_____________________________________________________
AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.
_____________________________________________________
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
Dated as of September 1, 1995
AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.
TABLE OF CONTENTS
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SECTION 1. NAME AND BUSINESS. . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Name; Continuation. . . . . . . . . . . . . . . . . . . 5
1.2 Offices and Registered Agent. . . . . . . . . . . . . . 5
1.3 Names and Addresses of Partners . . . . . . . . . . . . 6
1.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Term and Dissolution. . . . . . . . . . . . . . . . . . 6
SECTION 2. DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Cross References. . . . . . . . . . . . . . . . . . . . 14
SECTION 3. CAPITAL CONTRIBUTIONS AND ADMISSION OF LIMITED PARTNERS. . . . 15
3.1 Contribution of General Partner . . . . . . . . . . . . 15
3.2 Withdrawal of Original Limited Partner;
Admission of Investor Limited Partners . . . . . . . . 15
3.3 Contribution of Investor Limited Partners . . . . . . . 16
3.4 No Pledge or Assignment of Proceeds by
General Partner. . . . . . . . . . . . . . . . . . . . 18
3.5 Defaults. . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Capital Accounts. . . . . . . . . . . . . . . . . . . . 19
3.7 Interest; Return of Capital . . . . . . . . . . . . . . 19
3.8 Special Rights of Limited Partners. . . . . . . . . . . 19
3.9 Meetings. . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Redemption of Partnership Interests . . . . . . . . . . 20
SECTION 4. PROFITS AND LOSSES; DISTRIBUTIONS; CAPITAL ACCOUNTS. . . . . . 20
4.1 Profits, Losses and Tax Credits . . . . . . . . . . . . 20
4.2 Cash Distributions Prior to Dissolution . . . . . . . . 23
4.3 Termination Distributions . . . . . . . . . . . . . . . 23
4.4 Special Provisions. . . . . . . . . . . . . . . . . . . 24
SECTION 5. RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER . . . . . . . 27
5.1 Business Management; Tax Matters Partner. . . . . . . . 27
5.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3 Restrictions on Authority; Additional Obligations . . . 30
5.4 Duties and Obligations of the General
Partner. . . . . . . . . . . . . . . . . . . . . . . . 32
5.5 Duties and Obligations with respect to
Environmental Matters. . . . . . . . . . . . . . . . . 33
5.6 Other Activities. . . . . . . . . . . . . . . . . . . . 34
5.7 Distributions . . . . . . . . . . . . . . . . . . . . . 34
Page 2 of 55
5.8 Certain Payments. . . . . . . . . . . . . . . . . . . . 34
5.9 Agreements With Operating Partnerships. . . . . . . . . 36
5.10 Partnership Reserves and Payment of Expenses. . . . . . 37
5.11 Limitation of Liability; Indemnification. . . . . . . . 38
5.12 Affiliates. . . . . . . . . . . . . . . . . . . . . . . 39
5.13 Borrowings. . . . . . . . . . . . . . . . . . . . . . . 39
5.14 Delegation of General Partner Authority . . . . . . . . 40
5.15 Execution of Instruments. . . . . . . . . . . . . . . . 40
5.16 Purchase of Certain Operating Partnership
Interests. . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6. RIGHTS AND LIABILITIES OF LIMITED PARTNERS . . . . . . . . . . 41
6.1 Liability of Limited Partners . . . . . . . . . . . . . 41
6.2 No Right to Manage, Dissolve or Partition . . . . . . . 41
6.3 Priority. . . . . . . . . . . . . . . . . . . . . . . . 41
6.4 Death or Disability of Limited Partner. . . . . . . . . 42
SECTION 7. TRANSFERABILITY OF LIMITED PARTNER INTERESTS . . . . . . . . . 42
7.1 Assignments . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Substituted Investor Limited Partners . . . . . . . . . 43
7.3 Restrictions; Additional Limited Partners . . . . . . . 43
SECTION 8. WITHDRAWAL OF A GENERAL PARTNER;
DISPOSITION OF A GENERAL PARTNER'S INTEREST . . . . . . . . . 44
8.1 Transfer and Withdrawal . . . . . . . . . . . . . . . . 44
8.2 Obligation to Continue. . . . . . . . . . . . . . . . . 45
8.3 Withdrawal of All General Partners. . . . . . . . . . . 45
8.4 Interest of General Partner After Removal
or Withdrawal. . . . . . . . . . . . . . . . . . . . . 45
8.5 Additional General Partners . . . . . . . . . . . . . . 45
SECTION 9. BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC. . . . . . . 45
9.1 Books and Records . . . . . . . . . . . . . . . . . . . 45
9.2 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 55
9.3 Fiscal and Tax Year . . . . . . . . . . . . . . . . . . 46
9.4 Accrual Basis . . . . . . . . . . . . . . . . . . . . . 46
9.5 Accountants; Filing of Returns. . . . . . . . . . . . . 46
9.6 Federal Income Tax Elections. . . . . . . . . . . . . . 46
9.7 Special Basis Adjustments . . . . . . . . . . . . . . . 46
9.8 Information to Partners . . . . . . . . . . . . . . . . 46
SECTION 10. POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Power of Attorney . . . . . . . . . . . . . . . . . . . 47
10.2 Duration of Power of Attorney . . . . . . . . . . . . . 48
SECTION 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2 Amendments. . . . . . . . . . . . . . . . . . . . . . . 49
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11.3 Time of Admission . . . . . . . . . . . . . . . . . . . 49
11.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . 49
11.5 Headings. . . . . . . . . . . . . . . . . . . . . . . . 49
11.6 Separability Provision. . . . . . . . . . . . . . . . . 49
11.7 Pronouns and Plurals. . . . . . . . . . . . . . . . . . 49
11.8 Binding Agreement . . . . . . . . . . . . . . . . . . . 49
11.9 Counterparts; Execution . . . . . . . . . . . . . . . . 50
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . 50
11.11 Delivery of Certificate
and Amendments . . . . . . . . . . . . . . . . . . . . 50
11.12 Confidentiality . . . . . . . . . . . . . . . . . . . . 50
Schedule A - Names, Addresses and Capital Contributions . . . . . . . . . 53
Exhibit A - Initial Projections. . . . . . . . . . . . . . . . . . . . . .
Exhibit B - Legal Descriptions of Property Sites . . . . . . . . . . . . .
Exhibit C - Title Insurance Requirements . . . . . . . . . . . . . . . . . 54
Page 4 of 55
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP ("Agreement") is
dated as of September 1, 1995 by and among GrA Partners Joint Venture, a
Delaware general partnership (the "General Partner"), AmerUs Properties, Inc.,
an Iowa corporation (the "Original Limited Partner") and the Persons listed on
Schedule A hereto (the "Investor Limited Partners").
Preliminary Statement
American Mutual Affordable Housing Partners, L.P. (the "Partnership") was
formed as a Delaware limited partnership pursuant to an Agreement of Limited
Partnership dated as of July 1, 1995 (the "Original Agreement"), by and between
the General Partner, as general partner, and the Original Limited Partner, as
limited partner. A Certificate of Limited Partnership with respect to the
Partnership dated as of July 27, 1995 (the "Original Certificate") was filed in
the Filing Office on July 31, 1995. Defined terms used herein shall have the
respective meanings given them in Section 2.1, in the Section cross-referenced
opposite such term in Section 2.2 or in the Subscription Agreements.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereby agree that the Original Agreement is hereby amended and
restated in its entirety, as follows:
SECTION 1. NAME AND BUSINESS
1.1 NAME; CONTINUATION. The business of the Partnership shall be
conducted under the name "American Mutual Affordable Housing Partners, L.P."
The Partners hereby agree to continue the Partnership as a limited partnership
pursuant to the provisions of the Uniform Act and upon the terms and conditions
set forth in this Agreement. This Agreement completely restates, amends and
supercedes the Original Agreement.
1.2 OFFICES AND REGISTERED AGENT.
(a) The registered office of the Partnership in the State is Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
The principal office of the Partnership is Suite 200W, 0000 Xxxxxxx Xxxxxxx,
Xxxx Xxx Xxxxxx, Xxxx 00000-0000. The General Partner may at any time change
the registered or principal office of the Partnership and shall promptly give
notice thereof to the Limited Partners.
(b) The name and address of the initial registered agent for service of
process of the Partnership to be designated on the Certificate is The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The registered agent for service
of process of the Partnership may be changed from time to time by the General
Partner in its sole and absolute discretion, subject to applicable law.
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1.3 NAMES AND ADDRESSES OF PARTNERS. The names and business addresses of
the General Partner and the Investor Limited Partners are set forth on
Schedule A.
1.4 PURPOSE. The purpose of the Partnership is (i) to acquire the
Intermediate Partnership Interests in and become a limited partner of the
Intermediate Partnerships, which, in turn, are partners of the Operating
Partnerships, each of which Operating Partnerships owns and operates a Property
which has qualified for Tax Credits, and (ii) to hold, sell, dispose of and
otherwise deal with the Intermediate Partnership Interests. The business of the
Partnership shall include participation in such activities as are related or
incidental to the above. The Partnership shall not engage in any other business
or activity. The General Partner shall hold each of the Investor Limited
Partners (and their Affiliates, partners, shareholders, directors, officers,
employees, attorneys, agents, consultants or successors) (collectively with the
Investor Limited Partners, the "Indemnitees") harmless from and against any
loss, damage or liability (including any reasonable fees and expenses of
counsel) that they (or any of them) may incur in connection with any claim
arising as a result of business done or actions taken by the Partnership in
contravention of the provisions of this Section 1.4.
1.5 TERM AND DISSOLUTION. The Partnership shall continue in full force
and effect until December 31, 2055, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon: (i) the sale or
other disposition of all or substantially all of the assets of the Partnership;
(ii) the occurrence of any event as a result of which no General Partner remains
unless the Partnership is continued pursuant to Section 8.3; (iii) the election
to dissolve the Partnership made in writing by the General Partner with the
Consent of the Limited Partners (which Consent may be withheld in their sole
discretion); (iv) the dissolution and liquidation of all the Intermediate
Partnerships; (v) the occurrence of any event requiring such dissolution and
liquidation pursuant to the Uniform Act; or (vi) the entry of a final decree of
dissolution of the Partnership by a court of competent jurisdiction.
Upon dissolution of the Partnership (unless the business of the Partnership
is continued pursuant to Section 8.3), the General Partner (or, for purposes of
this paragraph, its trustees, receivers or successors) shall cause the
cancellation of the Certificate, liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 4.3.
Notwithstanding the foregoing, if during the liquidation the General Partner
shall determine that an immediate sale of all of the Partnership's assets would
be impermissible, impractical or would cause undue loss to the Partners, the
General Partner may in its sole and absolute discretion defer (for up to two
years after such dissolution) liquidation of any assets of the Partnership,
except those necessary to satisfy the debts and obligations of the Partnership.
Proceeds of such liquidation shall be distributed with reasonable promptness
pursuant to the provisions of Article IV hereof.
SECTION 2. DEFINED TERMS
2.1 DEFINITIONS. For purposes of this Agreement the following terms shall
have the meanings specified below (see Section 2.2 for certain terms defined
elsewhere in this Agreement) or in the Subscription Agreements:
Page 6 of 55
"Accountants" means Xxxxxxx, Xxxxxx & Xxxxxxxxx of Baltimore, Maryland, or
such other firm of independent certified public accountants as may be engaged by
the General Partner with the Consent of the Limited Partners.
"Affiliate" means as to any named Person (or as to every Partner if no
Person is specifically named): (i) such Person or any member of his Immediate
Family; (ii) the legal representative, successor or assignee of, or any trustee
of a trust for the benefit of, any such Person or member of his Immediate
Family; (iii) any Entity of which a majority of the voting interests is owned by
any one or more of the Persons referred to in the preceding clauses (i) and
(ii); (iv) any officer, director, trustee, employee, stockholder (10% or more)
or partner (or any Person serving in a similar capacity to any of the foregoing)
of any Person referred to in the preceding clauses (i), (ii) and (iii); and (v)
any Person directly or indirectly controlling, controlled by or under direct or
indirect common control with, any Person referred to in any of the preceding
clauses; provided that Orion, Polar and the Affiliates of each of them shall not
be deemed Affiliates of the Partnership or any of its Affiliates.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership (including all exhibits hereto), as amended from time to time.
"AMLIC" shall mean American Mutual Life Insurance Company.
"Capital Contribution" means the total value of cash contributed and agreed
to be contributed to the Partnership by each Partner, as shown in Schedule A or
as may be required under Section 6.1(b). Any reference in this Agreement to the
Capital Contribution of a then Partner shall include a Capital Contribution
previously made by any prior Partner for the Interest of such then Partner.
"Capital Transaction" means the sale or other disposition by the
Partnership of all or part of any Intermediate Partnership Interest, the sale or
other disposition by an Intermediate Partnership of all or part of any Operating
Partnership Interest, the sale or other disposition by an Operating Partnership
of all or substantially all of its assets, the refinancing of any Mortgage or
any other transaction affecting the Partnership, any Intermediate Partnership or
any Operating Partnership which is not in the ordinary course of its business,
except that the term "Capital Transaction" shall not include a
Repurchase/Adjustor Event as set forth in Section 3.3(b).
"Cash Available For Distribution" means (a) the sum of Cash Flow plus any
amounts withdrawn from Reserves which the General Partner determines are not
necessary for operations (but excluding amounts withdrawn from the Capital
Reserve pursuant to Section 5.10(c)), minus (b) the sum of payment of Incentive
Management Fees and payments to Reserves (other than payments to the Capital
Reserve).
"Cash Flow" means with respect to any period (a) all cash receipts of the
Partnership from the Intermediate Partnerships (other than proceeds from a
Capital Transaction) or other miscellaneous sources (including, without
limitation, interest on Temporary Investments), minus (b) all amounts expended
to pay for the costs and expenses of the Partnership (except for (i) the costs
and expenses of the Partnership in connection with a Capital Transaction,
(ii) the payments referred to in Section 5.8 and (iii) payments to Reserves).
Page 7 of 55
"Certificate" or "Certificate of Limited Partnership" means the Original
Certificate referred to in the Preliminary Statement as filed with the Filing
Office, as amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the Regulations issued thereunder. References herein to any Code
section shall include any successor provisions.
"Completion Date" means, with respect to any Property or any building
therein, the earliest date upon which such Property or building (a) may be
legally occupied by tenants under applicable local laws, rules or regulations,
as evidenced by issuance of temporary or permanent certificate(s) of occupancy
or comparable approvals if available under local law, (b) has had all roads
necessary for the full utilization thereof either completed or the necessary
rights of way therefor have been acquired by the appropriate Governmental
Authority and (c) is held out by the Operating Partnership for occupancy by
tenants.
"Compliance Period" means the "compliance period" defined in Section 42 of
the Code.
"Consent of the Limited Partners" means the written consent or approval of
Investor Limited Partners owning in the aggregate more than 50% (or equal to or
greater than some higher percentage, if a higher percentage is required under
this Agreement) of the Interests owned by all Investor Limited Partners as set
forth on Schedule A, including Investor Limited Partners which are Affiliates of
the General Partner but without taking into account any Interests held by
Defaulting Limited Partners (except as provided in Section 3.5). For this
purpose, consent or approval of a particular Investor Limited Partner with
respect to any matter shall be deemed to have been received if (a) written
consent or approval from such Investor Limited Partner has been received by the
Partnership or (b) written response from such Investor Limited Partner has not
been received by the Partnership within 30 days following the dispatch (by
nationally recognized overnight courier service or by certified mail, fee or
postage prepaid) by the General Partner and receipt by such Investor Limited
Partner of a written notice requesting such consent or approval which notice
shall state the circumstances as set forth in this paragraph under which failure
to respond will constitute receipt of consent, the time frame within which
response is required and the consequences of failure to respond.
"Deferrable Portion" means, with respect to any Property, a fraction the
numerator of which is the total Tax Credits projected in the Initial Projections
to be allocable to the Partnership ("Projected Credit") from the applicable
Intermediate Partnership with respect to the Operating Partnership which owns
such Property and the denominator of which is the Projected Credit from all
Intermediate Partnerships with respect to all Operating Partnerships; provided
that, for purposes of the Second Installment (referred to in Section 3.3(a)(2)),
in determining the Deferrable Portion with respect to any Property which has not
reached its Completion Date on or before January 15, 1996, if at least 75% of
the individual buildings comprising such Property have then reached their
Completion Date, the Deferrable Portion will be decreased with respect to such
Property by a fraction, the numerator of which is the Projected Credit from the
completed apartment units contained in such buildings and the denominator of
which is the total Projected Credit from such Property.
Page 8 of 55
"Disposition" (including the forms "Dispose" and "Disposing") means as to
an Investor Limited Partner, the assignment, sale, conveyance, exchange or other
transfer of all or any part of its Interest.
"8609 Issuance" means, with respect to any Property, the receipt by the
Operating Partnership which owns such Property of Internal Revenue Service
Form(s) 8609 with respect to all buildings in such Property.
"Entity" means any general partnership, limited partnership, limited
liability company or partnership, corporation, joint venture, trust, business
trust, cooperative, or other association (and, with respect to provisions
relating to environmental matters, Governmental Authority).
"Event of Bankruptcy" means, with respect to any Person, (i) the entry of a
decree or order for relief by a court having jurisdiction in respect of such
Person in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or similar official) of such Person
or for any substantial part of its property, or the issuance of an order for the
winding-up or liquidation of its affairs and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days, (ii) the
commencement by such Person of a voluntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or the consent by such person to
the appointment of, or the taking of possession by, a receiver, liquidator,
assignee, trustee, custodian, or sequestrator (or similar official) of such
Person or of any substantial part of such Person's property, or the making by
such Person of any assignment for the benefit of creditors or, the consent by
such Person to any such decree, order or appointment, or the taking of any
action by such Person in furtherance of any of the foregoing. To the extent
permitted by law, the term "Event of Bankruptcy" as used in this Agreement shall
supersede and replace the events of withdrawal described in Sections 17-
402(a)(4) and (5) of the Uniform Act.
"Filing Office" means the Office of the Secretary of State of the State of
Delaware.
"General Partner" means GrA Partners Joint Venture and shall include any
Person who becomes a General Partner as provided herein, in such Person's
capacity as a General Partner of the Partnership.
"Immediate Family" means, with respect to any Person, his spouse, parents,
parents-in-law, descendants, nephews, nieces, brothers, sisters,
brothers-in-law, sisters-in-law, children-in-law and grandchildren-in-law.
"Initial Funding Date" shall mean September 7, 1995.
"Initial Projections" means the financial projections and accompanying
notes thereto prepared by Xxxxxxx Xxxxxx & Xxxxxxxxx and attached hereto as
Exhibit A, which set forth on page 6 of such financial projections with respect
to the Partnership an after-tax internal rate of return (the "Internal Rate of
Return") of 12.26%.
Page 9 of 55
"Installment" means an installment of the Capital Contribution payable by
the Investor Limited Partners.
"Interest" means the entire interest of a Partner in the Partnership at any
particular time, including the right of such Partner to any and all benefits to
which a Partner may be entitled under this Agreement and the obligations of such
Partner to comply with this Agreement.
"Intermediate General Partners" means, with respect to an Intermediate
Partnership, the general partner(s) or other Person entitled to exercise
management rights under its Intermediate Partnership Agreement.
"Intermediate Partnerships" means CPI Housing Partners I, L.P., 60th &
Vista, L.P. and 65th & Vista, L.P., each an Iowa limited partnership and each of
which owns an Operating Partnership Interest in an Operating Partnership.
"Intermediate Partnership Agreement" means the limited partnership
agreement of an Intermediate Partnership and/or the subscription, purchase or
other agreement, if any, relating to the acquisition by the Partnership of an
Intermediate Partnership Interest, as each may be amended from time to time.
"Intermediate Partnership Installment" means an installment of capital
contribution payable by the Partnership to a particular Intermediate
Partnership.
"Intermediate Partnership Interest" means the entire interest of the
Partnership in an Intermediate Partnership, including the right of the
Partnership to any and all benefits to which the Partnership may be entitled as
provided in an Intermediate Partnership Agreement and the obligation of the
Partnership to comply with the terms of such Intermediate Partnership Agreement.
"Intermediate Partnership Non-Recourse Liability" means any liability (or
portion thereof) of an Intermediate Partnership for which no partner of such
Intermediate Partnership or Related Person thereof bears the economic risk of
loss as defined in Treasury Regulation Section 1.752-2.
"Investor Limited Partners" means those Persons listed in Schedule A as
Investor Limited Partners, including Substituted Investor Limited Partners, in
their capacity as such.
"Lender" means any holder of any Mortgage.
"Low-Income Housing Tax Credit" means the low-income housing tax credits
allowed for low-income housing under Section 42 of the Code (or any successor
provisions thereof).
"Mortgage" means, with respect to a particular Operating Partnership, the
mortgage indebtedness of such Operating Partnership to its Lender; where the
context admits, "Mortgage" shall mean and include the promissory note evidencing
said indebtedness, the mortgage deed or deed of trust and security agreement
securing such indebtedness and all other documentation relating thereto.
Page 10 of 55
"Operating General Partners" means, with respect to an Operating
Partnership, the general partner(s) or other Person entitled to exercise
management rights under its Operating Partnership Agreement.
"Operating Partnerships" means Commander Place Housing, Ltd. (a Florida
limited partnership), 00xx Xxxxxx Partnership (a general partnership governed by
Iowa law) and 00xx Xxxxxx Partnership (a general partnership governed by Iowa
law).
"Operating Partnership Agreement" means the partnership agreement or other
organization documents of an Operating Partnership and/or the purchase or other
agreement, if any, relating to the acquisition by an Intermediate Partnership of
an Operating Partnership Interest, as each may be amended from time to time.
"Operating Partnership Installment" means an installment of capital
contribution payable by an Intermediate Partnership to a particular Operating
Partnership.
"Operating Partnership Interest" means the entire interest of an
Intermediate Partnership in an Operating Partnership, including the right of
such Intermediate Partnership to any and all benefits to which such Intermediate
Partnership may be entitled as provided in an Operating Partnership Agreement
and the obligation of such Intermediate Partnership to comply with the terms of
such Operating Partnership Agreement.
"Operating Partnership Non-Recourse Liability" means any liability (or
portion thereof) of an Operating Partnership for which no partner of such
Operating Partnership or Related Person thereof bears the economic risk of loss
as defined in Treasury Regulation Section 1.752-2.
"Operative Documents" means this Agreement, the Subscription Agreements,
the Intermediate and Operating Partnership Agreements, a certain Lease
Performance Agreement of even date herewith between AmerUs Properties, Inc. and
the Operating Partnerships which own the Properties located in Iowa, and all
other material documents, instruments and agreements binding on or otherwise
materially related to the Partnership or any Intermediate or Operating
Partnership.
"Orion" shall mean NCC Orion Company, a Delaware corporation.
"Partner" means any General Partner or Investor Limited Partner.
"Partner Non-Recourse Debt" means any Partnership Liability (1) that is
considered non-recourse under Regulation Section 1.1001-2 and (2) for which any
Partner or Related Person bears the economic risk of loss under Treasury
Regulatory Section 1.752-2.
"Partner Non-Recourse Debt Minimum Gain" means the amount of partner
non-recourse debt minimum gain determined in a manner consistent with Treasury
Regulation Sections 1.704-2(d), 1.704- 2(k) and 1.704-2(g)(3).
"Partnership" means the limited partnership continued pursuant to this
Agreement.
Page 11 of 55
"Partnership Liability" means a liability of the Partnership or the
Partnership's share of a liability of an Intermediate Partnership or the
Partnership's share of an Intermediate Partnership's share of a liability of an
Operating Partnership.
"Partnership Minimum Gain" means the amount determined by computing, with
respect to each Partnership Non-Recourse Liability, the Partnership's share of
any Intermediate Partnership Non-Recourse Liability or the Partnership's share
of an Intermediate Partnership's share of an Operating Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by the Partnership
if it, an Intermediate Partnership or an Operating Partnership disposed of (in a
taxable transaction) the property subject to such liability in full satisfaction
of such liability, and by then aggregating the amounts so computed. Such
computations shall be made in a manner consistent with Treasury Regulation
Section 1.704-2(d) under Section 704 of the Code.
"Partnership Non-Recourse Liability" means any Partnership Liability (or
portion thereof) for which no Partner or Related Person bears the economic risk
of loss as defined in Treasury Regulation Section 1.752-2.
"Partnership Register" means the schedule (which shall form a part of the
books and records of the Partnership) listing the names and addresses of all
Limited Partners, together with the amounts of their respective Capital
Contributions, the Interest held by them and all security interests and pledges
applicable to the Interest of any Limited Partners, which schedule shall be
maintained by the General Partner in accordance with this Agreement.
"Permanent Mortgage Closing" means, with respect to any Property, the date
on which a Standby Permanent Mortgage (or another non-recourse (except that
there may be recourse for fraud, misapplication of funds, material
misrepresentation and environmental liability and there may be Partner
Non-Recourse Debt) and non cross-collateralized permanent Mortgage maturing in
no less than 15 years and on other terms (a) not materially less favorable to
the Operating Partnership in question and in any event not less favorable with
respect to principal amount, term and amortization period than either the terms
assumed in the Initial Projections or the terms of the Standby Permanent
Mortgage or (b) which have received the Consent of the Limited Partners) shall
have closed and the proceeds thereof shall have been disbursed by the lender.
Furthermore, Permanent Mortgage Closing with respect to a Property shall not be
deemed to have occurred until a Title Policy (as hereafter defined) and a
current, original as-built survey of such Property (prepared in accordance with
American Land Title Association standards by a surveying firm licensed in the
state where the Property is located and certified to the Operating Partnership
which owns such Property and the Title Insurance Company (as hereafter defined)
showing no legally objectionable matters (e.g. encroachments, violation of set
back lines, violation of easements, etc.) relating to the development of the
improvements shown thereon) shall have been delivered. As used herein, the term
"Title Policies" means the owner's policy of title insurance (or an equivalent
"marked up" commitment therefore provided that the premium therefor has been
paid and such insurance is immediately effective) issued to each of the
Operating Partnerships by First American Title Insurance Company (the "Title
Insurance Company"), which policy shall (i) insure such Operating Partnership's
fee simple interest in its Property subject only to those exceptions (a) which
are consented to by the Investor Limited Partners (which consent shall not be
unreasonably withheld), (b) which are contained in the title insurance policy
no. J447361 (effective date of May 18, 1995 ) issued by the Title Insurance
Company with respect to the Property owned by 00xx Xxxxxx Partnership, title
insurance policy no. J447360 (effective date of May 16,
Page 12 of 55
1995) issued by the Title Insurance Company with respect to the Property owned
by 00xx Xxxxxx Partnership and title insurance commitment no. 94.07832
(including endorsements 1, 2 and 3 and an effective date of July 17, 1995)
issued by the Title Insurance Company with respect to the Property owned by
Commander Place Housing, Ltd., (c) which refer to instruments evidencing the
permanent Mortgage meeting the requirements of the first sentence of this
paragraph or (d) which are reasonably necessary for the completion or operation
of the Property in accordance with applicable Operative Documents and which do
not materially adversely affect the value or use of the Property; (ii) be
down-dated or re-issued effective as of a date after the Initial Funding Date;
(iii) be acceptable to the General Partner; (iv) be in the amount of not less
than the sum of all Mortgage loans and the aggregate capital contributions of
the partners with regard to the Property insured and (v) otherwise meeting the
requirements for title insurance under EXHIBIT C attached hereto not
inconsistent with the explicit provisions of this definition.
"Person" means any individual or Entity.
"Polar" shall mean NCC Polar Company, a Delaware corporation.
"Properties" means the land and improvements comprising the housing
developments located on sites owned by the Operating Partnerships and more
particularly described on Exhibit B attached to this Agreement.
"Qualified Income Offset Item" means (1) an allocation of loss or deduction
that, as of the end of each year, reasonably is expected to be made (a) pursuant
to Section 704(e)(2) of the Code to a donee of an interest in the Partnership,
(b) pursuant to Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Regulation Section 1.751-1(b)(2)(ii) as
the result of a distribution by the Partnership of unrealized receivables or
inventory items and (2) a distribution that, as of the end of such year,
reasonably is expected to be made to a Partner to the extent it exceeds
offsetting increases to such Partner's Capital Account which reasonably are
expected to occur during or prior to the Partnership taxable year in which such
distribution reasonably is expected to occur.
"Related Person" means a Person related to a partner within the meaning of
Treasury Regulation Section 1.752-4(b).
"Reserves" means the Capital Reserve, the Operating Reserve and any other
funds set aside, or amounts allocated in the reasonable discretion of the
General Partner to reserves, for working capital, capital expenditure programs,
and to pay taxes, insurance, debt service or other costs, liabilities or
expenses incident to the operation of the Partnership.
"Schedule A" means the Schedule A attached hereto and hereby made a part
hereof.
"State" means the State of Delaware.
"Subscription Agreement" means the subscription agreement executed by the
General Partner and by each Investor Limited Partner in form and substance
satisfactory to the General Partner setting forth the commitment of such
Investor Limited Partner to acquire its Interest.
Page 13 of 55
"Substituted Investor Limited Partner" means any Person who is admitted to
the Partnership as a successor Investor Limited Partner pursuant to Section 7.2.
"Tax Counsel" means Peabody & Xxxxx, of Boston, Massachusetts, or another
law firm selected by the General Partner with the reasonable Consent of the
Limited Partners.
"Tax Credits" means with respect to all Properties, the Low-Income Housing
Tax Credits.
"Temporary Investments" means dollar denominated investments limited to (a)
United States government securities, (b) securities issued or fully guaranteed
by United States government agencies, (c) certificates of deposit and time or
demand deposits in, or repurchase agreements constituting obligations of,
commercial banks with deposits insured by the Federal Deposit Insurance
Corporation and having a combined capital and surplus of not less than
$100,000,000, (d) commercial paper of corporations doing business in, and
incorporated under the laws of, the United States of America or any State
thereof which are rated P-1 by Xxxxx'x Investors Services, Inc. ("Moody's"), or
(e) such other investments as are permitted by Consent of the Limited Partners.
"Uniform Act" means the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, or any successor statute.
"Withdrawal" (including the forms "Withdraw", "Withdrawing" and
"Withdrawn") means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy, dissolution,
liquidation, or voluntary or involuntary withdrawal or retirement from the
Partnership for any reason, including whenever a General Partner may no longer
continue as a General Partner by law or pursuant to any terms of this Agreement;
provided, however, that dissolution of GrA Partners Joint Venture by reason of
the withdrawal of a partner or joint venturer thereof shall not be deemed a
Withdrawal of the General Partner if each such partner or joint venturer of GrA
Partners Joint Venture shall be admitted as a General Partner hereunder prior to
the date of such dissolution (which admission each Partner hereof consents to by
the execution of this Agreement), the joint venture partners thereof assume the
duties of the General Partner hereunder and exercise their General Partner
authority in the same manner as provided in the joint venture agreement pursuant
to which the General Partner is constituted on the date hereof and each such
joint venture partner remains liable on a recourse basis hereunder.
2.2 CROSS REFERENCES. For purposes of this Agreement, the following terms
defined elsewhere in this Agreement or in the Subscription Agreements shall have
the respective meanings therein assigned:
TERM DEFINITION
------ ------------
Asset Management Fee Section 5.8(d)
Attorney Section 10.1
Book Value Section 4.4(k)
Bridge Loan Section 5.13
Capital Account Section 3.6
Capital Reserve Section 5.10
Contaminant Subscription Agreements
Page 14 of 55
Defaulting Limited Partner Section 3.5
Disposition Fee Section 5.8(f)
Environmental Damages Subscription Agreements
Environmental Laws Subscription Agreements
Environmental Lien Subscription Agreements
Final Projections Section 3.3(a)(4)
Good Cause Notice Section 3.5
Governmental Authority Subscription Agreements
Indemnitees Section 1.4
Internal Rate of Return Section 2.1, "Initial
Projections" definition
Losses Section 4.1(h)
Minimum Required Debt Service Section 5.9(b)
Net Operating Income Section 5.9(b)
Operating Reserve Section 5.10
Original Agreement Preliminary Statement
Original Certificate Preliminary Statement
Original Limited Partner Preamble
Organization Fee Section 5.8(b)
Partnership Preliminary Statement
Power of Attorney Section 10.2
Profits Section 4.1(h)
Projected Credit Section 2.1, "Deferrable
Portion" definition
Refinancing Fee Section 5.8(e)
Release Subscription Agreements
Repurchase/Adjustor Event Section 3.3(b)
Repurchase/Adjustor Funds Section 3.3(b)
Standby Permanent Mortgage Section 5.9(b)
Title Insurance Company Section 2.1, "Permanent
Mortgage Closing"
definition
Title Policy Section 2.1, "Permanent
Mortgage Closing"
definition
SECTION 3. CAPITAL CONTRIBUTIONS AND ADMISSION OF LIMITED PARTNERS
3.1 CONTRIBUTION OF GENERAL PARTNER. The General Partner has made a
Capital Contribution of cash in the amount set forth opposite its name in
Schedule A and is obligated to make a further Capital Contribution under the
circumstances set forth in Section 5.8(d) and 4.3(a).
3.2 WITHDRAWAL OF ORIGINAL LIMITED PARTNER; ADMISSION OF INVESTOR LIMITED
PARTNERS.
(a) Immediately following the admission effected by Section 3.2(b), the
Original Limited Partner hereby withdraws as the Original Limited Partner, and
acknowledges that, in its capacity
Page 15 of 55
as Original Limited Partner, it has received a return of its Capital
Contribution from and no longer has any interest in, or rights or claims
against, the Partnership.
(b) Each of the Persons listed on Schedule A as Investor Limited Partners
is hereby admitted to the Partnership as an Investor Limited Partner. The names
and the business or mailing addresses of the Investor Limited Partners, their
Capital Contributions and the Interests held by them, expressed as a percentage
of the Interests held by all Investor Limited Partners, shall be set forth in
the Partnership Register.
3.3 CONTRIBUTION OF INVESTOR LIMITED PARTNERS.
(a) Each Investor Limited Partner hereby agrees to make a Capital
Contribution to the Partnership in the amount set forth in Schedule A, which
amount shall be payable at the times and in the amounts (the "Installments") set
forth below:
(1) an initial Installment in an amount equal to 11.5% of the Capital
Contribution of each Investor Limited Partner shall be payable to the
Partnership upon the admission to the Partnership of such Investor Limited
Partner;
(2) a second Installment in an amount equal to 36.0% of the Capital
Contribution of each Investor Limited Partner (the "Second Installment")
shall be payable to the Partnership on the later of (A) January 15, 1996 or
(B) occurrence of the Completion Date with respect to each Property;
provided, however, that in the event that the Completion Date for one or
more of the Properties shall not have occurred by January 15, 1996 then
payment of the Deferrable Portion of the Second Installment with respect to
each such Property shall be postponed and shall then be paid in one payment
at a time determined by the General Partner reflecting the then applicable
decrease in the Deferrable Portion;
(3) a third Installment in an amount equal to 42.5% of the Capital
Contribution of each Investor Limited Partner (the "Third Installment")
shall be payable to the Partnership on the later of (A) October 15, 1996 or
(B) occurrence of Permanent Mortgage Closing and 8609 Issuance with respect
to each Property; provided, however, that in the event that Permanent
Mortgage Closing and 8609 Issuance for one or more of the Properties shall
not have occurred by October 15, 1996 then payment of the Deferrable
Portion of the Third Installment with respect to each such Property shall
be postponed until the occurrence of Permanent Mortgage Closing and 8609
Issuance with respect to such Property; and
(4) a fourth Installment in an amount equal to 10% of the Capital
Contribution of each Investor Limited Partner (the "Fourth Installment")
shall be payable to the Partnership on February 15, 1997; provided,
however, that at least 30 but no more than 45 days prior to February 15,
1997 the Accountants shall (a) recompute the Initial Projections using the
same methodology, assumptions and presentation but taking into account any
actual results or facts then known (including any results or facts which
constitute a Repurchase/Adjustor Event which has occurred prior to such
recomputation but excluding the effect of any change in Federal tax law, it
being agreed that such recomputation and such actual results and facts
shall not include any new categories of fees, or additional types of
categories of payments in lieu of those assumed or estimated in the Initial
Projections, and (b) include with such recomputation their certification
that such recomputation complies with the requirements of this sentence (as
Page 16 of 55
so recomputed and certified to, the "Final Projections"). If an Investor
Limited Partner does not agree with the Final Projections, within 7
business days after receipt by such Investor Limited Partner of such Final
Projections, such Investor Limited Partner shall notify the General Partner
in writing of such disagreement and set forth in such writing in reasonable
detail its grounds for such disagreement. If the Final Projections
determine that the Internal Rate of Return is less than 12.26% per annum,
then (a) up to $1,772,800 of the Fourth Installment shall be deferred into
one or more later payments, reduced or both deferred and reduced in whole or
in part (all as determined by the General Partner in its sole and absolute
discretion) and the Investor Limited Partners shall receive a distribution
of any Repurchase/Adjustor Funds arising from a Repurchase/ Adjustor Event
occurring prior to the due date of the Fourth Installment such that, when
the Final Projections are recomputed by the Accountants in accordance with
such deferred and/or reduced payments and Repurchase/Adjustor Funds
distribution, the Internal Rate of Return shall be increased to 12.26% (or
as near thereto as the maximum reduction and deferral of said $1,772,800
payment and distribution to Investor Limited Partners of any
Repurchase/Adjustor Funds distribution can achieve), and (b) the balance of
the Fourth Installment shall be payable in full on February 15, 1997.
The General Partner shall give each Investor Limited Partner not less than ten
(10) business days' written notice prior to the due date of each Installment
subsequent to the initial Installment. The Investor Partners shall pay any
Deferrable Portion of any Installment upon ten (10) business days' written
notice from the General Partner stating that the conditions thereto have been
met and setting forth the amount and due date thereof.
(b) The General Partner is hereby authorized, without the consent of any
other Partner, to direct an Intermediate Partnership to require the Operating
General Partners to repurchase an Operating Partnership Interest or to reduce or
receive a return of the Operating Partnership Installments or to receive any
other payment or distribution from an Operating Partnership (including any
increased cash distribution by an Operating Partnership to an Intermediate
Partnership resulting from a decrease in a cash payment or distribution by such
Operating Partnership to any party other than such Intermediate Partnership)
which arises as a result of a reduction in anticipated Tax Credits or Losses
("Repurchase/Adjustor Funds") upon the occurrence of any event set forth in the
related Operating Partnership Agreement giving rise to such repurchase
obligation or such reduction, payment or distribution (a "Repurchase/Adjustor
Event"). The General Partner shall direct an Intermediate Partnership to
distribute to the Partnership the capital which would otherwise have been
invested in such Operating Partnership and any Repurchase/Adjustor Funds from
the applicable Operating Partnership and any funds then being held by the
Partnership for the purpose of making payments of future Intermediate
Partnership Installments with respect to the applicable Intermediate Partnership
which are no longer required as the result of the Repurchase/Adjustor Event,
whereupon such funds shall be applied as follows: First, 100% to Investor
Limited Partners to the extent required for each to achieve the Internal Rate of
Return of 12.26% under a new set of Projections to be provided by the
Accountants (prepared in the same manner as the Final Projections) and
thereafter such funds shall be deemed to be cash available from a Capital
Transaction and shall be distributed pursuant to Section 4.2(b). The General
Partner may, subject to its fiduciary duty to the Partnership and the Investor
Limited Partners but otherwise in its sole and absolute discretion, direct an
Intermediate Partnership to exercise any rights under any Repurchase/Adjuster
Event provision of
Page 17 of 55
any Operating Partnership Agreement, to waive any such rights or to extend the
time for compliance therewith.
3.4 NO PLEDGE OR ASSIGNMENT OF PROCEEDS BY GENERAL PARTNER. The General
Partner shall not pledge or assign the proceeds of the Installments.
3.5 DEFAULTS. In the event any Investor Limited Partner fails to make any
payment of its Capital Contribution when due, unless prior to such due date one
or more Investor Limited Partners shall in good faith have given written notice
(a "Good Cause Notice") to the General Partner of an event constituting "good
cause" as defined in Section 3.8, it shall be in default hereunder (a
"Defaulting Limited Partner"). In such event, interest shall be payable on the
amount due at a rate equal to 1.5% per month (or, if less, the maximum rate
permitted by law) and such interest shall accrue from the day immediately
following the due date until payment of such due amount is made in full. If a
Good Cause Notice has been given as aforesaid but after such due date it is
determined that the Investor Limited Partner did not have the right to remove
the General Partner pursuant to Section 3.8, the Investor Limited Partner shall
be deemed to have been in default since such due date, but shall have the right
to cure such default by paying, within 10 business days following such
determination, the full amount of the unpaid Capital Contribution plus all
interest accrued thereon pursuant to the immediately preceding sentence. If
either (a) no Good Cause Notice was given or (b) the Good Cause Notice was given
and the aforesaid determination of no removal right is made but the Investor
Limited Partner has not cured such default within such 10 business day period,
then after 15 days written notice by the General Partner to the Defaulting
Limited Partner, the General Partner may in its sole and absolute discretion
(i) pursue any and all available legal remedies against the Defaulting Limited
Partner, including those under this Agreement, the Subscription Agreement or any
other agreement executed or furnished by such Defaulting Limited Partner, or
(ii) without being under any obligation to do so, negotiate a settlement with
the Defaulting Limited Partner providing for extensions of time of payment.
Further, the Defaulting Limited Partner shall also be subject to Section 4.4(f)
and the Partnership shall be entitled to collect all costs of collection
including, but not limited to, reasonable attorneys' fees.
Unless and until such default shall be cured, any distributions in respect
of the Interest of the Defaulting Limited Partner shall be applied first to
costs of collection, second to interest on the defaulted amount and third to the
defaulted amount; the profits, losses and Tax Credits in respect thereof shall
be allocated to the General Partner; and the Defaulting Limited Partner shall
have no right to vote the defaulted Interest.
Each Investor Limited Partner hereby irrevocably consents and agrees that
any action or proceeding against such Investor Limited Partner for the purpose
of enforcement of this Agreement may be instituted in the Federal courts or the
state courts of general jurisdiction sitting in the State of New York, and
hereby irrevocably waives any objection which such Investor Limited Partner may
have or hereafter may have to the venue of any such action or proceeding, and
irrevocably submits to the jurisdiction of such court in any action or
proceeding. Each Investor Limited Partner further agrees that final judgment
against such Investor Limited Partner in any such legal action or proceeding
shall be conclusive and may be enforced in any other jurisdiction within or
outside the United States of America, by suit on such judgment, a certified copy
of which shall be conclusive evidence of the existence and amount of the
obligations of such Investor Limited Partner thereunder.
Page 18 of 55
3.6 CAPITAL ACCOUNTS. An individual capital account shall be established
and maintained by the Partnership on behalf of each Partner, including any
additional or substituted Partner who shall hereafter receive an Interest (any
such account, a "Capital Account"). In accordance with Treasury Regulation
Section 1.704-1(b), the Capital Account of each Partner shall consist of
(a) the amount of the paid-in Capital Contribution of such Partner and
Partnership liabilities that are assumed by such Partner that are secured by any
Partnership property distributed to such Partner plus (b) the amount of profits
or income (including tax-exempt income) allocated to such Partner pursuant to
Section 4 less (c) the amount of losses and deductions allocated to such Partner
less (d) the amount of cash distributed to such Partner less (e) the fair market
value of any property distributed to such Partner net of any liabilities assumed
by such Partner or to which such property is subject less (f) such Partner's
share of any other expenditures which are not deductible by the Partnership for
Federal income tax purposes or which are not allowable as additions to the basis
of Partnership property. Capital Accounts shall be adjusted as provided in
Section 4.4(k) and (l) and shall be subject to such other adjustments as may be
required under the Code.
The original Capital Account established for any substituted Partner shall
be in the same amount as, and shall replace, the Capital Account of the Partner
which such substituted Partner succeeds, and, for the purposes of this
Agreement, such substituted Partner shall be deemed to have made the Capital
Contribution, to the extent actually paid in, of the Partner which such
substituted Partner succeeds. The term "substituted Partner", as used in this
paragraph, shall mean a Person who shall become entitled to receive a share of
the profits, losses, Tax Credits and distributions of the Partnership by reason
of such Person succeeding to the Interest of a Partner by assignment of all or
any part of a Partner's Interest. To the extent a substituted Partner receives
less than 100% of the Interest of a Partner it succeeds, the original Capital
Account of such substituted Partner and its Capital Contribution shall be in
proportion to the Interest it receives and the Capital Account of the Partner
who retains a partial Interest and its Capital Contribution shall continue, and
not be replaced, in proportion to the Interest it retains. Nothing in this
Section 3.6 shall affect the limitations on transferability of Partnership
interests set forth in Section 7 or Section 8.
3.7 INTEREST; RETURN OF CAPITAL. No Partner shall be paid interest on its
Capital Contribution. No Partner shall have the right to withdraw its Capital
Contribution or to demand and receive property of the Partnership in return for
its Capital Contribution, except as may be specifically provided herein or
required by applicable law. Nothing in this Section 3.7 shall affect the rights
of the Investor Limited Partners under Section 3.10.
3.8 SPECIAL RIGHTS OF LIMITED PARTNERS.
(a) In addition to the other rights provided for in this Agreement, the
Investor Limited Partners, by Consent of the Limited Partners holding at least
60% of the Interests, shall have the right to remove a General Partner for good
cause and, upon such removal, to elect one or more new General Partners and
continue the business of the Partnership with such new General Partner or
Partners. For purposes of Section 3.5 and this Section 3.8(a), "good cause"
means the occurrence of (i) any material breach by a General Partner of this
Agreement or any other Operative Document, (ii) any material breach by a General
Partner of its fiduciary duties to the Partnership or the Partners, (iii) gross
negligence or willful misconduct by a General Partner in connection with
Partnership affairs or any of the Operative Documents, (iv) the making of any
representation by a General Partner in any Operative Document which (x) is
untrue, false or
Page 19 of 55
misleading in any material respect when made or when required to be true
pursuant to the terms hereof or thereof and (y) remains untrue, false or
misleading in any material respect when any action requiring "good cause" under
Section 3.5 or this Section 3.8(a) is attempted to be taken and which materially
adversely impairs (or is reasonably likely to so impair in the future) the
Investor Limited Partners' investment in the Partnership or (v) a Withdrawal by
such General Partner; provided, however, that "good cause" shall be deemed to
exist in the case of a breach, only if such breach is not cured within
30 business days after notice to such General Partner or cured within a
reasonable time not to exceed 120 days in the event it is impossible to cure
such breach within such 30-day period, so long as such General Partner is
diligently and in good faith seeking to cure such breach.
(b) The Interest of any General Partner removed pursuant to this
Section 3.8 shall be subject to transfer pursuant to Section 8.4. Any General
Partner so removed shall continue to be entitled to repayment (in accordance
with the provisions of this Agreement applicable thereto) of any loans made by
it to the Partnership and will not be liable for any obligations of the
Partnership arising from events occurring after the effective date of its
removal.
3.9 MEETINGS. The General Partner or Investor Limited Partners owning at
least 25% of the Interests owned by all Investor Limited Partners may call
meetings of the Partnership for any matters for which the Investor Limited
Partners may vote as set forth in this Agreement. The General Partner shall
give the other Partners written notice of the meeting so called which shall be
scheduled not less than 15 nor more than 60 days from the date of notice (and,
in the case of a meeting called upon request of the Investor Limited Partners,
shall be given within 15 days of the request). All meetings shall be held at
the principal office of the Partnership; provided that Partners may attend such
meeting by means of teleconferencing systems wherein each participant can hear
and be heard by each other participant.
3.10 REDEMPTION OF PARTNERSHIP INTERESTS. Each Investor Limited Partner
shall have the right, exercised by giving written notice to the Partnership
within 180 days following the end of the Compliance Period, to require the
Partnership to redeem the Interest in the Partnership of such Investor Limited
Partner for a redemption price of $100, whereupon such Investor Limited Partner
shall cease to be a Partner and shall have no further rights, duties or
obligations with respect to the Partnership or any of the other Partners.
SECTION 4. PROFITS AND LOSSES; DISTRIBUTIONS; CAPITAL ACCOUNTS
4.1 PROFITS, LOSSES AND TAX CREDITS.
(a) Except as otherwise specifically provided in this Section, for each
fiscal year or portion thereof, (i) all profits, tax-exempt income, losses, Tax
Credits and non-deductible, non-capitalizable expenditures incurred and/or
accrued by the Partnership, other than those arising from a Capital Transaction,
shall be allocated 99% to the Investor Limited Partners and 1% to the General
Partner.
(b) Except as otherwise specifically provided in this Section, all profits
and losses arising from a Capital Transaction shall be allocated to the Partners
as follows:
As to profits:
Page 20 of 55
First, an amount of profit equal to the aggregate negative balances
(if any) in the Capital Accounts of all Partners having negative Capital
Accounts shall be allocated to such Partners in proportion to their
negative Capital Account balances until all such Capital Accounts shall
have zero balances; and
Second, an amount of profits shall be allocated to each of the
Partners until the positive balance in the Capital Account of each Partner
equals the amount of cash which would be distributed to such Partner in
accordance with, first, subparagraph (4) and, second, subparagraph (5) of
Section 4.2(b) if all Partnership assets were sold for an amount equal to
their adjusted basis determined under Regulation Section 1.704-1(b)(2)(iv)
(g) and all Partnership cash were so distributed.
As to losses:
First, an amount of losses equal to the aggregate positive balances
(if any) in the Capital Accounts of all Partners having positive balance
Capital Accounts shall be allocated to such Partners in proportion to their
positive Capital Account balances until all such Capital Accounts shall
have a zero balance; provided, however, that if the amount of losses so to
be allocated is less than the sum of the positive balances in the Capital
Accounts of those Partners having positive balances in their Capital
Accounts, then such losses shall be allocated to the Partners in such
proportions and in such amounts so that the Capital Account balances of
each Partner shall equal, as nearly as possible, the amount such Partner
would receive if an amount equal to the excess of (a) the sum of all
Partners' balances in their Capital Accounts computed prior to the
allocation of losses under this clause First over (b) the aggregate amount
of losses to be allocated to the Partners pursuant to this clause First
were distributed to the Partners in accordance with the provisions of,
first, subparagraph (4) and, second, subparagraph (5) of Section 4.2(b);
and
Second, the balance, if any, of any such losses shall be allocated 99%
to the Investor Limited Partners and 1% to the General Partner.
(c) Notwithstanding the foregoing provisions of Sections 4.1(a) and
4.1(b), in no event shall any losses be allocated to an Investor Limited Partner
if and to the extent that such allocation would cause, as of the end of the
Partnership taxable year, the negative balance in such Investor Limited
Partner's Capital Account to exceed such Investor Limited Partner's share of
Partnership Minimum Gain plus such Investor Limited Partner's share of Partner
Non-Recourse Debt Minimum Gain. Any losses which are not allocated to the
Investor Limited Partners by virtue of the application of this Section 4.1(c)
shall be allocated to the General Partner. For purposes of this Section 4.1(c),
a Partner's Capital Account shall be treated as reduced by Qualified Income
Offset Items.
(d) If (i) the Partnership incurs recourse obligations or Partner
Non-Recourse Debt or (ii) the Partnership incurs losses from extraordinary
events which are not recovered from insurance or otherwise (collectively,
"Recourse Obligations") in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be adjusted as follows:
first, an amount of deductions attributable to the Recourse Obligations other
than cost recovery deductions shall be allocated to the Partner or Partners that
bear the economic risk of loss (within the meaning of
Page 21 of 55
Treasury Regulation Section 1.752-2 with respect to such obligations in the
ratio in which they bear the economic risk of loss (or to the General Partner in
the case of extraordinary events); and second, the balance of such deductions
shall be allocated as provided in Section 4.1(a).
(e) If there is a net decrease in Partnership Minimum Gain during a
Partnership taxable year, each Partner will be allocated items of income
(including gross income) and gain for such year (and, if necessary, subsequent
years) in the proportion to, and to the extent of, an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain during the year.
A Partner is not subject to this Partnership Minimum Gain chargeback to the
extent that any of the exceptions provided in Treasury Regulation Section
1.704-2(f)(2)-(5) apply. Such allocations shall be made in a manner consistent
with the requirements of Treasury Regulation Section 1.704-2(f) under
Section 704 of the Code. This provision is a "minimum gain chargeback" under
the meaning of Treasury Regulation Section 1.704-2(f) and shall be interpreted
as such.
(f) If there is a net decrease in Partner Non-Recourse Debt Minimum Gain
during a Partnership taxable year, then each Partner with a share of the minimum
gain attributable to such debt at the beginning of such year will be allocated
items of income (including gross income) and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the extent of, an amount
equal to such Partner's share of the net decrease in Partner Non-Recourse Debt
Minimum Gain during the year. A Partner is not subject to this Partner
Non-Recourse Debt Minimum Gain chargeback to the extent that any of the
exceptions provided in Treasury Regulation Section 1.704-2(i)(4) applied
consistently with Treasury Regulation Section 1.704-2(f)(2)-(5) apply. Such
allocations shall be made in a manner consistent with the requirements of
Treasury Regulation Section 1.704-2(i)(4) under Section 704 of the Code. This
provision is a "partner nonrecourse debt minimum gain chargeback" under the
meaning of Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted as
such.
(g) If an Investor Limited Partner unexpectedly receives (1) an allocation
of loss or deduction or expenditures described in Section 705(a)(2)(B) of the
Code made (a) pursuant to Section 704(e)(2) of the Code to a donee of an
interest in the Partnership, (b) pursuant to Section 706(d) of the Code as the
result of a change in any Partner's interest in the Partnership, or (c) pursuant
to Regulation Section 1.751-1(b)(2)(ii) as a result of a distribution by the
Partnership of unrealized receivables or inventory items or (2) a distribution,
and such allocation and/or distribution would cause the negative balance in such
Partner's Capital Account to exceed (i) such Partner's share of Partnership
Minimum Gain plus (ii) such Partner's share, if any, of Partner Non-Recourse
Debt Minimum Gain plus (iii) the amount of such Partner's obligation, if any, to
restore a deficit balance in its Capital Account and such Partner's obligation
to make additional payments of its Capital Contribution to the extent permitted
under Section 704 of the Code, then such Partner shall be allocated items of
income (including gross income) and gain in an amount and manner sufficient to
eliminate such negative balance as quickly as possible. For purposes of this
Section, a Partner's Capital Account shall be treated as reduced by Qualified
Income Offset Items. This provision is a "qualified income offset" under the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3) and shall be
interpreted as such.
(h) The terms "profits" and "losses" used in this Agreement shall mean
income and losses, and each item of income, gain, loss or deduction entering
into the computation thereof, as determined in accordance with Regulation
Section 1.704-1(b)(2)(iv). Profits and losses for federal
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income tax purposes shall be allocated in the same manner as profits and losses
under this Section 4.1 except to the extent provided in Sections 4.4(b),
4.4(c) and 4.4(l).
4.2 CASH DISTRIBUTIONS PRIOR TO DISSOLUTION.
(a) Cash Available for Distribution
Cash Available for Distribution for each fiscal year (or portion thereof)
shall be distributed annually, within 90 days after the end of such fiscal year,
99% to the Investor Limited Partners and 1% to the General Partner.
(b) Distributions of Proceeds from Capital Transactions
Prior to dissolution, proceeds from Capital Transactions shall be applied
or distributed, as the case may be, in the following order of priority:
(1) First, to discharge, to the extent required by any Partnership
lender or creditor, the debts and obligations of the Partnership;
(2) Second, to fund reserves for contingent liabilities to the extent
deemed reasonable by the General Partner in its sole and absolute
discretion;
(3) Third, to the repayment of any loans or advances that may have
been made by the General Partner to the Partnership;
(4) Fourth, to the Partners, Limited and General, an amount equal to
the aggregate positive balances in their Capital Accounts (determined as of
the end of the fiscal year preceding the year in which the Capital
Transaction occurs), (to be allocated to each Partner in accordance with
each Partner's ratable share of the aggregate Capital Account balances of
all Partners (as of such date); and
(5) Fifth, the balance thereof 50% to the Investor Limited Partners
and 50% to the General Partner.
4.3 TERMINATION DISTRIBUTIONS.
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership, the remaining
assets of the Partnership shall be distributed to the Partners in accordance
with the positive balances in their Capital Accounts after taking into account
all Capital Account adjustments for the Partnership taxable year, including
adjustments to Capital Accounts pursuant to Section 4.1(b) and under
Section 4.3(b). In the event that the General Partner has a negative balance in
its Capital Account following the liquidation of the Partnership or its Interest
in the Partnership after taking into account all Capital Account adjustments for
the Partnership taxable year in which the liquidation occurs, the General
Partner shall pay to the Partnership in cash an amount equal to the lesser of
(a) the negative balance in such General Partner's Capital Account or (b) the
excess of 1.01% of the Capital Contributions of the Investor Limited Partners
over the Capital Contributions previously made by the General Partner. Such
payment shall be made by the end of such taxable year (or, if later, within 90
days
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after the date of such liquidation) which amount shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or distributed to
other Partners in accordance with their positive balances in their Capital
Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Partnership immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be allocated to the
Partners in accordance with Section 4.1(b), and any property so distributed
shall be treated as a distribution of an amount in cash equal to the excess of
such fair market value over the outstanding principal balance of and accrued
interest on any debt by which the property is encumbered. For the purposes of
this Section 4.3(b), "unrealized appreciation" or "unrealized depreciation"
shall mean the difference between the fair market value of such assets, taking
into account the fair market value of the associated financing (but subject to
Section 7701(g) of the Code) and the Partnership's adjusted basis for such
assets as determined under Section 1.704-1(b). This Section 4.3(b) is merely
intended to provide a rule for allocating unrealized gains and losses upon
liquidation or other distribution event, and nothing contained in this
Section 4.3(b) or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market value of such
assets shall be determined by an appraiser to be selected by the General Partner
in its sole and absolute discretion.
4.4 SPECIAL PROVISIONS. Notwithstanding any other provision in this
Agreement:
(a) Except as otherwise provided in this Agreement, all profits, losses,
Tax Credits and cash distributions shared by the Investor Limited Partners shall
be shared by each Investor Limited Partner in the proportions set forth in
Schedule A.
(b) Income, gain, loss and deduction with respect to property which has a
variation between its basis computed in accordance with Treasury Regulation
Section 1.704-1(b) and its basis computed for Federal income tax purposes shall
be shared among Partners so as to take account of such variation in a manner
consistent with the principles of Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(g).
(c) If any profit arises from the sale or other disposition of any
Partnership asset which shall be treated as ordinary income under the
depreciation recapture provisions of the Code, then the full amount of such
ordinary income shall be allocated among the Partners in the proportions that
the Partnership deductions from the depreciation giving rise to such recapture
were actually allocated. In the event that subsequently enacted provisions of
the Code result in other recapture income, no allocation of such recapture
income shall be made to any Partner which has not received the benefit of those
items giving rise to such other recapture income.
(d) If the Partnership shall receive any purchase money indebtedness in
partial payment of the purchase price of any of its assets and such indebtedness
is distributed to the Partners pursuant to the provisions of Section 4.2(b) or
4.3(a), the distributions of the cash portion of such purchase price and the
principal amount of such purchase money indebtedness hereunder shall be
allocated among the Partners in the following manner: On the basis of the sum
of the principal amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership obligations and
fund reasonable reserves), there shall be
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calculated the percentage of the total net proceeds distributable to each class
of Partners, General and Limited, based on Section 4.2(b) or 4.3(a), treating
cash payments and purchase money indebtedness principal interchangeably for this
purpose, and the respective classes shall receive such respective percentages of
the net cash purchase price and purchase money principal. Payments on such
purchase money indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated to the respective
classes of Partner in accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds shall be allocated
in the same proportion.
(e) Prior to making any distribution of Cash Flow or of cash attributable
to a sale or other disposition of Partnership property, the General Partner may
in its sole and absolute discretion request from any Investor Limited Partner an
affidavit or other evidence that such Investor Limited Partner is not a "foreign
person" within the meaning of Section 1445 of the Code or a person "which is not
a United States Person" within the meaning of Section 1446 of the Code. In the
event such Investor Limited Partner does not provide such affidavit or other
evidence in form and content satisfactory to the General Partner in its sole and
absolute discretion, within 30 days after request by the General Partner, the
General Partner may in its sole and absolute discretion withhold and pay over to
the Internal Revenue Service such portion of such Investor Limited Partner's
distribution as may be necessary to comply with Section 1445(e) or Section 1446
of the Code, whichever is applicable, and any amount so withheld and paid over
shall be treated as a distribution to such Investor Limited Partner at the time
it is paid over to the Internal Revenue Service.
(f) In addition to the provisions of Section 3.5, if any Investor Limited
Partner fails to make any payments of its Capital Contribution when due (either
under circumstances in which it never provided a Good Cause Notice, or if a Good
Cause Notice is given, such Investor Limited Partner is determined to be a
Defaulting Limited Partner pursuant to said Section 3.5) with the result that
(i) the Partnership or an Intermediate Partnership has insufficient funds to pay
when due an Intermediate Partnership Installment or an Operating Partnership
Installment and (ii) the Partnership's interest in an Intermediate Partnership
or an Intermediate Partnership's interest in an Operating Partnership is
reduced, any recapture which results therefrom shall be allocated solely to such
Defaulting Limited Partner. If there is more than one Defaulting Limited
Partner, the recapture described above shall be allocated among such Defaulting
Limited Partners in proportion to their respective defaulted amounts.
(g) In the event that any fee payable to any General Partner or any of its
Affiliates shall instead be determined to be a non- deductible,
non-capitalizable distribution from the Partnership to a Partner for Federal
income tax purposes, then there shall be allocated to such General Partner an
amount of gross income equal to such distribution. Furthermore, in the event
that the General Partner makes an additional Capital Contribution to the
Partnership under the circumstances set forth in Section 5.8(d), then the
calculation and allocation of profits and losses for the tax year in which such
Capital Contribution is made shall be adjusted as follows: FIRST, an amount of
Partnership deductions (consisting of deductions other than cost recovery
deductions) equal to the amount of such Capital Contribution shall be allocated
to the General Partner; and SECOND, the balance of such deductions shall be
allocated as provided in Section 4.1(a).
(h) All Partnership expenditures which constitute syndication expenses as
defined in Treasury Regulation Section 1.709-2(b) shall be allocated 1.0% to the
General Partners and
Page 25 of 55
99.0% to the Investor Limited Partners (and among the Investor Limited Partners
in accordance with the amount of such expenditures attributable to the
acquisition of their respective Interests in the Partnership).
(i) In applying the provisions of Section 4 with respect to distributions
and allocations, the following ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by Qualified
Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of Cash
Available for Distribution under Section 4.2.(a).
(3) Capital Accounts shall be reduced by distributions from Capital
Transactions under Section 4.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 4.1(e) or 4.1(f).
(5) Capital Accounts shall be increased by any qualified income
offset under Section 4.1(g).
(6) Capital Accounts shall be increased by allocations of profits
under Section 4.1(a)
(7) Capital Accounts shall be reduced by allocations of losses under
Section 4.1(a).
(8) Capital Accounts shall be reduced by allocations of losses under
Section 4.1(b).
(9) Capital Accounts shall be increased by allocations of profits
under Section 4.1(b).
(j) To the maximum extent permitted under the Code, allocations of profits
and losses shall be modified so that the Partners' Capital Accounts reflect the
amount they would have reflected if adjustments required by Sections 4.1(e),
4.1(f) and 4.1(g) had not occurred.
(k) The Partners agree that the assets of the Partnership may be revalued
to reflect their fair market value (referred to herein as the "Book Value") and
the Capital Accounts of the Partners adjusted to reflect the difference between
Book Value and the Partnership's adjusted tax basis in such assets (or, in the
case where a prior revaluation has occurred, the Partnership's prior Book Value)
upon the admission of Investor Limited Partner(s) to the Partnership. The
General Partner is authorized to take whatever actions it deems necessary or
appropriate to effect this revaluation of assets and the equitable adjustment of
Capital Accounts on behalf of the Partnership.
(l) In the event of a revaluation of Partnership assets pursuant to
Section 4.4(k), subsequent allocations of gain, income, loss and deduction
(including, without limitation, cost
Page 26 of 55
recovery and amortization deductions) with respect to such assets for the
purpose of computing Profits and Losses shall be determined based on the Book
Value of such assets and shall be computed consistent with Treasury Regulation
Section 1.704- 1(b)(2)(iv)(g). Allocations of gain, income, loss and deduction
(including, without limitation, cost recovery and amortization deductions) for
tax purposes with respect to such assets shall be allocated among the Partners
in accordance with the principles of Section 704(c) of the Code.
(m) If the Partnership is advised at any time by the Accountants or Tax
Counsel that the allocation of any item of Partnership income, gain, loss,
deduction or Tax Credit is unlikely to be respected for tax purposes, the
General Partner may, with the Consent of the Limited Partners, amend this
Agreement to cure such defect consistent with the principles of Section 704 of
the Code and the Regulations issued thereunder.
(n) Notwithstanding any other provision of this Agreement to the contrary
that may be expressed or implied herein, the interests of the General Partner,
in each item of the Partnership income, gain, loss, deduction or credit will be
equal to at least 1% of each of those items at all times during the existence of
the Partnership.
SECTION 5. RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
5.1 BUSINESS MANAGEMENT; TAX MATTERS PARTNER. The General Partner shall
be exclusively responsible for the conduct of the Partnership's affairs. All
Partners hereby acknowledge and agree that the General Partner shall be the "Tax
Matters Partner" pursuant to the Code in connection with any audit of the
federal income tax returns of the Partnership. The Partnership may engage
accountants and legal counsel to assist the Tax Matters Partner in discharging
its duties hereunder. The Tax Matters Partner will promptly after receipt
thereof provide to the Investor Limited Partners copies of all notices
concerning any tax proceedings. Each Partner has the right to participate in
such proceedings relating to the determination of partnership items at the
Partnership level. Expenses of any such proceedings undertaken by the Tax
Matters Partner will be paid out of Partnership assets. Each Investor Limited
Partner which elects to participate in the proceedings will be responsible for
any expenses incurred by it in connection with such participation. The cost of
any adjustments to any Partner, and the cost of any resulting audits or
adjustments of such Partner's tax return, will be borne solely by the affected
Partner. The Tax Matters Partner agrees to contest any issue challenged by the
Internal Revenue Service on audit involving material adverse tax consequences to
the Investor Limited Partners unless it is requested by a majority in interest
of the Investor Limited Partners or it obtains the Consent of the Limited
Partners not to contest such issue. The Tax Matters Partner will not extend the
statute of limitations with respect to the Partnership nor settle any tax
proceeding without first obtaining the Consent of the Limited Partners. The Tax
Matters Partner is hereby designated as the "Notice Partner" under Section
6231(a)(8) of the Code to receive any notice provided by the Internal Revenue
Service to the Investor Limited Partners as a group in accordance with Section
6223(b)(2) of the Code and agrees to forward copies of such notices to the
Investor Limited Partners. The Tax Matters Partner shall have the right to
determine whether a challenge to a final partnership administrative adjustment
shall be initiated in an action in the Tax Court, or, with the Consent of the
Investor Limited Partners, in a Federal district court or the Federal Claims
Court.
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5.2 POWERS. Subject to Sections 5.3 and 5.12 and the other provisions of
this Agreement, the General Partner shall have all authority, rights and powers
granted to general partners pursuant to the provisions of the Uniform Act, and
shall have all the authority, rights and powers which it deems necessary or
appropriate to effect the purposes of the Partnership, including, without
limitation, the following:
(a) To acquire, hold, dispose of and otherwise deal with the Intermediate
Partnership Interests and to enter into the Intermediate Partnership Agreements
and all other agreements, instruments and documents as may be required and take
any other actions in connection with the admission of the Partnership as a
limited partner of the Intermediate Partnerships; PROVIDED that any disposition
of the Partnership's Intermediate Partnership Interests prior to the end of the
related Compliance Period shall require the Consent of the Limited Partners.
(b) In connection with the Partnership's investment in the Intermediate
Partnerships or any investment in any Intermediate Partnership, to exercise all
powers afforded limited partners under the laws of the jurisdiction in which any
Intermediate Partnership is organized consistent with the terms of this
Agreement, including, without limitation, the power (i) to execute, deliver and
perform the terms, covenants and obligations of any Intermediate Partnership
Agreement and all other agreements, instruments and other documents as may be
necessary or appropriate in connection with the business and operations of such
Intermediate Partnership, (ii) to give or withhold the consent or approval of
the Partnership, in its capacity as a limited partner of any Intermediate
Partnership to any action proposed to be taken by such Intermediate Partnership
for which such consent is required, including with respect to the sale of any
Property or Operating Partnership Interest or the refinancing of any Mortgage,
(iii) to vote to amend the Intermediate Partnership Agreement of such
Intermediate Partnership in any manner as to change its Intermediate Partnership
Interest, to vote to change its Intermediate Partnership Interest in the
profits, losses and cash distributions of such Intermediate Partnership or to
assign (or grant a security interest) in a part or all of its Intermediate
Partnership Interest, (iv) to amend the Intermediate Partnership Agreement of
any Intermediate Partnership in the manner provided therein and to vote on any
issue for which the Partnership, as a partner of such Intermediate Partnership,
may vote, and (v) to exercise the right to cause Affiliates of the General
Partner to become an Intermediate General Partner, including the sole
Intermediate General Partner, in the event of the bankruptcy, death,
dissolution, withdrawal, removal or adjudication of incompetence of an
Intermediate General Partner, or in the event of a material default by the
Intermediate General Partner or any affiliates under any obligations of such
Intermediate General Partner or affiliate to the Intermediate Partnership, or
the Partnership or upon the occurrence of certain other events; provided that
the General Partner determines in good faith that the exercise of any such power
would best protect the interest of the Partnership with respect to any
Intermediate Partnership or is otherwise in the best interests of the
Partnership and the Partners, and provided further that the exercise of such
power does not conflict with any other provision of this Agreement, including,
without limitation, Section 5.3. In addition to and without limiting the
foregoing or any other rights provided for in this Agreement, the General
Partner shall have the right (and shall be obligated to make all determinations
with regard to the exercise of such right in a manner consistent with its
fiduciary duty to the Partnership and the Investor Limited Partners) to exercise
the Partnership's rights as a limited partner of the Intermediate Partnerships
and to exercise the Intermediate Partnership's rights as a partner of an
Operating Partnership including, without limitation, to cause the removal of the
general partner of an Intermediate Partnership or
Page 28 of 55
the managing or general partner of an Operating Partnership, as the case may be,
under circumstances permitted by the Operative Documents.
(c) To employ, contract and deal with, from time to time, any Persons,
including any Partner or Affiliate of any Partner, in connection with the
offering or the management and operation of the Partnership business, on such
terms as the General Partner shall determine in its sole and absolute
discretion.
(d) To acquire, by purchase or otherwise, hold, dispose of and otherwise
deal with such personal property as may be necessary, convenient or incidental
to the accomplishment of the purposes of the Partnership, provided that if the
acquisition or disposition of such property is not specifically authorized under
other provisions of this Agreement, then such property may not be acquired or
disposed of without the Consent of the Limited Partners (unless the acquisition
or disposition occurs in the ordinary course of the Partnership's business and
involves an expenditure of, or the fair market value of the property to be
disposed of is, $10,000 or less).
(e) To bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the
Partnership.
(f) To pay as a Partnership expense any and all costs or expenses
associated with the formation, development, organization and operation of the
Partnership.
(g) To deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with this Agreement.
(h) To the extent provided for in other provisions of this Agreement and
subject to those terms set forth in this Agreement, to borrow money and issue
evidences of indebtedness in furtherance of any or all of the purposes of the
Partnership on such terms and conditions as the General Partner shall in its
reasonable discretion determine, including borrowings from the General Partner
or its Affiliates, and to secure the same by grant of security interests in
assets of the Partnership (except as otherwise provided in Section 3.4) as the
General Partner shall in its reasonable discretion determine (which may include
borrowings from the General Partner or its Affiliates or others for the purpose
of paying fees, costs and expenses to the General Partner or its Affiliates).
(i) Subject to Sections 9.6 and 9.7, to make such elections under the Code
and other relevant tax laws as to the treatment of items of Partnership income,
gain, loss, deduction and credit, and as to all other relevant matters, as the
General Partner deems necessary or appropriate, including, without limitation,
elections referred to in Section 754 of the Code, selection of the manner and
method of determining depreciation of the capital assets of the Partnership,
determination of which items of cash outlay are to be capitalized or treated as
current expenses, and selection of the method of accounting and bookkeeping
procedures to be used by the Partnership.
(j) To require in any or all Partnership contracts that the General
Partner shall not have any personal liability thereon but that the Person
contracting with the Partnership shall look solely to the Partnership and its
assets for satisfaction.
Page 29 of 55
(k) To cause any obligation with respect to which the General Partner is
personally liable to be paid in preference to obligations for which no Partner
is liable.
(l) To become qualified as a foreign limited partnership in the states in
which the Properties are located or in any other jurisdiction in which the
General Partner deems such qualification to be in the interests of the
Partnership.
(m) To establish, maintain and augment Reserves to the extent the General
Partner shall deem appropriate, in its reasonable discretion, to effect the
immediate and long-term objectives of the Partnership.
(n) To make loans or advances to (including Mortgages), contract and
otherwise deal with, from time to time, any Operating Partnership or Affiliate
of any Operating Partnership.
(o) To enter into any kind of activity and to perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to the
accomplishment of the purposes of the Partnership, so long as said activities
and contracts may be lawfully carried on or performed by a partnership under the
laws of the State.
(p) To compromise the obligation of a Partner to make a contribution to
the capital of the Partnership or to return to the Partnership money or other
property paid or distributed to such Partner in violation of the Uniform Act.
(q) To cause or permit an Operating Partnership to grant an option to
acquire the Property owned by such Operating Partnership following the end of
the Compliance Period for an option price equal to the fair market value of the
Property as of the date of purchase as determined by an appraisal obtained by
the Operating Partnership at any time after the Initial Funding Date, but only
if (i) Consent of the Limited Partners (not to be unreasonably withheld) shall
have been given as to the compliance of the form and methodology of such
appraisal with proper appraisal standards and (ii) the Partnership shall have
received an opinion from Tax Counsel that it is more likely than not that the
granting of the option will not cause the Operating Partnership to fail to be
treated as the owner of Property for Federal income tax purposes.
(r) To execute, acknowledge and deliver any and all instruments to
effectuate the foregoing.
5.3 RESTRICTIONS ON AUTHORITY; ADDITIONAL OBLIGATIONS.
(a) Notwithstanding any other provisions of this Agreement, the General
Partner shall have no authority to do any of the following acts without the
Consent of the Limited Partners (which Consent may be withheld in their absolute
discretion):
(1) to sell, exchange or otherwise transfer or convey all or
substantially all the assets of the Partnership at one time; or
(2) to admit any additional Investor Limited Partners (except
Substituted Investor Limited Partners or as otherwise permitted
pursuant to Section 7.3(f)); or
Page 30 of 55
(3) To file, or acquiesce in the filing of, any bankruptcy proceeding
by the Partnership, any Intermediate Partnership or any Operating
Partnership or to knowingly cause the Partnership to voluntarily
take any action that would cause an Event of Bankruptcy; or
(4) To hire, or acquiesce in the hiring of, any natural persons as
employees (as opposed to independent contractors) of the
Partnership or any Intermediate Partnership; or
(5) To place record title to, or the right to use, Partnership assets
in the name or names of a nominee or nominees, or trustee or
trustees, for any purpose; or
(6) To incur indebtedness for money borrowed, whether or not secured
by the Partnership, Intermediate Partnership or Operating
Partnership assets, except as specifically permitted by the
Operative Documents, or to provide any guarantee or grant a
security interest with respect to any Partnership assets or any
lien thereon not in the ordinary course of business; or
(7) to amend, modify, supplement or terminate any Operative Document,
or to permit any party thereunder to waive any provision thereof,
to the extent that the effect of such amendment or waiver would
be (A) to eliminate or diminish or defer any obligation or
undertaking of the General Partner or any Affiliate thereof which
accrues, directly or indirectly, to the benefit of, or provides
additional security or protection to the Investor Limited
Partners (notwithstanding that any Investor Limited Partner is
neither a party to nor an express beneficiary of such provision
or was not a Partner when such provision became effective), or
(B) to increase the liability, or impair the limited liability,
of any Investor Limited Partner; or
(8) to confess a judgment against the Partnership or to commence
substantial litigation; or
(9) to perform any act that would subject any Investor Limited
Partner to liability as a general partner in any jurisdiction; or
(10) to elect to dissolve the Partnership or permit or consent to the
dissolution or liquidation of any Intermediate Partnership or
Operating Partnership; or
(11) to effect, permit, consent to the merger or consolidation of the
Partnership into or with another entity, or the acquisition by
the another entity, or the acquisition by the Partnership of all
or substantially all of the assets of one or more entities (other
than the acquisition of the interests in the Intermediate
Partnerships contemplated by the Operative Documents); or
(12) to approve any construction on a Property in addition to that
contemplated in its Operating Partnership Agreement or the
acquisition of any interest in real estate by an Operating
Partnership in addition to that contemplated in
Page 31 of 55
its Operating Partnership Agreement or the acquisition of
additional partnership interests by the Intermediate
Partnerships; or
(13) to permit, consent to or acquiesce in the admission of additional
partners to any Intermediate Partnership or Operating Partnership
other than as explicitly provided in the Operative Documents; or
(14) to permit or consent to the prepayment of any Mortgage or Bridge
Loan by the Partnership, the Operating Partnerships or the
Intermediate Partnerships; or
(15) to waive any defaults under the Operative Documents by any
Affiliate of the General Partner if such waiver is a breach by
the General Partner of its fiduciary duty to the Partnership and
the Investor Limited Partners; or
(16) to permit or consent to the amendment of an Intermediate
Partnership Agreement or Operating Partnership Agreement to
require or permit additional capital contributions by the
partners thereof or take other actions if such amendment,
additional capital contributions or other actions would alter the
profits, losses, credits and cash distributions allocable or
distributable to the partners thereof;
(17) to permit or consent to the admission of a co-general partner in
the Intermediate Partnerships or the substitution of an
Intermediate General Partner;
(18) to grant any consent by the Partnership as a limited partner of
any Intermediate Partnership; or
(19) To permit or consent to any change in the casualty or liability
insurance coverage from that required to be maintained pursuant
to any Operating Partnership Agreement or other Operative
Document as in effect on the date hereof.
(b) The General Partner shall promptly notify the Investor Limited
Partners of any material default under any of the Operative Documents,
including, without limitation, any defaults by Affiliates of the General Partner
of which the General Partner has knowledge or should have knowledge in the
exercise of its duties under the Operative Documents.
(c) The General Partner shall have no authority to do any act in violation
of applicable law or required to be approved or ratified by all limited partners
under the Uniform Act without the prior written consent of all Investor Limited
Partners.
5.4 DUTIES AND OBLIGATIONS OF THE GENERAL PARTNER.
(a) The General Partner shall devote to the affairs of the Partnership
such time and resources as are reasonable and necessary for the proper
performance of its duties hereunder and shall use reasonable efforts to carry
out the purpose and objectives of the Partnership.
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(b) If at any time the aggregate net worth (calculated on the basis of
fair market values of assets) of the General Partner shall decrease below
$500,000, the General Partner shall consult with Tax Counsel and, if such
counsel is of the opinion that such reduction might adversely affect the
treatment of the Partnership as such for Federal income tax purposes, the
General Partner shall use its best efforts either (i) to admit one or more
Persons as a general partner of the Partnership holding at least a 1% Interest
and having a combined net worth (calculated as aforesaid) equal to or greater
than $500,000 or (ii) to obtain additional capitalization sufficient to increase
the net worth (calculated as aforesaid) to at least $500,000.
(c) The General Partner shall cause an amendment to the Original
Certificate (reflecting the necessary changes thereto pursuant to the terms of
this Agreement) to be filed in the Filing Office in accordance with the
provisions of the Uniform Act and to take any and all other actions reasonably
necessary to perfect and maintain the status of the Partnership as a limited
partnership under the laws of the State, Iowa and Florida and in order to
qualify the Partnership under the laws of any jurisdiction in which the
Partnership is doing business or in which such qualification is necessary to
protect the limited liability of the Investor Limited Partners or in order to
continue in effect such qualification. The General Partner shall cause
amendments to the Certificate and other certificates, including limited
partnership and fictitious name certificates, and other documents as are
required by the applicable statutes, rules or regulations of any such
jurisdiction to be filed whenever and wherever required by the Uniform Act or by
the laws governing limited partnerships in effect in Iowa and Florida and any
other jurisdiction in which the Partnership is doing business. Such amendments
may be executed by the General Partner and, where such amendment reflects the
admission of a new general partner and to the extent required by the Uniform
Act, shall be executed by the existing General Partner and by any Person
designated in the amendment as a new general partner of the Partnership.
(d) The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in its immediate possession or control. The General Partner shall not employ,
or permit any other Person to employ, such funds or assets in any manner except
for the exclusive benefit of the Partnership.
(e) The General Partner shall not contract away the fiduciary duty owed at
common law to limited partners and shall use commercially reasonable efforts to
comply with all laws and regulations (including, without limitation,
Environmental Laws) affecting the Partnership or the business of the
Partnership.
(f) To the extent required by its fiduciary duty to the Partnership and
the Investor Limited Partners, the General Partner shall diligently exercise all
of its rights, and all of the rights of the Partnership on behalf of the
Partnership, to cause the Intermediate Partnerships, the Operating Partnerships
and the partners thereof to comply with the provisions of the Operative
Documents.
5.5 DUTIES AND OBLIGATIONS WITH RESPECT TO ENVIRONMENTAL MATTERS.
(a) The General Partner shall have no authority to do and will not approve
of or consent to any of the following activities: (i) treatment or disposal of
any Contaminant (as defined in the Subscription Agreement) at any of the
Properties; (ii) generation, use, handling or storage at any of the Properties
of any waste other than office trash or household waste or any
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Contaminant other than of a type and in quantities normally associated with the
use for which the Properties are intended as of the date of this Agreement; or
(iii) generation, use, handling, storage, transportation, disposal or
arrangement for transportation or disposal of any Contaminant required to have a
manifest under 40 C.F.R. Part 262.
(b) Upon obtaining notice, and consistent with the Partnership's status in
any of the Intermediate Partnerships, the General Partner shall use commercially
reasonable efforts to enforce, and under no circumstances shall waive any
Intermediate Partnership Agreement or Operating Partnership Agreement provisions
which (1) prohibit any of the Properties from being in violation of
Environmental Laws (as defined in the Subscription Agreement); (2) address or
require correction of or action with respect to any of the following conditions
or events: (i) the Release (as defined in the Subscription Agreement) or
threatened Release of any Contaminant from any of the Properties; (ii) the
incurrence of any expense or loss by any Person in connection with the
investigation, assessment, cleanup, containment or removal of any Contaminant or
any Environmental Damages (as defined in the Subscription Agreement) for which
the General Partner, the Partnership or any of the Intermediate Partnerships or
any of the Operating Partnerships may be liable; (iii) the imposition of any
Environmental Lien (as defined in the Subscription Agreement) on any of the
Properties; or (iv) the presence of any Contaminant in, on, at or under any of
the Properties in concentrations or quantities that exceed safe limits
established by applicable Environmental Laws; (3) require the Operating
Partnerships and any managing agents for or Persons performing work at the
Properties to comply with all Environmental Laws applicable to the Properties,
including the use, maintenance and operations of the Properties and all
activities and conduct related thereto; or (4) prohibit (i) treatment or
disposal of any Contaminant at any of the Properties; (ii) generation, use,
handling or storage at any of the Properties of any waste other than office
trash or household waste or any Contaminant other than of a type and in
quantities normally associated with the use for which the Properties are
intended as of the date of this Agreement; or (iii) generation, use, handling,
storage, transportation, disposal or arrangement for transportation or disposal
of any Contaminant required to have a manifest under 40 C.F.R. Part 262.
5.6 OTHER ACTIVITIES. Partners and any of their Affiliates may engage or
possess an interest, independently or with others, in other businesses or
ventures of every nature and description, including without limitation
development and operation of real estate in competition with the Partnership or
any of the Operating Partnerships, and neither the Partnership nor any other
Partner shall have any rights in or to such ventures or the income or profits
derived therefrom.
5.7 DISTRIBUTIONS. Except as provided in Section 4, each Partner shall
look solely to the assets of the Partnership for all distributions and share of
profits or losses and shall have no recourse therefor (upon dissolution or
otherwise) against any other Partner. No Partner shall have any right to demand
or receive property other than money upon dissolution and termination of the
Partnership, except as otherwise expressly provided for herein.
5.8 CERTAIN PAYMENTS. Without limiting the other powers set forth herein,
the General Partner is expressly authorized for, in the name of, and on behalf
of, the Partnership to:
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(a) Pay in connection with the offering of Interests in the
Partnership, commissions to Capstar Partners, Inc. in an amount up to 2% of the
gross Capital Contributions of the Investor Limited Partners.
(b) Pay to the General Partner or Affiliate(s) thereof in
consideration of the services of the General Partner in connection with the
organization of the Partnership, a fee (the "Organization Fee") in the amount of
4% of the gross Capital Contributions of the Investor Limited Partners.
(c) Pay to the General Partner a nonaccountable allowance for all
costs and expenses of (i) offering interests to the Investor Limited Partners in
an amount equal to 1% of the gross Capital Contributions of the Investor Limited
Partners and (ii) organizing the Partnership in an amount equal to 1.25% of the
gross Capital Contributions of the Investor Limited Partners. The General
Partner shall be obligated to pay on behalf of the Partnership all of such costs
and expenses, without regard to whether such costs and expenses exceed or are
less than the aforesaid allowance. In particular, and without limiting the
foregoing, the General Partner shall (A) pay out-of-pocket disbursements
incurred by Orion and Polar since May 19, 1995 in connection with the
transactions contemplated by the Operative Documents, and (B) pay to Xxxxx
Xxxxxxxxxx its fees and disbursements as counsel to Orion and Polar, in each
case in such amounts as shall be mutually agreed among the Partners on or prior
to the Initial Funding Date.
(d) Pay to the General Partner or Affiliate(s) thereof a fee (the
"Asset Management Fee"), for performing those services in connection with the
management of the affairs of the Partnership as set forth in a certain Asset
Management Agreement of even date herewith between the Partnership and the
General Partner, in the amount of the excess of (i) the gross Capital
Contributions of the Investor Limited Partner over (ii) the aggregate amount
necessary to pay the costs incurred in connection with acquisition of its
interest in the Intermediate Partnerships, make all payments required from the
Intermediate Partnerships to the Operating Partnerships, repayment in full of
the Bridge Loan and the payment of the fees and allowances set forth in
Sections 5.8(a) through (d) and the funding of the Capital Reserve. In the
event that the Asset Management Fee determined pursuant to the foregoing
following payment of the Fourth Installment shall be less than $1,268,000, the
General Partner shall make an additional Capital Contribution to the Partnership
on or before the end of the calendar year in which the Fourth Installment is
paid in an amount sufficient to enable the Partnership to pay the Asset
Management Fee in the full amount of $1,268,000.
(e) Pay to the General Partner a noncumulative fee (the "Incentive
Management Fee") in respect of each year or portion thereof (i) during the
period commencing on the Initial Funding Date and ending on the last day of the
fifth full fiscal year after the Initial Funding Date, an annual amount equal to
50% of any Cash Flow, and (ii) for each fiscal year or portion thereof
commencing with the sixth full fiscal year after the Initial Funding Date, the
sum of (A) an annual amount equal to $125 multiplied by the number of apartment
units owned by each Operating Partnership which Operating Partnership has
positive cash flow (as computed pursuant to its Operating Partnership Agreement)
for such year or portion thereof, plus (B) an annual amount equal to 50% of any
Cash Flow for such fiscal year or portion thereof (after deducting from Cash
Flow the amount payable for such fiscal year or portion thereof under
clause (A)), plus (C) any balance in the Capital Reserve which is released
pursuant to Section 5.10.
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(f) Pay to the General Partner or Affiliate(s) thereof (i) upon any
sale of a Property or an Operating Partnership Interest, a fee (the "Disposition
Fee") for arranging, structuring, negotiating and closing such sale and
(ii) upon the refinancing of any Mortgage (subsequent to initial permanent
financing on each Property), including extension or permitted restructuring of
any existing Mortgage a fee (the "Refinancing Fee") for arranging, structuring,
negotiating and closing such refinancing; provided, however, that any such
Disposition Fee or Refinancing Fee shall not exceed, when combined with any
other fees or commissions payable by the the Intermediate Partnership or the
Operating Partnership (whether or not to Affiliates of the General Partner) in
connection with each such sale or refinancing, an amount equal to 4.0% of the
gross sale price or the principal amount of the refinanced Mortgage.
The fees and reimbursements to the Partners or their Affiliates set forth in
paragraphs (a) through (d) of this Section 5.8 shall be payable from Capital
Contributions of the Investor Limited Partners and/or Bridge Loan proceeds as
and when provided herein, or if not specifically provided, as and when the
General Partner shall determine and without regard to the income of the
Partnership, provided, however, that one or more of the payments authorized
under paragraphs (a) through (d) of this Section 5.8 shall be reduced or
refunded by the General Partner as it shall determine in its sole discretion to
account for any delay in payment, reduction or return of Capital Contributions
to the Investor Limited Partners under this Agreement and that any payment made
pursuant to paragraph (d) of this Section shall be refunded by the General
Partner to the extent required to pay the amounts described in clause (ii)
thereof in full.
5.9 AGREEMENTS WITH OPERATING PARTNERSHIPS.
(a) The General Partner and its Affiliates are authorized to make loans or
advances to (including Mortgages which shall be non-recourse (except that there
may be recourse for fraud, misapplication of funds, material misrepresentation
and environmental liability and there may be Partner Non-Recourse Debt) and non
cross-collateralized)), contract and otherwise deal with, from time to time, any
Operating or Intermediate Partnership or Affiliate of any Operating Partnership
and in connection therewith to receive fees, prices or other compensation to the
extent already paid or provided to be paid pursuant to any presently existing
Operating Partnership Agreement or related agreement (the "Current
Arrangements"), and otherwise in a maximum total principal amount not exceeding
$180,000 and on terms no less favorable to such Operating Partnership than would
be applicable if such Persons were not Affiliates of the General Partner;
provided however, that in each such instance other than the provision of the
Current Arrangements or any Permanent Mortgage or Standby Permanent Mortgage,
the General Partner shall cause to be offered to the Investor Limited Partners
the opportunity to provide or participate in such loan or advance on a pro rata
basis (acceptance of which offer must be made in writing within 10 days after
notice of such offer is received by the Investor Limited Partners).
(b) If the construction financing for a Property shall mature and the
Operating Partnership which owns that Property shall have been unable to obtain
permanent financing on a non- recourse (except that there may be recourse for
fraud, misapplication of funds, material misrepresentation and environmental
liability and there may be Partner Non-Recourse Debt) and non
cross-collateralization basis with a term of at least 15 years, in an amount at
least sufficient to fully repay such construction financing, AMLIC will provide
or cause its Affiliate to provide a "Standby Permanent Mortgage" which, at its
sole option, will be either first mortgage permanent financing in an amount
sufficient to fully repay such construction financing, or second mortgage
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permanent financing in an amount which, when added to the first mortgage
permanent financing available to the Operating Partnership (which shall meet all
conditions of permanent financing described above except as to amount), will be
sufficient to fully repay such construction financing. A Standby Permanent
Mortgage will (i) be in an amount sufficient to repay such construction
financing as provided above, (ii) be for a term of at least 15 years, (iii) be
payable in equal monthly installments based on an amortization schedule of at
least 25 years, (iv) be on a non-recourse (except that there may be recourse for
fraud, misapplication of funds, material misrepresentation and environmental
liability and there may be Partner Non-Recourse Debt) and non
cross-collateralized basis, (v) bear interest at a rate equal to then prevailing
market rates for comparable financing and (vi) provide for the accrual (and the
addition thereof to principal) of any portion of debt service payments which
exceeds the sum of Operating Partnership "Net Operating Income" (operating
revenues less operating expenses and required deposits to reserves) plus any
Operating Partnership reserves available to pay debt service plus operating
deficit loan advances due from the Operating General Partners, with such accrued
amounts and interest thereon to be paid from any future Net Operating Income of
the Operating Partnership in excess of debt service. Notwithstanding the
foregoing, however, no such accrual shall be required and such Standby Permanent
Mortgage may be declared in default at any time when the sum of Net Operating
Income of the Operating Partnership plus such reserves and advances shall be
less than then applicable Minimum Required Debt Service. "Minimum Required Debt
Service" shall be that amount which would yield 105% debt service coverage on
the aggregate debt comprising any Permanent Mortgage and Standby Permanent
Mortgage based on Net Operating Income of the Operating Partnership for the six
month period prior to the closing of such Standby Permanent Mortgage as
determined by the Accountants.
5.10 PARTNERSHIP RESERVES AND PAYMENT OF EXPENSES.
(a) The General Partner shall establish, and invest in such Temporary
Investments as the General Partner shall determine in its reasonable discretion,
the following segregated reserve accounts in the name and for the sole and
exclusive benefit of the Partnership: (i) a reserve account (the "Operating
Reserve") which shall be funded in an amount not less than 50% of Cash Flow for
each fiscal year through and including the fifth full fiscal year following the
date hereof, and thereafter in the reasonable discretion of the General Partner;
and (ii) a reserve account (the "Capital Reserve") which shall be funded in the
total amount of $750,000 from the gross Capital Contributions of the Investor
Limited Partners ($250,000 from the first payments made of each of the Second,
Third and Fourth Installments thereof). Any interest or other earnings on the
monies held in the Capital Reserve or the Operating Reserve shall be held and
become a part of such Reserve.
(b) All expenses of the Partnership, including reimbursement to the
General Partner for all direct expenses reasonably incurred in connection with
the affairs of the Partnership, shall be paid from available Partnership funds,
including (except as to the allowances referred to in Section 5.8(c) or unless
otherwise specified hereunder) funds in the Operating and Capital Reserves, as
the General Partner shall determine in good faith. Without limiting the
generality of the foregoing, the General Partner intends to pay or reimburse
Partnership expenses first from available Partnership funds or Reserves other
than the Operating Reserve and the Capital Reserve and next from the Operating
Reserve. In any event expenses shall be paid last from the Capital Reserve.
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(c) If the General Partner determines, at any time after the end of the
fifth full fiscal year of the Partnership following date hereof, in its
reasonable discretion that, after giving effect to such release, the aggregate
balance in the Capital Reserve, the Operating Reserve and any other Partnership
reserve exceeds the amount required for Partnership purposes, funds in the
Capital Reserve shall be released and applied to payment of the Incentive
Management Fee (as provided in Section 5.8(e)); provided, however, that no such
release shall reduce the then combined balance in the Capital Reserve and the
Operating Reserve to less than $250,000 until the end of the tenth full fiscal
year following the date of this Agreement.
5.11 LIMITATION OF LIABILITY; INDEMNIFICATION. (a) The General Partner and
its Affiliates shall have no liability to the Partnership or to any Partner for
any loss suffered by the Partnership or any Partner (i) which arises out of any
action or inaction of the General Partner or its Affiliates if (x) such action
or inaction has been taken pursuant to affirmative instructions of 50% in
interest of the Investor Limited Partners, or (y) the General Partner or its
Affiliates, in good faith, determined that such action or inaction was in the
best interest of the Partnership and such action or inaction did not constitute
gross negligence, breach of fiduciary duty, material breach of this Agreement or
any Operative Document or willful misconduct of the General Partner or such
Affiliates or (ii) which arises out of any circumstances existing or events
occurring prior to the Initial Funding Date to the extent that such liabilities,
loss, damage, fees, costs and expenses, judgments or amounts paid in settlement
arise from those circumstances or events for which, and to the extent, amounts
have been provided or reserved for in the Initial Projections or otherwise
budgeted for by the Partnership, Intermediate Partnership or Operating
Partnership as of the Initial Funding Date or to the extent the General Partner
did not have and should not reasonably have had after commercially reasonable
diligence, actual knowledge. The General Partner and its Affiliates shall be
indemnified by the Partnership against any losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained by them in their
capacity as General Partner in connection with the Partnership, provided that
the same were not the result of negligence, breach of fiduciary duty, material
breach of this Agreement or any Operative Document or misconduct on the part of
the General Partner or such Affiliates and were the result of a course of
conduct which such General Partner or its Affiliates, in good faith, determined
was in the best interest of the Partnership and provided further that the same
do not arise from any circumstances existing or events occurring prior to the
Initial Funding Date. Any indemnity under this Section 5.11(a) shall be
provided out of and to the extent of Partnership assets only and no Investor
Limited Partner shall have any personal liability on account thereof.
Notwithstanding the foregoing, the General Partner and its Affiliates shall not
be indemnified for any Environmental Damages arising from any violation of any
Environmental Laws by the General Partner, the Partnership, any of the
Intermediate Partnerships, any Intermediate General Partner, either of the
Operating Partnerships relating to the Properties in Iowa (namely, 00xx Xxxxxx
Partnership and 00xx Xxxxxx Partnership) or the Operating General Partner of
either of those two Operating Partnerships.
(b) The General Partner shall defend, indemnify and hold harmless the
Partnership, the Investor Limited Partners and the Indemnitees from any
liability, loss, damage, fees, costs and expenses, judgments or amounts paid in
settlement, including, without limitation, any Environmental Damages, incurred
by reason of (i) matters as to which the General Partner is not absolved of
liability pursuant to the first sentence of Section 5.11(a), (ii) Tax Credit
recapture or the cost of the posting of any bond pursuant to Section 42 of the
Code suffered by any Investor Limited Partner arising from the loss of ownership
of a Property due in whole or in part to the
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stated maturity date (not by reason of acceleration) of the permanent Mortgage
being earlier than the end of the Compliance Period for such Property or (iii)
the ownership by the Intermediate Partnership known as CPI Housing Partners I,
L.P. of an interest in Chimney Ridge Partners, Ltd. (a South Carolina limited
partnership) or the assignment of such interest by such Intermediate
Partnership.
Notwithstanding Section 5.11(a), the General Partner and its Affiliates and
any Person acting as a broker-dealer shall not be indemnified for any losses,
liabilities or expenses arising from or out of any alleged violation of Federal
or state securities laws unless (i) there has been a successful adjudication on
the merits of each count involving alleged securities law violations as to the
particular indemnitee and the court approves indemnification of litigation
costs, or (ii) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee and the court
approves indemnification of litigation costs, or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and related costs should be
made.
In any claim for indemnification for Federal or state securities law
violations, the party seeking indemnification shall place before the court the
position of the Securities and Exchange Commission (and the position of any
state securities administrator whose rules or published policies require such
disclosure, if the Interests were sold or any Investor Limited Partner is
headquartered in such state) with respect to the issue of indemnification for
securities law violations.
The Partnership shall not incur the cost of that portion of any insurance,
other than public liability insurance, which insures any party against any
liability the indemnification of which is herein prohibited.
For purposes of this Section 5.11 only, the term "Affiliate" shall mean any
person performing services on behalf of the Partnership, within the scope of
authority of the General Partner, who (i) directly or indirectly controls, is
controlled by or is under common control with the General Partner; (ii) owns or
controls 10% or more of the outstanding voting securities of the General
Partner; (iii) is an officer, director, partner or trustee of the General
Partner; or (iv) is any company for which the General Partner acts as officer,
director, partner or trustee.
5.12 AFFILIATES. Subject to Section 5.3(a)(4), the Partnership is
authorized to employ, contract and deal with, from time to time, any Partner
(including the General Partner) or any Affiliate, and in connection therewith to
pay such Person fees, prices or other compensation, provided that such
employment, contracts and dealings are necessary or appropriate for Partnership
purposes and the fees, prices or other compensation paid by the Partnership
therefor is, in the judgment of the General Partner, reasonable or competitive
with the fees, prices or other compensation customarily paid for similar
property or services in the same geographic area.
5.13 BORROWINGS.
(a) Subject to Section 5.3, the Partnership is authorized to borrow Bridge
Loans and also to borrow funds from the General Partner or its Affiliates
provided that such borrowings from the General Partner or its Affiliates shall
be unsecured and the Partnership may not pay in connection therewith (i)
interest or other financing charges or fees in excess of the amounts which
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would be charged by unrelated lending institutions on comparable loans for the
same purpose in the same locality or (ii) any prepayment charge or penalty. If
any Partner shall lend any monies to the Partnership, the amount of any such
loan shall not be an increase of such Partner's Capital Contribution and shall
not affect such Partner's share of profits, losses, Tax Credits and
distributions.
(b) AMLIC shall be obligated to make (or cause its Affiliate to make)
loans to the Partnership in such amounts, and from time to time, as shall be
necessary to permit the Partnership to make capital contributions to the
Intermediate Partnerships equal to capital contributions to be made by the
Intermediate Partnerships to the Operating Partnerships, and to pay fees and
other expenses payable from time to time by the Partnership ("Bridge Loans").
The Bridge Loan: (i) shall be made upon written demand by the General Partner
as needed by the Partnership to meet its aforesaid cash requirements after
application of all other available funds of the Partnership (provided that no
advance shall be required at any time when the then outstanding principal
balance of the Bridge Loan plus a reasonable projection of interest accruing
thereon will exceed the total future Capital Contributions expected to be
payable by the Investor Limited Partners); (ii) bear interest at a fixed rate
equal to 10.0% per annum; (iii) shall be repaid from the Capital Contributions
of the Investor Limited Partners upon receipt thereof and before any other
application thereof; and (iv) shall be unsecured.
5.14 DELEGATION OF GENERAL PARTNER AUTHORITY. If at any time there shall
be more than one General Partner serving hereunder, each General Partner may
from time to time, by an instrument in writing, delegate all or any of its
powers or duties hereunder to another General Partner or General Partners.
5.15 EXECUTION OF INSTRUMENTS. Every contract, deed, mortgage, lease and
other instrument executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder that at the time of
the delivery thereof that (a) the Partnership was in existence, (b) this
Agreement had not been amended in any manner so as to restrict the delegation of
authority among General Partner (except as shown in certificates or other
instruments duly filed in the Filing Office) and (c) the execution and delivery
of such instrument was duly authorized by the General Partner. Any Person may
always rely on a certificate addressed to him and signed by the General Partner
hereunder:
(1) As to the identity of the General Partner or Investor Limited
Partners hereunder;
(2) As to the existence or nonexistence of any fact which constitutes
a condition precedent to acts by the General Partner or is in any other
manner germane to the affairs of this Partnership;
(3) As to who is authorized to execute and deliver any instrument or
document of the Partnership; or
(4) As to the authenticity of any copy of this Agreement and
amendments thereto.
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5.16 PURCHASE OF CERTAIN OPERATING PARTNERSHIP INTERESTS. In the event
that, on June 15, 1997, with respect to any Property (i) the Completion Date and
8609 Issuance shall not have occurred, (ii) 80% of the apartment units therein
shall not have been occupied by tenants meeting Tax Credit requirements or (iii)
Permanent Mortgage Closing shall not have occurred, then, the General Partner
shall cause AMLIC to purchase (or cause another party to purchase) within 15
business days the interest of the Partnership in the Intermediate Partnership
which has an interest in such Property for the purchase price set forth below,
which price shall then be distributed to the Investor Limited Partners as a
return of capital. The purchase price to be paid pursuant to this Section 5.16
shall be an amount determined by the Accountants, based on their recomputation
of the Initial Projections to reflect the disposition of such Interest, any
transaction costs, Tax Credit recapture (or the cost of posting any bond) and
any other Federal income tax cost resulting from such purchase and the aforesaid
distribution to the Investor Limited Partners of the purchase price (but no
other changes) in order to achieve an Internal Rate of Return of 12.26%.
SECTION 6. RIGHTS AND LIABILITIES OF LIMITED PARTNERS
6.1 LIABILITY OF LIMITED PARTNERS.
(a) No Investor Limited Partner shall be liable for any debts,
liabilities, contracts, or obligations of the Partnership. An Investor Limited
Partner shall be liable only to make payments of its Capital Contribution as and
when due hereunder. After its Capital Contribution shall be fully paid, no
Investor Limited Partner shall be required to make any further capital
contributions or lend any funds to the Partnership or to repay to the
Partnership, any Partner or any creditor of the Partnership any portion of any
negative balance in its Capital Account, except as otherwise required by the
Uniform Act or Section 6.1(b).
(b) In the event the Partnership is required, pursuant to applicable law,
to return to any Intermediate Partnership any funds previously distributed by
such Intermediate Partnership to the Partnership, which funds have been
distributed by the Partnership in turn to the Investor Limited Partners
hereunder, the Investor Limited Partners shall, upon notice from the General
Partner, return promptly as a Capital Contribution to the Partnership that
portion of such Partnership distribution (in proportion to the amounts
distributed to them) as shall be required by the Partnership to meet its
obligation to return funds to such Intermediate Partnership.
6.2 NO RIGHT TO MANAGE, DISSOLVE OR PARTITION. No Investor Limited
Partner shall take part in the management, control, conduct or operation of the
Partnership, or have any right, power or authority to act for or bind the
Partnership. No Investor Limited Partner shall have the right to bring an
action for dissolution or partition against the Partnership and each Investor
Limited Partner hereby agrees to indemnify and hold harmless the Partnership and
each other Partner from any loss, liability, cost or expense arising from any
such action brought by it.
6.3 PRIORITY. Except as otherwise specifically provided herein, no
Investor Limited Partner shall have priority over any other Investor Limited
Partner either for the return of Capital Contributions or distributions from, or
allocations of profits, losses or Tax Credits of, the Partnership.
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6.4 DEATH OR DISABILITY OF LIMITED PARTNER. The Partnership shall not be
dissolved by the death, insanity, adjudication of incompetency, bankruptcy,
insolvency or withdrawal of any Investor Limited Partner, by the assignment by
any Investor Limited Partner of its Interest, or by the admission of a
Substituted Investor Limited Partner.
SECTION 7. TRANSFERABILITY OF LIMITED PARTNER INTERESTS
7.1 ASSIGNMENTS.
(a) Except by operation of law, an Investor Limited Partner may not
assign, transfer or otherwise Dispose of all or any part of its Interest without
the prior written consent of the General Partner, the giving or withholding of
which is exclusively within its discretion. In addition, Consent of the Limited
Partners shall be required for any assignment or other Disposition of AMLIC's
Interest (directly or indirectly, including disposition of the beneficial
interest thereof, by stock transfer or otherwise), by AMLIC or any other
Affiliate of the General Partner, except that no such Consent shall be required
for any such Disposition by AMLIC or such Affiliate (i) where the transferee is
an Affiliate of AMLIC and AMLIC remains primarily liable for all of its
obligations under this Agreement including without limitation all obligations
hereunder with respect to the Disposed Interest, (ii) following the expiration
of the Compliance Period for the last of the Properties placed in service,
(iii) where (a) the Disposition is to occur after payment of the Fourth
Installment and the expiration of or performance of the obligations of AMLIC set
forth in Section 5.16, (b) the Disposition will not result in recapture of Tax
Credits from any other Investor Limited Partner, and (c) the Accountants shall
determine, based on a duly authorized officer's certificate of AMLIC, that the
Tax Credits attributable to the Interest to be Disposed of will not reduce
dollar for dollar the Federal income tax liability of AMLIC for its taxable year
in which the Disposition is proposed or any prior or subsequent year in which
such Tax Credit is expected to be available or to which such Tax Credit can be
carried back or forward pursuant to the Code, or (iv) as to which the
Partnership shall receive a legal opinion to the effect that AMLIC is required
to Dispose of such Interest in order to conduct its customary businesses in
compliance with applicable laws and regulations and the Disposition will not
result in recapture of Tax Credits from any other Investor Limited Partner.
Upon the occurrence of any Disposition by AMLIC of its Interest other than a
Disposition with the Consent of the Limited Partners or pursuant to clauses (i)
or (ii) above, the Accountants shall make a projection of Tax Credits and
federal income tax losses allocable to the AMLIC Interest so Disposed (the
"AMLIC Interest") for each year from the date of the Disposition through the end
of the Compliance Period based on all facts and circumstances then known and
income tax laws and regulations then in effect. Thereafter, annually within 30
days after the issuance of Schedule K-1 with respect to the AMLIC Interest for
each year through the year including the end of the Compliance Period, AMLIC
shall pay to Orion and Polar (one-half to each) an amount equal to the excess
(if any) of (a) the cumulative sum of the aforesaid projected Tax Credits and
35% of the aforesaid projected Federal income tax losses over (b) the cumulative
sum of the amounts previously paid pursuant to this sentence, the actual Tax
Credits and 35% of the actual Federal income tax losses attributable to the
AMLIC Interest (actual Tax Credits and actual Tax Losses shall be those as
reported on Schedule K-1 as issued each year by the Partnership), determined in
each case from the Disposition date through the year for which such Schedule K-1
is issued (provided that in no event shall the total of such payments exceed the
amount received by AMLIC in consideration for such Disposition). The provisions
of this Section 7.1(a) shall not apply to transactions permitted or required by
Section 3.10 hereof.
Page 42 of 55
(b) An assignee of an Investor Limited Partner who does not become a
Substituted Investor Limited Partner in accordance with Section 7.2 shall have
the right to receive the same share of profits, losses, credits and
distributions of the Partnership to which the assigning Investor Limited Partner
would have been entitled if no such assignment had been made by such Investor
Limited Partner.
(c) Any Investor Limited Partner who shall assign all its Interest shall
cease to be an Investor Limited Partner and shall no longer have any rights or
privileges of an Investor Limited Partner except that, unless and until the
assignee of such Investor Limited Partner is admitted to the Partnership as a
Substituted Investor Limited Partner in accordance with Section 7.2, said
assigning Investor Limited Partner shall retain the statutory rights and be
subject to the statutory obligations of an assignor limited partner under the
Uniform Act.
(d) In the event any assignment of an Investor Limited Partner's Interest
as an Investor Limited Partner shall be made, there shall be filed with the
Partnership (and the Partnership need not recognize such assignment until such
filing) a fully and duly executed and acknowledged counterpart of the instrument
making such assignment. Such instrument must evidence the written acceptance by
the assignee of all the terms and provisions hereof. If the General Partner
shall recognize any assignment, such assignment shall be promptly recorded by
the General Partner on the Partnership Register. The General Partner shall
cause the assignor to bear all costs in connection with an assignment consented
to by the General Partner.
(e) An assignee of an Investor Limited Partner's interest as an Investor
Limited Partner who does not become a Substituted Limited Partner as provided
aforesaid and who desires to make a further assignment or other Disposition of
such interest shall be subject to all the provisions of this Section 7 to the
same extent and in the same manner as any Investor Limited Partner desiring to
make an assignment or other Disposition of its Interest.
7.2 SUBSTITUTED INVESTOR LIMITED PARTNERS. No Investor Limited Partner
shall have the right to substitute an assignee as an Investor Limited Partner in
its place without the consent of the General Partner, which consent is solely
within its discretion. The consent of the General Partner to an assignment of
an Investor Limited Partner Interest under Section 7.l shall not, in and of
itself, constitute consent under this Section 7.2. Each Substituted Investor
Limited Partner shall execute such instruments as shall be required by the
General Partner in its sole and absolute discretion to signify the agreement of
such Substituted Investor Limited Partner to be bound by all the provisions of
this Agreement and shall pay the Partnership's reasonable legal fees and filing
costs in connection with its substitution as an Investor Limited Partner. Any
substitutions of Investor Limited Partners permitted by the General Partner
shall promptly be recorded in the Partnership Register.
7.3 RESTRICTIONS; ADDITIONAL LIMITED PARTNERS.
(a) Except for a Disposition made pursuant to Section 3.10, no Disposition
may be made if the Interest sought to be Disposed of when added to the total of
all other Interests Disposed of within the period of twelve consecutive months
prior to the proposed date of Disposition could, in the opinion of Tax Counsel,
result in the termination of the Partnership under Section 708 of the Code.
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(b) In no event shall all or any part of an Investor Limited Partner
Interest be Disposed of to a minor or to an incompetent.
(c) The General Partner may in its sole and absolute discretion, in
addition to any other requirement it may impose, require as a condition of
Disposition that the transferor (i) assume all costs incurred by the Partnership
in connection therewith, including, without limitation, fees and expenses of Tax
Counsel or other professionals retained by the Partnership and (ii) furnish the
Partnership with a satisfactory opinion of counsel that such Disposition
complies with applicable Federal and state securities laws.
(d) No Disposition shall be made if, in the opinion of Tax Counsel, such
Disposition would cause the Partnership to become a "publicly-traded
partnership" for Federal income tax purposes and such result would have
materially adverse Federal income tax consequences for any Partner.
(e) Any Disposition in contravention of any of the provisions of this
Section 7.3 shall be void and ineffectual and shall not bind or be recognized by
the Partnership.
(f) No person may be admitted as an additional limited partner of the
Partnership without the consent of each Investor Limited Partner. Any such
additional limited partner shall, by its execution of this Agreement and as a
condition of receiving any interest in the Partnership, agree to be bound by the
terms of this Agreement. Upon the admission of any additional limited partner,
an amendment to the Certificate, reflecting such admission, shall be filed with
the appropriate governmental authorities if required by the Uniform Act or the
laws of the State of Iowa and Florida. If and to the extent required by the
terms of the Uniform Act or such other laws, such amendment shall amend
Schedule A hereof to reflect the names, addresses and Capital Contributions of
such additional limited partner, and shall set forth the agreement of such
additional limited partner to be bound by all the provisions of this Agreement.
The parties acknowledge that any transferee of all or a portion of the Interest
of AMLIC pursuant to a Disposition where no Consent of the Limited Partners is
required pursuant to Section 7.1(a) which is to be admitted to the Partnership
as a limited partner shall be admitted as a substitute limited partner subject
to compliance with all requirements for admission as such under this Agreement
(including without limitation the requirements set forth in Section 7.2), but
such admission shall not require the consent of each Investor Limited Partner
set forth in the first sentence of this Section 7.3(f).
SECTION 8. WITHDRAWAL OF A GENERAL PARTNER; DISPOSITION OF A GENERAL
PARTNER'S INTEREST
8.1 TRANSFER AND WITHDRAWAL. The General Partner may not voluntarily
Withdraw from the Partnership or transfer all or any part of its Interest in the
Partnership without the Consent of the Limited Partners. However, without the
Consent of the Limited Partners, the General Partner may assign or transfer a
portion of its Interest to an Affiliate provided that the General Partner
maintains at least a 1% Interest in the Partnership or GrA Partners Joint
Venture may dissolve and the partners or joint venturers thereof be admitted as
General Partners hereunder in accordance with the proviso in the definition of
"Withdrawal" in Section 2.1 hereof.
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8.2 OBLIGATION TO CONTINUE. Upon the Withdrawal of a General Partner or
upon the dissolution of GrA Partners Joint Venture and the admission as General
Partners hereunder of the partners or joint venturers thereof in accordance with
the proviso in the definition of "Withdrawal" in Section 2.1 hereof, any
remaining General Partner shall have the right and obligation to continue the
business of the Partnership and shall, within two business days, notify the
Limited Partners of such Withdrawal.
8.3 WITHDRAWAL OF ALL GENERAL PARTNERS. If, following the Withdrawal of a
General Partner, there is no remaining General Partner, the Limited Partners may
elect to continue the Partnership and continue the business of the Partnership
for the balance of its term by selecting a successor General Partner within 90
days after the Withdrawal of the last serving General Partner. If the Limited
Partners so elect and admit the successor General Partner, the relationship
among the then Partners shall be governed by this Agreement.
8.4 INTEREST OF GENERAL PARTNER AFTER REMOVAL OR WITHDRAWAL. In the event
of the Withdrawal of a General Partner or removal of a General Partner pursuant
to Section 3.8, the Withdrawing General Partner hereby covenants and agrees to
transfer to any remaining General Partner(s) or to a successor General Partner
selected in accordance with Section 8.3, as the case may be, the Withdrawing
General Partner's entire Interest without consideration of any kind. The
transfer of the Withdrawing General Partner's Interest in accordance with the
provisions of this Section 8.4 shall, for the purposes of Section 4, be deemed
to be effective immediately prior to the effectiveness of such Withdrawal, but
the Partnership shall not make any distributions to the designated transferee
until the transfer has been made.
8.5 ADDITIONAL GENERAL PARTNERS. The General Partner shall have the right
to designate one or more Persons as additional General Partners. Notice of any
such designation shall be promptly given to all the other Partners. Any such
designation shall be subject to the Consent of the Limited Partners. Subject to
Section 8.1, the General Partner shall assign to such Persons such portion of
their Interests as may be agreed upon by the General Partner and such Persons.
SECTION 9. BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC.
9.1 BOOKS AND RECORDS. The General Partner shall cause the Partnership to
maintain all books of account of the Partnership, in which shall be entered,
fully and accurately, each and every transaction of the Partnership and all
other books and records which are required under the Uniform Act or by any
governmental agencies having jurisdiction over the Partnership and may maintain
such other books and records as the General Partner in its exclusive discretion
deems advisable. The Partnership will also maintain the Partnership Register in
accordance with this Agreement. The books of account and all other books and
records, including the Partnership Register, shall be available for examination
by any Partner, or its duly authorized representatives, at the principal office
of the Partnership at any and all reasonable times.
The Partnership will also obtain the books and records of any Intermediate
Partnership and have them available for examination by any Partner, or its duly
authorized representatives, at the request of any Partner.
9.2 BANK ACCOUNTS. The bank accounts of the Partnership shall be
maintained with such financial institutions, and withdrawals shall be made on
such signature(s), as the General Partner
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may determine in its reasonable discretion. All deposits and other funds not
needed in the operation of the business shall be deposited in interest-bearing
bank accounts or invested in Temporary Investments maturing within one year.
9.3 FISCAL AND TAX YEAR. The fiscal year of the Partnership shall end on
December 31 of each year or as otherwise required by the Code. The tax year of
the Partnership shall be the calendar year or as otherwise required by the Code.
9.4 ACCRUAL BASIS. The books of the Partnership shall be kept on the
accrual basis.
9.5 ACCOUNTANTS; FILING OF RETURNS. The Accountants shall prepare, for
execution by the General Partner, all tax returns, reports and statements of the
Partnership and shall prepare or review all annual financial reports to the
Partners to the extent provided in Section 9.8(a). All such tax returns,
reports and statements which must be filed on behalf of the Partnership and
those to be filed on behalf of the Intermediate Partnerships and (to the extent
permitted under the applicable Operating Partnership Agreement) the Operating
Partnerships with any taxing governmental authority shall be submitted, or
caused to be submitted, by the General Partner to the Investor Limited Partners,
and not before thirty days thereafter (and not without consultation with the
Investor Limited Partners if the Tax Credits, income, losses and depreciation
claimed on such tax return and allocated to the Investor Limited Partners
deviate from the amounts shown in the Initial Projections, or, after then in
effect, the Final Projections), the General Partner shall make or consent to the
timely filing thereof. The General Partner shall cause the Partnership to pay
any taxes payable by the Partnership.
9.6 FEDERAL INCOME TAX ELECTIONS. Subject to Section 9.7, all elections
required or permitted to be made by the Partnership under the Code shall be made
by the General Partner in such manner as will be, in the opinion of the General
Partner in its sole and absolute discretion, most advantageous to a majority in
Interest of the Investor Limited Partners.
9.7 SPECIAL BASIS ADJUSTMENTS. In the event of a transfer of all or any
part of the Interest of any Partner for a consideration in excess of the
adjusted basis of such Interest for Federal income tax purposes, the transferor
may, in its sole and absolute discretion, cause the Partnership to (i) elect
pursuant to Section 754 of the Code to adjust the basis of the Partnership
property and (ii) to the extent so permitted under the applicable partnership
agreement, cause the Intermediate Partnership and the Operating Partnership to
make corresponding elections. Any adjustments made pursuant to said Section 754
and all expenses related thereto shall affect and be borne by only the successor
in Interest to the transferring Partner. Each Partner will furnish the
Partnership all information necessary to give effect to such election.
9.8 INFORMATION TO PARTNERS.
(a) The General Partner shall cause the Partnership to deliver to all
Persons who were Partners at any time during the tax year, no later than 90 days
after the end of each tax year, all data and information regarding the business
of the Partnership as may be necessary for the Partnership and each such Partner
to prepare its federal, state and local tax returns. Without limiting the
foregoing, the General Partner will provide (or cause to be provided) to each of
the Partners an actual Schedule K-1 or its best estimate Schedule K-1 for each
of the Partnership, each Intermediate Partnership and each Operating Partnership
no later than 90 days after the end
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of each tax year and, in all events, will provide (or cause to be provided) to
each of the Partners an actual Schedule K-1 for each of the Partnership, each
Intermediate Partnership and each Operating Partnership by June 30 of each year.
In addition, no later than 90 days after the end of each fiscal year, the
General Partner shall cause the Partnership to deliver to all Partners, (i) a
financial report of the Partnership, each Intermediate Partnership and each
Operating Partnership for each such Entity's prior fiscal year, including a
balance sheet and statements of profit and loss, Partners' equity and cash flow,
which balance sheet and statements shall be prepared by the Accountants in
accordance with generally accepted accounting principles; (ii) a descriptive
statement of all transactions during the fiscal year between or among the
General Partner or Affiliate thereof, the Partnership, any Intermediate
Partnership or any Operating Partnership, including the nature of the
transaction and the payments involved (including accrued cash or other
payments); and (iii) a report on the activities of the Partnership and each of
the Intermediate Partnerships and the Operating Partnerships during the fiscal
year. The books of the Partnership shall be examined in accordance with
generally accepted auditing standards annually as of the end of each fiscal year
of the Partnership by the Accountants. The financial statements of the
Partnership shall be accompanied by the opinion of the Accountants that the
balance sheet and financial statements prepared by the Accountants have been
prepared in accordance with generally accepted accounting principles applied
consistently with prior periods, identifying any matters to which the
Accountants take exception and stating, to the extent practicable, the effect of
each such exception on such financial statements. Upon the written request of
any Investor Limited Partner for further information with respect to any matter
covered above, the Partnership shall furnish such information within 30 days of
receipt of such request to the extent the Partnership possesses such information
or may obtain it without unreasonable effort or expense.
(b) Prior to December 1 of each taxable year, the Partnership shall send
to all Partners an estimate of each Partner's share of the Tax Credits, profits
and losses of the Partnership for Federal income tax purposes for the current
tax year. The General Partner 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 any Investor Limited Partner to satisfy its
reporting requirements or any governmental authorities.
(c) Within sixty (60) days after the end of each calendar quarter, the
General Partner will cause the Partnership to prepare and distribute (or cause
to be prepared and distributed) to each of the Partners copies of quarterly
operating statements for the Partnership, each Intermediate Partnership and each
Operating Partnership.
(d) No cause of action shall accrue to any Investor Limited Partner if the
General Partner shall have acted in good faith and without negligence or
misconduct in attempting to satisfy the requirements of this Section 9.8.
SECTION 10. POWER OF ATTORNEY
10.1 POWER OF ATTORNEY. Each Investor Limited Partner hereby irrevocably
constitutes and appoints the General Partner, each person acting from time to
time as a general partner of the General Partner (each of such Persons
hereinafter referred to as the "Attorney"), and each of them acting singly, with
full power of substitution, the true and lawful attorney-in-fact of such
Investor Limited Partner, with full power and authority to act in its name,
place and stead, to
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make, execute, sign, acknowledge, swear to, verify, deliver, file, record and
publish the following documents:
(a) any certificate, instrument or document which the General Partner
believes is necessary or appropriate to be filed by the Partnership under the
laws of any state or by any governmental agency including, without limitation,
for purposes of qualifying the Partnership to do business in a state in which
any Intermediate Partnership is doing business or to protect the limited
liability of the Investor Limited Partners;
(b) any certificate, instrument or document which may be required to
effect the continuation of the Partnership, the Withdrawal of the Original
Limited Partner or of an Investor Limited Partner, the admission of an Investor
Limited Partner or the dissolution and termination of the Partnership, provided
such continuation, admission, dissolution and termination is in accordance with
the terms of this Agreement;
(c) any document necessary or appropriate for the Disposition of, or
suspension of benefits with respect to, a Defaulted Interest in accordance with
Section 3.5; and
(d) any amendment to this Agreement made in accordance with Section 11.2.
With respect to the exercise of any of the foregoing powers and authority
which may involve a ratification or consent required by the Uniform Act, each
Investor Limited Partner, by its execution hereof, acknowledges that once the
provisions of this Agreement providing for the Consent of the Limited Partners
with respect to such action have been complied with, the Attorney's foregoing
power and authority to act for such Investor Limited Partner in respect of such
action shall be effective notwithstanding that such Investor Limited Partner may
not have specifically consented to such action when the General Partner sought
the Consent of the Limited Partners for such action.
10.2 DURATION OF POWER OF ATTORNEY. It is expressly intended by each of
the Investor Limited Partners and the General Partner that the power of attorney
granted under Section 10.1 (the "Power of Attorney") is coupled with an
interest, and it is agreed that the Power of Attorney shall survive (a) the
death, incompetency, dissolution or merger of any Investor Limited Partner or
Attorney and (b) the assignment by any Investor Limited Partner of the whole or
any portion of its Interest, except that, where the transferee of the Interest
has been approved by the General Partner for admission to the Partnership as a
Substituted Investor Limited Partner, the Power of Attorney shall survive such
transfer for the sole purpose of enabling the Attorney to execute, acknowledge
and file any instrument or document necessary to effect such substitution.
SECTION 11. MISCELLANEOUS
11.1 NOTICES. Notices to the Partnership shall be sent to the principal
office of the Partnership and to the General Partner by certified mail, return
receipt requested. Notices to a Partner shall be sent to its address as set
forth on the Partnership Register. Any Partner may require notices to be sent
to a different address by giving notice to the Partnership in accordance with
this Section 11.1. Any notice or other communication to an Investor Limited
Partner required or permitted hereunder shall be in writing, and shall be deemed
to have been given (unless otherwise specified in this Agreement) if and when
delivered personally, sent by nationally
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recognized overnight courier service and evidenced by a receipt therefor or
mailed first class, postage prepaid, by certified mail, return receipt
requested, to such Investor Limited Partner at such address.
11.2 AMENDMENTS. This Agreement may not be amended or modified except by
the General Partner with the Consent of the Limited Partners which Consent may
be withheld in their sole discretion; provided, however, that all the Investor
Limited Partners shall have given their consent in writing to any amendment
which would (i) extend the term of the Partnership or (ii) amend this
Section 11.2, and any Investor Limited Partner adversely affected thereby shall
have given its consent to any amendment which would (x) increase the amount of
Capital Contributions payable by such Investor Limited Partner or accelerate the
date certain for payment of the Installments set forth in Section 3.3(a)(2)(A),
3.3(a)(3)(A) and Section 3.3(a)(4), (y) increase the liability of such Investor
Limited Partner or (z) reduce such Investor Limited Partner's share of profits,
losses, Tax Credits or distributions;
11.3 TIME OF ADMISSION. Each Investor Limited Partner shall be deemed to
have been admitted to the Partnership as of the first day of the month in which
it becomes an Investor Limited Partner for all purposes of this Agreement,
including Section 4; provided, however, that if regulations are issued or an
amendment to the Code is adopted which would require, in the opinion of the
Accountants, that an Investor Limited Partner be deemed admitted on a date other
than as of the first day of such month, then the General Partner shall select a
permitted admission date which is most favorable to such Investor Limited
Partner.
11.4 ENTIRE AGREEMENT. This Agreement and the Subscription Agreement
constitute the entire agreement among the parties and supersede any prior
agreement or understanding among them with respect to the subject matter hereof
and thereof.
11.5 HEADINGS. All article and section headings in this Agreement are for
convenience of reference only and are not intended to, and shall not, modify or
control the meaning of this Agreement as set forth in the text of any article or
section hereof.
11.6 SEPARABILITY PROVISION. If the operation of any provision of this
Agreement would contravene the mandatory provisions of the Uniform Act, result
in the imposition of general liability on any Investor Limited Partner or cause
any Investor Limited Partner to be bound by the obligations of the Partnership
under the laws of the State, as the same may now or hereafter exist, such
provision shall be void and ineffectual. If any provision of this Agreement or
the application of such provision to any Person or circumstance shall be held
invalid or contrary to any existing or future law, the remainder of this
Agreement, or the application of such provision to a Person or circumstance
other than those as to which it is held invalid, shall not be affected thereby.
11.7 PRONOUNS AND PLURALS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter as the identity of the
Person or Persons may require. Where the context admits, the singular forms of
terms used herein shall include the plural and the plural shall include the
singular.
11.8 BINDING AGREEMENT. This Agreement and the covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the parties
hereto, their
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successors, heirs, legatees, devisees, assigns, legal representatives, executors
and administrators, except as otherwise provided herein.
11.9 COUNTERPARTS; EXECUTION. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on all
the parties hereto. A Person may be admitted as an Investor Limited Partner and
become bound by this Agreement if such Person (or a representative authorized by
such Person in writing) executes this Agreement or any other writing evidencing
the intent of such Person to become an Investor Limited Partner and complies
with the conditions for becoming an Investor Limited Partner as set forth in
this Agreement. Upon acceptance by the General Partner, each such Investor
Limited Partner, including any Substituted Investor Limited Partner, additional
General Partner, or successor General Partner, as the case may be, shall be
deemed to have adopted, and to have agreed to be bound by, all the provisions of
this Agreement.
11.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State.
11.11 DELIVERY OF CERTIFICATE AND AMENDMENTS. Promptly upon the filing
of the Certificate and each amendment thereto in the Filing Office and promptly
upon the complete execution of any amendments to this Agreement, the General
Partner shall deliver or mail a true, correct and complete copy thereof to each
Investor Limited Partner.
11.12 CONFIDENTIALITY. Notwithstanding anything to the contrary
contained in this Agreement, each of the parties hereto agrees, and each
successor or assign thereof and each person that shall become a Partner after
the Initial Funding Date, by becoming a party to this Agreement, shall be deemed
to have agreed (a) that it will not issue or release for publication any article
or advertising or publicity matter relating to or otherwise disclose the
transactions contemplated herein or in the other Operative Documents and
mentioning the identity of any Investor Limited Partner or any of its Affiliates
without the prior written consent of such Investor Limited Partner and (b) that
the terms and conditions of this Agreement, the Subscription Agreements, the
Initial Projections and such other projections contemplated under this Agreement
will, except to the extent required to be disclosed to or filed with any
governmental authority pursuant to applicable legal requirements, be maintained
in strictest confidence and shall not be disclosed or disseminated to any other
Person other than (i) to any prospective successors, assign or new Partner which
has agreed with such party or the Partnership that, upon disclosure of such
terms and conditions, such prospective successor, assign or new Partner shall be
deemed to be bound by the terms of this Section 11.12, whether or not such
Person becomes a party hereto and (ii) to attorneys, accountants and financial,
insurance and other independent advisors of any such party who have been
similarly advised of the provisions of this Section 11.12.
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IN WITNESS WHEREOF, each of the parties hereto has executed and sworn to
this Agreement as of the 1st day of September, 1995.
GENERAL PARTNER: ORIGINAL LIMITED PARTNER:
---------------- -------------------------
GrA PARTNERS JOINT VENTURE, AMERUS PROPERTIES, INC.
By: AmerUs Properties, Inc., a By:/s/Xxxx X. Xxxxxx
joint venturer --------------------------------
Xxxx X. Xxxxxx, Vice President
By:/s/Xxxx X. Xxxxxx
----------------------
Xxxx X. Xxxxxx, Vice
President
By: AGGR Central Services, L.L.C.
By:/s/Xxxxxxx X. Xxxxxx
--------------------
Xxxxxxx X. Xxxxxx,
attorney in fact for
Xxxxxx X. Xxxxxx, Manager
INVESTOR LIMITED PARTNERS:
AMERICAN MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------
Title: Assistant Secretary
-----------------------------
NCC ORION COMPANY
By:/s/Xxxxxxx X. Xxxxx
--------------------------------
Name:Xxxxxxx X. Xxxxx
------------------------------
Title:President
-----------------------------
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NCC POLAR COMPANY
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------
Title: President
---------------------------
The undersigned hereby executes this Agreement below to acknowledge and
confirm its obligations pursuant to Sections 5.9(b), 5.13(b), 5.16 and 7.1
hereof.
AMERICAN MUTUAL LIFE INSURANCE COMPANY
By:/s/Xxxxx X. Xxxxxxxx
---------------------------
Name:Xxxxx X. Xxxxxxxx
-------------------------
Title:Assistant Secretary
------------------------
ATTACHMENTS
-----------
Schedule A Partner's Names, Addresses and Capital Contributions
Exhibit A Initial Projections
Exhibit B Legal Descriptions of Property Sites
Exhibit C Title Insurance Requirements
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AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.
Schedule A - Names, Addresses and Capital Contributions
--------------------------------------------------------
General Partner Capital Contribution
--------------- --------------------
GrA Partners Joint Venture $100
c/o AmerUs Properties, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxx Xxx Xxxxxx, XX 00000
PERCENTAGE INTEREST IN
TOTAL AGREED-TO PAID-IN PROFITS, LOSSES AND DIS-
INVESTOR CAPITAL CAPITAL TRIBUTIONS ALLOCABLE TO THE
LIMITED PARTNERS CONTRIBUTION CONTRIBUTION INVESTOR LIMITED PARTNERS
----------------- --------------- -------------- ----------------------------
American Mutual Life Insurance $ 2,160,000 $ 248,000 9.747292%
Company
0000 Xxxxxxx Xxxxxxx
Xxxx Xxx Xxxxxx, XX 00000
NCC Polar Company $10,000,000 $1,150,000 45.126354%
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
NCC Orion Company $10,000,000 $1,150,000 45.126354%
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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EXHIBIT C
----------
TITLE INSURANCE REQUIREMENTS FOR INVESTMENTS IN
LOW-INCOME HOUSING TAX CREDIT HOUSING PROJECT
A. REQUIREMENTS RELATING TO THE TITLE INSURANCE COMPANY:
The fee simple interest of the Partnership which owns the Property must be
insured by an acceptable title insurance policy issued by a title insurance
company which has the financial strength to pay any claims made under the
policy. The General Partner will have the right, in their sole discretion, to
approve the primary title insurance company and any reinsurer insurance company
involved in the issuance of the title policy. The General Partner will require
compliance with the following requirements with respect to the title insurance
company and any reinsurer:
1. The maximum single risk by any single title insurer may not exceed
25% of that company's capital, surplus, and statutory reserves. Excess
amounts may be covered by appropriate reinsurance arrangements, with direct
access, with other acceptable title insurance companies.
2. Each title insurer and reinsurer must be authorized to do business
in all jurisdiction where the Property is located.
B. REQUIREMENTS RELATING TO THE TITLE INSURANCE POLICY:
In addition, the title policy must insure the Partnership's fee simple
interest in the Property and must be acceptable to the General Partner in its
sole discretion. The General Partner will require compliance with the following
requirements with respect to the title insurance policy for the Property:
1. The amount of the title insurance policy must equal the original
principal amount of the total capital contributions made, or which are
anticipated to be made, by any partner of the Partnership, any grants made
in connection with the Property, and the higher of: (a) the aggregate debt
with respect to the construction of the Property and which is secured, or
to be secured, in whole or in part, by the Property; or (b) the aggregate
of any permanent financing anticipated to be obtained in connection with
the Property and secured, in whole or in part, by the Property.
2. Schedule A of the policy must name as the insured the Partnership
as constituted as of the date of the issuance of the policy and as may be
reconstituted from time to time, must insure that the Property is owned
solely by the Partnership, and must insure that the Partnership's interest
in the Property is fee simple absolute.
3. The title policy must be written on the current standard American
Land Title Association (ALTA) owner's policy form or a similar form
approved by the General Partner. In those states in which ALTA forms of
coverage are not used or are unacceptable the policy shall provide similar
coverage.
4. The policy should insure against the standard exceptions (E.G.,)
parties in possession or other matters not shown on public records).
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5. The effective date of the title policy (and time, where
available) must be as of the date of the Permanent Mortgage Closing.
6. The legal description of each Property in the title policy must
conform to that shown on the survey of each Property.
7. If Schedule B-1 of the policy indicates the presence of any
easements that are not specifically located 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.
8. If the title insurance policy includes any exception for taxes,
assessments or other lienable items, it must insure that such taxes,
assessments or items are not yet delinquent.
9. The title policy shall include such other endorsements and
affirmative coverages as are customarily obtained in real estate
transactions, including, without limitation, a single tax lot endorsement,
an ALTA 3.1 zoning endorsement, an access (to a named public highway)
endorsement, a non-imputation endorsement (except with respect to
properties located in the State of Florida) and "Fairway" endorsement.
10. The Investor Limited Partners shall each be provided with a
true, correct and complete copy of the title insurance policy meeting the
requirements set forth above when issued.
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