LIMITED PARTNERSHIP AGREEMENT
OF
▇▇▇▇▇▇/▇▇▇▇▇ ROSEVILLE, L.P.
This Limited Partnership Agreement (this "Agreement") is
executed as of February 27, 1998, by and between ANTELOPE CREEK
APARTMENTS, L.P., a California limited partnership ("ACALP"), as
the sole general partner and ▇▇▇▇▇▇ DEVELOPMENT CORPORATION, a
Delaware corporation ("▇▇▇▇▇▇"), as the sole limited partner.
ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
have the meanings:
"Acquisition Fee" means an amount equal to the greater of (a)
$33,600 or (b) the product of (i) $100 and (ii) the number of
units in the Project as shown by the final architectural
drawings. The Acquisition Fee is payable in accordance with
the provisions of Subsection 4.2(b).
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in the Partner's Capital
Account as of the end of the relevant Fiscal Year, after
giving effect to the following adjustments:
(a) The Capital Account will be increased by any amounts that
the Partner is obligated to restore to the Partnership or
is deemed obligated to restore under Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5).
(b) The Capital Account will be decreased by the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5), and
(6) of the Regulations.
This definition of Adjusted Capital Account Deficit and the
application of the term in the manner provided in this
Agreement are intended to comply with the provisions of
Section 1.704-1(b)(2)(ii)(d) of the Regulations and will be
interpreted consistently therewith.
"Adjustment Period" means any period of time that begins on
the Closing Date (in the case of the first Adjustment Period)
or the day following the end of the immediately preceding
Adjustment Period (with respect to each subsequent Adjustment
Period) and ends on the first to occur of: (a) the last day
of a Fiscal Year, (b) the day immediately preceding the date
of the "liquidation" of a Partner's interest in the
Partnership (within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations), or (c) the date on
which the Partnership is terminated under Article 9.
"Affiliate" (including the term "Affiliated") means, with
respect to any Person, any other Person who is controlled by,
under common control with, or in control of, the first Person.
As used in this definition, the term "control" means the
possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise. For purposes of this definition, any
Person that owns, directly or indirectly, more than 10% of the
issued and outstanding stock or other equity interests of
another Person is deemed to control the other Person and any
Person that is an executive officer, trustee, general partner,
managing member or director of another Person is deemed to
control the other Person.
"Affiliate Loan" means the funds advanced to the General
Partner in the aggregate amount of $589,878.12 by LSAC G.P.
Corporation, the general partner of the General Partner, which
amount will be assumed by the Partnership and repaid on the
Closing Date out of the proceeds of the Initial Loan.
"Agreement" means this Limited Partnership Agreement,
including the Exhibits attached hereto, as amended and in
effect from time to time.
"Ancillary Income" means an amount, determined as of the
Purchase Price Computation Date, equal to the annualized
Partnership net income from sources other than rental of
apartment units, including garage or parking rents, revenue
from telephone and cable systems, operation of vending
machines, nonrefundable application fees, credit check and
other miscellaneous fees, and forfeited security deposits, but
not including security deposits which by their terms have not
been forfeited to the Partnership.
"Approval of" or "Approved by" a Partner or Partners means the
written consent or approval of the matter in question in
accordance with Section 7.12.
"Bankrupt Partner" means any Partner with respect to which an
event of the type described in Section 402(a)(4) or (5) of the
Partnership Act has occurred, subject to the lapsing of any
period of time therein specified.
"Base Rate" has the meaning given that term in the Initial
Loan Documents.
"Bonus Project Value" means the value of the Project
determined by applying a 9.25% cap rate to the Project's 1999
Net Income. For purposes of computing the Bonus Project
Value, 1999 Net Income means (a) the annualized effective
rents in place from Non-Defaulting Tenants as of the Purchase
Price Computation Date (with market rental values as of the
Purchase Price Computation Date being substituted for any
leases expiring during the 90 day period following the
Purchase Price Computation Date) using the greater of 95%
occupancy or the actual occupancy rate for Qualifying Tenants,
plus (b) Ancillary Income, less (c) the Purchase Price
Expenses.
"Bonus Purchase Price" means the sum of (a) the Investment
Amount plus (b) the lesser of (i) the excess, if any, of the
Bonus Project Value over $25,835,450 and (ii) $1,135,238.
"Book Depreciation" means, for each Adjustment Period, an
amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to a Partnership
asset for the Adjustment Period, except that if the Book Value
of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of the Adjustment Period, Book
Depreciation with respect to that asset will be an amount that
bears the same ratio to the beginning Book Value as the
federal income tax depreciation, amortization, or other cost
recovery deduction with respect to that asset for the
Adjustment Period bears to the beginning adjusted tax basis;
provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction
with respect to that asset for the Adjustment Period is zero,
Book Depreciation will be determined with reference to the
beginning Book Value using any reasonable method approved by
the Partners.
"Book Gain" or "Book Loss" means the gain or loss recognized
by the Partnership for book purposes in any Adjustment Period
by reason of a disposition (as determined under Section 1001
of the Code) of all or part of the assets. The Book Gain and
Book Loss will be computed by reference to the Book Value of
the assets as of the date of the sale or other disposition,
rather than by reference to the tax basis of the assets as of
the date. If a Partnership asset is distributed to a Partner,
the difference between the fair market value of the asset and
its Book Value will be considered a Book Gain or a Book Loss.
"Book Value" of the assets means, as of any particular date,
the value at which the assets are properly reflected on the
books of the Partnership, as of the date, in accordance with
the provisions of Section 1.704-1(b) of the Regulations. The
initial Book Values of the assets will be the gross fair
market value of the assets (without reduction for indebtedness
to which the assets may be subject) as determined by the
General Partner. The Book Value will be adjusted for Book
Depreciation with respect to the assets, rather than for the
cost recovery deductions to which the Partnership is entitled
for income tax purposes with respect to the assets.
"Business Day" means Monday through Friday of each week,
except that a legal holiday recognized as such by the
government of the United States or the State of Texas shall
not be regarded as a Business Day.
"Capital Account" has the meaning given it in Section 3.4.
"Capital Contribution" means the amount of cash or the fair
market value of property of any nature (net of liabilities
assumed or taken subject to by the Partnership) contributed by
a Partner to the Partnership pursuant to the provisions of
this Agreement.
"Certificate" means, at any date, the Certificate of Limited
Partnership of the Partnership filed with the Secretary of
State of the State of Delaware under the Partnership Act, as
amended or restated at such date.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or
from and after the date any successor statute becomes, by its
terms, applicable to the Partnership, the successor statute,
in each case as amended at such time by amendments that are,
at that time, applicable to the Partnership. All references
to sections of the Code include any corresponding provision or
provisions of any such successor statute.
"Company" means ▇▇▇▇▇▇ Residential Properties, Inc., a
Maryland corporation.
"Completion Date" means the date on which each of the
following two conditions are satisfied: (i) the final
certificate of occupancy for the Project is issued and (ii)
the General Partner certifies that the Project is free of all
liens (other than those existing in connection with the
Initial Loan) and provides the Limited Partner with
documentation, in a form satisfactory to the Limited Partner,
of customary lien releases.
"Construction Contract" means that certain contract between
the Partnership and Contractor in the form attached hereto as
Exhibit D.
"Construction Period" means the period commencing on the
commencement of construction of the Project and ending upon
issuance of the final certificate of occupancy for the
Project.
"Contractor" means Marchbrook Building Company, a California
corporation.
"Contractor Fee" means $608,286 which represents three percent
(3%) of the amount that is described in the "Total Direct
Construction Costs" category of the Project Budget. The
Contractor Fee is payable to Contractor in accordance with the
terms and provisions of the Construction Contract.
"Cost Overruns" means any amounts by which actual Total
Project Costs exceed the amount of Total Project Costs that
were included in the Project Budget.
"Developer" means Marchbrook Building Company, a California
corporation.
"Development Fee" means $608,286 which represents three
percent (3%) of the amount that is described in the "Total
Direct Construction Costs" category of the Project Budget.
The Development Fee shall be earned by and payable to
Developer in accordance with the provisions of Subsection
4.2(c).
"Distributable Cash" of the Partnership means at any time all
cash funds of the Partnership on hand at such time after
payment of all Operating Expenses of the Partnership as of
such time less such reserve(s) that the General Partner may,
in its reasonable discretion, establish in order to provide
for payment of outstanding and unpaid obligations of the
Partnership or other purposes. Prior to the Purchase
Settlement Date, Distributable Cash shall include the amount
that could be drawn as "interest reserve or interest
contingency" pursuant to the Initial Loan. On the Purchase
Settlement Date, Distributable Cash shall include all amounts
that would otherwise comprise Distributable Cash plus all
amounts that could be drawn pursuant to the Initial Loan less
an estimated amount equal to the normal prorations that the
Partnership would be required to pay if it had sold the
Project to an unrelated buyer on such date (the "Proration
Reserve"). The General Partner shall be required to fund the
Proration Reserve on the Purchase Settlement Date.
"Distributable Land Equity Account" means an account to be
maintained by the Partnership which will have a balance equal
to $1,830,286 on the Closing Date and which will be decreased,
but not below zero, by Excess Cost Overruns. If the
Completion Date does not occur on or before the Final Date,
the balance in the Distributable Land Equity Account will be
reduced to zero.
"Distribution Date" means, commencing with the calendar
quarter beginning April 1, 2000, a date selected by the
General Partner once each calendar quarter which date will be
during the first 30 days of such calendar quarter.
"Event of Withdrawal" means the occurrence, with respect to
the General Partner, of any event described in Section 402(a)
of the Partnership Act other than an event described in
Subsection 402(a)(4) or (5) of the Partnership Act (unless the
Limited Partner approves an event described in Subsection
402(a)(4) or (5) of the Partnership Act as being an Event of
Withdrawal, in which case it will be an Event of Withdrawal);
provided, however, that neither a Transfer nor the
substitution of another Person as a Partner in respect all or
any portion of the General Partner's Partnership Interest
without violation of this Agreement will be an Event of
Withdrawal and, to the extent the Partnership Act would
otherwise require, each Partner hereby agrees to continue the
business of the Partnership following any such event.
"Excess Cost Overruns" means the amount by which Cost Overruns
exceed the Development Fee.
"Excess Operating Shortfall" means the amount by which
Operating Expenses exceed the sum of (a) Distributable Cash,
and (b) the balance in the Land Equity Account.
"Excess Real Estate Taxes" means the amount, if any, by which
(a) the real estate taxes for a twelve month taxable period
calculated using the then current tax rates of the appropriate
taxing authorities and based on the Bonus Project Value or the
Target Project Value (as appropriate), exceed (b) $356,421.
"Final Date" means December 10, 1999; provided, however, that
if the aggregate period of Excusable Delays (as that term is
defined in the Construction Contract) exceeds 163 days the
Final Date shall be the date which follows December 10, 1999
by a number of days equal to such excess.
"Fiscal Year" means the year commencing on January 1 of each
year (or the Closing Date, with respect to 1998) and ending on
the following December 31.
"General Partner" means ACALP or any other Person admitted
under this Agreement in the capacity of a general partner in
the Partnership, each for only so long as the Person remains
as a general partner in accordance with this Agreement and the
Partnership Act.
"GP Computed Expenses" means the Operating Expenses for an
entire year of operation computed by the General Partner based
on various computations of the General Partner showing
averages per unit for different expenses at various occupancy
levels plus a replacement reserve of $200 per unit. The GP
Computed Expenses shall include the then current real estate
taxes for a twelve month taxable period calculated using the
then current tax rates of the appropriate taxing authorities
and based on the Bonus Project Value or the Target Project
Value (as appropriate), the salaries and burden for the normal
amount of personnel required to operate, pursuant to good real
estate management practices, a project similar in size to the
Project, a 3% management fee, and all other normal and
customary operating expenses of a project similar in size to
the Project and shall be determined pursuant to Subsection
7.8(h).
"GP Loan" means a loan required to be made by the General
Partner to the Partnership pursuant to Subsection 3.3(b)
hereof. Each GP Loan shall: (a) bear no interest, (b) be
repayable only from Distributable Cash other than proceeds of
the Initial Loan, (c) be unsecured, and (d) be with recourse
solely to the assets of the Partnership and no Partner will
have any obligation or liability on account thereof.
"GP Put Notice" has the meaning given it in Subsection 7.8(f).
"GP Put Option" has the meaning given it in Subsection 7.8(f).
"Gross Income" means, for each Adjustment Period, an amount
equal to the Partnership's gross income as determined for
federal income tax purposes for the Adjustment Period but
computed with the adjustments in paragraphs (a) through (d) of
the definition of Net Profit or Net Loss.
"Guaranteed Cost Overruns" means the amount by which Cost
Overruns exceed the sum of: (a) the Development Fee, and (b)
$1,830,286.
"Indemnifiable Costs" has the meaning given it in Section
10.2.
"Indemnified Affiliates" means, with respect to any Person,
its owners and the officers, directors, partners, agents,
employees, owners, and other Affiliates of such Person or any
of its owners (other than the Partnership).
"Indemnified Person" means any Person who is within the
category of Persons entitled to indemnification in accordance
with this Agreement (assuming the prerequisites for
indemnification are satisfied).
"Initial Lender" means BankBoston, N.A., the lender of the
Initial Loan.
"Initial Loan" means the $25,835,450 loan contemplated by the
Construction Loan Agreement, dated as of February 27, 1998
among the Partnership, the Initial Lender, individually and as
agent, and various other financial institutions now or
thereafter parties thereto.
"Initial Loan Documents" means the loan documents described on
Exhibit E.
"Investment Amount" means the amount that would be
distributable to the General Partner on the Purchase
Settlement Date pursuant to Section 4.1, assuming that Section
4.1 contained no time restrictions.
"Land" means the real property more particularly described on
Exhibit B,
"Land Equity Account" means an account to be maintained by the
Partnership which will have a balance equal to $1,830,286 on
the Closing Date and which will be decreased, but not below
zero, by Excess Cost Overruns and Operating Shortfalls.
"Land Loan" means the loan from Guaranty Federal to the
General Partner in the amount of $521,714, which amount will
be assumed by the Partnership and repaid on the Closing Date
out of the proceeds of the Initial Loan.
"Leasing Commencement Date" means the date on which leasing
commences for the Project or any part thereof.
"Limited Partner" means ▇▇▇▇▇▇ or any other Person admitted
under this Agreement in the capacity of a limited partner in
the Partnership, each for only so long as the Person remains
as a limited partner in accordance with this Agreement and the
Partnership Act.
"Liquidating Manager" means the General Partner(s) who did not
wrongfully dissolve the Partnership who remain after the
Partnership is dissolved, if it is not properly reconstituted,
or, in the absence of any such remaining General Partner, the
Person or Persons selected to effect the liquidation of the
Partnership by the Limited Partner or, in both the absence of
any such remaining General Partner and the failure of the
Limited Partner to select a Liquidating Manager within the
period of time during which the Partnership may be properly
reconstituted following its dissolution, the Person or Persons
appointed by a court of competent jurisdiction pursuant to
Section 803(a) of the Partnership Act.
"LP Call Notice" has the meaning given it in Subsection
7.8(g).
"LP Call Option" has the meaning given it in Subsection
7.8(g).
"LP Loan" means a loan made by the Limited Partner to the
Partnership pursuant to Section 3.8 hereof. Unless otherwise
agreed by the Limited Partner and approved by the General
Partner, each such loan shall (a) bear interest at the Base
Rate plus 2% from the date the loan is made until the date of
payment, but in no event more than the maximum rate permitted
by applicable law, (b) require interest and principal to be
payable in a single installment on demand and, if no demand is
made, one year after the date of such advance, (c) be
unsecured, and (d) be with recourse solely to the assets of
the Partnership and no Partner will have any obligation or
liability on account thereof.
"LP Put/Call Closing Notice" means a notice from the Limited
Partner or its designee to the General Partner designating the
Purchase Settlement Date.
"Management Agreement" has the meaning given it in Section
7.9.
"Manager" means Franklin Landings Management Company, a
California corporation.
"Net Profit" or "Net Loss" means, for each Adjustment Period,
the Partnership's taxable income or taxable loss for the
Adjustment Period, as determined under Section 703(a) of the
Code, and Section 1.703-1 of the Regulations (and for this
purpose all items of income, gain, loss, or deduction required
to be stated separately under Section 703(a)(1) of the Code
will be included in taxable income or taxable loss), but with
the following adjustments:
(a) Any tax-exempt income, as described in
Section 705(a)(1)(B) of the Code, realized by the
Partnership during the Adjustment Period will be taken
into account in computing the taxable income or taxable
loss as if it were taxable income.
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code for the Adjustment Period,
including any items treated under Section
1.704-1(b)(2)(iv)(i) of the Regulations as items
described in Section 705(a)(2)(B) of the Code, will be
taken into account in computing the taxable income or
taxable loss as if they were deductible items.
(c) Book Depreciation for the Adjustment Period will be taken
into account in computing the taxable income or taxable
loss in lieu of any amortization, depreciation, or cost
recovery deduction to which the Partnership is entitled
for the Adjustment Period with respect to Partnership
assets.
(d) Any Book Loss or Book Gain recognized by the Partnership
during the Adjustment Period by reason of a sale or other
disposition of all or part of the assets will be taken
into account in computing the taxable income or taxable
loss in lieu of any tax gain or tax loss recognized by
the Partnership during any Adjustment Period by reason of
the sale or other disposition.
(e) Any item of income, gain, loss, or deduction required to
be allocated to the Partners under Sections 5.4, 5.5, and
5.6 will not be taken into account in computing the
taxable income or taxable loss.
If the Partnership's taxable income or taxable loss for the
Adjustment Period, as adjusted in the manner provided in
paragraphs (a) through (e) above, is a positive amount, the
amount will be the Partnership's Net Profit for the Adjustment
Period; and if negative, the amount will be the Partnership's
Net Loss for the Adjustment Period.
"Non-Defaulting Tenant" means a Qualifying Tenant whose
financial obligations to the Partnership are not more than 2
weeks delinquent.
"Operating Budget" means the operating budget prepared by the
General Partner and Approved by the Limited Partner.
"Operating Expenses" means all ordinary and necessary costs,
expenses, or charges with respect to the ownership,
improvement, operation, maintenance, and upkeep of Partnership
assets, including, without limitation, administrative
expenses, ad valorem taxes, advertising and promotional
expenses, insurance expenses, management fees, repair and
maintenance expenses, reserves, utilities, and debt service,
including principal and interest payable in respect of the
Initial Loan and other Partnership indebtedness (other than GP
Loans). Operating Expenses do not include (a) items to be
expended after the end of the Construction Period which are
included in Total Project Costs, (b) any sums necessary to pay
any loan when the same matures (even if matured through
acceleration upon default), or (c) non-cash items such as
depreciation.
"Operating Shortfall" means as of the last day of any calendar
month ending after the Closing Date the amount, if any, by
which unpaid Operating Expenses for such calendar month exceed
the Distributable Cash on the last day of such calendar month.
"Partner" means the General Partner or the Limited Partner and
"Partners" means, collectively, the General Partner and the
Limited Partner. If a Partner Transfers its Partnership
Interest, that Partner will remain a Partner in respect of the
Partnership Interest until another Person is admitted as a
Partner in respect of the Partnership Interest in accordance
with this Agreement and the Partnership Act, if ever.
"Partner Nonrecourse Debt" means any nonrecourse debt of the
Partnership for which any Partner bears the economic risk of
loss as determined under Sections 1.704-2(b)(4) and 1.752-2 of
the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means the minimum gain
attributable to Partner Nonrecourse Debt as determined under
Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Deductions" means any loss, deduction, or
Code Section 705(a)(2)(B) expenditure, or item thereof, that
is attributable to a Partner Nonrecourse Debt as determined
under Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed pursuant to
this Agreement.
"Partnership Act" means the Delaware Revised Uniform Limited
Partnership Act or, from and after the date any successor
statute becomes, by its terms, applicable to the Partnership,
the successor statute, in each case as amended at the time by
amendments that are, at that time, applicable to the
Partnership (to the extent the provisions of the Partnership
Act are not modified by the Certificate or this Agreement).
All references to sections of the Partnership Act include any
corresponding provision or provisions of any such successor
statute.
"Partnership Interest" means the ownership interest in the
Partnership held by a Partner, representing a fractional part
of the Partnership Interests of all Partners, and includes any
and all benefits to which the holder of such a Partnership
Interest may be entitled as provided in this Agreement,
including a Partner's share of the profits and losses of the
Partnership and the right to receive distributions of the
Partnership's assets, together with all obligations of such
Person to comply with the terms and provisions of this
Agreement.
"Partnership Minimum Gain" means the amount computed under
Regulations Section 1.704-2(d).
"Partnership Nonrecourse Deductions" means any loss,
deduction, or Code Section 705(a)(2)(B) expenditure, or item
thereof, that is attributable to nonrecourse liabilities of
the Partnership as defined in Regulations Section
1.752-1(a)(2).
"Person" means any individual, partnership, limited
partnership, joint venture, corporation, limited liability
company, trust, estate, custodian, trustee, executor,
administrator, nominee, representative, unincorporated
organization, sole proprietorship, trust, employee benefit
plan, tribunal, governmental entity, department, or agency, or
other entity.
"Plans" means the plans and specifications described in
Exhibit C hereto, as amended as permitted by this Agreement.
"Project" means the Land, together with all buildings,
structures, garages, open parking areas, and other
improvements thereon, all fixtures installed on or in such
real property or such improvements, all materials, supplies,
equipment, and other items installed on or in such real
property or such improvements, and all rights, titles, and
interests appurtenant thereto.
"Project Budget" means the budget of the Total Project Costs
shown on Exhibit F hereto, as the same may be amended as
permitted by this Agreement.
"Purchase Price Computation Date" means (a) the date specified
by the General Partner in the GP Put Notice, or (b) the date
specified by the Limited Partner in the LP Call Notice.
"Purchase Price Expenses" means the greater of (a) the sum of
(i) $1,122,010, and (ii) the Excess Real Estate Taxes, or (b)
the GP Computed Expenses.
"Purchase Settlement Closing" means the Transfer of the
General Partner's Partnership Interest pursuant to Subsection
7.8(f) or Subsection 7.8(g) which shall occur on the Purchase
Settlement Date.
"Purchase Settlement Date" means the later of (a) the date
specified by the Limited Partner in the LP Put/Call Closing
Notice, provided, however, that if the General Partner
exercises the GP Put Option, the Limited Partner must specify
a date on or before January 14, 2000. and (b) the date on
which all of the procedures and actions described in
Subsection 7.8(h)(i) - (vi) have occurred.
"Qualifying Tenant" has the meaning given it in the Management
Agreement.
"Regulations" means the income tax regulations promulgated
under the Code and effective as of the date of this Agreement,
and any future amendments to the regulations and any
corresponding provisions of succeeding regulations that are
mandatory. The term will also be deemed to include any future
amendments or succeeding regulations that call for an election
by the Partnership as to the application of the amendment or
succeeding regulation to the Partnership if the Tax Matters
Partner so elects, on behalf of the Partnership, which the Tax
Matters Partner may do only after determining that any such
amendments and succeeding regulations do not adversely affect
the economic interests of the Partners hereunder.
"REIT" means a "real estate investment trust" under Section
856 of the Code.
"Section" means a section of this Agreement, unless the text
indicates otherwise.
"Sharing Ratio" means 51% in the case of the General Partner
and 49% in the case of the Limited Partner.
"Subsection" means a subsection of this Agreement, unless the
text indicates otherwise.
"Target Project Value" means the value of the Project
determined by applying a 9.15% cap rate to the Project's 1999
Net Income. For purposes of computing the Target Project
Value, 1999 Net Income means the difference between (a) the
annualized effective rents in place from Non-Defaulting
Tenants as of Purchase Price Computation Date (without market
rental values being substituted for any leases expiring during
the 90 day period following the Purchase Price Computation
Date) using the greater of 95% occupancy or the actual
occupancy rate for Qualifying Tenants, plus (b) Ancillary
Income, less (c) the Purchase Price Expenses.
"Target Purchase Price" means the sum of (a) the Investment
Amount plus (b) lesser of (i) the excess, if any, of the
Target Project Value over $25,835,450 and (ii) $967,238.
"Tax Matters Partner" has the meaning given to it in Section
6.3.
"Total Interest Cost" means accrued interest on the Initial
Loan from the first date amounts are outstanding under such
loan to the end of the Construction Period.
"Total Project Cost" means the sum of (a) $2,941,878.12, which
is the Book Value of the Land, and (b) the total cost to the
Partnership of designing, developing, financing, constructing,
and leasing the Project excluding Total Interest Cost and
excluding $589,878.12 of such cost (which represent amounts
paid by the general partner of the General Partner and assumed
by the Partnership). Total Project Cost shall include,
without limitation, the Contractor Fee, the Developer Fee, and
all costs within the categories set forth in the Project
Budget (excluding the categories described as "Interest
Reserve" and "Interest Contingency" which are included in
Total Interest Cost).
"Transfer" means (a) any sale, encumbrance, gift, donation,
assignment, pledge, hypothecation, mortgage, exchange, or
other disposition of any Partnership Interest or any interest
therein, in each case whether voluntary or involuntary,
including any Transfer by operation of law, by court order, by
judicial process, or by foreclosure, levy, or attachment; or
(b) the act of making any of the foregoing.
1.2 Other Definitions. Certain other terms are defined elsewhere
herein and have the meanings so given them.
1.3 Construction. Whenever the context requires, the gender of
all words used in this Agreement includes the masculine,
feminine, and neuter. All references to Exhibits are to
Exhibits attached to this Agreement, each of which is made a
part of this Agreement for all purposes. All references in
this Agreement to "dollars" or "$" means United States of
America dollars. The term "including" and variations of the
term mean including without limitation and without
duplication.
1.4 Interest Calculations. Any interest or amounts like interest
that are to be calculated under this Agreement shall be
computed on the daily outstanding balance of the amount on
which interest or amounts like interest accrue hereunder. The
calculation of interest and amounts like interest under this
Agreement shall be made monthly and shall be computed on the
basis of a fraction, the denominator of which is 360 and the
numerator of which is the actual number of days in the period
for which interest or amounts like interest are being
calculated.
ARTICLE 2.
GENERAL PROVISIONS
2.1 Formation. ACALP and ▇▇▇▇▇▇ hereby form, effective as of the
date indicated in Section 2.8, the Partnership pursuant to the
Partnership Act.
2.2 Name of Partnership. The name of the Partnership is
"▇▇▇▇▇▇/▇▇▇▇▇ Roseville, L.P." and all Partnership business
must be conducted in that name or such other name or names
that comply with applicable law as the General Partner may
select from time to time.
2.3 Name and Address of Partners. The name and address of each
initial Partner of the Partnership are set forth on Exhibit A.
Each such Person is admitted to the Partnership as a general
partner or limited partner, as the case may be, at the time
the Partnership's existence begins under Section 2.8. The
name and address of each Person who later becomes a Partner
will be as set forth in the records of the Partnership and
Exhibit A will be deemed amended appropriately. The records
of the Partnership will be prima facie evidence of the status
of any Person as a Partner.
2.4 Registered Office and Registered Agent. The General Partner
will use commercially reasonable efforts to ensure that the
Partnership complies with applicable provisions of the
Partnership Act regarding the maintenance of a registered
office and registered agent in the State of Delaware. The
initial registered office and registered agent of the
Partnership in the State of Delaware will be as set forth in
the Certificate. From time to time, the General Partner may
change the Partnership's registered office and registered
agent in the State of Delaware or either in the manner
provided in the Partnership Act.
2.5 Principal Office and Other Offices. The Partnership's
principal place of business will be initially located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General
Partner may change the principal office of the Partnership at
any time and from time to time by notice to the Limited
Partner. The Partnership may also establish such additional
places of business as the General Partner may determine to be
appropriate.
2.6 Purpose. The purpose of the Partnership shall be (a) to
acquire, own, hold, develop, construct, improve, renovate,
rehabilitate, refurbish, maintain, lease, operate, finance,
refinance, sell, dispose of, and otherwise deal with the
Project and (b) to engage in such other businesses and
activities as the Partners approve; provided, however, that
upon receiving specific written instructions from the Limited
Partner, the General Partner will use its reasonable efforts
to cause the Partnership's business and any activities
conducted in connection therewith to be limited and conducted
in such a manner as to permit the Company at all times to be
classified as a REIT unless the Company ceases to qualify as
a REIT for reasons other than the conduct of the business of
the Partnership.
2.7 Powers. The Partnership shall be empowered to do any and all
acts necessary, appropriate, proper, advisable, incidental to
or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection
and benefit of the Partnership; provided, however, that the
Partnership shall not take, and shall refrain from taking, any
action which was described in a written notice from the
Limited Partner to the other Partners as being an action that,
in the judgment of the Limited Partner, in its sole and
absolute discretion (a) could adversely affect the ability of
the Company to continue to qualify as a REIT, (b) could
subject the Company to any taxes under Section 857 or Section
4981 of the Code, or (c) could violate any law or regulation
of any governmental body or agency having jurisdiction over
the Company or its securities, unless such action (or
inaction) shall have been specifically consented to by the
Company in writing.
2.8 Governmental Certificates. Prior to commencing any activities
in any jurisdiction other than the State of Delaware, the
Partners will execute and acknowledge, and the Partnership
will promptly file or record with the proper offices in such
jurisdiction, such certificates as are required or permitted
by any partnership or fictitious name act or similar statute
in effect in such jurisdiction or political subdivision. The
Partners will further execute and acknowledge, and the
Partnership will promptly file or record as aforesaid, such
amended certificates or additional certificates as may from
time to time be required by the statutes to permit the
continued existence and operation of the Partnership.
2.9 Term. The term of the Partnership did or will commence on the
date on which the Certificate was or is filed in the office of
the Secretary of State of the State of Delaware and will
continue until it terminates in accordance with Article 9
following dissolution.
2.10 Mergers and Exchanges. The Partnership may adopt and effect
a plan of merger and may adopt and effect a plan of exchange
if the action is approved by all Partners.
ARTICLE 3.
CAPITAL CONTRIBUTIONS; PARTNER LOANS
3.1 Initial Capital Contributions. On the Closing Date, the
General Partner hereby contributes (and agrees to execute such
further assignments and other documents and to make physical
delivery and to take such further acts as may be necessary to
fully evidence and effect such contribution) to the
Partnership all of its interest in the Land, Plans, studies,
commitments, leases, letters of intent, construction
contracts, construction in progress, and other contracts,
assets, rights, and properties relating to the acquisition,
ownership, and development of the Project. In connection with
the General Partner's contribution of the Land, the
Partnership agrees to assume the Land Loan and the Affiliate
Loan, each of which shall be paid in full on the Closing Date
from the proceeds of the Initial Loan. The Partners agree
that the General Partner shall be treated as making an initial
Capital Contribution of $1,830,286 (after taking into account
the Partnership's assumption of the Land Loan and the
Affiliate Loan) and shall receive a credit to its Capital
Account in the same amount. The Limited Partner shall not be
required to make an initial Capital Contribution to the
Partnership.
3.2 Additional Capital Contributions. The Partners may make
additional Capital Contributions to the Partnership from time
to time but shall be obligated to do so only if, when, and to
the extent they agree in writing to do so.
3.3 Additional Obligations of General Partner.
(a) If Guaranteed Cost Overruns occur, the General Partner
shall pay to the Partnership in cash any amount required
to satisfy the Partnership's obligations in connection
with such Guaranteed Cost Overruns. Any amount paid by
the General Partner pursuant to this Subsection 3.3(a)
shall not be considered a Capital Contribution or a loan
to the Partnership.
(b) If at any time there is an Excess Operating Shortfall,
the General Partner shall make a GP Loan to the
Partnership in an amount equal to the Excess Operating
Shortfall. On the Purchase Settlement Date, the General
Partner shall make a Capital Contribution to the
Partnership of all outstanding GP Loans.
3.4 Capital Accounts. A separate capital account (a "Capital
Account") shall be established and maintained for each Partner
in accordance with Section 1.704-2(b)(2)(iv) of the
Regulations.
3.5 No Other Capital Contributions Required. Except as set forth
in this Article 3, no Partner is required to make any Capital
Contribution to the Partnership.
3.6 Return of Contributions. Except as otherwise expressly set
forth in this Agreement, a Partner is not entitled to the
return of any part of its Capital Contributions to the
Partnership or to be paid interest in respect of either its
Capital Account or its Capital Contributions. An unrepaid
Capital Contribution to the Partnership is not a liability of
the Partnership or of any Partner.
3.7 No Duty to Restore Negative Capital Account. A Partner is not
required to contribute or lend any cash or property to the
Partnership to enable the Partnership to return any other
Partner's Capital Contributions or to make any distribution to
any other Partner, even if the first Partner has a deficit
balance in its Capital Account.
3.8 Loans by Partners. No Partner has or will have any obligation
to loan any funds to the Partnership. However, ▇▇▇▇▇▇, so
long as it is a Limited Partner, may make LP Loans to the
Partnership. Not all Partners must be given the opportunity
to make an LP Loan. An LP Loan constitutes a loan to the
Partnership and is not a Capital Contribution.
3.9 Project Financing. ▇▇▇▇▇▇ shall obtain the Initial Loan and
the Company, ▇▇▇▇▇▇/▇▇▇▇▇▇ Operating Partnership, L.P. and The
▇▇▇▇▇ Company shall act as guarantors of the Initial loan.
The principal amount of the Initial Loan shall be at least
$25,835,450, the loan fee due to the Initial Lender shall not
exceed 1% of the principal amount of the Initial Loan, the
Initial Loan shall have a term of three years, and the
Initial Loan shall accrue interest in accordance with the
Construction Loan Agreement referenced on Exhibit E. The
Partnership shall, upon the formation and commencement of the
Partnership, enter into the Initial Loan Documents. The
Partners hereby authorize: (a) the Partnership to obtain the
Initial Loan pursuant to the Initial Loan Documents, and (b)
the General Partner to execute and deliver, on behalf of the
Partnership, the Initial Loan Documents. The Partnership
shall borrow the Initial Loan on the terms and conditions
contained in the Initial Loan Documents. The Initial Loan
shall be used to pay Total Project Costs and Total Interest
Cost or for any other permissible purpose mutually agreed to
by the Partners. Notwithstanding the foregoing, nothing in
this Agreement shall be construed as superseding, modifying or
otherwise affecting the terms and provisions of the Initial
Loan Documents. To the extent that any provision of this
Agreement is in conflict with any provision of any Initial
Loan Document, such provision of the Initial Loan Documents
shall control.
3.10 Guarantee. The ▇▇▇▇▇ Company guarantees to the Partnership
and the Limited Partner, the General Partner's obligation to
make payments pursuant to Section 3.3 hereof. In addition, if
the General Partner, in its capacity as General Partner,
commits fraud, criminal conduct, willful misconduct or gross
negligence, The ▇▇▇▇▇ Company guarantees to the Partnership
and the Limited Partner, the General Partner's payment of
damages to the Partnership as a result of such described acts.
Any amount paid by the ▇▇▇▇▇ Company pursuant to this Section
3.10 shall not be considered a Capital Contribution or a loan
to the Partnership.
ARTICLE 4.
DISTRIBUTIONS
4.1 Distributions of Distributable Cash. Until the earlier of the
day immediately following the Purchase Settlement Date or
April 1, 2000, Distributable Cash shall be retained and held
in reserve for payment of Operating Expenses and Total
Interest Cost. On the day immediately following the Purchase
Settlement Date and on each Distribution Date following March
31, 2000, Distributable Cash shall be applied by the
Partnership and distributed to the Partners in accordance with
the following priorities (subject to any requirements of
applicable law with respect to the priority of creditors of
the Partnership, if any):
(a) First, to the Limited Partner in an amount equal to the
outstanding balance of all LP Loans applied first to
outstanding interest and then to outstanding principal;
(b) Second, to the General Partner in an amount equal to the
outstanding balance of all GP Loans;
(c) Third, to the General Partner in an amount equal to the
balance, if any, in the Distributable Land Equity
Account; and
(d) Fourth, the balance, if any, to the Partners pro rata in
accordance with their Sharing Ratios.
4.2 Special Payments.
(a) Contractor Fee. The Contractor Fee shall be payable to
Contractor in accordance with the terms and provisions of
the Construction Contract.
(b) Acquisition Fee. The Acquisition Fee shall be payable to
the Company as follows: (i) $16,800 on the Closing Date
and (ii) the balance upon the Partnership's receipt of an
invoice or other statement calculating the proper amount
of such fee.
(c) Development Fee. In connection with the Developer's
agreement to perform the services necessary to develop
the Project and if the Completion Date occurs on or prior
to the Final Date, the Partnership shall pay to the
Developer an amount equal to the excess, if any, of the
Development Fee over the aggregate amount of Cost
Overruns. The amount due pursuant to this Subsection
4.2(c) is to be paid in cash on the Completion Date.
ARTICLE 5.
ALLOCATIONS
5.1 Allocation of Net Profit. After applying the provisions of
Section 5.4 and except as otherwise provided in Section 9.9,
Net Profit for any Adjustment Period will be allocated in the
following order and priority:
(a) first, if the aggregate amount of Net Loss previously
allocated to any Partner exceeds the aggregate amount of
Net Profit previously allocated to such Partner (for the
current and all previous Adjustment Periods), then to
such Partner, or among such Partners, so as to reverse
the effect of the prior allocation of Net Loss in the
following order and priority:
(i) first, to the extent Net Loss was allocated to the
General Partner pursuant to Subsection 5.2(d) for
any prior Adjustment Period, Net Profit shall be
allocated to the General Partner to the extent of
such previously allocated Net Loss;
(ii) second, to the extent Net Loss was allocated to any
Partner(s) pursuant to Subsection 5.2(c) for any
prior Adjustment Period, Net Profit shall be
allocated to Partner(s) to the extent of such
previously allocated Net Loss (among the Partner(s)
in proportion to their respective shares of Net
Loss being offset);
(iii) third, to the extent Net Loss was allocated to
the General Partner pursuant to Subsection
5.2(b) for any prior Adjustment Period, Net
Profit shall be allocated to the General
Partner to the extent of such previously
allocated Net Loss;
(b) second, to the Partners in accordance with their Sharing
Ratios.
5.2 Allocation of Net Loss. After applying the provisions of
Section 5.4 and except as otherwise provided in Section 9.9,
Net Loss for any Adjustment Period will be allocated in the
following order and priority:
(a) first, to the extent Net Profit has been allocated
pursuant to Section 5.1(b) for prior Adjustment Periods,
Net Loss shall be allocated to offset such previously
allocated Net Profit (among the Partner(s) in proportion
to their respective shares of the Net Profit being
offset);
(b) second, if the General Partner's Land Equity Account
(computed as of the close of the Adjustment Period)
exceeds the cumulative amount previously allocated to the
General Partner under this Subsection 5.2(b), then to the
General Partner to the extent of the excess;
(c) third, to the Partners in proportion to and to the extent
of their respective positive Capital Account balances
until the Capital Account balance of each such Partner is
reduced to zero; and
(d) fourth, to the General Partner.
5.3 Limitation on Allocation of Net Loss. Notwithstanding the
provisions of Section 5.2, if the amount of Net Loss for any
Adjustment Period that would otherwise be allocated to a
Limited Partner under Section 5.2 would cause or increase an
Adjusted Capital Account Deficit of the Limited Partner as of
the last day of the Fiscal Year, then a proportionate part of
the Net Loss equal to the excess will be allocated to the
General Partner, and the remainder of the Net Loss, if any,
will be allocated to the Limited Partner.
5.4 Special Allocations. The following special allocations will
be made in the following order before allocations of Net
Profit or Net Loss are made:
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Agreement to the contrary, if in any
Adjustment Period there is a net decrease in Partnership
Minimum Gain, then each Partner shall first be allocated
items of Gross Income for the Adjustment Period (and, if
necessary, subsequent Adjustment Periods) in an amount
equal to the portion of the Partner's share of the net
decrease in Partnership Minimum Gain, determined in
accordance with Regulations Section 1.704-2(g), that is
attributable to the disposition of Partnership property
subject to one or more nonrecourse liabilities of the
Partnership that are not Partner Nonrecourse Debts;
provided, however, if there is insufficient Gross Income
in an Adjustment Period to make the above allocation for
all Partners for the Adjustment Period, the Gross Income
will be allocated among the Partners in proportion to the
respective amounts they would have been allocated had
there been an unlimited amount of Gross Income for the
Adjustment Period.
(b) Minimum Gain Chargeback for Partner Nonrecourse Debt.
Notwithstanding any other provision of this Agreement to
the contrary other than Subsection 5.4(a), if in any
Adjustment Period there is a net decrease in Partner
Nonrecourse Debt Minimum Gain, then each Partner shall
first be allocated items of Gross Income for the
Adjustment Period (and, if necessary, subsequent
Adjustment Periods) in an amount equal to the portion of
the Partner's share of the net decrease in the Minimum
Gain during the Adjustment Period (as determined in
accordance with Regulations Section 1.704-2(i))
attributable to the disposition of Partnership property
subject to one or more Partner Nonrecourse Debts;
provided, however, if there is insufficient Gross Income
in an Adjustment Period to make the above allocation for
all Partners for the year, the Gross Income will be
allocated among the Partners in proportion to the
respective amounts they would have been allocated had
there been an unlimited amount of Gross Income for the
Adjustment Period.
(c) Qualified Income Offset. After application of
Subsections 5.4(a) and 5.4(b), if in any taxable year a
Limited Partner unexpectedly receives any adjustment,
allocation, or distribution described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) and if the
Limited Partner has an Adjusted Capital Account Deficit
as of the first day of the taxable year, items of Gross
Income will be allocated to the Limited Partner in the
amount and in the manner sufficient to eliminate the
Adjusted Capital Account Deficit as quickly as possible;
provided, however, that an allocation under this
Subsection 5.4(c) will be made only if and to the extent
that the Limited Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for
in this Article 5 have been tentatively made as if this
Subsection 5.4(c) were not in this Agreement.
(d) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any Adjustment Period or other period will
be allocated to the Partner who bears the economic risk
of loss with respect to the Partner Nonrecourse Debt to
which the Partner Nonrecourse Deductions are
attributable.
5.5 Curative Allocations. In the event that any Gross Income, Net
Profit (or items thereof), Net Loss (or items thereof) or
deductions are allocated under Sections 5.3 or 5.4 subsequent
Gross Income, Net Profit (or items thereof), or Net Loss (or
items thereof) will first be allocated (subject to
Sections 5.3 and 5.4) to the Partners in a manner that will
result in each Partner having a Capital Account balance equal
to that which would have resulted if the original allocation
of Gross Income, Net Profit (or items thereof), Net Loss (or
items thereof) or deductions under Sections 5.3 or 5.4 had not
occurred; provided, however, no allocations under this
Section 5.5 that are intended to offset allocations under
Subsection 5.4(a) or 5.4(b) will be made prior to the taxable
year during which there is a net decrease in Partner
Nonrecourse Debt Minimum Gain or Partnership Minimum Gain, and
then only to the extent necessary to avoid any potential
economic distortions caused by the net decrease in Partner
Nonrecourse Debt Minimum Gain or Partnership Minimum Gain, and
no such allocation under this Section 5.5 will be made to the
extent that the General Partner reasonably determines that it
is likely to duplicate a subsequent mandatory allocation under
Subsection 5.4(a) or 5.4(b).
5.6 Tax Allocations - Code Section 704(c). In accordance with
Code Section 704(c) and the related Regulations, income, gain,
loss, and deduction with respect to any property contributed
to the capital of the Partnership, solely for tax purposes,
will be allocated among the Partners so as to take account of
any variation between the adjusted basis to the Partnership of
the property for federal income tax purposes and the Book
Value of the property. The Partnership shall use the
"remedial allocation method" described in Section 1.704-3(d)
of the Regulations with respect to all property contributed to
the capital of the Partnership in connection with the
formation of the Partnership. Any other elections or other
decisions relating to allocations under this Section 5.6 will
be made by the General Partner with the consent of the Limited
Partner. Allocations under this Section 5.6 are solely for
purposes of federal, state and local taxes and will not
affect, or in any way be taken into account in computing, any
Partner's Capital Account or share of Net Profit, Net Loss or
other items or distributions under any provision of this
Agreement.
5.7 Other Allocation Rules.
(a) For purposes of determining the Net Profit, Net Loss, or
any other item allocable to any period, Net Profit, Net
Loss, and any such other item will be determined on a
daily, monthly, or other basis, as determined by the
General Partner using any permissible method under
Section 706 of the Code and the Regulations thereunder.
(b) If any Partnership Interest is Transferred, or the
Sharing Ratios are increased or decreased by reason of
the admission of a new Partner or otherwise, during any
Adjustment Period, each item of Net Profit or Net Loss
and other Partnership profit and loss for such Adjustment
Period shall be assigned pro rata to each day in the
particular period of such Adjustment Period to which such
item is attributable (i.e., the day on or during which it
is accrued or otherwise incurred) and the amount of each
such item so assigned to any such day shall be allocated
among the Partners based upon their respective interests
in the Partnership at the close of such day. For the
purpose of accounting convenience and simplicity, the
Partnership shall treat a Transfer of, or an increase or
decrease in, a Partnership Interest or an increase or
decrease in a Partner's Sharing Ratios which occurs at
any time during a semi-monthly period as having been
consummated on the first day of such semi-monthly period,
regardless of when during such semi-monthly period such
Transfer, increase or decrease actually occurs (i.e.,
Transfers or increases or decreases made during the first
15 days of any month will be deemed to have been made on
the first day of the month and Transfers or increases or
decreases thereafter will be deemed to have been made on
the 16th day of the month).
ARTICLE 6.
OTHER FINANCIAL MATTERS
6.1 Compensation of General Partner; Reimbursement of General
Partner. The General Partner shall not be entitled to any
compensation for services rendered as General Partner.
However, the General Partner shall be reimbursed promptly by
the Partnership for costs and expenses reasonably incurred by
it in connection with the performance of its duties to the
Partnership, but only to the extent anticipated in the Project
Budget or Operating Budget or otherwise as Approved by the
Limited Partner.
6.2 Books, Records, Accounting and Reports.
(a) Records and Accounting. The General Partner shall keep
or cause to be kept appropriate books and records with
respect to the Partnership's business at the principal
office of the Partnership or such other office as the
General Partner may designate for that purpose. The
books of the Partnership shall be maintained for
financial reporting purposes on the cash or accrual
basis, in accordance with generally accepted accounting
principles and applicable law. Any Partners shall have
the right to inspect and copy the books and records of
the Partnership at its discretion and at the expense of
the Partnership.
(b) Fiscal Year. The fiscal year of the Partnership shall be
the calendar year.
(c) Reports.
(i) Annual Reports. By no later than March 31 of the
following year, the General Partner shall cause to
be delivered to the Limited Partner reports
containing unaudited financial statements of the
Partnership for the fiscal year just concluded,
presented on a cash basis, including a balance
sheet and a statement of income and cash flow. The
Limited Partner shall have the right, at its
expense, to require an audit of the Partnership's
financial statements for any fiscal year.
(ii) Quarterly Reports. Within 30 days after the
expiration of the respective quarter, the General
Partner shall cause to be delivered to the Limited
Partner a report containing unaudited financial
statements of the Partnership for such just
concluded quarter consisting of at least a balance
sheet and cash flow statement.
(iii) Monthly Reports. Beginning with the Leasing
Commencement Date, within 30 days after the
end of each calendar month, the General
Partner shall cause to be delivered to the
Limited Partner a rent roll and an operating
statement for the Project.
(iv) Initial Lender Reports. The General Partner shall
promptly provide the Limited Partner with copies of
all draw requests and all other material
correspondence, notices and other written
communication to or from the Initial Lender. On or
before five days prior to each due date thereof,
the General Partner shall provide the Limited
Partner, via facsimile, with written evidence of
the payment of all amounts due on the Initial Loan.
6.3 Tax Matters.
(a) Preparation of Tax Returns. The General Partner shall
arrange for the preparation of all returns of Partnership
income, gain, loss, deduction, credit, and other items
necessary for federal, state, and local income tax
purposes and shall cause the same to be filed in a timely
manner. The General Partner shall furnish to the Limited
Partner a copy of each such return, together with any tax
information reasonably required for federal and state
income tax reporting purposes. If required, within 60
days after the end of each fiscal quarter of the
Partnership, the General Partner shall furnish to the
Partners the tax information reasonably required for the
Partners to determine quarterly tax estimate payments.
(b) Tax Elections. The General Partner shall determine
whether to make any available tax election.
(c) Tax Controversies. Subject to the provisions hereof, the
General Partner is designated the Tax Matters Partner (as
defined in Section 6231 of the Code) and is authorized
and required to represent the Partnership, at the
Partnership's expense, in connection with all
examinations of the Partnership's affairs by tax
authorities, including resulting administrative and
judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith.
The General Partner shall deliver to the Limited Partner,
within ten Business Days following receipt thereof, a
copy of any notice or other communication with respect to
the Partnership received by the General Partner from the
Internal Revenue Service (or other governmental tax
authority), and if requested by any Limited Partner,
shall provide to counsel designated by such Limited
Partner a copy of any submission to be made to the
Internal Revenue Service (or other governmental tax
authority) or any court with respect to any
administrative or judicial proceeding involving the
Partnership prior to the submission thereof to the
Internal Revenue Service (or other governmental tax
authority) or the court, as the case may be, and shall
direct counsel for the Partnership to confer with counsel
of such Limited Partner and to consider in good faith all
comments or suggestions of counsel for such Limited
Partner. The Limited Partner agrees to cooperate with
the General Partner in connection with such proceedings.
(d) Organizational Expenses. The Partnership shall elect to
deduct expenses incurred in organizing the Partnership
ratably over a 60-month period as provided in Section 709
of the Code.
(e) Taxation as a Partnership. No election shall be made by
the Partnership or by any Partner for the Partnership to
be excluded from the application of any of the provisions
of Subchapter K, Chapter 1 of Subtitle A of the Code or
from any similar provisions of any state tax laws.
ARTICLE 7.
POWERS, RIGHTS, AND DUTIES OF PARTNERS
7.1 Obligation of the General Partner. The General Partner shall
conduct the business of the Partnership in accordance with
this Agreement.
7.2 Authority of Limited Partners. The Limited Partners as such
(a) have no rights or powers in the management of the
Partnership, (b) have no power to sign for or bind the
Partnership, and (c) may not attempt to take part in the
management of the business of the Partnership. The rights of
the Limited Partners to consent to and approve of certain
matters under the provisions of this Agreement shall not be
construed as participation in the operation and management of
the business of the Partnership or the exercise of control
over the Partnership affairs.
7.3 Powers and Duties of the General Partner.
(a) In General. Subject to the limitations set forth in this
Agreement, the General Partner is responsible for the
day-to-day management of Partnership operations and
performing or overseeing the performance of all acts
needed to carry on the Partnership business on a daily
basis. Its responsibilities include, without limitation,
oversight of the Partnership's operation and maintenance
of Partnership property, management of Partnership
operations, maintenance of financial and tax accounting
records, preparation and filing of tax and securities
laws reports, dissemination and receipt of communications
with the Limited Partner, dissemination of distributions,
and establishment and management of a reasonable cash
reserve. The General Partner has the power and authority
to execute, without the joinder of any other Partner,
instruments evidencing matters approved of in accordance
with the terms of this Agreement.
(b) Powers of the General Partner. The General Partner shall
have the right (except for those matters set forth in
Section 7.4 hereof) and the duty to take any and all
actions the General Partner deems necessary or advisable,
in the General Partner's reasonable opinion, in order to
carry out the purpose of the Partnership, and, without
limitation:
(i) to execute and to deliver, for and on behalf of the
Partnership, any promissory notes, deeds of trust,
mortgages, security agreements, financing
statements, assignments of leases, "master leases",
or other instruments required or advisable in
connection with any permitted loans, mortgages,
pledges or hypothecations, specifically including
the Initial Loan Documents;
(ii) to design and construct the Project and to develop
and improve the Land or to cause the Project to be
designed and constructed and the Land to be
developed and improved;
(iii) to administer all matters pertaining to
insurance with respect to Partnership
property;
(iv) to institute, prosecute and defend any legal or
administrative actions or proceedings on behalf of
or against the Partnership;
(v) to operate and maintain, or cause to be operated
and maintained the Project, or any part or parts
thereof;
(vi) to employ, terminate employment, supervise and
compensate out of Partnership funds all Persons for
and in connection with the business of the
Partnership or the acquisition, improvement,
operation, maintenance, management, leasing,
financing, refinancing, sale, exchange, or other
disposition of the Project, or any interest
therein;
(vii) to acquire, repair and replace such tangible
and intangible personal property as may be
necessary to carry on the business of the
Partnership;
(viii) to negotiate and execute leases for
prospective tenants or other occupancy
agreements with prospective concessionaires in
the Project;
(ix) to collect all rentals and all other sums due to
the Partnership and to enforce the obligations of
tenants, concessionaires, and guests of the
Project;
(x) to negotiate and contract with all utility
companies servicing the Project;
(xi) to apply for and maintain all licenses and permits
required to be obtained and maintained by the
Partnership;
(xii) to negotiate the amounts of all taxes,
assessments, and other impositions applicable
to Partnership Property with the proper
authorities and, when appropriate, undertake
any action or proceeding seeking to reduce
such taxes, assessments or impositions;
(xiii) to deposit all monies received by General
Partner for or on behalf of the Partnership
into such accounts as may be designated by the
General Partner and to disburse and to pay all
funds on deposit on behalf of the Partnership
in such amounts and at such time as the same
are required in connection with the ownership,
construction, development, maintenance and
operation of the Partnership;
(xiv) to supervise and coordinate construction and
architectural services, to engage in the
leasing of rooms, apartments or other space in
the Project, and to perform accounting and
other functions normally performed by
development partners;
(xv) to take such actions (and promptly thereafter, send
written notice to the Limited Partner) as it, in
its reasonable judgment, deems necessary for the
protection of life or health or the preservation of
the assets of the Partnership, if, under the
circumstances, any delay would materially increase
the risk to life or health or the preservation of
such assets; and
(xvi) to take all actions, undertake such
proceedings, exercise all rights and execute
all documents not expressly described herein
deemed necessary or advisable by the General
Partner to perform any of the foregoing or any
rights or obligations of the General Partner
set forth elsewhere in this Agreement or to
conduct or carry out the business of the
Partnership.
(c) Project Budget. The General Partner shall supervise the
construction of the Project in accordance with the Plans
and the Project Budget. During the Construction Period,
the Limited Partner shall receive copies of all materials
the Partnership is required to provide to the Initial
Lender.
(d) Decorator/Designer. The General Partner shall retain
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as the decorator for the Project's
clubhouse and model and ▇▇▇▇▇▇ Von Rochsburg as the
architect to design the signage and graphics for the
Project. If the proposals submitted by either ▇▇▇▇▇
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ Von Rochsburg are not consistent with
the Plans and the Project Budget, the General Partner
shall have the authority to remove either person and
replace them with any person qualified to perform the
required task.
(e) Duties of General Partner. The General Partner shall
manage and control the affairs of the Partnership to the
best of its ability and conduct the operations
contemplated hereby in a careful and prudent manner and
in accordance with good industry practice. The General
Partner in its capacity as such shall devote as much time
to the performance of its duties under this Agreement as
is necessary to carry on the affairs of the Partnership.
Without limiting the foregoing, the General Partner shall
diligently (i) conduct all operations of the Partnership
in accordance with good business practices and in an
efficient and economical manner, (ii) cause the
Partnership to comply with all laws and regulations,
including zoning and other governmental ordinances
affecting the Partnership and the Project, (iii) cause
the Partnership to comply with the terms and conditions
of this Agreement, the Initial Loan Documents and all
other agreements, contracts and obligations of the
Partnership, (iv) use reasonable efforts to adhere to the
Time Schedule for construction and completion of the
Project set forth in Exhibit G, and (v) following the
Purchase Price Computation Date but prior to the Purchase
Settlement Date submit draw requests to the Initial
Lender for all remaining amounts that could be drawn
pursuant to the Initial Loan. The General Partner shall,
at all times, act in a manner consistent with its
fiduciary duties to the Partnership and the Limited
Partner.
7.4 Restrictions on the Authority of the General Partner.
(a) The General Partner may not:
(i) Acquire any property in exchange for interests in
the Partnership;
(ii) Commingle Partnership funds with those of any other
Person or permit Partnership funds or assets to be
employed in any manner except for the exclusive
benefit of the Partnership;
(iii) Permit any Person who makes a loan to the
Partnership to acquire, as a result of making
such loan, any direct or indirect interest in
the profits, capital, or assets of the
Partnership other than an interest as a
secured creditor;
(iv) Make, execute, or deliver any adjustment,
compromise, or settlement of any claim against the
Partnership other than in the ordinary course of
business;
(v) Except as required by the Initial Loan Documents or
otherwise in the ordinary course of business,
encumber or ▇▇▇▇▇ ▇ ▇▇▇▇ on any Partnership
property;
(vi) Sell any general or limited partner interests in
the Partnership, or add any Partner;
(vii) Do any act in contravention of this Agreement;
(viii) Mortgage, pledge, hypothecate, for and on
behalf of the Partnership, all or any part of
the property of the Partnership, in order to
secure any loans to the Partnership for the
refinancing of the Initial Loan;
(ix) Sell, transfer or convey the Project or any
material part thereof or interest therein (divided
or undivided) or sell, transfer or convey any other
material assets of the Partnership;
(x) Make any agreement of merger or consolidation of
the Partnership or change or reorganize the
Partnership into any other legal form;
(xi) Possess Partnership property or assign the rights
of the Partnership in any Partnership property for
other than a Partnership purpose;
(xii) Borrow money on behalf of the Partnership
(except for the Initial Loan, the GP Loans and
the LP Loans) or grant any mortgage or lien to
secure any borrowing (except for the mortgages
and liens securing the Initial Loan);
(xiii) Amend in any material manner the terms of,
renew or extend the Initial Loan or any
document evidencing or securing the same;
(xiv) Settle any litigation by or against the
Partnership except for litigation arising in
the ordinary course of business;
(xv) Take any action which under federal tax law in
effect as of the date of this Agreement would cause
the Partnership to be treated as an association
taxable as a corporation for federal income tax
purposes;
(b) Without the prior approval of the Initial Lender, the
General Partner may not:
(i) Amend any contract or agreement with an Affiliate
which has previously been Approved by the Initial
Lender or the Limited Partner or, or otherwise
enter into or amend any contract or agreement that
delegates to any other Person or entity
discretionary authority over the management or
operation of the Partnership;
(ii) Confess a judgment in excess of $5,000 against the
Partnership;
(iii) Make any material or substantive changes to
the scope or quality of the Project;
(iv) Make changes to the Plans which alter the size,
appearance, utility or value of the Project;
(v) Except for the Construction Contract, the
Management Agreement and any apartment lease with
Executive Living that otherwise complies with the
terms of the Management Agreement, enter into any
contract with an Affiliate of the General Partner
or The ▇▇▇▇▇ Company;
(vi) Execute any changes in the Plans unless the amount
of such change is less than $25,000 and all changes
theretofore made are less than $100,000 in the
aggregate;
(vii) Make any material change to the insurance
carried by the Partnership;
(viii) Except as necessary to reflect changes in the
Plans permitted to be made pursuant to
Subsection 7.4(b)(vi) hereof, amend, modify,
or terminate the Construction Contract or
enter into any additional construction
contract.
7.5 Reliance on Authority. In its dealings with the Partnership,
a third party may rely on the authority of the General Partner
to bind the Partnership without reviewing the provisions of
this Agreement or confirming compliance with the provisions of
this Agreement; however, as between the Partners and as
between the General Partner and the Partnership, the authority
of the General Partner to act on behalf of the Partnership
shall be determined from the pertinent provisions of this
Agreement.
7.6 Title to Partnership Assets. Title to the properties and
assets of the Partnership, whether real, personal, or mixed
and whether tangible or intangible, shall be deemed to be
owned by the Partnership, as an entity, and no Partner,
individually or collectively, shall have any ownership
interest in such properties or assets or any portion thereof.
7.7 Removal of General Partner. The Limited Partner may remove
the General Partner for Cause. The term "Cause" is defined to
mean: (a) a material breach resulting from an act of fraud or
gross negligence by the General Partner of its obligations
under this Agreement, (b) a material breach, not resulting
from an act of fraud or gross negligence, by the General
Partner of its obligations under this Agreement, which breach
continues unremedied for a period of 30 days after any Limited
Partner gives notice to the defaulting General Partner
specifying the default, (c) the bankruptcy or insolvency of
the General Partner, (d) the material breach resulting from an
act of fraud or gross negligence by any Affiliate of the
General Partner of a duty or obligation under a material,
written contract or agreement with the Partnership, (e) the
material breach, not resulting from an act of fraud or gross
negligence, by any Affiliate of the General Partner of a duty
or obligation under a material, written contract or agreement
with the Partnership if within a period of 30 days after any
Limited Partner gives notice to the General Partner and the
defaulting Affiliate specifying the default, either the
default has not either been cured or the contract or the
agreement replaced with a substitute which does not otherwise
adversely impact the Partnership, (f) the dissolution or
cessation of business of the General Partner, or (g) the
Completion Date does not occur on or before the Final Date.
Nothing contained herein shall limit any other rights or
remedies which are, at law, afforded to the Limited Partner.
7.8 Transfer of Interests.
(a) Transfer. No Partnership Interest may be Transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Section 7.8. Any Transfer
or purported Transfer of any Partnership Interest not
made in accordance with this Section 7.8 is null and
void. A Person who alleges to be a transferee of a
Partnership Interest that was not Transferred in
accordance with this Agreement has no right to require
any information or account of the Partnership's
transactions or to inspect the Partnership's books. The
Partnership is entitled to treat the alleged transferor
of a Partnership Interest as the absolute owner thereof
in all respects and incurs no liability to any alleged
transferee for distributions to the Partner owning such
Partnership Interest of record or for allocations of Net
Income, Net Losses, deductions or credits or for
transmittal of reports and notices required to be given
to holders of Partnership Interests.
(b) Assignment. Any Partner may, upon prior written notice
to the General Partner but without any consent required,
assign to any Person or entity all or any part of (i)
such Partner's right to distributions under Article 4
hereof, or (ii) any other economic right or benefit under
this Agreement attributable to such Partner's Partnership
Interest; provided, however, that notwithstanding any
provision to the contrary contained in this Agreement or
the Act, in no event may this Subsection 7.8(b) result in
the Transfer of any voting rights or other non-economic
attributes of the assigned interest. No assignee
acquiring the economic rights and benefits of a Partner
solely by reason of this Subsection 7.8(b) may exercise
any rights of a Partner, and to the extent that any
Partner assigns its Partnership Interest solely pursuant
to this Subsection 7.8(b), it shall not cease to be a
Partner.
(c) Transfer by General Partner. The General Partner may not
Transfer its Partnership Interest to any Person without
the Approval of the Limited Partner.
(d) Transfer by a Limited Partner. Except as otherwise
provided in Subsection 7.8(b), a Limited Partner may not
Transfer its Partnership Interest to any Person unless it
has first obtained the Approval of the General Partner.
(e) Substituted Limited Partner. An assignee or transferee
(other than an existing Partner) of the Partnership
Interest of a Limited Partner may be admitted as a
substitute partner ("Substituted Partner") upon the
receipt by the General Partner of an appropriate
supplement to this Agreement pursuant to which such
Substituted Partner agrees to be bound by all the terms
and provisions of this Agreement. Unless the assignee is
already a General Partner, any assignee of a Partnership
Interest satisfying these requirements shall become and
shall have only the rights and duties of a Limited
Partner and the assigned Partnership Interest shall
thereafter be a Limited Partner's Partnership Interest.
The General Partner shall reflect the admission of a
Substituted Partner and the withdrawal of the
transferring Partner, if appropriate, by preparing a
supplemental Exhibit, dated as of the date of such
admission and withdrawal, and by filing it with the
records of the Partnership. Any Substituted Partner
shall, if required by the General Partner, prior to such
admission, also execute any other documents requested by
the General Partner, including, without limitation, an
irrevocable power of attorney in form satisfactory to the
General Partner appointing the General Partner as such
Person's attorney-in-fact with full power to execute,
swear to, acknowledge, and file all certificates and
other instruments necessary to carry out the provisions
of the Agreement, including, without limitation, such
undertakings as the General Partner may require for the
payment of all fees and costs necessary to effect any
such Transfer and admission. Upon admission, such
Substituted Partner shall be subject to all provisions of
this Agreement in the place and stead of his assignor as
if the Substituted Partner originally was a party to this
Agreement.
(f) General Partner Put Option. The Limited Partner hereby
grants to the General Partner an option to require the
Limited Partner to purchase the entire Partnership
Interest of the General Partner at the greater of the
Bonus Purchase Price or the Target Purchase Price (the
"GP Put Option"). At any time on or before December 10,
1999, the General Partner may deliver to the Limited
Partner a written notice (the "GP Put Notice") that the
General Partner desires to exercise the GP Put Option.
The GP Put Option shall expire if the GP Put Notice is
not issued on or before December 10, 1999. The purchase
price shall be determined and the transfer consummated in
accordance with Subsection 7.8(h).
(g) Limited Partner Call Options.
(i) The General Partner hereby grants to the Limited
Partner or its designee an option to purchase the
entire Partnership Interest of the General Partner
(the "LP Call Option"). At any time after December
10, 1999, the Limited Partner or its designee may
deliver to the General Partner a written notice
(the "LP Call Notice") that the Limited Partner
desires to exercise the LP Call Option at the
greater of the Bonus Purchase Price or the Target
Purchase Price. The purchase price shall be
determined and the transfer consummated in
accordance with Subsection 7.8(h).
(ii) At any time prior to December 11, 1999, the Limited
Partner or its designee may deliver to the General
Partner a LP Call Notice that the Limited Partner
desires to exercise the LP Call Option for a
purchase price equal to the sum of the Investment
Amount plus $1,135,238.
(h) Put/Call Procedures.
(i) The GP Put Notice (A) shall set forth the Purchase
Price Computation Date, which shall not be later
than December 10, 1999, and (B) shall contain the
General Partner's calculation of the GP Computed
Expenses, the Purchase Price Expenses, and the
Ancillary Income. The General Partner shall attach
to the GP Put Notice all workpapers, schedules and
other materials supporting or explaining the
General Partner's calculation of the GP Computed
Expenses, the Purchase Price Expenses, and the
Ancillary Income.
(ii) The LP Call Notice shall set forth the Purchase
Price Computation Date, which, unless the LP Call
Option is being exercised pursuant to Subsection
7.8(g)(ii), shall not be earlier than December 11,
1999. If the LP Call Option is being exercised
pursuant to Subsection 7.8(g)(i), within ten days
following receipt of the LP Call Notice, the
General Partner shall submit to the Limited Partner
the General Partner's calculation of the GP
Computed Expenses, the Purchase Price Expenses, and
the Ancillary Income. The General Partner shall
attach to its submission all workpapers, schedules
and other materials supporting or explaining the
General Partner's calculation of the GP Computed
Expenses, the Purchase Price Expenses and the
Ancillary Income.
(iii) During the ten day period following the
Limited Partner's receipt of the General
Partner's calculation of the GP Computed
Expenses and the Ancillary Income, the parties
shall endeavor to agree on the amount of the
GP Computed Expenses and the Ancillary Income.
If the parties are unable to agree on the
amount of the GP Computed Expenses, the
Purchase Price Expenses shall be presumed to
be equal to $1,122,010 plus the Excess Real
Estate Taxes. If the parties are unable to
agree on the amount of the Ancillary Income,
the Ancillary Income will be presumed to be
equal to the sum of (A) $144 per unit/per year
based on 95% occupancy, and (B) an annualized
amount based on the preceding three month net
effective garage rental per garage assuming
95% of the available garages are occupied.
(iv) As soon as practicable following the Purchase Price
Computation Date, the General Partner shall
deliver to the Limited Partner a certified rent
roll (as of the Purchase Price Computation Date)
for apartments and garages and the General
Partner's calculation of the greater of the Bonus
Purchase Price or the Target Purchase Price. The
Limited Partner shall have the right to audit the
Partnership's records including the rent roll,
leases and tenant files to verify the number of
Qualified Tenants and Non-Defaulting Tenants. If
the parties are unable to agree on the proper
calculation of the Bonus Purchase Price of the
Target Purchase Price, either party may submit the
matter to arbitration pursuant to Section 10.10.
(v) As soon as practicable following the determination
of the appropriate purchase price, the Limited
Partner shall deliver to the General Partner the LP
Put/Call Closing Notice.
(vi) The Limited Partner's obligations pursuant to this
Section 7.8 shall be conditioned upon and subject
to (A) delivery of an as built survey and a
downdate endorsement, (B) the General Partner's
certification that as of the Purchase Settlement
Closing the units in the Project will be in
substantially a rent ready condition and (C) the
Limited Partner's right to walk the units to ensure
that such units are in such condition.
(vii) The Limited Partner shall pay the General
Partner the appropriate purchase price in cash
at the Purchase Settlement Closing to occur by
the Purchase Settlement Date. After the
Purchase Settlement Date, the General Partner
will have no additional obligations under the
Partnership Agreement or with respect to the
Partnership, the Limited Partner or the
Project. The Limited Partner will defend,
indemnify, and hold the General Partner (and
its Affiliates and agents) harmless from and
against all claims, losses, costs, liabilities
and expenses (including attorneys' fees)
related to the Partnership or the Project
which are attributable to actions, events or
periods occurring after the Purchase
Settlement Date.
7.9 Management of the Project. The operation, management and
maintenance of the Project (other than the construction and
development thereof) shall be conducted by a Manager (or, upon
its resignation, termination or expiration of its Management
Agreement without the same being renewed, or any other event
which results in its no longer serving as the Manager, then by
a successor Manager) pursuant to a management agreement
between the Partnership and the Manager (each such management
agreement being herein called the "Management Agreement").
The form, terms, and provisions of the Management Agreement
must be Approved by all Partners. The Manager and each
successor Manager shall be selected and appointed by the
General Partner. The initial Manager shall be Franklin
Landings Management Company. All Partners hereby authorize
the General Partner, on behalf of the Partnership, to enter
into a Management Agreement with Manager in the form Approved
by all Partners. The Limited Partner may elect to cause the
Partnership to terminate the Management Agreement if the
Partnership has the right to do so under the applicable
Management Agreement.
7.10 Budgetary Approval Process.
(a) The Project Budget is attached hereto as Exhibit F. The
General Partner may freely reallocate to contingency any
savings in any line item in the Project Budget. Subject
to the terms of the Initial Loan, the General Partner may
freely reallocate from contingency to any other line item
in the Project Budget.
(b) Beginning on the Leasing Commencement Date, the Project
shall be operated pursuant to an approved Operating
Budget. At least 45 days prior to the beginning of a
Fiscal Year (or at least 45 days prior to the Leasing
Commencement Date, as the case may be) in the case of the
Operating Budget for such Fiscal Year, the General
Partner shall submit the proposed Operating Budget to the
Limited Partner.
7.11 Services By and Payments to the General Partner and Certain
Affiliates Thereof.
(a) No commissions shall be paid by the Partnership to the
General Partner for leases heretofore or hereafter
entered into by the Partnership.
(b) The actual salaries, benefits, bonuses and burdens for
any employees of the General Partner and/or its
Affiliates actually and directly involved in the
development, construction, marketing or leasing of the
Project shall be payable as Total Project Costs,
provided, that such Total Project Costs will not include
the salaries of any employees of Contractor other than a
superintendent, assistant superintendent and a job cost
accountant.
7.12 Approvals and Consents. Whenever the approval, satisfaction
or consent of a party hereto is required or requested, such
approval, satisfaction or consent may be granted or withheld
in such party's reasonable discretion unless expressly
provided herein to the contrary. Any approval, satisfaction,
or consent hereunder must be express and in writing duly
executed and delivered by the party to be bound thereby,
unless otherwise specified to the contrary in this Agreement.
No Partner shall unreasonably delay its response to a request
for approval, satisfaction or consent hereunder.
7.13 Notices and Meetings. Whenever any notice is required to be
given to any Partner under the provisions of this Agreement,
or under any provision of the Partnership Act, a waiver
thereof, in writing, signed by the Person or Persons entitled
to such notice, whether before or after the time stated
therein, is equivalent to the giving of such notice. Except
as provided in the next sentence, any action, vote, approval
or consent required or permitted to be taken or made by any
Partner pursuant to this Agreement may be taken or made only
by the vote of such Partner at a duly called meeting thereof.
Any action which could be taken at any meeting of the Partners
may be taken without a meeting, without prior notice, and
without a vote if a consent (or consents) in writing, setting
forth the action so taken, is signed by all Persons entitled
to vote with respect to the action that is the subject of the
consent. Subject to the giving of the required notice (or a
waiver executed in lieu thereof), the Partners may participate
and hold a meeting by telephone conference or similar
communications equipment by which all Persons participating in
the meeting can hear each other, and participating in such a
meeting constitutes the presence in Person at such meeting,
except where a Person participates in the meeting for the
express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called
or convened or that proper notice of such business has not
been given.
7.14 Compliance with Financing Documents. The Partnership and each
Partner shall comply with (a) each provision of the Initial
Loan Documents applicable to it, and (b) the Affordable Rental
Housing Development Agreement with the city of Roseville dated
October 22, 1997.
ARTICLE 8.
CERTAIN COVENANTS AND REPRESENTATIONS OF PARTNERS
8.1 Information. In addition to the other rights specifically set
forth in this Agreement, each Partner is entitled to all
information to which that Partner is entitled to have access
under the Partnership Act under the circumstances and subject
to the conditions therein stated. No Person to whom a Transfer
is purported to be made without compliance with this Agreement
will be entitled to have access to any information about the
Partnership.
8.2 Conflicts of Interest. Nothing in this Agreement will prevent
or restrict a Partner or any of its Affiliates from engaging
in or possessing interests in other business ventures of any
and every type and description, independently or with others,
including ones in direct competition with the Partnership. No
such action will be deemed wrongful or improper under this
Agreement and neither the Partnership nor any other Partner
will have any right to participate therein.
ARTICLE 9.
DISSOLUTION, LIQUIDATION, AND TERMINATION
9.1 Dissolution. The Partnership will dissolve upon the first to
occur of the following events:
(a) The 15th anniversary of the date of this Agreement (or
such later date that the Partners may approve in
writing);
(b) At the time as there is only one Partner;
(c) The dissolution by the written agreement of all Partners;
(d) The sale or other disposition of the Project, unless such
sale or other disposition involves any deferred payment
of the consideration therefor, in which case the
Partnership will not be dissolved until the last day of
the calendar year during which the Partnership collects
the full amount of the deferred payment or otherwise
ceases to have any rights to collect the deferred payment
as a result of the bankruptcy of the obligor or
otherwise;
(e) The entry of a decree of judicial dissolution under the
Partnership Act; and
(f) The occurrence of an Event of Withdrawal with respect to
the General Partner unless the Limited Partner agrees in
writing, within 90 days after the occurrence of the Event
of Withdrawal, to continue the Partnership and to the
appointment, effective as of the date of the Event of
Withdrawal, of a new general partner if necessary or
desired.
9.2 Interim Manager. If the Partnership is dissolved as a result
of the General Partner's being a Bankrupt Partner, the Limited
Partner may appoint an interim manager of the Partnership (the
"Interim Manager"), who will have and may exercise only the
rights, powers, and duties of a general partner necessary to
preserve the Partnership assets, until (a) a new general
partner, if any, is elected, if the Partnership is
reconstituted or (b) the Liquidating Manager is appointed, if
the Partnership is not reconstituted as permitted by Section
9.1. The Interim Manager will not be liable as a general
partner to the Partners.
9.3 Winding Up and Liquidation.
(a) Winding Up. Upon the dissolution of the Partnership, if
it is not reconstituted by the Partners as permitted in
this Agreement, the Liquidating Manager will proceed to
wind up the affairs and business of the Partnership. A
reasonable time will be allowed for the orderly
liquidation of the Partnership's assets under this
Article 9 in order to minimize the risk of loss that
might be attendant upon the a liquidation. In connection
with the winding up, the Liquidating Manager will sell or
otherwise dispose of the Partnership's assets; provided,
however, that, without the written consent of the Limited
Partner, except to the extent required to satisfy the
debts and liabilities of the Partnership, the Liquidating
Manager will not sell any of the assets of the
Partnership. If such consent is not obtained, the assets
of the Partnership, to the extent they need not be
liquidated to satisfy the debts and liabilities of the
Partnership, shall be distributed in kind to the
Partners. Each Partner hereby consents to such in-kind
distribution.
(b) Powers. Until final distribution, the Liquidating
Manager will continue to operate the Partnership
properties with all of the power and authority of the
General Partner.
(c) Distributions in Liquidation. Liquidating distributions
will be applied and distributed as follows:
(i) to the repayment of debts and liabilities of the
Partnership, including those owed to Partners; then
(ii) to the establishment of the cash reserves as the
Liquidating Manager deems appropriate for any
contingent or unforeseen liabilities of the
Partnership; provided, however, that at the
expiration of the period as the Liquidating Manager
deems advisable, the balance of the cash reserves
will be distributed to the Partners in the manner
hereinafter provided; and then
(iii) to the Partners in accordance with Article 4.
(d) In-Kind Distributions. Except as contemplated by
Subsection 9.3(a), no in-kind distributions will be made
to the Partners without the Approval of all Partners.
9.4 Cost of Winding Up; Audit. The costs of winding up and
liquidation will be borne by the Partnership. At the election
of the Limited Partner, the Liquidating Manager will cause an
independent auditor to prepare a complete and final certified
audit of the books, records, and accounts of the Partnership
and all adjustments between the Partners will be made upon the
basis of the certified audit.
9.5 Termination of Interest. The distribution of cash or property
to a Partner in accordance with the provisions of this Article
constitutes a complete return to the Partner of its capital
contributions and a complete distribution to the Partner in
respect of its Partnership Interest and all the Partnership's
property and constitutes a compromise to which all Partners
have consented for purposes of the Partnership Act. To the
extent that a Partner returns funds to the Partnership, it has
no claim against any other Partner for those funds.
9.6 Subsequent Distributions. If at any time (whether before or
after termination of the Partnership) any of the funds placed
in reserve(s)under this Article are released because, in the
opinion of the Liquidating Manager, the need for the
reserve(s) has ended, the funds will be distributed in
accordance with this Article.
9.7 Filing Certificate of Cancellation. Promptly after the
distribution of assets under this Article (other than funds
that are reserved under this Article), the General Partner (or
the other Person or Persons as the Partnership Act may require
or permit) will cause a Certificate of Cancellation to be
filed with the Secretary of State of the State of Delaware,
cancel any other filings made under Section 2.7, and take such
other actions as may be necessary to terminate the
Partnership.
9.8 Date of Termination. The Partnership will be terminated when
all of its assets (other than those to be distributed in kind
pursuant to this Agreement) have been converted into cash, all
promissory notes or other evidences of indebtedness derived by
the Partnership from the conversion of its assets (other than
those to be distributed in kind pursuant to this Agreement)
have been collected or otherwise converted into cash, and all
the cash, together with any other cash held by the Partnership
and the assets to be distributed in kind pursuant to this
Agreement, has been applied and distributed in accordance with
the provisions of this Article. The establishment of any cash
reserves under this Article will not have the effect of
extending the term of the Partnership, but any such cash
reserves will be applied and distributed in the manner
provided in the Section upon expiration of the period of the
reserve.
9.9 Allocations in Year of Liquidation. It is the intent of the
Partners that the allocations set forth in Article 5 will
cause the positive balance of the Capital Account of each of
the Partners to equal the distributions required under this
Article to such Partner. Accordingly, if after giving
hypothetical effect to the allocations set forth in Article 5
and all adjustments attributable to contributions and
distributions of money and property effected prior to the
distributions under Subsection 9.3(c)(iii), the positive
Capital Account of each of the Partners is not equal to the
distributions to be made to each Partner under this Article,
Net Profit (or items thereof), Net Loss (or items thereof),
and gross income will be allocated among the Partners so that
the positive balance in each Partner's Capital Account, prior
to the distributions under this Article, equals the amount of
distributions to be received by the Partner under Subsection
9.3(c)(iii) in the order of priority set forth therein.
ARTICLE 10.
MISCELLANEOUS
10.1 Extent of Liability.
(a) The General Partner shall be fully liable for any
liability or loss incurred or suffered by the Partnership
or any other Partner caused by any act or omission of the
General Partner or any of the General Partner's
Affiliates that: (i) constitutes bad faith, active and
deliberate fraud, dishonesty, willful neglect, willful
misconduct or gross negligence, (ii) is outside the scope
of authority of the General Partner under this Agreement,
(iii) results in the General Partner or any of its
Affiliates actually and knowingly receiving an improper
benefit in money, property, or services, (iv) is criminal
if the General Partner had reasonable cause to believe
that such act or omission was criminal, or (v) is a
material breach of any of the obligations of the General
Partner under this Agreement (other than the obligations
to make a Capital Contribution).
(b) The Limited Partner is not and will not be liable to the
Partnership or any other Partner except for a breach by
the Limited Partner of its obligations under this
Agreement.
10.2 Indemnification by the Partnership.
(a) Obligation. To the fullest extent permitted by law, the
Partnership hereby agrees to indemnify, defend, and hold
harmless each Partner and its Indemnified Affiliates from
and against any and all claims, demands, actions, rights
of action, losses, costs, expenses, and liabilities,
including attorneys' fees and court costs (collectively,
"Indemnifiable Costs"), that any of them may incur as a
result of or in connection with anything done or omitted
to be done by the Partner or its Indemnified Affiliates
for or on behalf of the Partnership and in furtherance of
its interests, SPECIFICALLY INCLUDING THE SOLE, PARTIAL,
OR CONCURRENT NEGLIGENCE OF THE PARTNER OR INDEMNIFIED
AFFILIATE, but excluding any such items incurred as a
result of something for which the Partner or Indemnified
Affiliate is liable under Section 10.1 hereof. In
addition and to the extent not encompassed within the
preceding sentence, the Partnership will indemnify the
Limited Partner and its Indemnified Affiliates for
Indemnifiable Costs that any of them may incur as a
result of the Limited Partner's being deemed to have
participated in the control of the Partnership's business
as a result of exercising, or attempting to exercise, its
rights and powers under this Agreement. On request by an
Indemnified Person, the Partnership will advance to that
Indemnified Person the expenses associated with the
defense of any related action. Notwithstanding anything
contained in this Subsection to the contrary, the
Partnership's liability under the indemnification will be
limited to the extent of the Partnership's assets, but
the limitation will not affect any insurance coverage
that may be available for the indemnification.
(b) Insurance. The General Partner may cause the Partnership
to purchase directors and officers liability or similar
insurance for the benefit of the Partnership, each
Partner, and each other Indemnified Person that insures
them against any liability for which they are entitled to
be indemnified hereunder.
10.3 Offset. If a Partner has any obligation to pay money to the
Partnership at a time that the Partnership or the other
Partner is required to make any payment or distribution to the
obligated Partner, the Partnership may deduct the amount of
the liability from its payment or distribution to the
obligated Partner and the other Partner may fulfill its
requirement to make a payment to the obligated Partner by
paying the amount of the obligated Partner's liability to the
Partnership instead of to the Partner. If a Partner has any
obligation to pay money to the other Partner at a time that
the other Partner is required to make any payment to the
obligated Partner, the other Partner may deduct the amount of
the liability from its payment to the obligated Partner.
10.4 Entire Agreement; Supersedure. This Agreement, including the
Exhibits hereto, constitutes the entire agreement of the
Partners relating to the internal affairs of the Partnership
and supersedes all prior contracts or agreements with respect
to the internal affairs of the Partnership, whether oral or
written.
10.5 Governing Law. THIS AGREEMENT IS GOVERNED BY AND WILL BE
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT
REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO
THE LAW OF ANOTHER JURISDICTION. In the event of a direct
conflict between the provisions of this Agreement and any
mandatory provision of the Partnership Act, the applicable
provision of the Partnership Act will control.
10.6 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties
had signed the same document. All counterparts will be
construed together and constitute the same instrument. In
making proof of this Agreement, it will not be necessary to
account for more than one counterpart executed by the Person
against whom enforcement is sought.
10.7 Captions. The captions, headings, and arrangements used in
this Agreement are for convenience only and do not in any way
affect, limit, amplify, or modify the terms and provisions
hereof.
10.8 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or
future laws effective during the term of this Agreement, the
provision will be fully severable; this Agreement will be
construed and enforced as if the illegal, invalid, or
unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by
the illegal, invalid, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of each
such illegal, invalid, or unenforceable provision, there will
be added automatically as a part of this Agreement a provision
as similar in terms to the illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and
enforceable.
10.9 Successors and Assigns. Each and every covenant, term,
provision, and agreement herein contained will be binding upon
each of the Partners and their respective heirs, legal
representatives, successors, and assigns and will inure to the
benefit of each of the Partners. Unless and until properly
admitted as a Partner, no assignee will have any rights of a
Partner beyond those provided by the Partnership Act to
assignees or otherwise expressly provided herein to assignees.
10.10 Arbitration. Any controversy, claim, or dispute arising
out of or relating to this Agreement, including any
alleged breach or threatened breach of the provisions
contained in this Agreement will, upon demand of a party
to the controversy, claim, or dispute, be resolved by
arbitration administered by the American Arbitration
Association ("AAA") in accordance with the Commercial
Arbitration Rules of the AAA and, to the maximum extent
applicable, pursuant to the Federal Arbitration Act, 9
U.S.C. 1 et seq. An award rendered in any such proceeding
shall be final, binding, and non-appealable, and judgment
thereon may be entered in any court having competent
jurisdiction. With respect to a controversy, claim, or
dispute in which the claim or amount in controversy does
not exceed $100,000, a single arbitrator will be
impaneled, who will have authority to render a maximum
award of $100,000, including all damages of any kind and
costs, fees, interest, and the like. With respect to a
controversy, claim, or dispute in which the claim or
amount in controversy exceeds $100,000, the dispute will
be decided by a majority vote of three arbitrators.
Subject to the limitations contained in this Agreement,
the arbitrators may grant any remedy or relief they deem
just and equitable, including any provisional and
injunctive remedies available at law (in which case the
party receiving such relief may apply to the court of
competent jurisdiction for enforcement of such
provisional or injunctive order, without prejudice to the
continued arbitration of the matter); provided, however,
that the AAA may, upon the demand of any party to the
controversy, claim, or dispute, administratively appoint
a single "provisional relief" arbitrator on an expedited
basis to consider any request for, and grant, such
provisional or injunctive remedy. The arbitrators will
resolve all disputes in accordance with the laws of the
State of Delaware. The arbitrators will be knowledgeable
in the subject matter of the dispute. The arbitrators
will make specific, written findings of fact and
conclusions of law. The arbitrators' findings of fact
will be binding on all parties and will not be subject to
further review.
Executed on the date or dates indicated below, to be effective
as of the day and year first written above.
GENERAL PARTNER:
ANTELOPE CREEK APARTMENTS, L.P., a
California limited partnership
By: LSAC G.P. CORPORATION, a California
corporation, its general partner
By:
Name:
Title:
Date: February 27, 1998
LIMITED PARTNER:
▇▇▇▇▇▇ DEVELOPMENT CORPORATION, a
Delaware corporation
By:
Name:
Title:
Date: February 27, 1998
LIMITED JOINDER
The ▇▇▇▇▇ Company hereby executes this Agreement for the
limited purpose of agreeing to be bound by the provisions of
Section 3.10.
THE ▇▇▇▇▇ COMPANY, a California
corporation
By:
Name:
Title:
Date: February 27, 1998
EXHIBIT A
Name of Partner
Address for Notices/Service
of Process
Sharing
Ratio
Capital
Contributions
Antelope Creek
Apartments,
L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
51%
$1,830,286
▇▇▇▇▇▇
Development
Corporation
One Lincoln Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
49%
$ -0-
EXHIBIT B
THE PROJECT
EXHIBIT C
PLANS AND SPECIFICATIONS
EXHIBIT D
CONSTRUCTION CONTRACT
EXHIBIT E
INITIAL LOAN DOCUMENTS
A. Construction Loan Agreement.
B. Note payable to BankBoston, N.A. for $25,835,450.
C. Construction Deed of Trust with Assignment of Rents,
Security Agreement and Fixture Filing.
D. Absolute Assignment of Leases and Rents.
E. Unconditional Guaranty of Payment and Performance
(Company).
F. Unconditional Guaranty of Payment and Performance (WDOP).
G. Unconditional Guaranty of Payment and Performance (The
▇▇▇▇▇ Company).
H. Agreement Regarding Fees.
I. Any other promissory notes, deeds of trust, mortgages,
security agreements, financing statements, assignments of
leases, or other instruments required or advisable in
connection with any other Initial Loan Document.
EXHIBIT F
PROJECT BUDGET
EXHIBIT G
TIME SCHEDULE
Site work March 1998
Construction Start April 1998
First Units Leased October 1998
Last Units Completed July 1999
Target 95% Leased November 15, 1999
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