AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
ST. XXXXXXX TOWNHOMES PARTNERS, L.P.
A Texas limited partnership
(the "Partnership")
Among
WINDRIDGE WOODCREST MANAGEMENT, INC.
A Texas corporation
(the "Withdrawing General Partner")
and
ST. XXXXXXX HOMES FOR AMERICA, INC.
A Texas corporation
(the "Admitted General Partner")
and
COMMUNITY HOUSING TAX CREDIT FUND 1997-II, L.P.
a Texas Limited Partnership
("CHTCF 97-II")
and
COMMUNITY HOUSING INCOME EQUITY FUND 1998-I, L.P.
a Texas Limited Partnership
("CHIEF 98-I")
as of
December 1, 2001
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
ST. XXXXXXX TOWNHOMES PARTNERS, L.P.
THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF St. Xxxxxxx
Townhomes Partners, L.P. (this "Agreement"), is made as of the 1st day of
December, 2001, amending and restating that certain Original Partnership
Agreement (described herein), constituting and continuing the Partnership, by
and between Windridge Woodcrest Management, Inc., a Texas corporation (the
"Withdrawing General Partner"), St. Xxxxxxx Homes for America, Inc., a Texas
corporation (the "Admitted General Partner"), and Community Housing Tax Credit
Fund 1997-II, L.P., a Texas limited partnership ("CHTCF 97-II"), and Community
Housing Income Equity Fund 1998-I, L.P., a Texas Limited Partnership ("CHIEF
98-I") (CHTCF 97-II and CHIEF 98-I each being a "Limited Partner" and
collectively, the "Limited Partners").
WHEREAS, the Limited Partners and G2 Partners II, L.P., a Texas limited
partnership ("G2 Partners"), organized the Partnership pursuant to that certain
Agreement of Limited Partnership dated July 1, 1998 (the "Original Partnership
Agreement"); and
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WHEREAS, the Limited Partners removed G2 Partners II, L.P. as general
partner of the Partnership effective , 2001, and the Limited Partners appointed
the Withdrawing General Partner as the substitute general partner of the
Partnership, without amending the Original Partnership Agreement; and
WHEREAS, the parties hereto desire to amend and restate, in its entirety,
the Original Partnership Agreement;
NOW, THEREFORE, for and in consideration of the above premises, and of the
terms, conditions and mutual covenants set forth below, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Adverse Event. The term "Adverse Event" shall have the meaning
given in Section 12.3 hereof.
Section 1.1.A. Applicable Federal Fund Rate. The term "Applicable Federal Fund
Rate" shall have the meaning given in .
Section 1.2. Assignee. The term "Assignee" shall mean any Person who shall have
acquired an interest in the Partnership as a result of an Assignment, but
who shall not be a Substitute General Partner or a Substitute Limited
Partner.
Section 1.3. Assignment. The term "Assignment" shall mean any sale, exchange,
transfer, gift, bequest, inheritance or other disposition of an interest in
the Partnership, whether voluntary, by operation of this Agreement or by
operation of law.
Section 1.4. Capital Contributions. The term "Capital Contributions" shall mean
the amounts of cash contributed to the Partnership by the Partners pursuant
to Article IV hereof.
Section 1.5. This section left blank intentionally.
Section 1.6. Code. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended, as in effect from time to time.
Section 1.7. Depreciation. The term "Depreciation" shall mean the allowance for
exhaustion, wear and tear, as provided in Section 167 of the Code.
Section 1.8. Depreciation Percentage. With respect to each Limited Partner, for
each taxable year, the percentage determined by dividing the Projected
Federal Credits to be allocated to such Limited Partner for such year over
the total of all Project Federal Credits to be allocated to the Limited
Partners for such year, all as set forth on Schedule 1 to Exhibit B hereof.
Section 1.9. Effective Date. The term "Effective Date" means December 31, 2001.
Section 1.10. Fiscal Year. The term "Fiscal Year" shall mean the calendar year.
Section 1.11. HCA. The Term "HCA" shall mean the entity in the State duly
authorized to allocate Tax Credits.
Section 1.12. General Partner. The term "General Partner" shall have the meaning
given in Section 3.1 hereof.
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Section 1.13. Limited Partner. The terms "Limited Partner" and "Limited
Partners" shall have the meanings given in Section 3.2 hereof.
Section 1.14. Limited Partnership Law. The term "Limited Partnership Law" means
the Revised Uniform Limited Partnership Act adopted by the State of Texas
as amended, as in effect from time to time.
Section 1.15. Net Operating Cash Flow. The term "Net Operating Cash Flow" shall
mean (a) all cash received from operations of the Partnership in the
ordinary course of business, including the proceeds of casualty insurance
in excess of the amounts expended or to be expended to repair or replace
the property which suffered the casualty, and excluding net proceeds
resulting from the sale, transfer, exchange or other disposition or
condemnation of all or substantially all of the Partnership's property,
less (b) cash expended, reserved, or required for debts and expenses, and
with accrual of such applicable Project expenses as taxes and insurance
premiums (including without limitation all fees and other expenses required
to be paid in accordance with Section 10.4 hereof, and any fee based on a
percentage of net operating cash flow shall be calculated on the basis of
net operating cash flow prior to deduction of such fee whereupon net
operating cash flow shall decrease by the amount of such fee), interest,
and principal payments on any indebtedness, capital expenditures,
replacements, expansion, or any other reasonable requirements of the
business of the Partnership (excluding expenses funded from cash expended
from capital contributions and from net proceeds resulting from the sale,
transfer, exchange or other disposition or condemnation of all or
substantially all of the Partnership's property).
Section 1.16. Office of Registered Agent. The term "Office of Registered Agent"
shall have the meaning given in Section 2.5 hereof.
Section 1.17. This section left blank intentionally.
Section 1.18 This section left blank intentionally.
Section 1.19. Partners. The term "Partners" shall mean the General Partner and
the Limited Partners and any Substitute General Partner or Substitute
Limited Partner pursuant to, and in accordance with, the terms and
provisions of this Agreement.
Section 1.20. Partnership. The term "Partnership" shall mean St. Xxxxxxx
Townhomes Partners, L.P., the Texas limited partnership amended pursuant to
this Agreement by and between the General Partner and the Limited Partners
dated as of December 1, 2001, and that certain Certificate of Limited
Partnership filed with the Texas Secretary of State with an effective date
of May 6, 1998, as amended.
Section 1.21. Percentage Interests. The term "Percentage Interests" shall have
the meaning given in Article VI hereof.
Section 1.22. Person. The term "Person" shall mean an individual, a trust or
estate, a partnership, a corporation, or other business entity or a
custodian under the Uniform Gift to Minors Act.
Section 1.23. Project. The term "Project" shall have the meaning given in
Section 2.4 hereof.
Section 1.24. This section left blank intentionally.
Section 1.25. Registered Agent. The term "Registered Agent" shall have the
meaning given in Section 2.5 hereof.
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Section 1.26. Substitute General Partner. The term "Substitute General Partner"
shall have the meaning given in Section 12.4 hereof.
Section 1.27. Substitute Limited Partner. The term "Substitute Limited Partner"
shall mean any Person who shall have acquired an interest of a Limited
Partner in the Partnership as a result of an Assignment which conforms with
the requirements of Article IX hereof and the Limited Partnership Law, and
who shall become a Substitute Limited Partner in accordance with Section
9.2 hereof.
Section 1.28. Tax Credits. Tax Credits shall mean the federal low income housing
tax credits allocated to the Project pursuant to Section 42 of the Code.
Section 1.29. Taxable Year. The term "Taxable Year" shall mean the year as
described in Exhibit A, Section 15 hereof.
ARTICLE II
THE PARTNERSHIP
Section 2.1. Name of Partnership. The name of the limited partnership
constituted pursuant to this Agreement shall be: St. Xxxxxxx Townhomes
Partners, L.P.
Section 2.2. Term of Partnership. The term for which the Partnership shall exist
commenced on June 1, 1998 and shall expire on the earlier of (a) December
31, 2037, or (b) the date the Partnership is terminated in accordance with
Section 13.5 hereof.
Section 2.3. Principal Office. The principal office and place of business of the
Partnership shall be at 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxx 00000, or at such
other place or places within the State of Texas as may be selected from
time to time by the General Partner, upon prior written notice to the
Limited Partners.
Section 2.4. Purposes. The character of the business of the Partnership and the
purposes for which the Partnership is formed are to operate the land,
improvements and the residential building or buildings constituting a 252
unit residential apartment project located at 0000 Xxxxxxx, Xxxxxx, Xxxxx
(the "Project"), to finance through loans, grants and/or capital
contributions, and to operate, manage, lease and otherwise deal with the
Project as a real estate development consisting of low-income rental
housing. The purposes of the Partnership shall include the provision of
decent, safe and sanitary affordable housing primarily to low-income
households and qualifying for federal low-income housing Tax Credits,
within the meaning of Section 42 of the Code, to be passed through to the
Limited Partners. The Partnership shall have all powers necessary to
accomplish such purposes.
Section 2.5. Registered Agent and Office. The Registered Agent and Registered
Office of the Partnership shall be Xxxx X. XxxXxxxxxx and 0000 Xxxxxx Xxxx,
Xxxxxx, Xxxxx 00000, respectively, or such other agent or office in the
State of Texas as may be selected from time to time by the General Partner,
upon prior written notice to the Limited Partners.
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ARTICLE III
THE PARTNERS
Section 3.1. General Partner. The general partner of the Partnership from the
time of the removal of G2 Partners to the Effective Date of this Agreement
(the "Withdrawing General Partner") was Windridge Woodcrest Management,
Inc. The general partner admitted to the Partnership on the Effective Date
of this Agreement (the "Admitted General Partner") is and shall be St.
Xxxxxxx Homes for America, Inc. or any Person who shall become a Substitute
General Partner as provided in Section 12.4 hereof. The term "General
Partner" before the Effective Date shall refer to the Withdrawing General
Partner and thereafter to the Admitted General partner. All obligations and
agreements of the General Partner herein shall be the joint and several
obligation of each corporate or partnership entity constituting the General
Partner.
Section 3.2. Limited Partners. The limited partners of the Partnership (the
"Limited Partners") shall be CHTCF 97-II and CHIEF 98-I, and/or any
Person(s) who becomes a Substitute Limited Partner pursuant to Section 9.2
hereof. For purposes of this Agreement, references to Limited Partners
shall be deemed to include Assignees.
ARTICLE IV
PARTNERSHIP CONTRIBUTIONS, LOANS AND GUARANTIES
Section 4.1. Total Cash Contributions of Partners. The Partners shall contribute
cash to the capital of the Partnership in the aggregate amounts specified
in Sections 4.2 and 4.3 below.
Section 4.2. Cash Contributions of General Partner. In addition to any other
amounts payable by the General Partner under this Agreement, the General
Partner shall contribute cash to the capital of the Partnership in the
amounts and at the times of that certain Agreement to Invest dated November
30, 2001 (the "Agreement to Invest"), by and between the Partnership, the
Withdrawing General Partner, and the Admitted General Partner, attached
hereto as Exhibit A and hereby incorporated as if set forth in full herein.
Section 4.3. Cash Contributions of Limited Partners. The Limited Partners have
contributed cash to the Partnership before the Effective date in the
following amounts: CHTCF 97-II's cash contribution is Two Hundred Thousand
Dollars ($200,000), and CHIEF 98-I's cash contribution is Six Hundred
Thousand Dollars ($600,000)
Section 4.4. Additional Cash Contributions. No Partner shall be assessed for or
have any responsibility whatsoever to make any contributions to the capital
of the Partnership other than as specifically required in this Agreement or
the Agreement to Invest.
Section 4.5. Return of Capital. No Partner shall be entitled to the return of
all or any part of such Partner's Capital Contribution prior to or upon
termination of the Partnership, except as otherwise expressly provided
herein.
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Section 4.6. Loans and Interest. During the term of the Partnership, no interest
shall be allowed to any Partner upon the amount of such Partner's capital
account or Capital Contributions. The Partnership may borrow funds from a
Partner as and when required hereunder, and otherwise from a Partner or an
affiliate of a Partner only if the General Partner prepares a financial
forecast on the date thereof, and based on the actual losses to such date,
reasonably believes that such loan would not result in a reallocation of
projected tax benefits among the Partners such that there would be a
reduction in the Tax Credits allocable to the Limited Partners from those
projected in Schedule 1 to Exhibit B. Except for those loans and advances
by the General Partner which are required hereunder to be interest free, in
the event that the Partnership borrows any funds from any Partner or an
affiliate of a General Partner, such Partner or affiliate of a General
Partner shall be paid that rate of interest which is the greater of Ten per
cent (10%) er annum and the Applicable Federal Rate in effect on the date
of such loan, and such loan shall be accounted for as a liability of the
Partnership.
Section 4.7. Loans from General Partner. The following provisions shall govern
loans from the General Partner or any of its affiliates to the Partnership:
(a) The General Partner may, but is not obligated to, loan to the Partnership
such sums as the General Partner deems appropriate and necessary for the
conduct of the Partnership's business; provided that such loan(s) must not
result in a reduction of the deductions or credits to any Partner from
those projected in Schedule 1 to Exhibit B. Any such loans made by the
General Partner, and any loans made to the Partnership by any affiliate of
the General Partner, shall be upon terms and conditions as set forth in a
written Promissory Note kept with the books and records of the Partnership.
Nothing herein shall be construed to affect the General Partner's
obligation to seek third-party financing on the best terms and conditions
available to the extent necessary or appropriate for the conduct of
Partnership business. Except for those loans and advances by the General
Partner which are required hereunder to be interest free, in the event that
the Partnership borrows any funds from a General Partner or an affiliate of
a General Partner, such Partner or affiliate of a General Partner shall be
paid that rate of interest set forth in Section 4.6 above, and such loan
shall be accounted for as a liability of the Partnership.
(b) At such time, if ever, as the losses allocated to the Limited Partners
pursuant to Article VII hereof equal such Limited Partner's aggregate
Capital Contribution plus such Limited Partner's share of Partnership
non-recourse debt, then from and after such date all General Partner
advances made or to be made hereunder shall be forgiven and all future
advances shall be treated as fees recognized as income by the Partnership,
without adjustment to the Percentage Interests and Capital Accounts of the
Partners. Section 4.8. Partnership Management Guaranty. The General Partner
hereby agrees that it shall continue to act as general partner of the
Partnership, and shall fully and timely perform all its obligations as
General Partner hereunder and under applicable law, in the absence of the
occurrence of any Adverse Event, or any event resulting in removal for
cause under Section 12.2 hereof and shall not voluntarily withdraw
throughout the term of the Partnership as required by Article XII hereof.
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ARTICLE V
CAPITAL ACCOUNTS
A Capital Account shall be established and maintained for each Partner as
follows:
(a) To each Partner's Capital Account there shall be credited such Partner's
cash Capital Contributions, the fair market value of property contributed
by such Partner to the Partnership (net of liabilities secured by such
contributed property that the Partnership is considered to assume or take
subject to under Section 752 of the Code), such Partner's distributive
share of Partnership income or gain (or items thereof), including income
and gain exempt from tax, and, in the event the adjusted tax basis of any
Partnership property described in Section 46 of the Code which has been
placed in service by the Partnership is increased pursuant to Section 50(c)
of the Code, such Partner's share of such basis increase (determined by
allocating such increase among the Partners in the same proportions as the
investment tax credit that is recaptured with respect to such property is
shared among the Partners).
(b) To each Partner's Capital Account there shall be debited the amount of cash
distributed to such Partner pursuant to any provision of this Agreement,
the fair market value of property distributed to such Partner by the
Partnership (net of liabilities secured by such distributed property that
the Partner is considered to assume or take subject to), such Partner's
distributive share of Partnership losses and deductions (or items thereof),
such Partner's distributive share of Partnership expenditures described in
Section 705 (a)(2)(B) of the Code and, in the event the adjusted tax basis
(or cost) of any Partnership property described in Section 46 of the Code
is reduced pursuant to Section 50(c) of the Code, such Partner's share of
such reduction (determined by allocating such reduction among the Partners
in the same proportions as the basis (or cost) of such property is
allocated pursuant to Treas. Reg. 129~1.46-3(f)(2)(i)).
(c) Except as provided in subsection (d) below, upon the transfer by a Partner
of such Partner's interest in the Partnership, the Capital Account of the
transferor shall be transferred to the transferee. Except as otherwise
provided in Treas. Reg. 129~1.704-1(b)(2)(iv)(m)(1), an election under
Section 754 of the Code shall have no effect on a transferee's Capital
Account, and the credits and debits to the Capital Account required by this
Article V shall be determined without regard to any such election.
(d) Upon the occurrence of any event described in Treas. Reg
129~1.704-1(b)(2)(iv)(f)(5) (or any corresponding successor provision) such
as the liquidation of a Partner's interest in the Partnership, non-pro rata
additional capital contributions or certain admissions of one or more
Partners into the Partnership, all Partners' Capital Accounts shall, to the
extent necessary or appropriate to reflect the relative economic interests
of the Partners, be increased or decreased to reflect a revaluation of
Partnership property. Any such adjustment(s) to Capital Accounts shall be
based on the value of Partnership property as of the date of the adjustment
and shall reflect the manner in which unrealized income, gain, loss or
deduction inherent in such property (that has not been reflected in Capital
Accounts previously) would be allocated among the Partners if there were a
taxable disposition of such property for such fair market value on that
date. After any such revaluation, the Partners' Capital Accounts shall be
subsequently adjusted for book depreciation, depletion, amortization, and
gain or loss with respect the Partnership property.
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(e) No Limited Partner shall be required to restore any deficit in such Limited
Partner's Capital Account or bring such Limited Partner's Capital Account
into parity with the Capital Account of other Partners.
(f) The foregoing provisions, and the other provisions of this Agreement
relating to the maintenance of Capital Accounts, are intended to comply
with Treas. Reg.129~1.704 - 1 (b), and shall be interpreted and applied in
a manner consistent with such Regulations.
ARTICLE VI
PERCENTAGE INTERESTS
(a) For the purposes of this Agreement, "Percentage Interests" shall be
determined as follows:
(i) From the date of the Agreement, the Percentage Interest of the Partners
shall be as follows:
General Partner One per cent (1%)
CHTCF 97-II Twenty four per cent (24%)
CHIEF 98-I Seventy five per cent (75%)
(ii) There shall be no adjustment to Percentage Interests by reason of any
Capital Contributions or loans made by the General Partner pursuant to
Article IV.
(iii)In the event that a Substitute General Partner shall be appointed pursuant
to Section 12.4 hereof, the Substitute General Partner shall have such
Percentage Interest as shall be specified at the time pursuant to such
Section, and the Percentage Interest of all other Partners shall be
accordingly and proportionately adjusted. (b) In connection with any
adjustment of the Percentage Interests as provided above, the Substitute
General Partner shall cause an amendment to this Agreement to be executed
to set forth such adjustment.
ARTICLE VII
ALLOCATIONS
Section 7.1. Allocations Of Nonrecourse Deductions Other Than Depreciation.
Except as otherwise provided in Sections 7.3, 7.8, 7.9 and 7.11, all
Nonrecourse Deductions of the Partnership for any Taxable Year shall be
shared by the Partners in proportion to the Partners' respective Percentage
Interests on the last day of such Taxable Year. The amount of Nonrecourse
Deductions for each Taxable Year shall be determined in accordance with
Treas. Reg. 129~1.704-2(c), and, accordingly, shall equal the excess, if
any, of the net increase in the amount of Partnership Minimum Gain during
such Taxable Year, as determined pursuant to Section 7.4(b) hereof, over
the aggregate amount of any distributions during such Taxable Year of the
proceeds of a Nonrecourse Liability that are allocable to an increase in
Partnership Minimum Gain, as determined pursuant to Section 7.4(c) hereof.
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Section 7.2. Allocations of Income and Gain and of Loss Not Attributable to
Nonrecourse Deductions.
(a) Except as otherwise provided in Sections 7.3, 7.7, 7.8, 7.9, and 7.11
hereof, for each Taxable Year of the Partnership all Partnership income and
gains (other than income and gains subject to the Minimum Gain chargeback
set forth in Section 7.4(a) hereof or subject to Section 7.6 hereof) shall
be allocated (1) first among the Partners in an amount equal to the income
distributed to each pursuant to Section 8.1 hereof during such taxable year
and (2) thereafter, in proportion to the Partners Percentage Interests.
(b) Except as otherwise provided in Sections 7.3, 7.8, and 7.11 hereof, all
Partnership losses and deductions (other than Nonrecourse Deductions
described in Sections 7.1 and 7.5 hereof) shall be shared by the Partners
in proportion to the Partners' respective Percentage Interests on the last
day of such Taxable Year. All unamortized costs which are deducted upon
liquidation of the Partnership shall be allocated among the Partners in
proportion to their Percentage Interests.
(c) Notwithstanding anything to the contrary set forth in subsection (b), if an
allocation pursuant thereto would cause any Limited Partner to have a
negative Capital Account balance (determined after making appropriate
adjustments to reflect all reasonably expected adjustments, allocations and
distributions described in Treas. Reg. 129~129~1.704-1(b)(2)(ii)(d)(4), (5)
and (6)), which would exceed such Partner's shares of such Minimum Gain and
Minimum Gain attributable to Partner Nonrecourse Debt, such excess shall
instead be allocated:
(A) to those Partners who have positive Capital Accounts or whose shares of
such Minimum Gain exceed such Partner's negative Capital Account balances
(determined, in both cases, after appropriate adjustments are made to
reflect all reasonably expected adjustments, distributions and allocations
described in the aforementioned paragraphs of Treas. Reg.
129~1.704-1(b)(2)(ii)(d)) in proportion to the sum of each such Partner's
(1) Capital Account balance and (2) shares of such Minimum Gain; or, if
there be no such Partners,
(B) to the General Partner.
Section 7.3. Depreciation Deductions. Except as otherwise required by Sections
7.5 and 7.8 hereof, Depreciation deductions, whether attributable to
recourse debt, nonrecourse debt, or cash, shall be specifically allocated
to the Limited Partners in proportion to their Depreciation Percentages.
If, in any taxable year, the rules applicable under other provisions of
this article and/or applicable Treasury Regulations would otherwise
prohibit an allocation of Depreciation deductions to either Limited Partner
in accordance with its Depreciation Percentage, items of gross income shall
be allocated to each Limited Partner to the extent necessary to permit such
allocations of Depreciation deduction.
Section 7.4. Chargeback Of Partnership Minimum Gain.
(a) Notwithstanding anything to the contrary set forth in this Agreement, if
there is a net decrease in Partnership Minimum Gain during a Taxable Year,
each Partner shall be allocated items of income and gain for such Taxable
Year (and, if necessary, for subsequent years) in the manner specified in
Treas. Reg.129~1.704-2(f), equal to such Partner's share of such net
decrease in Partnership Minimum Gain as determined under Treas.
Reg.129~1.704-2(g)(2). This Section 7.3 is intended to comply with the
minimum gain chargeback requirements of Treas. Reg.129~1.704-2(f) and shall
be interpreted in a manner consistent therewith.
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(b) For purposes of this Agreement (i) Partnership Minimum Gain shall be
determined in accordance with Treas. Reg.129~1.704-2(d) and (ii) each
Partner's share of Partnership Minimum Gain shall be determined in
accordance with Treas. Reg. 129~1.704-2(g)(1).
(c) If during any Taxable Year, the Partnership makes a distribution to the
Partners which is allocable to the proceeds of a Nonrecourse Liability of
the Partnership, such distribution shall be deemed allocable to an increase
in Partnership Minimum Gain in accordance with Treas. Reg.129~1.704-2(h).
The determination of (i) whether the proceeds of a Nonrecourse Liability of
the Partnership have been distributed to the Partners and (ii) the Partners
to whom such proceeds have been distributed shall both be made in
accordance with Treas. Reg.129~1.163-8T.
Section 7.5. Allocations Of Partner Nonrecourse Deductions. All Partner
Nonrecourse Deductions of the Partnership for any Taxable Year shall be
allocated in accordance with Treas. Reg.129~1.704-2(i)(1). The amount of
Partner Nonrecourse Deductions for each Taxable Year shall be determined in
accordance with Treas. Reg.129~1.704-2(i)(2) and, accordingly, shall equal
the excess, if any, of the net increase in the amount of Minimum Gain
attributable to Partner Nonrecourse Debt during such Taxable Year, as
determined pursuant to Section 7.5(b) hereof, over the aggregate amount of
any distributions during such Year to the Partner(s) which bears the
economic risk of loss for such Debt of the proceeds of such Debt that are
allocable to an increase in the Minimum Gain attributable to such Debt, as
determined pursuant to Section 7.5(c) hereof.
Section 7.6 Chargeback Of Minimum Gain Attributable To Partner Nonrecourse Debt.
(a) If there is a net decrease in Minimum Gain attributable to Partner
Nonrecourse Debt during a Partnership Taxable Year, each Partner with a
share of the Minimum Gain attributable to such Partner Nonrecourse Debt
shall be allocated items of income and gain for such Year (and, if
necessary, for subsequent years) in accordance with Treas. Reg.
129~1.704-2(i)(4).
(b) For purposes of this Agreement (i) the Minimum Gain attributable to Partner
Nonrecourse Debt shall be determined in accordance with Treas.
Reg.129~1.704-2(i)(3) and (ii) each Partner's share of Minimum Gain
attributable to Partner Nonrecourse Debt shall be determined in accordance
with Treas. Reg.129~1.704-2(i)(5).
(c) If during any Taxable Year, the Partnership makes a distribution to the
Partners, which under Treas. Reg. 129~1.704-2(i)(6) is allocable to the
proceeds of a Partner Nonrecourse Debt, such distribution shall be deemed
allocable to an increase in Minimum Gain attributable to Partner
Nonrecourse Debt in accordance with such provision.
Section 7.7 Allocation of Remaining Income and Gains on Sale or Other
Disposition. Except as otherwise provided hereinbelow or in Sections 7.8,
7.9, and 7.11 hereof, income and gains (other than income and gains subject
to the Minimum Gain chargebacks set forth in Sections 7.3(a) and 7.5(a)
hereof) arising from the sale, exchange, transfer, or disposition or
condemnation of all or substantially all of the Partnership's property
shall be allocated, for Federal income tax purposes, among those who shall
be Partners on the date of such transaction or transactions as follows:
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(a) First, if one or more Partners has a negative Capital Account after such
Partner's Capital Account is adjusted to reflect any allocation of gains
under Sections 7.3(a) and 7.5(a) but before such Partner's Capital Account
is adjusted to reflect any distribution under Section 8.3 with respect to
the disposition to which this Section 7.6 is being applied, such income and
gains shall be allocated to such Partners in proportion to their negative
Capital Accounts until each such Partner's Capital Account equals zero; and
(b) Second, an amount of income and gains equal to the net cash available for
distribution from the Partnership, after payment of all amounts required to
be paid as set forth in Section 12.3 below ("Liquidation Proceeds") as
follows: (i) To CHIEF 98-I, Seven and One-Half per cent (7.5%); and (ii) To
CHTCF 97-II, Two and One-Half per cent (2.5%); and (iii) To the General
Partner, Ninety per cent (90.0%). The term "income or gains arising from
the sale, exchange, transfer, or disposition or condemnation of all or
substantially all of the Partnership's property" does not include any
proceeds attributable to the return of capital for capital expenses at the
Project made by the General Partner after the Effective Date (whether or
not funded by directly by the General Partner or by the Partnership), which
proceeds shall not be allocated as described above but instead shall be
returned to the Person providing the capital for such capital expenses.
Section 7.8. Assignment. In the event of an Assignment of an interest in the
Partnership (other than an Assignment by reason of the death of a Partner),
the assignor's distributive share of Partnership income, gains, losses,
deductions (including Nonrecourse Deductions), credits (other than the
low-income housing Tax Credit described in Section 42 of the Code) and
expenditures not deductible in computing its taxable income (in respect of
the Partnership interest so assigned) shall be the share of such items
attributable to such interest accruing prior to such Assignment (based on
an interim closing of the books of the Partnership), and the Assignee's
share shall be the share of such items attributable to such interest after
such Assignment (based on such interim closing). With respect to any low
income housing Tax Credit described in Section 42 of the Code claimed by
the Partnership for the Taxable Year of such Assignment, the assignor and
Assignee may agree to allocate the distributive share of such credit
between the assignor and Assignee either (a) in accordance with the ratio
that the number of days in the Taxable Year before and after such
Assignment bears to the total number of days in the Taxable Year, or (b) in
accordance with the ratio that the number of months in the Taxable Year
before and after such Assignment bears to the total number of months in the
Taxable Year, provided that the month in which the Assignment takes place
shall be considered to be after the Assignment if the Assignment takes
place in the first half of the month and before the Assignment if the
Assignment takes place in the second half of the month. In the event the
assignor and Assignee do not agree on the method for allocating the
distributive shares of the low income housing Tax Credit, such credit shall
be allocated in accordance with the ratio that the number of days in the
Taxable Year before and after such Assignment bears to the total number of
days in the Taxable Year. Also, for purposes of this Section, any change in
the Percentage Interests of any Partners shall be treated as an Assignment
from those Partners whose Percentage Interests declined to those Partners
whose Percentage Interests increased and to those Persons who became
Partners and acquired a Percentage Interest.
- Page 11 -
Section 7.9. Qualified Income Offset. If, in any Partnership Taxable Year, (i)
any Limited Partner unexpectedly receives any adjustment, allocation or
distribution described in Treas. Reg. 129~129~1.704-1(b)(2)(ii)(d)(4), (5),
or (6), and (ii) such adjustment, allocation and/or distribution causes
such Limited Partner to have a negative Capital Account balance, which
exceeds such Limited Partner's aggregate share of Partnership and Partner
Minimum Gain as of the end of such Taxable Year, items of income and gain
for such Taxable Year and, if necessary, subsequent Taxable Years, shall be
allocated to such Limited Partner in an amount and manner sufficient to
eliminate such excess of negative Capital Account balance over such Limited
Partner's share of Partnership and Partner Minimum Gain as quickly as
possible.
Section 7.10. Tax Credits and Recapture. Tax credits and credit recapture shall
be allocated as follows:
(a) Tax Credits. In accordance with Treas. Reg.129~1.704-1(b)(4)(ii), any
credits under129~46 of the Code (including any rehabilitation tax credits)
shall be allocated in accordance with Treas. Reg. 129~1.46-3(f) and
129~1.48-8(a)(4)(iv). All other federal tax credits shall be allocated
among the Partners in the manner in which the deductions arising from the
expenditures that gave rise to the credit are allocated among the Partners
for the relevant Taxable Year, except as may otherwise be expressly
provided by applicable law. Federal low-income housing tax credits shall be
allocated in proportion to allocations of Depreciation deduction.
(b) Recapture of Section 46 Property Credits. Recapture of any tax credit
attributable to property described in129~46 of the Code shall be allocated
among the Partners in accordance with Treas. Reg.129~1.47-6.
(c) Recapture of Other Tax Credits. Recapture of any tax credit by the
Partnership other than that provided by 129~46 of the Code shall be
allocated among the then Partners who were previously allocated such credit
in the proportions that the credit allocated to each such Partner bears to
the total credit allocated to all of the then Partners.
Section 7.11. Mandatory Section 704(c) Allocations. Notwithstanding the
foregoing, to the extent that Code Section 704(c) principles applicable
under Treas. Reg. 129~ 1.704-1(b)(2)(iv) or 1.704-3 or any other
regulations which may be promulgated under Code Section 704(c) require
allocations of Partnership income or loss in a manner which is different
than that set forth above, the provisions of Section 704(c) and the
regulations thereof shall control such allocations among the Partners. Any
item of income, gain, loss, or deductions with respect to any property
(other than cash) that has been contributed by a Partner to the capital of
the Partnership and which is required to be allocated to such Partner for
income tax purposes under Code Section 704(c) so as to take into account
the variation between the contributing Partner's tax basis of such property
and its fair market value at the time of its contribution shall be
allocated solely for income tax purposes in the manner described under Code
Section 704(c) using the "traditional method" described in Treas. Reg. 129~
1.704-3(b) (or any successor proposed or final regulation); provided,
however, that the Partners may agree to use any other method allowable
under applicable Regulations for any contribution of property.
Section 7.12. General. The foregoing provisions of this Article VII are intended
to comply with Treas. Reg. 129~1.704-1(b) and Treas. Reg.129~1.704-2, and
shall be interpreted and applied in a manner consistent with such
Regulations.
- Page 12 -
Section 7.13. Other Provisions of Treas. Reg.129~1.704-1. In order to avoid
complexity which is unnecessary at this time, this Agreement does not
specifically include a number of provisions set forth in Treas.
Reg.129~129~1.704-1, 1.704-2 and 1.704-3 (the "Regulations") which are not
relevant to the Partnership at this time but which will be if certain
events occur in the future. Therefore, all of the provisions of the
Regulations, or any successor Treasury Regulations, are hereby incorporated
in this Agreement by this reference.
ARTICLE VIII
DISTRIBUTIONS TO THE PARTNERS
Section 8.1. Distribution and Payment of Net Operating Cash Flow. Except as
otherwise provided in Section 8.3 hereof, One Hundred per cent (100%) of
the Net Operating Cash Flow shall be distributed to the General Partner.
Section 8.2. This Section left intentionally blank.
Section 8.3. Distribution and Payment of Cash on Refinancing of Partnership
Indebtedness. Any net proceeds resulting from the refinancing of
Partnership indebtedness ("Refinancing Proceeds") shall be distributed to
the Partners on the date of such distribution, as follows:
(a) To CHIEF 98-I, Seven and One-Half per cent (7.5%); and
(b) To CHTCF 97-II Two and One-Half per cent (2.5%); and.
(c) To the General Partner, Ninety per cent (90.0%).
The term Refinancing Proceeds does not include any proceeds attributable to the
return of capital for capital expenses at the Project made by the General
Partner after the Effective Date (whether or not funded by directly by the
General Partner or by the Partnership), which proceeds shall be returned to the
Person providing the capital for such capital expenses.
Section 8.4. Distribution and Payment of Cash on Sale or Transfer of the
Project, Liquidation of the Partnership. Any net proceeds resulting from
the sale, transfer, exchange, or other disposition or condemnation of all
or substantially all of the Partnership's property or on liquidation of the
Partnership shall be distributed to the Partners on the date of such
distribution as follows:
(a) The proceeds shall first be paid as required in subsections (a) through (d)
of Section 13.3 of this Agreement.
(b) The proceeds shall second be paid as follows:
(i) To CHIEF 98-I, Seven and One-Half per cent (7.5%); and
(ii) To CHTCF 97-II, Two and One-Half per cent (2.5%); and
(iii) To the General Partner, Ninety per cent (90.0%)
The term "net proceeds" as used in this Section 8.4 does not include any
proceeds attributable to the return of capital for capital expenses at the
Project made by the General Partner after the Effective Date (whether or not
funded by directly by the General Partner or by the Partnership), which proceeds
shall not be allocated as described above but instead shall be returned to the
Person providing the capital for such capital expenses.
- Page 13 -
ARTICLE IX
ASSIGNMENT
Section 9.1. Assignment. The rights of the Partners to assign or transfer any
interests in the Partnership are as follows:
(a) Any assignment or transfer by a Limited Partner of its Partnership
interest, in whole or in part, will require the prior written consent of
the General Partner and the other Limited Partners.
(b) The General Partner shall not assign or otherwise pledge or transfer its
interest in the Partnership, voluntarily or involuntarily, without the
prior written consent of the Limited Partners, which the Limited Partners
shall not withhold unless such assignment or transfer will have a material
adverse effect on the tax credits or cause any credit recapture to the
detriment of the Limited Partners.
(c) Assignments or transfers of Partnership interests in the Partnership shall
be subject to the following:
(i) If the approval of any lender is required pursuant to the terms of any
indebtedness of the Partnership, such approval must be delivered to or
obtained by the General Partner.
(ii) Upon request of the Partner from which consent has been requested, the
transferee shall submit financial statements of the transferee to such
Partner, evidencing sufficient financial ability to undertake the
obligations which would be imposed on the transferee, and any document of
assignment must be in a form reasonably acceptable to such Partner whose
consent has been requested.
(iii)The transferor shall deliver to the General Partner or the Limited
Partner(s), as applicable, an opinion of counsel (or such other evidence as
such Partner may reasonably require) that such transfer (A) will not result
in the Partnership being treated as an association taxable as a corporation
for federal income tax purposes, and (B) may be effected without
registration or qualification under any applicable federal or state
securities laws, or confirming that any such registration or qualification,
and any other required actions, have been taken in connection therewith.
Section 9.2. Assignees; Substitute Limited Partners. (a) Following any transfer
of its entire interest in the
Partnership by a Limited Partner, whether or not the Assignee(s) shall become a
Limited Partner(s), the assignor, in respect of the interest assigned, shall no
longer be deemed to be a Limited Partner hereunder.
(b) Upon compliance with the requirements of Section 9.1(c) and upon receipt of
the applicable General Partner or Limited Partner consent, an appropriate
amendment to this Agreement shall be prepared, to evidence same.
ARTICLE X
RIGHTS, DUTIES AND RESTRICTIONS OF GENERAL PARTNER
Section 10.1. Partnership Management and Control. The General Partner shall have
full responsibility and exclusive and complete discretion in the management
and control of the business and affairs of the Partnership for the purposes
herein stated and shall make all decisions affecting the Partnership
affairs and business, except as may be expressly restricted in this
Agreement. The General Partner shall manage and control the affairs and
business of the Partnership to the best of its ability and shall use its
best efforts to carry out the purposes of the Partnership as set forth
herein.
- Page 14 -
Section 10.2. This section left blank intentionally.
Section 10.3. Tax-Exempt Use. If the General Partner is or becomes a tax-exempt
controlled entity as described in Section 168(h)(6) of the Code, the
controlled entity must make an election pursuant to Section
168(h)(6)(F)(ii) of the Code requiring any gain recognized by a tax-exempt
entity on any disposition of an interest in the controlled entity and any
dividend or interest received or accrued by a tax-exempt entity from such
controlled entity to be treated as unrelated business taxable income for
purposes of Section 511 of the Code.
Section 10.4. Expenditures. Subject to Section 10.16 hereof, the General
Partner, on behalf of the Partnership, is hereby authorized to pay
reasonable compensation for accounting, administrative, legal, technical,
financial, management, consulting, or other services rendered to the
Partnership. The General Partner may, on behalf of the Partnership and with
prior written notice to the Limited Partners, retain the services of a
company or firm in which any General or Limited Partner is directly or
indirectly a shareholder, partner, or member to render such services and
may pay reasonable compensation for such services. In furtherance of the
foregoing and without limiting the generality thereof, the General Partner
shall, on behalf of the Partnership, pay all fees and expenses due to or
incurred by the General Partner in connection with the Partnership. The
General Partner shall not contract away its fiduciary duties under the
common law of agency.
Section 10.5. Potential Conflicts. The General Partner shall devote so much of
its time to the business of the Partnership as is necessary or advisable
for the conduct of such business. The General Partner may engage in
business ventures of any nature and description independently or with
others, including but not limited to business of the character described in
Article III hereof (or any part thereof), and neither the Partnership nor
any other Partner shall have any rights in and to such independent ventures
or the income or profits derived therefrom. The Partnership may, from time
to time, retain the services of the General Partner, or firms or entities
in which the General Partner or its affiliates have substantial interests,
to render such services in connection with the development, investment,
financing, supervision, and/or management of the Partnership or Partnership
property, upon such terms and conditions as the General Partner may
determine in its sole discretion; provided, however, that any such dealings
shall be on terms and for compensation not more favorable than the terms
and compensation payable respecting arm's length transactions. The Partners
expressly acknowledge the rights of the general Partner and its affiliates
to receive the fees and expenses provided for under the agreements
established pursuant to the authority of this Section 10.5.
Section 10.6. General Authority. Except as may be expressly restricted in this
Agreement, the General Partner shall have all of the rights and powers
permitted general partners of limited partnerships under the provisions of
the Limited Partnership Law consistent with the purposes of the
Partnership, including, without limitation, the power and right to:
(a) manage the Partnership;
(b) execute such documents as it may deem necessary or appropriate for
Partnership purposes, including but not limited to documents establishing
signatory authority for Partnership bank accounts and other Partnership
assets and activities;
- Page 15 -
(c) lease apartment units in the normal course of business, including the
modification or amendment of leases entered into by the Partnership;
(d) perform or cause to be performed all of the Partnership's obligations under
any agreement to which the Partnership is a party; and
(e) sign checks on Partnership accounts and execute and/or accept any
instrument or agreement, incident to or connected with the Partnership
business and in furtherance of its purposes (and any such instrument or
agreement so executed or accepted by the General Partner in its name shall
be deemed executed and accepted on behalf of the Partnership by the General
Partner).
Section 10.7. Specific Authority and Responsibility. In addition to the rights
and powers set forth in Section 10.6 hereof, and without limiting the
generality thereof, the General Partner shall have the following specific
powers, rights, and duties in connection with the development and operation
of the Project, subject to Section 10.8 hereof:
(a) acquire, finance, and insure the Project real estate for the Partnership in
accordance with Sections 10.8, 10.9, and 10.11 hereof;
(b) lease, operate, and manage the Project for rental to persons and families
of low income as required under Sections 10.13 through 10.15 hereof;
(c) to make improvements to the Project; and
(d) sell the Project.
Each Partner and its designated agents, including without limitation any
construction and management consultants, shall at all reasonable times have free
access to and the right to inspect the Project and all records pertaining
thereto, and the General Partner shall cooperate with any such inspections and
answer (in writing if requested) all inquiries relating thereto; provided that
any such Partner or consultant shall provide reasonable advance notice of any
inspection, shall make copies and incur such other inspection costs at its own
expense, and shall not interfere with the business operations at the Project.
Section 10.8. Limitations on General Partner's Authority. Notwithstanding any
other provision of this Agreement to the contrary, the General Partner
shall not have the authority to do any of the following without the written
consent of the Limited Partners (which may be granted or withheld in the
Limited Partners' reasonable discretion):
(a) Confess a judgment against the Partnership in excess of Fifty Thousand
Dollars ($50,000); (b) Admit any person as a General Partner, or withdraw
as General Partner; (c) Execute or deliver any assignment for the benefit
of the creditors of the Partnership; (d) Transfer or hypothecate the
General Partner's interest as a General Partner in the Partnership,
including its interest in Partnership allocations or distributions; (e)
Dissolve the Partnership; (f) Change the nature of the business of the
Partnership; (g) Engage in transactions in which the General Partner or an
affiliate of the General Partner has an actual conflict of interest with
either the Limited Partner or the Partnership and which have a material
adverse effect on the Partnership or the Project; (h) File a voluntary
petition for bankruptcy of the Partnership; or (i) Borrow funds from the
Partnership.
- Page 16 -
Section 10.9. Project Acquisition and Financing. The Partnership has acquired
fee simple title to the Project, free and clear of any liens and
encumbrances against title and any beneficial interests therein, other than
those listed on Exhibit B to the Agreement to Invest.
Section 10.10. This section left blank intentionally.
Section 10.11. Insurance. The General Partner shall obtain and maintain the
following types of insurance on the Project:
(a) title insurance in an amount not less than the total mortgage debt and
Partners' equity insuring good and indefeasible title to the Project to be
vested in the Partnership, and subject only to such exceptions as do not
materially and adversely affect the value of the Project or its intended
use;
(b) casualty insurance for full replacement cost or, to the extent the Project
consists of rehabilitated property and the Limited Partners reasonably
agree, an agreed amount endorsement in an amount not less than the total
mortgage debt and Partners' equity less project land value, including, in
either case, fire, other hazard, and extended coverage, special extended
coverage, boiler and machinery, flood (if the Project is in a flood plain),
wind, hail, tornado, and earthquake (if reasonably available), and rent
loss, all to the extent applicable to the Project and customarily obtained
for rehabilitation or construction projects in the area in which the
Project is located;
(c) liability insurance in the amounts determined by the General Partner (but
not less than in effect on the Effective Date), including public liability,
workmen's compensation, employee's liability, contingent liability, and
automobile, all to the extent applicable and customary in the area in which
the Project is located;
(d) during the rehabilitation or construction period, appropriate builder's
risk and contractor's liability insurance to be maintained by the Project
general contractor, including contingent liability, and automobile, all to
the extent applicable;
(e) appropriate errors and omissions insurance to be maintained by all Project
architects; and
(f) appropriate crime insurance or bonding of employees to be maintained by the
Project property manager.
All insurance policies shall be with reputable insurance carriers licensed to do
business in Texas, in reasonable form, content, and amount provided above, and,
except for architects' insurance, shall list the Partnership as a named insured.
The Limited Partners shall be additional insureds and certificate holders under
each such policy, other than architect's insurance, entitled to not less than
thirty (30) days' notice of termination, nonrenewal, or modification.
Section 10.13. Rental Program. The General Partner shall cause the Project to be
rented to low-income tenants and the General Partner shall cause to be kept
all records of rental and occupancy, including, without limitation,
verification of tenant income, and shall take such other actions required
under Section 10.14 and 10.15 hereof to claim all available tax benefits in
connection therewith. The General Partner specifically warrants that the
Project will be operated in compliance with IRS Section 42 and all state
and local tax credit compliance requirements pertaining to the Project.
- Page 17 -
Section 10.14. Tax Credit Requirements. The General Partner acknowledges the
importance to the Limited Partners of achieving and maintaining the minimum
set-aside requirement and applicable fraction (the "Applicable Fraction")
as follows:
(a) The minimum set-aside requirement elected under Section 42(g) of the Code
shall be forty per cent (40%) or more unit occupancy by persons or families
with sixty per cent (60%) or less of area median income; and
(b) The applicable fraction of eligible tax basis resulting from low-income
occupancy, based on the lesser of the unit fraction or the floor space
fraction as described in Section 42(c)(i) of the Code, is One Hundred per
cent (100%).
Accordingly the General partner agrees that it shall not cause or permit any
failure to achieve and maintain such levels during the compliance period of the
Tax Credits pursuant to Section 42 of the Code. The General Partner shall cause
to be kept all records, and cause to be made all elections, certifications, and
verifications, pertaining to the number and size of apartment units, occupancy
thereof by tenants, income levels of tenants, set-aside for low-income tenants,
and any other matters now or hereafter required to qualify for and maintain all
of the low-income housing Tax Credits under Section 42 of the Code allocated to
the Partnership by the HCA, and any other available tax benefits in connection
with low-income occupancy of the Project. In the event at any time it becomes
apparent to the General Partner that the Tax Credits projected in Schedule 1 to
Exhibit B are not likely to be substantially realized by the Limited Partners,
the General Partner shall promptly notify the Limited Partners of the
circumstances. The General Partner shall certify, to the HCA or the Internal
Revenue Service, as required, compliance with the elected set-aside requirement
and report the dollar amount of qualified basis, maximum applicable percentage
and qualified basis under housing credit agency allocations, date of placement
in service, and any other information required under the Tax Credit program for
each taxable year during the remaining compliance period for such Tax Credit, or
such other time periods as may hereafter be required by the Code or regulations
thereunder and/or by the HCA for such Tax Credit. The General Partner shall be
obligated to make any Credit Deficit Payments resulting from a Credit Deficit
pursuant to Exhibit B hereto.
Section 10.15. Project Management. The General Partner, on behalf of the
Partnership, may enter into a management agreement with the managing agent
designated by the General Partner for the physical property management and
leasing of the Project and a Project lease, each in form and content as set
forth in separate documents in compliance with applicable Tax Credit
requirements and reasonably acceptable to the Limited Partners; provided
that the Limited Partners shall not withhold consent thereto unless such
instruments or their application and use will have a material adverse
effect on the tax credits or cause any credit recapture to the detriment of
the Limited Partners. The General Partner shall not authorize or permit any
deviation from such lease which could impair the Project Tax Credits. The
General Partner, on behalf of the Partnership, shall diligently enforce all
of the obligations of the managing agent under the Management Agreement and
shall perform all of the Partnership's obligations as owner under the
Management Agreement. Upon the reasonable request of the Limited Partners,
the General Partner shall terminate such management agreement or any
subsequent management agreement, subject to, and in accordance with, the
terms of such management agreement. Following such termination, the General
Partner shall enter into an agreement having substantially similar managing
- Page 18 -
agent obligations and owner remedies with a managing agent acceptable to
the Limited Partners. Subject to the above termination obligations, upon
the expiration of such management agreement or subsequent management
agreement, the General Partner shall either renew the same or enter into an
agreement having substantially similar managing agent obligations and owner
remedies, with the same managing agent or another managing agent reasonably
acceptable to the Limited Partners. All management agreements shall contain
specific provisions requiring the managing agent to rent to low-income
tenants at the levels required to maintain both the minimum set-aside
requirement and Applicable Fraction, to obtain prior written approval of
the General Partner for any deviation from such levels, to keep records of
such low-income rental and occupancy, and to prepare elections,
certifications, and any other materials contemplated by Section 10.14
hereof, to the extent required to qualify for and maintain the low-income
housing Tax Credit and any other available tax benefits in connection with
such rental and occupancy. Where the managing agent is a General Partner or
its affiliate, each management agreement shall provide that such management
agent may be terminated, upon thirty (30) days' prior written notice, with
or without cause and that such management agreement shall automatically
terminate, upon the removal of its affiliated General Partner as a partner
in the Partnership. Notwithstanding the foregoing the Limited Partners
shall have no right to cause the termination of any management agreement
except where the conduct of the management agent has an material adverse
effect on the tax credits or cause any credit recapture to the detriment of
the Limited Partners.
Section 10.16. This section left blank intentionally
Section 10.17. This section left blank intentionally.
Section 10.18. Reliance on Authority. Nothing herein contained shall impose any
obligation on any person or firm doing business with the Partnership to
inquire as to whether or not the General Partner, or any designee of the
General Partner, has exceeded its authority in executing any contract,
lease, mortgage, note, settlement, deed, or other instrument on behalf of
the Partnership, and any such third person shall be fully protected in
relying upon such authority.
Section 10.19. Scope of Liability. The General Partner shall not be liable to
the Limited Partners for the return or repayment of the capital of the
Limited Partners, subject, however, to the provisions herein setting forth
the General Partner's obligations under Sections 13.3 and 13.4 hereof.
Section 10.20. Indemnification of Limited Partners. The General Partner shall
indemnify and hold harmless the Limited Partners and their directors,
officers, employees, agents, and affiliates from and against any and all
actual and reasonable out-of-pocket costs, expenses (including, without
limitation, reasonable attorneys' fees), damages, or liabilities incurred
by the Limited Partners, which may arise out of or relate to any costs,
expenses, damages, or liabilities incurred in connection with a General
Partner's gross negligence, willful misconduct, or malfeasance. Without
limiting the generality of the foregoing, the General Partner shall
indemnify and hold harmless the Limited Partners, and their directors,
officers, employees, agents, and affiliates, from and against any and all
actual and reasonable out-of-pocket costs, expenses (including, without
limitation, reasonable attorneys' fees and expenses), damages, or
liabilities incurred in connection with the use, handling, production,
transaction, disposal, presence, release, or storage of any Hazardous
Material in, under or on the Project.
- Page 19 -
Section 10.21. Indemnification of Partners. The Partnership shall indemnify the
Partners, and the employees, officers, and directors, partners, agents and
affiliates of such persons, and shall hold them harmless on an after-tax
basis, from any claim, demand, judgment, cost or expense arising out of or
related to any act or omission by the Partnership, the Partners or the
agents, employees, and contractors, and affiliates of the Partnership or
the Partners, arising after the date hereof except (i) for any act or
omission which is performed or omitted to be performed in bad faith or
which constitutes gross negligence, willful misconduct or breach of
fiduciary duty of a Partner (or the employees, officers, directors,
partners, agents, and affiliates of such person), or (ii) for which
liability arises under the provisions of any agreement by and between or
among any Partners (or the agents, employees, contractors, and affiliates
of the Partners) or the Partnership.
Section 10.22. Representations and Warranties of the General Partner. The
General Partner represents and warrants the following to the Limited
Partners, the veracity of which was a material factor in the Limited
Partners entering into this Agreement and becoming Limited Partners, and
the Withdrawing Partner represents and warrants the same to the Admitted
General Partner, for the period before the Effective Date, the veracity of
which was a material factor in the Admitted General Partner entering into
this Agreement:
(a) Warranties and Representations Pertaining to Real Estate and Legal Matters.
(1) Formation. The Partnership will continue to be a valid limited partnership,
duly organized and validly existing under the laws of the State of Texas,
and duly authorized to transact business and own real property in the State
of Texas, and has (and shall continue to have) full power and authority to
own, develop, rehabilitate, operate, and maintain the Project in accordance
with the terms of this Agreement.
(2) General Partner. The General Partner is a Texas corporation.
(3) Low-Income Housing Tax Credits. The Project will be operated at all times
in a manner which satisfies all requirements and restrictions, including
tenant income and rent restrictions, applicable to projects which qualify
for low-income housing Tax Credits under Section 42 of the Code, including
without limitation, the following:
(i) Forty per cent (40%) of the units in the Project must be occupied by
households with income at or below sixty per cent (60%) of the area median
gross income as required by Section 42(g)(1) of the Code, or held vacant
and available for occupancy by such tenants;
(ii) The gross rents paid by tenants of low-income units in the Project shall
not exceed thirty per cent (30%) of the qualifying income standard
applicable to the project (i.e., 60% of the imputed median gross income) as
required by Code Section 42(g)(2)(A), as adjusted by the applicable utility
allowances;
(iii)The low-income units in the Project will be suitable for occupancy; and
(iv) The low-income units in the Project will not be used on a transient
basis.
(4) Credit Allocation. The Limited Partners shall be allocated Ninety nine per
cent (99%) of all Tax Credits available to the Partnership.
- Page 20 -
(5) Taxpayer Certifications. For federal income tax purposes the General
Partner reports its income on the cash or accrual method of accounting, as
designated in writing to the Limited Partners by the General Partner. On
behalf of the Partnership, the General Partner will file, any and all
certifications and other documents on a timely basis with the Internal
Revenue Service, the Texas taxing authorities and any other federal, state,
or local governmental agency or political subdivision as may be required to
support the full amount of Tax Credits as set forth in Schedule 1 to
Exhibit B.
(6) This section left blank intentionally.
(7) Insurance. The Partnership will maintain insurance on all Partnership
activities and the Project which complies with the terms specified in this
Agreement.
ARTICLE XI
PROVISIONS RELATING TO LIMITED PARTNER
Section 11.1. Limitation of Liability. No Limited Partner shall be personally
liable for the obligations of the Partnership.
Section 11.2. No Part in Management. The Limited Partners (as such) shall take
no part in the control or management of the day to day business of the
Partnership or transact any business in the name of the Partnership except
as specifically permitted in this Agreement and under the Limited
Partnership Law.
Section 11.3. Investment Representations. Each Limited Partner hereby
represents, warrants, and agrees as to its respective interest that it is
acquiring its Partnership interest for it own account for investment only
and not for the purpose of, or with a view to, the resale or distribution
of all or any part thereof, nor with a view to selling or otherwise
distributing said interest or any part thereof at any particular time or
under any predetermined circumstances. Each Limited Partner further
represents and warrants that it is a sophisticated and accredited investor,
able and accustomed to fending for itself in financial matters in general
and real estate investments in particular.
Section 11.4. Included Payables over $100,000. The Withdrawing General Partner
and each Limited Partner hereby represents, warrants, and agrees that it
will be liable for and pay to the Partnership or the payor any Included
Payables (as defined in the Agreement to Invest) unpaid as of the Effective
Date in excess of the aggregate sum of One Hundred Thousand Dollars
($100,000), provided that the Admitted General Partner shall provide the
Limited Partners evidence of its payment from its own funds of One Hundred
Thousand Dollars ($100,000) toward such Included Payables.
Section 11.5. Pledge of Limited Partner Interests. Each Limited Partner hereby
represents, warrants, and agrees that its Limited Partnership Interest is
unencumbered by any lien, claim, or liability, that the Limited Partner has
the right and authority without obtaining any third party consent not
already obtained to transfer the Limited partnership Interest, and that the
Limited Partner hereby pledges, assigns, and transfers to the General
Partner a security interest in the Limited Partnership Interest to guaranty
and secure (i) the repayment to the General Partner of all sums described
- Page 21 -
in Section 11(b) of the Agreement to Invest, (ii) the indemnification
obligations of the Partnership and the Withdrawing General Partner for any
breach or default by the Partnership of the Agreement to Invest or for any
and all claims arising from the removal of G2 Partners and REM Properties,
Inc. or from a declaration by the Partnership's lender Finova of a default
or breach based upon a default of the Partnership before the Effective Date
(including without limitation a default under section 7.13 of the Finova
Loan Agreement).
ARTICLE XII
WITHDRAWAL, REMOVAL, BANKRUPTCY, DISSOLUTION,
DEATH OR INCAPACITY OF A PARTNER
Section 12.1. No Voluntary Withdrawal. The General Partner hereby covenants that
it will not voluntarily withdraw from the Partnership without the consent
of all other Partners except as the result of a sale or transfer as may be
permitted under Article IX hereof, but will carry out such General
Partner's duties and responsibilities hereunder until the purposes of the
Partnership are fulfilled and the Partnership is dissolved, wound up, and
terminated. No Partner or Partners shall have the right to cause a
dissolution of the Partnership, except as may be specifically provided in
this Agreement.
Section 12.2. Removal for Cause. Notwithstanding anything contained in this
Agreement to the contrary, the Limited Partners shall have the right to
remove and replace the General Partner upon the occurrence of any of the
following events with respect to the Project or the Partnership (a) a
material loan default not cured within any applicable cure period under the
loan documents, unless the lender acknowledges in writing satisfactory
progress, agrees not to take action without further notice, and refrains
from action until cure occurs; (b) written notice of intent to effect a
foreclosure or other lender's action or of intent by such lender to
exercise control over the Project, unless the lender acknowledges in
writing satisfactory progress, agrees not to take action without further
notice, and refrains from action until cure occurs; (c) the filing of a
bankruptcy petition or similar creditor's action by or against the
Partnership or any general partner thereof, except for any such action by a
lender or creditor that is dismissed or stayed within sixty (60) days; (d)
any part of the Project is in material violation of the building code or
any other applicable law and, if applicable, any cure period respecting
such violation has expired, unless the Partnership is contesting such
violation in good faith and with all due diligence, as permitted under the
applicable law and title to the Project is not threatened; or (e) gross
negligence or willful misconduct by the General Partner; or (f) material
failure by the General Partner to comply with its obligations under this
Agreement, including without limitation those obligations relating to
low-income housing occupancy at the requisite levels and Applicable
Fraction required hereunder, and/or under applicable Project debt and
equity financing requirements; or (g) willful or material failure to
achieve the Tax Credits pursuant to Schedule 1 to Exhibit B; or (h) if the
General Partner's representations or warranties herein are untrue, in any
material respect (any of the above events being referred to herein as an
"Event of Default"). Prior to removing and replacing the General Partner
because of the occurrence of an Event of Default, the Limited Partners
shall give such General Partner prior written notice setting forth the
Event of Default providing the basis for removal. Any such removal will be
- Page 22 -
effective as of the date set forth in such notice; provided that, as
regards Events of Default for which cure periods are provided above, such
removal shall not be effective until expiration of such cure periods,
without cure of such default. Upon such removal, each General Partner so
removed may be replaced by one or more Substitute General Partner(s)
appointed by the Limited Partners pursuant to Section 12.4 hereof. The
foregoing notwithstanding the Limited Partners shall have no right to
exercise such removal right unless and until the Event of Default is one
having a material adverse effect on the tax credits or cause any credit
recapture to the detriment of the Limited Partners.
Section 12.3. Adverse Events Affecting General Partner. If a general partner of
the Partnership becomes bankrupt (as such term is defined in Section 12.6
hereof), or, if a corporation or partnership, is dissolved or liquidated or
its charter is forfeited, or, if an individual, dies or becomes
incapacitated (as such term is defined in Section 12.7 hereof) (any of such
events being referred to herein as an "Adverse Event"), and at that time at
least one other general partner of the Partnership remains, or one or more
Substitute General Partners are appointed pursuant to Section 12.4 hereof,
then the Partnership shall not terminate, but shall be continued and the
interest of the general partner as to which such Adverse Event has occurred
shall be forfeited and its Percentage Interest shall be reallocated to the
remaining general partners pro rata in accordance with their Percentage
Interests. All parties hereto shall execute and deliver such instruments in
form and substance satisfactory to the remaining partners as they deem
necessary or desirable to effect such forfeiture and reallocation.
Section 12.4. Substitute General Partner(s). If a general partner of the
Partnership at any time withdraws or is removed from the Partnership, or
suffers an Adverse Event, and at that time such general partner was the
last remaining general partner of the Partnership, then the Limited
Partners shall have the right, within ninety (90) days thereafter, to
appoint one or more new general partners as "Substitute General
Partner(s)". In such event, the interest of the general partner which has
withdrawn, been removed or as to which such Adverse Event has occurred
shall be forfeited, and such General Partner shall be deemed to have
waived, remised and forever quitclaimed all right, title and interest in
and to all Partnership assets and all fees payable to, and amounts advanced
by, such general partner in accordance with the terms of this Agreement
shall be thereupon assigned, without compensation of such general partner,
to the Substitute General Partner(s) or as otherwise directed by the
Limited Partner. The Limited Partners shall reallocate such Percentage
Interest to such Substitute General Partner(s) as the Limited Partners
determine and shall amend this Agreement to provide for the same. In the
event of the timely appointment of Substitute General Partner(s) pursuant
to this Section 12.4, the relationship of the Partners shall be governed by
the provisions of this Agreement as so amended, the Partnership shall be
continued, and the Substitute General Partner(s) shall have all of the
management rights, duties, responsibilities, authority, and powers provided
the General Partner in this Agreement. The Limited Partners hereby are
granted an irrevocable power of attorney, coupled with an interest, to
execute any and all documents on behalf of the Partners and the Partnership
as shall be legally necessary and sufficient to effect all of the
provisions of this Section 12.4. In the event the Limited Partners fail to
select a Substitute General Partner(s) within ninety (90) days following
the withdrawal or the sufferance of an Adverse Event by the last remaining
general partner of the Partnership, then the Partnership shall dissolve and
terminate.
- Page 23 -
Section 12.5. Adverse Events Affecting a Limited Partner. If any Limited Partner
suffers any Adverse Event described in Section 12.3 hereof, then the
Partnership shall not terminate, but shall be continued with the legal
representative or other successor to the interest of such Limited Partner
as to which such Adverse Event has occurred, as a Substitute Limited
Partner having all of the rights and obligations of the Limited Partner as
to which such Adverse Event has occurred.
Section 12.6. Definition of Bankruptcy. For the purpose of this Agreement, a
Partner shall be deemed to have become bankrupt if (a) such Partner files a
voluntary petition under federal or state bankruptcy laws, (b) there is
filed against such Partner a petition in bankruptcy that remains
undismissed for ninety (90) days, (c) such Partner makes a general
assignment for the benefit of creditors, or (d) a receiver or trustee is
appointed to administer all or any part of the assets of such Partner or
such assets or part thereof are seized by a judgment creditor and such
appointment or seizure remains unrevoked for thirty (30) days.
Section 12.7. Definition of Incapacity. For all purposes of this Agreement, a
Partner who is an individual shall be deemed to be incapacitated if such
Partner (a) is adjudged incompetent or (b) becomes disabled and therefore
unable to take an active part in the management of the Partnership business
for a continuous period of at least thirty (30) days.
ARTICLE XIII
DISSOLUTION AND TERMINATION
Section 13.1. Dissolution. The Partnership shall be dissolved upon the happening
of any one of the following events:
(a) the expiration of the term of the Partnership;
(b) the specification in a written consent executed by the General Partner and
the Limited Partners of a date for dissolution;
(c) the sale, exchange or other disposition, or condemnation, of all or
substantially all of the property of the Partnership;
(d) the withdrawal or removal of the last remaining general partner of the
Partnership and the failure of the Limited Partners to appoint one or more
new general partners as provided in Section 12.4 hereof; or
(e) The entry of a decree of judicial dissolution under Section 8.02 of the
Texas Revised Uniform Limited Partnership Act.
(f) such other events as shall result in dissolution of the Partnership under
the Limited Partnership Law.
Section 13.2. Who Shall Wind Up Partnership. If the Partnership is dissolved
pursuant to Section 13.1(a), (b), (c) or (e), the General Partner shall
wind up the affairs of the Partnership. If the Partnership is dissolved
pursuant to Section (d), a representative appointed by the Limited Partners
shall wind up the affairs of the Partnership.
- Page 24 -
Section 13.3. Winding Up. Upon dissolution of the Partnership, all assets of the
Partnership shall be sold as promptly as is consistent with obtaining
reasonable fair value for such assets. All cash on hand, the proceeds of
the sale of all of the assets of the Partnership, and any amounts to be
paid to the Partnership by the General Partner under Section 13.4 below,
shall be applied and distributed in the following order of priority:
(a) to the payment of the debts and liabilities of the Partnership to Persons
other than Partners and their affiliates, including the expenses of
liquidation, dissolution, and termination;
(b) to the setting up of any reserves which are deemed reasonably necessary or
appropriate by the General Partner (or the representative of the Limited
Partner in charge of winding up, as the case may be) for any contingent or
unforeseen liabilities or obligations of the Partnership, which reserves
shall be paid over to a bank, as escrow-holder, to be held by it for the
purpose of disbursing (under the direction of the General Partner or the
representative) such reserves in payment of such liabilities and
obligations and, at the expiration of such period as the General Partner or
such representative may deem advisable, for distribution in the manner
hereinafter provided;
(c) to the payment of debts and liabilities to the Limited Partners (other than
those on account of Capital Contributions), including, without limitation,
any unpaid Tax Equivalency Payments (as defined in Exhibit B) and Credit
Deficit payments;
(d) to the payment of debts and liabilities to any General Partner or its
affiliates (other than those on account of Capital Contributions);
(e) the remaining proceeds to the Partners in liquidation of their interests in
accordance with the provisions of Section 8.4 hereof. Section 13.4. Deficit
Capital Account Restoration. Notwithstanding anything to the contrary
contained in this Agreement, a General Partner with a deficit in such
General Partner's Capital Account following the liquidation of such General
Partner's interest in the Partnership pursuant to Section 13.3 hereof,
after taking into account all Capital Account adjustments provided for in
Article V for the Taxable Year during which such liquidation occurs (other
than those made on account of this Section 13.4), shall restore the amount
of such deficit to the Partnership by the end of such Taxable Year (or, if
later, within ninety days after the date of such liquidation), which amount
shall be distributed to the other Partners in accordance with such other
Partners' positive Capital Account balances, if any, or paid to the
creditors of the Partnership.
Section 13.5. Termination of the Partnership. Following the distribution of the
Partnership's assets in accordance with Section 13.3 of this Agreement, the
Partnership shall terminate.
ARTICLE XIV
FISCAL MATTERS
Section 14.1. Books. Appropriate books of account shall be maintained under the
supervision of the General Partner, which shall reflect all the business
and transactions of the Partnership. Such books shall be kept in accordance
with sound income tax accounting principles on an accrual basis, except as
otherwise provided in Article V hereof. All Partners shall have the right
to examine, inspect and copy, free of charge, such books of account, at all
reasonable times, at the principal place of business of the Partnership.
The Limited Partners are expressly granted the right to request an audit of
all Partnership activities by an independent third party Certified Public
Accounting Firm at Partnership expense.
- Page 25 -
Section 14.2. Fiscal Year and Taxable Year. The Fiscal Year and Taxable Year of
the Partnership shall be as set forth in Exhibit A, Section 15 hereof.
Section 14.3. Reports to Partners. The General Partner shall prepare or cause to
be prepared, and shall deliver to each Partner, the following material
documents and information in full accordance with the schedule below.
(a) Interim Reports. Within thirty (30) days of receipt or preparation by the
General Partner:
(i) copies of any filings made by the Partnership during the previous month
with respect to the Project's compliance with any income and rent
regulatory restrictions imposed on the Project;
(ii) copies of any reports, notices and/or other communications received by the
Partnership from the HCA or any other Authority regarding the Project's
compliance with any income and rent restrictions; and
(iii)any other information regarding the Partnership and its operations during
the prior fiscal month reasonably deemed by the General Partner to be
material to the Limited Partner, for example, any lawsuits involving the
Partnership or its Property.
(b) Annual Reports. On or before March 1 of each year:
(i) the annual unaudited financial statements of the Partnership prepared by
the Project accountants, showing the income and expenses and changes in
financial condition of the Partnership for the preceding fiscal year and a
balance sheet for the Partnership as of the end of the preceding fiscal
year, prepared in conformity with the Partnership's tax information
returns;
(ii) a certificate from an officer of the General Partner to the effect that, as
of the end of the preceding year, (A) all required payments of Project loan
indebtedness, real estate taxes and insurance on the Project have been made
and (B) if applicable, to the best knowledge of such officer, no material
default has occurred and is continuing with respect to any mortgage
financing relating to the Properties or, to the extent that such officer is
unable to certify to any of the foregoing, stating the reason for such
inability and the action, if any, taken or proposed to be taken by the
General Partner relating thereto, accompanied by proof of payment of
property taxes and insurance for such Fiscal Year;
(iii)a detailed statement of any transactions between the Partnership and the
General Partner or its affiliates, and of fees, commissions, compensation
and other benefits paid, or accrued, to the General Partner or its
affiliates for the prior fiscal year of the Partnership, showing the amount
paid or accrued to each recipient and a general indication of the services
performed. (c) This section left blank intentionally.
(d) This section left blank intentionally.
(e) Tax Returns. Within sixty (60) days after the end of each fiscal year, the
General Partner shall prepare and transmit to all Partners a true and
correct copy of all necessary tax reporting information regarding the
Partnership required by the Partners for preparation of their respective
federal, state, and local income or franchise tax or information returns
- Page 26 -
and a copy of the Partnership's federal, state, and local income tax or
information returns for the Fiscal Year. The Partnership's accountants
shall prepare and file, on a timely basis, all required federal, state and
local tax returns for the Partnership. In the event the General Partner
shall fail to provide the Limited Partners a true and correct copy of all
necessary tax reporting information regarding the Partnership required by
the Limited Partners for preparation of their respective federal, state and
local income or franchise tax or information returns by March 1 of each
year, the General Partner shall pay to each Limited Partners the sum of
$250.00 for each day until such required information is delivered.
Section 14.4. Federal Income Tax Election. In the event of a transfer of an
interest in the Partnership as described in Section 743 of the Code, the
General Partner may, and shall if requested by any Partner, elect, pursuant
to Section 754 of the Code and pursuant to corresponding provisions of
applicable state and local tax laws, to adjust the basis of the assets of
the Partnership pursuant to Sections 734 and 743 of the Code.
Section 14.5. Designation of Tax Matters Partner. The General Partner is hereby
designated as the "Tax Matters Partner" under Section 6231(a)(7) of the
Code, to manage administrative tax proceedings conducted at the Partnership
level by the Internal Revenue Service with respect to Partnership matters.
Any Partner has the right to participate in such administrative proceedings
relating to the determination of partnership items at the Partnership
level. Expenses of such administrative proceedings undertaken by the Tax
Matters Partner will be paid for out of Partnership assets. Each other
Partner who elects to participate in such proceedings will be responsible
for any expenses incurred by such Partner in connection with such
participation. Further, the cost of any adjustments to a Partner and the
cost of any resulting audits or adjustments of a Partner's tax return will
be borne solely by the affected Partner.
ARTICLE XV
AMENDMENTS TO THE AGREEMENT
This Agreement may be amended only by an instrument in writing duly executed by
all of the Partners.
ARTICLE XVI
MISCELLANEOUS
Section 16.1. General Partner and Limited Partner at Same Time. Except to the
extent CHIEF 98-I or CHTCF 97-II succeeds to the interest of the General
Partner in the Partnership as permitted pursuant to Section 8.2 above or
the General Partner purchases the interest of a Limited Partner, no person
shall be a General Partner and Limited Partner at the same time.
Section 16.2. Binding Effect. Except as herein otherwise provided to the
contrary, this Agreement shall be binding upon, and inure to the benefit
of, the Partners and their respective heirs, personal representatives,
successors and assigns.
Section 16.3. Captions. The captions in this Agreement are for convenience and
reference only and shall in no way affect the meaning or interpretation of
any of the provisions of this Agreement.
- Page 27 -
Section 16.4. Counterparts. This Agreement, and any amendment hereto, may be
signed in any number of counterparts, and signature to any one counterpart
shall be deemed signature to all other counterparts, which when taken
together shall constitute one agreement.
Section 16.5. Notice. Any notices, requests or other documents required or
permitted to be delivered to a Partner hereunder shall be deemed to have
been given for all purposes hereof when delivered, either by personal
delivery, by Federal Express (or similar overnight delivery) or by
confirmed facsimile transfer (with a hard copy simultaneously sent by first
class mail, postage prepaid) or on the third business day after the deposit
of the same in the United States mail, postage prepaid, first class,
registered or certified mail, return receipt requested, and addressed to
the Partner to whom such notice, request, information or other document is
being given at the address specified herein for such Partner, unless such
Partner has designated a new address by notice to the other Partners, in
which event at such new address.
Section 16.6. State and Other Filings By General Partner. The General Partner
shall take all appropriate actions requisite for the perfection and
continuation of the Partnership as a limited partnership pursuant to the
Limited Partnership Law, and shall take all similar appropriate action in
connection with any amendment to this Agreement.
Section 16.7. Adjustments. To the extent that any fees payable to the General
Partner, or an affiliate, hereunder are fully or partially disallowed as
deductions by the Internal Revenue Service, the amount so disallowed shall
be deemed to be a distribution of cash to the General Partner and will
cause an adjustment to Capital Account balances pursuant to, and in
accordance with, Article V. To the extent such an adjustment creates a
deficit Capital Account balance for the General Partner, such General
Partner shall be obligated to restore the amount of such deficit to the
Partnership in accordance with Section 13.4.
Section 16.8. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas. This Agreement is
performable in the County where the principal place of business of the
Partnership is located.
Section 16.9. Partnership Classification. The Partners intend for the
Partnership to be classified as a partnership for Federal income tax
purposes continuously from the date of its formation forward. Therefore,
the General Partner will not take any actions which would impair the
Partnership's continued classification as a partnership. This includes,
without limitation, the filing of any elections to be treated as anything
other than a Partnership for federal income tax purposes.
- Page 28 -
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated above.
Withdrawing General Partner:
WINDRIDGE WOODCREST MANAGEMENT, INC.
/s/ Xxxxxx Xxxxx
By: -------------------------------------
Xxxxxx Xxxxx, Executive Vice President
Address of Withdrawing General Partner:
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Admitted General Partner:
ST. XXXXXXX HOMES FOR AMERICA, INC.
/s/ Xxxxxx XxxXxxxxxx
By: -------------------------------------
Xxxxxx X. XxxXxxxxxx, President
Address of Admitted General Partner:
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Limited Partner:
COMMUNITY HOUSING TAX CREDIT FUND 1997-II, L.P.
/s/ Xxxxxx Xxxxx
By: -------------------------------------
Community Housing, Inc. (its General Partner)
Xxxxxx Xxxxx, Executive Vice President
Address of Limited Partner:
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Limited Partner:
COMMUNITY HOUSING INCOME EQUITY FUND 1998-I, L.P.
/s/ Xxxxxx Xxxxx
By: -------------------------------------
Community Housing, Inc. (its General Partner)
Xxxxxx Xxxxx, Executive Vice President
Address of Limited Partner:
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
- Page 29 -
