field inspections of
competitive projects or surveys of property managers and
owners, and assisting in developing a rental schedule;
(C) Assisting the Partnership and the Management
Agent in developing systems for processing applications,
credit checks, occupancy schedules and such other procedures
as may be required to assure an orderly occupancy of the
Apartment Complex;
(D) Assisting the Partnership and the Management
Agent in coordinating efforts to achieve a desirable tenant
selection through recruitment and screening of tenants before
and during occupancy and assisting in helping tenants organize
themselves for social programs;
(E) Developing and maintaining favorable community
relations between the Partnership and various social and
community organizations; and
(F) Maintaining effective communications with all
governmental bodies having jurisdiction over the Apartment
Complex.
(III) The Supervisory Agent will provide asset management
services for the Partnership. This asset management shall include:
(A) Responsibility for overall strategic management
of the Apartment Complex, including establishing rent levels
and concessions thereto, marketing strategies for the
Apartment Complex, and sales strategies for the Apartment
Complex;
(B) Performance of accounting services for the
Apartment Complex, including providing reports showing income
and expenses, on a monthly and annual basis. These services
will not include tax return preparation for the Partnership or
auditing services to be performed by independent accountants
on behalf of the Partnership; and
(C) Preparation of periodic communications to the
Partnership, with such frequency as Supervisory Agent in its
sole discretion may deem appropriate.
(IV) The Supervisory Agent is authorized to approach and
negotiate with new or existing lenders with respect to the Apartment
Complex from time to time on behalf of the Partnership and to negotiate
for additional funds, better interest rates and/or extended repayment
terms as and when Supervisory Agent determines that such negotiations
may result in beneficial loan modifications and/or refinancing and
shall present such recommended financing to the Partnership for
consideration. The Supervisory Agent shall also provide consulting
services to the Partnership in connection with selling the Apartment
Complex. The listing price and minimum sales price for the Apartment
Complex shall be as recommended by the Supervisory Agent.
2. Compensation.
(I) Commencing October 1, 1999, the Partnership shall pay the
Supervisory Agent an incentive management fee for each year equal to the
following amounts; provided, that the amounts payable with respect to any year
shall be owed and payable only to the extent of Cash Flow available for payment
of the incentive management fee for such year pursuant to Section 9.2A of the
Agreement ("Net Cash Flow"):
80.0% of Net Cash Flow, provided that the incentive management fee for
any year shall not exceed that amount which equals 12.0% of gross
rental income received by the Partnership for such year.
(II) The Partnership shall reimburse the Supervisory Agent for all
ordinary and necessary costs and expenses incurred in connection with its
performing services pursuant to this Agreement.
3. Default of the Supervisory Agent. Notwithstanding anything contained
in this Agreement to the contrary, in the event that (a) the Supervisory Agent
shall default in any material respect in any of its obligations hereunder or (b)
the General Partners default in any of their obligations under the Agreement and
such default shall continue beyond any applicable notice or cure period, then
the Partnership shall have the right to withhold all compensation otherwise
payable to the Supervisory Agent hereunder until such default is fully cured,
and to set off against such compensation any obligations of the Supervisory
Agent hereunder or of the General Partners under the Agreement. In addition,
this Agreement shall automatically terminate upon the withdrawal of a General
Partner as a general partner of the Partnership for whatever reason.
4. Term of Agreement. Subject to Section 3 above, the term of this
Agreement shall commence on and as of the date hereof and shall continue in full
force and effect until termination of the Partnership.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
SUPERVISORY AGENT:
Prairie Village - Homes for America,
Inc., an Indiana corporation
/s/ Xxxxxx X. XxxXxxxxxx
By: ----------------------------
Xxxxxx X. XxxXxxxxxx, President
PARTNERSHIP:
Middlebury Elkhart, L.P., an Indiana
limited partnership
By: Prairie Village - Homes for
America, Inc., its general
partner
/s/ Xxxxxx X. XxxXxxxxxx
By: -------------------------------
Xxxxxx X. XxxXxxxxxx,
President
EXHIBIT J
PROJECT BUDGET
EXHIBIT K
PERMITTED ENCUMBRANCES
As shown on Schedule B of the Title Policy.
EXHIBIT L
TITLE INSURANCE REQUIREMENTS
The title policy for the property must be acceptable to Alliant and
must be in compliance with the following requirements:
1. The title policy must be written on the current standard ALTA
owner's policy form or a similar form approved by Alliant. If the property is
located in a state in which ALTA forms of coverage are not used or are
unacceptable, the title policy shall provide similar coverage.
2. The title policy shall be issued as an extended coverage policy that
insures against any Standard Exceptions (e.g., parties in possession or other
unrecorded matters).
3. The amount of the title policy must equal the total sum of all
Capital Contributions and the Mortgage Loan.
4. Schedule A of the title policy must (a) name as the "Insured" the
Partnership as constituted as of the issuance date of the title policy and as
may be reconstituted from time to time, (b) insure that the property is owned
solely by the Partnership, and (c) insure that the Partnership's interest in the
property is fee simple absolute.
5. The legal description of the property described in the title policy
must match that shown on the survey of the property.
6. If Schedule B of the title policy indicates the presence of any
easements that are not found on the survey and identified by recording
information, the title policy must provide affirmative insurance against any
loss that conflicts with the use or diminishes the value of the improvements
resulting from the exercise by the holder of such easement or its right to use
or maintain that easement.
7. If the title policy includes any exception for taxes, assessments or
other items which may become a lien on the property, it must insure that such
taxes, assessments or items are not yet delinquent.
8. The title policy shall include such other endorsements as are
customarily obtained in real estate transactions, including, without limitation,
a survey endorsement, a zoning endorsement, an access (to a named public
highway) endorsement, a street address endorsement, a non-imputation endorsement
(except for properties located in the State of Florida) and a Fairway or change
in partners endorsement.
9. Prior to the issuance of the title policy, Alliant and its legal
counsel shall each be provided with recorded copies of all exceptions to title
coverage. Upon the issuance of the title policy, each shall be provided with a
true, correct and complete copy.
