Amended and Restated Agreement
of Limited Partnership of
Boonville Associates I, L.P.
This Amended and Restated Agreement of Limited Partnership is being entered
into effective as of the date written below by and between Central Missouri
Counties' Human Development Corporation, a Non-profit Corporation as the general
partner (the "General Partner"), WNC Housing Tax Credit Fund VI, L.P., Series 6,
a California limited partnership as the limited partner (the "Limited Partner"),
WNC Missouri Tax Credits XXXI, L.P., as the Missouri limited partner (the
"Missouri Limited Partner"), WNC Housing, L.P., as the special limited partner
(the "Special Limited Partner"), and Crestwood Development, Inc., a Missouri
corporation as the withdrawing limited partner (the "Original Limited Partner).
RECITALS
WHEREAS, Boonville Associates I, L.P., a Missouri limited partnership (the
"Partnership") filed a Certificate of Limited Partnership with the Missouri
Secretary of State on October 19, 1998. A agreement of limited partnership dated
October 9, 1998 was entered into by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
Vitor as the general partners and the ▇▇▇▇▇▇▇▇ Group, L.L.P. as the limited
partner (the "Original Partnership Agreement").
WHEREAS, on September 14, 1999 a First Amendment to the Agreement of
Limited Partnership of Boonville Associates I, L.P., was entered into to provide
for the withdrawal of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and The ▇▇▇▇▇▇▇▇ Group, L.L.P. as a
general partner and limited partner, respectively, and for the admission of
Crestwood Development, Inc. as the limited partner. Such withdrawal resulted in
having ▇▇▇▇▇▇▇ ▇. Vitor as the sole general partner and Crestwood Development,
Inc. as the limited partner (the "First Amendment").
WHEREAS, on June 1, 2000 a Second Amendment to the Agreement of Limited
Partnership of Boonville Associates I, L.P., was entered into to provide for the
withdrawal of ▇▇▇▇▇▇▇ ▇. Vitor as sole general partner and the admission of
Central Missouri Counties' Human Development Corporation, a Non-profit
Corporation as the general partner (the "Second Amendment"). An Amended and
Restated Certificate of Limited Partnership was filed on August 1, 2000 with the
Missouri Secretary of State.
WHEREAS, the Partners desire to enter into this Agreement to provide for,
among other things, (i) the continuation of the Partnership, (ii) the admission
of the General Partner, the Limited Partner, the Special Limited Partner, and
the Missouri Limited Partner as partners of the Partnership, (iii) the
1
liquidation of the Original General Partner's Interest in the Partnership, (v)
the payment of Capital Contributions by the Limited Partner, the Special Limited
Partner and the Missouri Limited Partner to the Partnership, (vi) the allocation
of Income, Losses, Tax Credits, Missouri Tax Credits and distributions of Net
Operating Income and other cash funds of the Partnership among the Partners
(vii) the determination of the respective rights, obligations and interests of
the Partners to each other and to the Partnership, and (viii) certain other
matters.
WHEREAS, the Partners desire hereby to amend and restate the Original
Partnership Agreement and the First Amendment.
NOW, THEREFORE, in consideration of their mutual agreements herein set
forth, the Partners hereby agree to amend and restate the Original Partnership
Agreement and the First Amendment in its entirety to provide as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Accountant" shall mean ▇▇▇▇▇▇▇, Walla & ▇▇▇▇▇▇▇▇▇, or such
other firm of independent certified public accountants as may be engaged for the
Partnership by the General Partner with the Consent of the Special Limited
Partner. Notwithstanding any provision of this Agreement to the contrary, the
Special Limited Partner shall have the discretion to dismiss the Accountant for
cause if such Accountant fails to provide, or inaccurately provides in any
material respect, the information required in Section 14.2 or 14.3 of this
Agreement.
Section 1.2 "Act" shall mean the laws of the State governing limited
partnerships, as now in effect and as the same may be amended from time to time.
Section 1.3 "Actual Missouri Tax Credit" shall mean as of any point in
time, the total amount of the Missouri Tax Credits actually allocated by the
Partnership to the Missouri Limited Partner, representing 100% of the Missouri
Tax Credits actually received by the Partnership, as shown on the applicable tax
returns of the Partnership.
Section 1.4 "Actual Tax Credit" shall mean as of any point in time, the
total amount of the LIHTC actually allocated by the Partnership to the Limited
Partner, representing 99.9899.97% of the LIHTC actually received by the
Partnership, as shown on the applicable tax returns of the Partnership.
Section 1.5 "Adjusted Capital Account Deficit" shall mean with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant fiscal period, after giving effect to the following
adjustments:
2
(a) credit to such Capital Account any amounts which such Partner is
obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted consistently therewith.
Section 1.6 "Affiliate" shall mean (a) any Person directly or indirectly
controlling, controlled by, or under common control with another Person; (b) any
Person owning or controlling 10% or more of the outstanding voting securities of
such other Person; (c) any officer, director, trustee, or partner of such other
Person; and (d) if such Person is an officer, director, trustee or general
partner, any other Person for which such Person acts in any such capacity.
Section 1.7 "Agreement" or "Partnership Agreement" shall mean this Amended
and Restated Agreement of Limited Partnership, as it may be amended from time to
time. Words such as "herein," "hereinafter," "hereof," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement, refers to this
Agreement as a whole, unless the context otherwise requires.
Section 1.8 "Apartment Housing" shall collectively mean the approximately
8.4 acres of land in Boonville, ▇▇▇▇▇▇ County, Missouri as more fully described
in Exhibit "A" attached hereto and incorporated herein by this reference, and
the Improvements.
Section 1.9 "Assignee" shall mean a Person who has acquired all or a
portion of the Limited Partner's beneficial interest in the Partnership and has
not become a Substitute Limited Partner.
Section 1.10 "Bankruptcy" or "Bankrupt" shall mean the making of an
assignment for the benefit of creditors, becoming a party to any liquidation or
dissolution action or proceeding, the commencement of any bankruptcy,
reorganization, insolvency or other proceeding for the relief of financially
distressed debtors, or the appointment of a receiver, liquidator, custodian or
trustee and, if any of the same occur involuntarily, the same not being
dismissed, stayed or discharged within 90 days; or the entry of an order for
relief under Title 11 of the United States Code. A Partner shall be deemed
Bankrupt if the Bankruptcy of such Partner shall have occurred and be
continuing.
Section 1.11 "Break-even Operations" shall mean at such time as the
Partnership has Cash Receipts equal to Cash Expenses, as determined by the
Accountant and approved by the Special Limited Partner which approval shall not
3
be unreasonably withheld. For purposes of this definition, any one-time up front
fee paid to the Partnership from any source shall not be included in Cash
Receipts to calculate Break-even Operations.
Section 1.12 "Budget" shall mean the annual operating Budget of the
Partnership as more fully described in Section 14.3 of this Agreement.
Section 1.13 "Capital Account" shall mean, with respect to each Partner,
the account maintained for such Partner comprised of such Partner's Capital
Contribution as increased by allocations to such Partner of Partnership Income
(or items thereof) and any items in the nature of income or gain which are
specially allocated pursuant to Section 10.3 or 10.4 hereof, and decreased by
the amount of any Distributions made to such Partner, and allocations to such
Partner of Partnership Losses (or items thereof) and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 10.3 or
10.4 hereof. In the event of any transfer of an interest in the Partnership in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest. The foregoing definition and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), as amended or any successor thereto, and
shall be interpreted and applied in a manner consistent with such Treasury
Regulation.
Section 1.14 "Capital Contribution" shall mean the total amount of money,
or the Gross Asset Value of property contributed to the Partnership, if any, by
all the Partners or any class of Partners or any one Partner as the case may be
(or by a predecessor-in-interest of such Partner or Partners), reduced by any
such capital which shall have been returned pursuant to Section 7.3, 7.4 or 7.6
of this Agreement. A loan to the Partnership by a Partner shall not be
considered a Capital Contribution.
Section 1.15 "Cash Expenses" shall mean all cash operating obligations of
the Partnership (other than those covered by Insurance) in accordance with the
applicable Budget, including without limitation, the payment of Mortgage
payments, the Management Agent fees (which shall be deemed to include that
portion of such fees which is currently deferred and not paid), the funding of
reserves in accordance with Article VIII of this Agreement, advertising and
promotion, utilities, maintenance, repairs, Partner communications, legal,
telephone, any other expenses which may reasonably be expected to be paid in a
subsequent period but which on an accrual basis is allocable to the period in
question, such as Insurance, real estate taxes and audit, tax or accounting
expenses (excluding deductions for cost recovery of buildings; improvements and
personal property and amortization of any financing fees) and any seasonal
expenses (such as snow removal, the use of air conditioners in the middle of the
4
summer, or heaters in the middle of the winter) which may reasonably be expected
to be paid in a subsequent period shall be allocated equally per month over the
calendar year. Cash Expenses payable to Partners or Affiliates of Partners shall
be paid after Cash Expenses payable to third parties.
Section 1.16 "Cash Receipts" shall mean actual cash received on a cash
basis by the Partnership from operating revenues of the Partnership, including
without limitation rental income (but not any subsidy thereof from the General
Partner or an Affiliate thereof) and laundry income, but excluding prepayments,
security deposits, Capital Contributions, borrowings, lump-sum payment, any
extraordinary receipt of funds, and any income earned on investment of its
funds.
Section 1.17 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
Section 1.18 "Completion of Construction" shall mean the date the
Partnership has received the required certificates of occupancy (or the local
equivalent) for all forty-eight (48) apartment units, or by the issuance of the
inspecting architect's certification, in a form substantially similar to the
form attached hereto as Exhibit "D" and incorporated herein by this reference,
with respect to completion of all the apartment units in the Apartment Housing;
provided, however, that Completion of Construction shall not be deemed to have
occurred if on such date any liens or other encumbrances as to title to the
Apartment Housing exist, other than those securing the Construction Loan or
Mortgage and/or those set forth in the Title Policy as of the date of closing as
consented to by the Limited Partner and/or those consented to by the Limited
Partner and Special Limited Partner and/or those liens in dispute which do not
show up on title because provisions for payment have been made, as example a
bond.
Section 1.19 "Compliance Period" shall mean the period set forth in Section
42 (i)(1) of the Code, as amended, or any successor statute.
Section 1.20 "Consent" shall mean the agreement or approval of a Partner
which shall not be unreasonably withheld, delayed or conditioned in light of the
facts and circumstances. If a Partner fails to respond to any notice soliciting
consent within 30 days (or such other period as may be set forth in the
Agreement) after the date of such notice, such Partner shall be deemed for all
purposes of this Agreement to have granted Consent to the action proposed in
such notice.
Section 1.21 "Consent of the Special Limited Partner" shall mean the prior
written consent or approval of the Special Limited Partner which consent shall
not be unreasonably withheld, delayed or conditioned in light of the facts and
circumstances. If any Partner fails to respond to any notice soliciting Consent
within 30 days (or such other period as may be set forth in the Agreement) after
the date of such notice, such Partner shall be deemed for all purposes of this
Agreement to have granted Consent to the action proposed in such notice.
5
Section 1.22 "Construction Budget" shall mean the agreed upon cost of
construction of the Improvements, including soft costs (which includes, but is
not limited to, financing charges, market study, Development Fee, architect
fees, etc.), based upon the Plans and Specifications. The final Construction
Budget is referenced in the Construction and Operating Budget Agreement entered
into by and between the Partners the even date hereof and incorporated herein by
this reference.
Section 1.23 "Construction Contract" shall mean the construction contract
dated June 9, 1999 in the amount of $2,958,602, entered into between the
Partnership and the Contractor pursuant to which the Improvements are being
constructed.
Section 1.24 "Construction Lender" shall mean Missouri Housing Development
Commission or any successor thereto.
Section 1.25 "Construction Loan" shall mean the loan obtained from
Construction Lender in the principal amount of $810,000 at an interest rate
equal to 1% per annum for a term of 12 months to provide funds for the
acquisition, renovation and/or construction and development of the Apartment
Housing. Where the context admits, the term "Construction Loan" shall include
any deed, deed of trust, note, security agreement, assumption agreement or other
instrument executed by, or on behalf of, the Partnership or General Partner in
connection with the Construction Loan. This Construction Loan will convert into
permanent loan upon Completion of Construction.
Section 1.26 "Contractor" shall mean Crestwood Building Associates, Inc.,
which is the general construction contractor for the Apartment Housing.
Section 1.27 "Debt Service Coverage" shall mean for the applicable period
the ratio between the Net Operating Income (excluding Mortgage payments) and the
debt service required to be paid on the Mortgage(s); as example, a 1.10 Debt
Service Coverage means that for every $1.00 of debt service required to be paid
there must be $1.10 of Net Operating Income available. A worksheet for the
calculation of Debt Service Coverage is found in the Report of Operations
attached hereto as Exhibit "G" and incorporated herein by this reference.
Section 1.28 "Deferred Management Fee" shall have the meaning set forth in
Section 9.2(c) hereof.
Section 1.29 "Developer" shall mean ▇▇▇▇▇▇▇▇ Development Company, L.L.C.
and Central Missouri Counties Human Development Corporation, a non-profit
corporation and community housing corporation (CHDO).
Section 1.30 "Development Fee" shall mean the fee payable to the Developer
for services incident to the development and construction of the Apartment
Housing in accordance with the Development Services Agreement between the
6
Partnership and the Developer dated the even date herewith and incorporated
herein by this reference. Development activities do not include services for the
acquisition of the land or syndication activities.
Section 1.31 "Distributions" shall mean the total amount of money, or the
Gross Asset Value of property (net of liabilities securing such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code), distributed to Partners with respect to their
Interests in the Partnership, but shall not include any payments to the General
Partner or its Affiliates for fees or other compensation as provided in this
Agreement or any guaranteed payment within the meaning of Section 707(c) of the
Code, as amended, or any successor thereto.
Section 1.32 "DOR" shall mean the Missouri Department of Revenue.
Section 1.33 "Fair Market Value" shall mean, with respect to any property,
real or personal, the price a ready, willing and able buyer would pay to a
ready, willing and able seller of the property, provided that such value is
reasonably agreed to between the parties in arm's-length negotiations and the
parties have sufficiently adverse interests.
Section 1.34 "First Year Certificate" shall mean the certificate to be
filed by the General Partner with the Secretary of the Treasury as required by
Code Section 42(1)(1), as amended, or any successor thereto.
Section 1.35 "Force Majeure" shall mean any act of God, strike, lockout, or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, fire, flood, explosion, governmental action, governmental delay, restraint
or inaction and any other cause or event, whether of the kind enumerated
specifically herein, or otherwise, which is not reasonably within the control of
a Partner to this Agreement claiming such suspension.
Section 1.36 "General Partner" shall mean Central Missouri Counties' Human
Development Corporation, a Non-profit Corporation and such other Persons as are
admitted to the Partnership as additional or substitute General Partners
pursuant to this Agreement. If there is more than one General Partner of the
Partnership, the term "General Partner" shall be deemed to refer to such General
Partners and vice versa.
Section 1.37 "Gross Asset Value" shall mean with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the Fair Market Value of such asset, as
7
determined by the contributing Partner and the General Partner, provided that,
if the contributing Partner is a General Partner, the determination of the Fair
Market Value of a contributed asset shall be determined by appraisal;
(b) the Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective Fair Market Values, as determined by the General
Partner, as of the following times: (1) the acquisition of an additional
Interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (2) the distribution by the Partnership
to a Partner of more than a de minimis amount of Partnership property as
consideration for an Interest in the Partnership; and (3) the liquidation of the
Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to
clauses (1) and (2) above shall be made only with the Consent of the Special
Limited Partner and only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) the Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the Fair Market Value of such asset on the
date of distribution as determined by the distributee and the General Partner,
provided that, if the distributee is a General Partner, the determination of the
Fair Market Value of the distributed asset shall be determined by appraisal; and
(d) the Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section
10.3(g) hereof; provided however, that Gross Asset Values shall not be adjusted
pursuant to this Section 1.37(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.37(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.37(d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section 1.37(a), Section 1.37(b), or Section 1.37(d) hereof, such
Gross Asset Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Income and Losses.
Section 1.38 "Hazardous Substance" shall mean and include any substance,
material or waste, including asbestos, petroleum and petroleum products
(including crude oil), that is or becomes designated, classified or regulated as
"toxic" or "hazardous" or a "pollutant" or that is or becomes similarly
designated, classified or regulated, under any federal, state or local law,
regulation or ordinance including, without limitation, Compensation and
8
Liability Act of 1980, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, and the
regulations adopted and publications promulgated pursuant thereto.
Section 1.39 "Improvements" shall mean the 6 buildings containing
forty-eight (48) apartment units and ancillary and appurtenant facilities
(including those intended for commercial use, if any,) being constructed for
family built in accordance with the Project Documents. It shall also include all
furnishings, equipment and personal property used in connection with the
operation thereof.
Section 1.40 "Incentive Management Fee" shall have the meaning set forth in
Section 9.2(e) hereof.
Section 1.41 "Income and Losses" shall mean, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Income or Losses pursuant
to this Section 1.41 shall be added to such taxable income or loss;
(b) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Income and Losses pursuant to this Section 1.41 shall be subtracted
from such taxable income or loss;
(c) in the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 1.37(a) or (b) hereof, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Income and Losses;
(d) gain or loss resulting from any disposition of Partnership assets
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) in lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account depreciation for such fiscal year or other period,
computed as provided below; and
(f) notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Sections 10.3 or 10.4 hereof shall not
otherwise be taken into account in computing Income or Losses.
9
Depreciation for each fiscal year or other period shall be calculated as
follows: an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period for federal income tax purposes, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however,
if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
General Partner.
For purposes of this Agreement, the term Income when used alone shall
include all items of income or revenue contemplated in this Section and the term
Losses when used alone shall include all items of loss or deductions
contemplated in this Section.
Section 1.42 "Inspecting Architect" shall mean ▇▇▇▇▇▇▇ Design, Inc. The
Inspecting Architect shall make regular inspections of the construction site,
but in no event less than once a month, to confirm that construction of the
Improvements is in conformance with the Plans and Specifications. The Inspecting
Architect will sign-off on all the draw requests made by the Contractor and
provide the documents specified in Section 14.3 of this Agreement.
Section 1.43 "Insurance" shall mean:
(a) during construction, the Insurance shall include builder's risk
insurance, liability insurance in the minimum amount of $1,000,000 per
occurrence with an aggregate of $2,000,000, and worker's compensation;
(b) during operations the Insurance shall include business interruption
coverage covering actual sustained loss for 12 months, worker's compensation,
hazard coverage (including but not limited to fire, or other casualty loss to
any structure or building on the Apartment Housing in an amount equal to the
full replacement value of the damaged property without deducting for
depreciation) and general liability coverage against liability claims for bodily
injury or property damage in the minimum amount of $1,000,000 per occurrence and
an aggregate of $2,000,000;
(c) all liability coverage shall include an umbrella liability coverage
in a minimum amount of $4,000,000 per occurrence and an aggregate of $4,000,000;
10
(d) all Insurance polices shall name the Partnership as the named
insured, the Limited Partner as an additional insured, and WNC & Associates,
Inc. as the certificate holder;
(e) all Insurance policies shall include a provision to notify the
insured, the Limited Partner and the certificate holder prior to cancellation;
(f) hazard coverage must include inflation and building or ordinance
endorsements;
(g) the minimum builder's risk coverage shall be in an amount equal to
the construction contract amount; and
(h) the Contractor must also provide evidence of liability coverage
equal to $1,000,000 per occurrence with an aggregate of $2,000,000 and shall
name the Partnership as an additional insured and WNC & Associates, Inc., as
certificate holder.
Section 1.44 "Insurance Company" shall mean any insurance company engaged
by the General Partner for the Partnership with the Consent of the Special
Limited Partner which Insurance Company shall have an A rating or better for
financial safety by A.M. Best or Standard & Poor's.
Section 1.45 "Interest" shall mean the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled hereunder and
the obligation of such Partner to comply with the terms of this Agreement.
Section 1.46 "Involuntary Withdrawal" means any Withdrawal caused by the
death, adjudication of insanity or incompetence, Bankruptcy of a General
Partner, or the removal of a General Partner pursuant to Section 13.2 hereof.
Section 1.47 "LIHTC" shall mean the low-income housing tax credit
established by TRA 1986 and which is provided for in Section 42 of the Code, as
amended, or any successor thereto.
Section 1.48 "Limited Partner" shall mean Housing Tax Credit Fund VI, L.P.,
Series 6, a California limited partnership, and such other Persons as are
admitted to the Partnership as additional or Substitute Limited Partners
pursuant to this Agreement.
Section 1.49 "Management Agent" shall mean the property management company
which oversees the property management functions for the Apartment Housing and
which is on-site at the Apartment Housing. The initial Management Agent shall be
▇▇▇▇▇▇▇▇ Realty Inc.
Section 1.50 "Management Agreement" shall mean the agreement between the
Partnership and the Management Agent for property management services. The
11
initial management fee shall equal to $30 per unit. Neither the Management
Agreement nor ancillary agreement shall provide for an initial rent-up fee, a
set-up fee, nor any other similar pre-management fee payable to the Management
Agent. The Management Agreement shall provide that it will be terminable at will
by the Partnership at anytime following the Withdrawal or removal of the General
Partner and, in any event, on any anniversary of the date of execution of the
Management Agreement, without payment or penalty for failure to renew the same.
Section 1.51 "MHDC" shall mean the Missouri Housing Development Commission.
Section 1.52 "Minimum Set-Aside Test" shall mean the 40-60 set-aside test
pursuant to Section 42(g), as amended and any successor thereto, of the Code
with respect to the percentage of apartment units in the Apartment Housing to be
occupied by tenants whose incomes are equal to or less than the required
percentage of the area median gross income. Notwithstanding, the General Partner
has agreed that 16 apartment units will be rented to tenants with incomes of 50%
or less of the area median income adjusted for family size.
Section 1.53 "Missouri Limited Partner" shall mean WNC Missouri Tax Credits
XXXI, L.P., and such other Persons as are admitted to the Partnership as
additional or substitute Missouri Limited Partners pursuant to this Agreement.
Section 1.54 "Missouri Tax Credits" shall mean the low-income housing tax
credit established by Section 135.352 of the RsMO.
Section 1.55 "Mortgage" or "Mortgage Loan" shall mean the permanent
nonrecourse financing wherein the Partnership promises to pay Missouri Housing
Development Commission (MHDC), or its successor or assignee, the principal sum
of $810,000, plus interest on the principal at 1% per annum over a term of 30
years and amortized over 30 years. Where the context admits, the term "Mortgage"
or "Mortgage Loan" shall include any mortgage, deed, deed of trust, note,
regulatory agreement, security agreement, assumption agreement or other
instrument executed in connection with the Mortgage which is binding on the
Partnership; and in case any Mortgage is replaced or supplemented by any
subsequent mortgage or mortgages, the Mortgage shall refer to any such
subsequent mortgage or mortgages. Prior to closing the Mortgage, the General
Partner shall provide to the Limited Partner a draft of the Mortgage documents
for review.
Section 1.56 "Net Operating Income" shall mean the cash available for
Distribution on an annual basis, when Cash Receipts exceed Cash Expenses.
Section 1.57 "Non-Profit Corporation" shall mean a corporation organized
exclusively for charitable and/or education purposes, including for such
purposes, the making of distributions to organizations which qualify as exempt
12
organization under Section 501 (c)(3) of the Internal Revenue of 1986, as
amended from time to time. The corporation shall have the power to acquire,
improve and to sell or operate any real or personal or interest therein or
appurtenant thereto.
Section 1.58 "Nonrecourse Deductions" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).
Section 1.59 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).
Section 1.60 "Operating Deficit" shall mean, for the applicable period,
insufficient funds to pay operating costs when Cash Expenses exceed Cash
Receipts, as determined by the Accountant and approved by the Special Limited
Partner which approval shall not be unreasonably withheld; provided, however,
that for purposes of determining Operating Deficit funding of reserves shall be
excluded from Cash Expenses.
Section 1.61 "Operating Deficit Guarantee Period" shall mean the period
commencing with the date of this Agreement and ending three years following
three months of Break-even Operation.
Section 1.62 "Operating Loans" shall mean loans made by the General Partner
to the Partnership pursuant to Article VI of this Agreement, which loans do not
bear interest and are repayable only as provided in Article XI of this
Agreement.
Section 1.63 "Original Limited Partner" shall mean Crestwood Development,
Inc.
Section 1.64 "Partner(s)" shall collectively mean the General Partner, the
Limited Partner, the Missouri Limited Partner and the Special Limited Partner or
individually may mean any Partner as the context dictates.
Section 1.65 "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.
Section 1.66 "Partner Nonrecourse Debt Minimum Gain" shall mean an amount,
with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Treasury Regulations.
Section 1.67 "Partner Nonrecourse Deductions" shall have the meaning set
forth in Sections 1.704-2 (i)(1) and 1.704-2(i)(2) of the Treasury Regulations.
Section 1.68 "Partnership" shall mean the limited partnership continued
under this Agreement.
13
Section 1.69 "Partnership Minimum Gain" shall mean the amount determined in
accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
Section 1.70 "Permanent Mortgage Commencement" shall mean the first date on
which all of the following have occurred: (a) the Construction Loan shall have
been repaid in full; (b) the Mortgage shall have closed and funded; and (c)
amortization of the Mortgage shall have commenced.
Section 1.71 "Person" shall collectively mean an individual, proprietor-
ship, trust, estate, partnership, joint venture, association, company, corpora-
tion or other entity.
Section 1.72 "Plans and Specifications" shall mean the plans and specifi-
cations for the construction of the Improvements which are approved by the
local city/county building department with jurisdiction over the construction
of the Improvements and which plans and specifications are referred to in the
Construction Contract.
Section 1.73 "Program Reserve Account" shall mean as defined in Section 8.3
of this Agreement.
Section 1.74 "Project Documents" shall mean all documents relating to the
Construction Loan, Mortgage Loan and Construction Contract. It shall also
include all documents required by any governmental agency having jurisdiction
over the Apartment Housing in connection with the development, construction and
financing of the Apartment Housing, including but not limited to, the approved
Plans and Specifications for the development and construction of the Apartment
Housing.
Section 1.75 "Projected Annual Missouri Tax Credits" shall mean Missouri
Tax Credits in the amount of $163,980 for 2001, $302,823 per year for each of
the years 2002 through 2010, and $138,843 for 2011, which the General Partner
has projected to be the total amount of Missouri Tax Credit which will be
allocated to the Missouri Special Limited Partner by the Partnership,
constituting 99.98100% of the aggregate amount of Missouri Tax Credits of
$3,028,230 to be available to the Partnership.
Section 1.76 "Projected Annual Tax Credits" shall mean LIHTC in the amount
of $75,698 for 2001, $302,732.15 per year for each of the years 2002 through
2010, and $138,752.15 for 2011, which the General Partner has projected to be
the total amount of LIHTC which will be allocated to the Limited Partner by the
Partnership, constituting 99.97% of the aggregate amount of LIHTC of $3,028,230
to be available to the Partnership.
Section 1.77 "Projected Missouri Tax Credits" shall mean Missouri Tax
Credits in the aggregate amount of $3,028,230.
14
Section 1.78 "Projected Tax Credits" shall mean LIHTC in the aggregate
amount of $3,028,230.
Section 1.79 "Rent Restriction Test" shall mean the test pursuant to
Section 42 of the Code whereby the gross rent charged to tenants of the
low-income apartment units in the Apartment Housing cannot exceed 30% of the
qualifying income levels of those units under Section 42.
Section 1.80 "Reporting Fee" shall have the meaning set forth in Section
9.2(d) hereof.
Section 1.81 "Revised Projected Missouri Tax Credits" shall have the
meaning set forth in Section 7.4(a) hereof.
Section 1.82 "Revised Projected Tax Credits" shall have the meaning set
forth in Section 7.4(a) hereof.
Section 1.83 "RsMO" shall mean the Missouri Revised Statutes 1986, as
amended.
Section 1.84 "Sale or Refinancing" shall mean any of the following items or
transactions: a sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Partnership, a condemnation of or
casualty at the Apartment Housing or any part thereof, a claim against a title
insurance company, the refinancing or any Mortgage or other indebtedness of the
Partnership and any similar item or transaction; provided, however, that the
payment of Capital Contributions by the Partners shall not be included within
the meaning of the term "Sale or Refinancing."
Section 1.85 "Sale or Refinancing Proceeds" shall mean all cash receipts of
the Partnership arising from a Sale or Refinancing (including principal and
interest received on a debt obligation received as consideration in whole or in
part, on a Sale or Refinancing) less the amount paid or to be paid in connection
with or as an expense of such Sale or Refinancing, and with regard to damage
recoveries or insurance or condemnation proceeds, the amount paid or to be paid
for repairs, replacements or renewals resulting from damage to or partial
condemnation of the Apartment Housing.
Section 1.86 "Special Limited Partner" shall mean WNC Housing, L.P., a
California limited partnership, and such other Persons as are admitted to the
Partnership as additional or substitute Special Limited Partners pursuant to
this Agreement.
Section 1.87 "State" shall mean the State of Missouri.
Section 1.88 "State Tax Credit Agency" shall mean the state agency of
Missouri which has the responsibility and authorization to administer the LIHTC
program in Missouri.
15
Section 1.89 "Substitute Limited Partner" shall mean any Person who is
admitted to the Partnership as a Limited Partner pursuant to Section 12.5 or
acquires the Interest of the Limited Partner pursuant to Section 7.3 of this
Agreement.
Section 1.90 "Tax Credit" shall mean any credit permitted under the Code or
the RsMO against, respectively, the federal or Missouri tax liability of any
Partner as a result of activities or expenditures of the Partnership including,
without limitation, LIHTC and Missouri Tax Credits.
Section 1.91 "Tax Credit Conditions" shall mean, for the duration of the
Compliance Period, any and all restrictions including, but not limited to,
applicable federal, state and local laws, rules and regulations, which must be
complied with in order to qualify for the LIHTC and the Missouri Tax Credit or
to avoid an event of recapture in respect of the LIHTC or the Missouri Tax
Credit.
Section 1.92 "Tax Credit Period" shall mean the ten year time period
referenced in Code Section 42(f)(1) over which the Projected Tax Credits and the
Projected Missouri Tax Credits are allocated to the Partners. It is the intent
of the Partners that the Projected Tax Credits and the Projected Missouri Tax
Credits will be allocated during the Tax Credit Period and not a longer term.
Section 1.93 "Title Policy" shall mean the policy of insurance covering the
fee simple title to the Apartment Housing from a company approved by the Special
Limited Partner. The Title Policy shall be an ALTA owners title policy naming
the Partnership as insured and including a non-imputation and fairway
endorsement. The Title Policy shall delete the standard exception for
rights-of-way, easements, or claims of easements, which are not shown on a valid
survey. The Title Policy shall be in an amount not less than the Construction
Loan amount and the Limited Partner's Capital Contribution.
Section 1.94 "TRA 1986" shall mean the Tax Reform Act of 1986.
Section 1.95 "Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
Section 1.96 "Withdrawing" or "Withdrawal" (including the verb form "With-
draw" and the adjectival forms "Withdrawing" and "Withdrawn") shall mean, as to
a General Partner, the occurrence of the death, adjudication of insanity or
incompetence, or Bankruptcy of such Partner, or the withdrawal, removal or
retirement from the Partnership of such Partner for any reason, including any
sale, pledge, encumbering, assignment or other transfer of all or any part of
its General Partner Interest and those situations when a General Partner may no
longer continue as a General Partner by reason of any law or pursuant to any
terms of this Agreement.
16
ARTICLE II
NAME
The name of the Partnership shall be "Boonville Associates I, L.P."
ARTICLE III
PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE
Section 3.1 Principal Executive Office. The principal executive office of
the Partnership is located at ▇▇▇-▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other place or places within the State as the General Partner
may hereafter designate.
Section 3.2 Agent for Service of Process. The name of the agent for service
of process on the Partnership is ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ whose address is ▇▇▇-▇ ▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE IV
PURPOSE
Section 4.1 Purpose of the Partnership. The purpose of the Partnership is
to acquire, construct, own and operate the Apartment Housing in order to
provide, in part, Tax Credits to the Partners in accordance with the provisions
of the Code and the Treasury Regulations applicable to LIHTC and the provisions
of the RsMO applicable to Missouri Tax Credits, and to sell the Apartment
Housing. The Partnership shall not engage in any business or activity which is
not incident to the attainment of such purpose.
Section 4.2 Authority of the Partnership. In order to carry out its
purpose, the Partnership is empowered and authorized to do any and all acts and
things necessary, appropriate, proper, advisable or incidental to the
furtherance and accomplishment of its purpose, and for protection and benefit of
the Partnership, including but not limited to the following:
(a) acquire ownership of the real property referred to in Exhibit
"A" attached hereto;
(b) construct, renovate, rehabilitate, own, maintain and operate the
Apartment Housing in accordance with the Plans and Specifications;
(c) provide housing, subject to the Minimum Set-Aside Test and the Rent
Restriction Test and consistent with the requirements of the Project Documents
so long as any Project Documents remain in force;
17
(d) maintain and operate the Apartment Housing, including hiring the
Management Agent (which Management Agent may be any of the Partners or an
Affiliate thereof) and entering into any agreement for the management of the
Apartment Housing during its rent-up and after its rent-up period in accordance
with this Agreement;
(e) enter into the Construction Loan and Mortgage;
(f) rent dwelling units in the Apartment Housing from time to time, in
accordance with the provisions of the Code applicable to LIHTC; and
(g) do any and all other acts and things necessary or proper in
furtherance of the Partnership business and in accordance with this Agreement.
ARTICLE V
TERM
The Partnership term commenced upon the filing of the Certificate of
Limited Partnership in the office of, and on the form prescribed by, the
Secretary of State of the State, and shall continue until December 31, 2051
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.
ARTICLE VI
GENERAL PARTNER'S CONTRIBUTIONS AND LOANS
Section 6.1 Capital Contribution of General Partner. The General
Partner's Interest was earned for its services relating to the acquisition of
land including locating, negotiating and closing on the purchase of the real
property upon which the Improvements are, or will be, erected; and including
syndication services in forming the Partnership, locating and approving the
Limited Partner, Special Limited Partner and the Missouri Limited Partner as the
limited partners in the Partnership, negotiating and finalizing this Agreement
and for such other services described in Treasury Regulation Section 1.709-2(B).
Section 6.2 Construction Obligations.
(a) The General Partner shall cause Completion of Construction in
accordance with the Project Documents, pay all expenses and costs with respect
to financing the Apartment Housing through Completion of Construction, equip the
Apartment Housing or cause the same to be equipped with all necessary and
appropriate fixtures, equipment and articles of personal property, including but
not limited to, refrigerators and ranges and pay all other costs incident to the
Apartment Housing through Completion of Construction. If costs and expenses
18
necessary to effect Completion of Construction exceed the sum of the Capital
Contributions, the proceeds of the Mortgage and the Development Fee then the
General Partner shall be responsible for and shall be obligated to pay such
construction financing shortfalls. Any such advances by the General Partner
pursuant to the previous sentence shall not change the Interest of any Partner
in the Partnership and shall be considered a cost overrun and not be repayable.
(b) In addition, if (1) the Improvements are not completed on or before
December 01, 2001 ("Completion Date") (which date may be extended in the events
of Force Majeure, but in no event longer than three months from the Completion
Date); (2) prior to completing the Improvements, there is an uncured default
under or termination of the Construction Loan, Mortgage Loan commitment, or
other material documents; or (3) a foreclosure action is commenced against the
Partnership, then at the Special Limited Partner's election, either the General
Partner will be removed from the Partnership and the Special Limited Partner
will be admitted as successor General Partner, all in accordance with Article
XIII hereof, or the General Partner will repurchase the Interest of the Limited
Partner and the Special Limited Partner for an amount equal to the amounts
theretofore paid by the Limited Partner and the Special Limited Partner shall
have no further Interest in the Partnership. If the Limited Partner elects to
have the General Partner repurchase the Interest of the Limited Partner then the
repurchase shall occur within 60 days after the General Partner receives written
demand from the Limited Partner.
Section 6.3 Operating Obligations. From Completion of Construction
until three consecutive months of Break-even Operations, the General Partner
will provide the necessary funds to pay any Operating Deficits which funds shall
not change the Interest of any Partner and shall be considered a cost overrun
and not be repayable. For the balance of the Operating Deficit Guarantee Period
the General Partner will provide Operating Loans to pay any Operating Deficits.
The aggregate maximum amount of the Operating Loan(s) the General Partner will
be obligated to lend will be equal to one year's operating expenses (including
debt and reserves) approved by the General Partner and the Special Limited
Partner. Each Operating Loan shall be nonrecourse to the Partners, and shall be
repayable out of 50% of the available Net Operating Income or Sale or
Refinancing Proceeds in accordance with Article XI of this Agreement.
Section 6.4 Other General Partner Loans. After expiration of the
Operating Deficit Guarantee Period, with the Consent of the Special Limited
Partner and the General Partner may loan to the Partnership any sums required by
the Partnership and not otherwise reasonably available to it. Any such loan
shall bear simple interest (not compounded) at the 10-year Treasury money market
rate in effect as of the day of the General Partner loan, or, if lesser, the
maximum legal rate. The maturity date and repayment schedule of any such loan
shall be as agreed to by the General Partner and the Special Limited Partner.
The terms of any such loan shall be evidenced by a written instrument. The
General Partner shall not charge a prepayment penalty on any such loan. Any loan
19
in contravention of this Section shall be deemed an invalid action taken by the
General Partner and such advance will be classified as a General Partner Capital
Contribution.
ARTICLE VII
CAPITAL CONTRIBUTIONS OF ORIGINAL LIMITED PARTNER,
LIMITED PARTNER, MISSOURI LIMITED PARTNER
AND SPECIAL LIMITED PARTNER
Section 7.1 Original Limited Partner. The Original Limited Partner made
a Capital Contribution of $95. Effective as of the date of this Agreement, the
Original Limited Partner's Interest has been liquidated and the Partnership has
reacquired the Original Limited Partner's Interest in the Partnership. The
Original Limited Partner acknowledges that it has no further interest in the
Partnership as a limited partner as of the date of this Agreement, and has
released all claims, if any, against the Partnership arising out of its
participation as a limited partner.
Section 7.2 Capital Contribution of Limited Partner. The Limited
Partner shall make a Capital Contribution in the amount of $2,195,028, as may be
adjusted in accordance with Section 7.4 of this Agreement, in cash on the dates
and subject to the conditions hereinafter set forth.
(a) $2,195,028 shall be payable upon the Limited Partner's receipt and
approval of the following documents:
(1) a legal opinion in a form substantially similar to the
form of opinion attached hereto as Exhibit "B" and incorporated herein by this
reference;
(2) a fully executed Certification and Agreement in the form
attached hereto as Exhibit "C" and incorporated herein by this reference;
(3) a copy of a title commitment, (in a form and substance
satisfactory to the Special Limited Partner) constituting an agreement by such
title company to issue the Title Policy within fifteen working days. The title
commitment will show the Apartment Housing to be free from liens except the
Construction Loan and free from other exceptions not previously approved by the
Special Limited Partner;
(4) insurance required during construction;
(5) construction costs, sources and uses and operating budget;
and
(6) a copy of the recorded grant deed (warranty deed).
20
(b) The Missouri Limited Partner shall make a total Capital Contribu-
tion in the amount of $999,316, in cash, on the dates and subject to the condi-
tions herein as follows:
(1) $512,606 shall be payable at the time of th Limited
Partner's Capital Contribution referenced in Section 7.2(a) of this agreement;
(2) $79,135 shall be payable upon the Limited Partner's
receipt and approval of the following documents:
(a) the Inspecting Architect's certification of fifty
percent completion of the total construction; and
(b) the construction documents required pursuant to
Section 14.3(a) of this Agreement.
(3) $170,075 shall be payable upon the Limited Partner's
receipt and approval of the following documents. The amount of $90,847 from this
capital contribution shall be deposited into a Program Reserve Account, as
described in Section 8.3 of this Agreement.
(a) a certificate of occupancy (or equivalent evidence
of local occupancy approval if a permanent certificate is not available) on all
the apartment units in the Apartment Housing;
(b) a completion certification in a form substantially
similar to the form attached hereto as Exhibit "D" and incorporated herein
by this reference, indicating that the Improvements have been completed in
accordance with the Project Documents;
(c) a letter from the Contractor in a form substantially
similar to the form attached hereto as Exhibit "F" and incorporated herein by
this reference stating that all amounts payable to the Contractor have been
paid in full and that the Partnership is not in violation of the Construction
Contract;
(d) Insurance required during operations; and
(e) the construction documents required pursuant to
Section 14.3(a) of this Agreement.
(4) $118,750 shall be payable upon the Limited Partner's
receipt and approval of the following documents:
(a) Completion of Construction;
(b) Mortgage Loan documents signed and the Mortgage
funded;
21
(c) endorsement to the Title Policy dated no more than
ten days prior to the scheduled Capital Contribution providing an as-built
survey;
(d) Debt Service Coverage of 1.10 for 90 consecutive
days immediately prior to funding;
(e) the current rent roll;
(f) copies of all initial tenant files including com-
pleted applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, and income cer-
tification forms (LIHTC specific) collected by the Management Agent, or
General Partner, verifying each tenant's eligibility pursuant to the Minimum
Set-Aside Test; and
(g) copies of the executed lease agreement with the
tenants.
(5) $118,750 shall be payable upon the Limited Partner's
receipt and approval of the following documents:
(a) a copy of the declaration of restrictive covenants/
extended use agreement entered into between the Partnership and the State Tax
Credit Agency;
(b) an audited construction cost certification (which
includes an itemized cost breakdown);
(c) the Accountant's final Tax Credit certification in
a form substantially similar to the form attached hereto as Exhibit "E" and
incorporated herein by this reference;
(d) Internal Revenue Code Form 8609, or any successor
form; and
(e) any documents previous not provided to the Limited
Partner but required pursuant to this Section 7.2 and Sections 14.3(a) and (b).
(c) In the event the Limited Partner fails to make a Capital
Contribution payment when due as provided in this Section, the General Partner
shall give written notice to the Limited Partner of its failure to make the
required Capital Contribution payment. The Limited Partner shall have fifteen
calendar days to either: (i) pay the Capital Contribution payment; or (ii)
provide the General Partner with a written explanation identifying the
conditions precedent to payment which the Partnership has not satisfied which
are the Limited Partner's basis for non-payment; or (iii) the Limited Partner
can do nothing. If the Limited Partner does not make its Capital Contribution
payment within the fifteen day notice period, the General Partner may request a
22
copy of Limited Partner's financial statements to verify that the Limited
Partner has the required Capital Contribution funds on deposit and has the
ability to make the disputed Capital Contribution payment. The Limited Partner,
within ten (10) business days of such request shall provide the General Partner
with its or an acceptable guarantor's financial statement, or in the alternative
in its sole and absolute discretion may deposit the disputed funds into an
escrow account to be held until the resolution of the dispute. In the event the
Limited Partner cannot demonstrate its ability to pay the Capital Contribution
payment as evidenced by the above documents or deposit then the Limited Partner
may sell its Interest within sixty (60) days to a third party purchaser
acceptable to the General Partner, which acceptance shall not be unreasonably
withheld. If the Limited Partner does not elect to sell its Interest, or elects
to sell its Interest and does not sell it within the sixty (60) day period, then
the Limited Partner's Interest may be reduced as provided below at the General
Partner's election. The Interest of the Limited Partner shall be reduced by
multiplying the Interest by a fraction, the numerator of which is the difference
between the Limited Partner's total Capital Contribution and the Limited
Partner's paid in Capital Contribution and the denominator is the Limited
Partner's total Capital Contribution. Upon reduction of the Interest of the
Limited Partner, the Partnership may sell the remaining Interest to any person
and admit the purchaser of the Interest as a Limited Partner. Notwithstanding,
if the Limited Partner does not make its Capital Contribution payment within the
fifteen-day notice period, and the Limited Partner has demonstrated it has the
financial ability to make the Capital Contribution payment, then any Partner may
arbitrate the non-payment dispute. Such arbitration shall be mandatory and shall
be conducted under the auspice of the American Arbitration Association in the
State. The decision of the arbitrator may be entered in any court having
jurisdiction and may be appealable as if it were the decision of that court. The
Partners shall share equally the expenses of arbitration, including the
arbitrator's fee, provided, however, that the arbitrator, in the arbitrator's
sole discretion, may award costs to the prevailing party. The Partner filing the
arbitration request may seek any remedy it deems appropriate for non-payment of
the Limited Partner's Capital Contribution payment.
(d) Provided the conditions of Section 7.2(a) of this Partnership
Agreement have been met, the Limited Partner shall pay its Capital Contribution
to the Partnership, at which time the Partnership shall pay the Developer a
portion of the Development Fee in the amount of $475,500 and concurrently the
Developer shall deposit the $475,500 into an escrow dated the even date herewith
(the "Escrow Agreement" is incorporated herein by this reference). The Escrow
Agreement will provide, in part, for a 7% interest per annum on the outstanding
Development Fee payable to the Developer. The Escrow Agreement will further
provide for the release of the unpaid Development Fee as follows:
(1) $79,135 shall be payable provided the conditions set forth
in Section 7.2(b)(1) of this Agreement have been met.
23
(2) $79,135 shall be payable provided the conditions set forth
in Section 7.2(b)(2) of this Agreement have been met.
(3) $79,230 shall be payable provided the conditions set forth
in Section 7.2(b)(3) of this Agreement have been met.
(4) $118,750 shall be payable provided the conditions set
forth in Section 7.2(b)(4) of this Agreement have been met.
(5) $118,750 shall be payable provided the conditions set
forth in Section 7.2(b)(5) of this Agreement have been met.
Section 7.3 Repurchase of Limited Partner's Interest. Within 60 days
after the General Partner receives written demand from the Limited Partner
and/or the Special Limited Partner and/or the Missouri Limited Partner's, the
Partnership shall repurchase the Limited Partner's Interest and/or the Special
Limited Partner and/or the Missouri Limited Partner's Interest in the
Partnership by refunding to it in cash the full amount of the Capital
Contribution which the Limited Partner and/or the Special Limited Partner and/or
the Missouri Limited Partner has theretofore made in the event that, for any
reason, the Partnership shall fail to:
(a) cause the Apartment Housing to be placed in service by December 1,
2001;
(b) achieve 90% occupancy of the Apartment Housing by satisfying the
Minimum Set-Aside Test by February 1, 2002;
(c) obtain Permanent Mortgage Commencement by December 1, 2001;
(d) meet both the Minimum Set-Aside Test and the Rent Restriction Test
not later than December 31 of the first year the Partnership elects the LIHTC to
commence in accordance with the Code; and
(e) obtain a carryover allocation, within the meaning of Section 42
of the Code, from the State Tax Credit Agency on or before December 31, 2000.
Section 7.4 Adjustment of Limited Partner's Capital Contribution.
(a) The amount of the Limited Partner's and Special Limited Partner's
Capital Contribution was determined in part upon the amount of Tax Credits that
were expected to be available to the Partnership, and was based on the
assumption that the Partnership would be eligible to claim, in the aggregate,
the Projected Tax Credits. If the anticipated amount of Projected Tax Credits to
be allocated to the Limited Partner and the Special Limited Partner as evidenced
by IRS Form 8609, Schedule A thereto, and the audited construction cost
certification provided to the Limited Partner and the Special Limited Partner
are less than or greater than $3,027,624 (the new Tax Credit amount, if
24
applicable, shall be referred to as the "Revised Projected Tax Credits") then
the Limited Partner's and Special Limited Partner's Capital Contribution
provided for in Section 7.2 and Section 7.5 respectively shall be adjusted by
the amount which will make the total Capital Contribution to be paid by the
Limited Partner and Special Limited Partner to the Partnership equal to 72.5% of
the Revised Projected Tax Credits so anticipated to be allocated to the Limited
Partner and Special Limited Partner. If the Capital Contribution adjustment
referenced in this Section 7.4(a) is a reduction then the General Partner shall
have thirty days to pay the shortfall. If the Capital Contribution adjustment
referenced in this Section 7.4(a) is an increase then the Limited Partner and
Special Limited Partner shall have ninety days from the date the Limited Partner
and Special Limited Partner have received notice from the General Partner to pay
the increase.
If the anticipated amount of Projected Missouri Tax Credits to be allocated to
the Missouri Limited Partner as evidenced by Missouri Low Income Housing Credit
Eligibility Statement and the audited construction cost certification provided
to the Missouri Limited Partner are less than or greater than $3,028,230 (the
new Projected Missouri Tax Credit amount, if applicable, shall be referred to as
the "Revised Projected Missouri Tax Credits") then the Missouri Limited
Partner's Capital Contribution provided for in Section 7.2(b)(5) shall be
adjusted by the amount which will make the total Capital Contribution to be paid
by the Missouri Limited Partner to the Partnership equal to 33% of the Revised
Projected Missouri Tax Credits so anticipated to be allocated to the Missouri
Limited Partner.
(b) The General Partner is required to use its best efforts to rent
100% of the Apartment Housing's apartment units to tenants who meet the Minimum
Set-Aside Test throughout the Compliance Period. If at the end of each calendar
year during the first five calendar years following the year in which the
Apartment Housing is placed in service, the Actual Tax Credit for any fiscal
year or portion thereof is or will be less than 95% of the Projected Annual Tax
Credit, or the Projected Annual Tax Credit as modified by Section 7.4(a) of this
Agreement if applicable (collectively the "Annual Tax Credit") (the "Annual
Credit Shortfall"), then unless the Annual Credit Shortfall shall have
previously been addressed under Section 7.4(a) or 7.4(d) the General Partner
shall pay to the Limited Partner the Annual Credit Shortfall. The General
Partner shall have ninety days to pay the Annual Credit Shortfall from the date
the General Partner receives notice from the Limited Partner. The provisions of
this Section 7.4(b) shall apply equally to the Special Limited Partner in
proportion to its Capital Contribution and anticipated annual Tax Credit.
If at the end of each calendar year during the first five calendar years
following the year in which the Apartment Housing is placed in service, the
Actual Missouri Tax Credit for any fiscal year or portion thereof is or will be
less than the Projected Annual Missouri Tax Credit, or the Projected Annual
Missouri Tax Credit as modified by Section 7.4 of this Agreement if applicable
(the "Annual Missouri Credit Shortfall"), then the next Capital Contribution
25
owed by the Missouri Limited Partner shall be reduced by the Annual Missouri
Credit Shortfall amount, and any portion of such Annual Missouri Credit
Shortfall in excess of such Capital Contribution shall be applied to reduce
succeeding Capital Contributions of the Missouri Limited Partner. If the Annual
Missouri Credit Shortfall is greater than the Missouri Limited Partner's
remaining Capital Contributions then the General Partner shall pay to the
Missouri Limited Partner the excess of the Annual Missouri Credit Shortfall over
the remaining Capital Contributions. The General Partner shall have sixty days
to pay the Annual Missouri Credit Shortfall from the date the General Partner
receives notice from the Special Limited Partner.
(c) In the event that, for any reason, at any time after the first five
calendar years following the year in which the Apartment Housing is placed in
service, there is an Annual Credit Shortfall, then there shall be a reduction in
the General Partner's share of Net Operating Income in an amount equal to the
Annual Credit Shortfall and said amount shall be paid to the Limited Partner. In
the event there are not sufficient funds to pay the full Annual Credit Shortfall
to the Limited Partner at the time of the next Distribution of Net Operating
Income, then the unpaid Annual Credit Shortfall shall be repaid in the next year
in which sufficient monies are available from the General Partner's Net
Operating Income. In the event a Sale or Refinancing of the Apartment Housing
occurs prior to repayment in full of the Annual Credit Shortfall then the excess
will be paid in accordance with Section 11.2(b). The provisions of this Section
7.4(c) shall apply equally to the Special Limited Partner in proportion to its
Capital Contribution and anticipated annual Tax Credit.
(d) The General Partner is required to use its best efforts to deliver
Projected Annual Tax Credits of $163,980 in 2001 and $302,732.15 in 2002.
(e) The General Partner is required to use its best efforts to the
deliver to the Missouri Limited Partner Projected Annual Missouri Tax Credits of
$163,980 in 2001 and $302,823 in 2002.
(f) The Partners recognize and acknowledge that the Limited Partner and
the Special Limited Partner are making their Capital Contribution, in part, on
the expectation that the Projected Tax Credits are allocated to the Partners
over the Tax Credit Period. If the Projected Tax Credits are not allocated to
the Partners during the Tax Credit Period then the Limited Partner's and Special
Limited Partner's Capital Contribution shall be reduced by an amount agreed upon
by the Partners, in good faith, to provide the Limited Partner and Special
Limited Partner with their anticipated internal rate of return.
(g) In the event there is: (1) a filing of a tax return by the
Partnership evidencing a reduction in the qualified basis of the Apartment
Housing causing a recapture of Tax Credits previously allocated to the Limited
Partner; (2) a reduction in the qualified basis of the Apartment Housing for
26
income tax purposes following an audit by the Internal Revenue Service (IRS)
resulting in a recapture of Tax Credits previously claimed; (3) a decision by
the United States Tax Court upholding the assessment of such deficiency against
the Partnership with respect to any Tax Credit previously claimed in connection
with the Apartment Housing, unless the Partnership shall timely appeal such
decision and the collection of such assessment shall be stayed pending the
disposition of such appeal; or (4) a decision of a court affirming such decision
upon such appeal then, in addition to any other payments to which the Limited
Partner and Special Limited Partner are entitled under the terms of this Section
7.4, the General Partner shall pay to the Limited Partner and Special Limited
Partner the sum of (A) the income tax deficiency assessed against the Limited
Partner or Special Limited Partner as a result of the Tax Credit recapture, (B)
any interest and penalties imposed on the Limited Partner or Special Limited
Partner with respect to such deficiency, and (C) an amount sufficient to pay any
tax liability owed by the Limited Partner or Special Limited Partner resulting
from the receipt of the amounts specified in (A) and (B).
(h) The increase in the Capital Contribution of the Limited Partner and
Special Limited Partner pursuant to Section 7.4(a) shall be subject to the
Limited Partner and Special Limited Partner having funds available to pay any
such increase at the time of its notification of such increase. For these
purposes, any funds theretofore previously earmarked by the Limited Partner or
Special Limited Partner to make other investments, or to be held as required
reserves, shall not be considered available for payment hereunder.
(i) In the event that the Missouri Limited Partner's Interest in the
Missouri Tax Credits is different than $3,028,230, then the Capital Contribution
provided in Section 7.2(b)(5) shall be adjusted by the amount which will make
the total Capital Contribution to be paid by the Missouri Limited Partner equal
to 33% of the total Missouri Tax Credits allocable to the Missouri Limited
Partner. In the event that there is a payment to the Missouri Limited Partner
pursuant to this Section 7.4(h), Projected Missouri Tax Credits shall be
referenced to as Revised Projected Missouri Tax Credits. In the event that there
is a reduction in the Capital Contribution of the Missouri Limited Partner
pursuant to this Section 7.4(h), the amount of the reduction shall be paid by
the General Partner to the Missouri Limited Partner within ninety days of the
determination of the amount of the reduction. In the event that there is an
increase in the Capital Contribution of the Missouri Limited Partner pursuant to
the Section 7.4(h), the additional Capital Contribution shall be paid by the
Missouri Limited Partner within ninety days of notification from the Partnership
to the Missouri Limited Partner. If at any time the Accountants determine that
the Missouri Tax Credits for any fiscal year are less than the Projected
Missouri Tax Credits or the Revised Projected Missouri Tax Credits, as
applicable, then the Partnership shall make a payment to the Missouri Limited
Partner in the aggregate amount of the reduction within ninety days of notice of
27
such reduction. During the first five calendar years of Partnership operations,
the General Partner shall be obligated to provide such funds to the Partnership
as shall be necessary to cause the aforesaid payment to be made by the
Partnership to the Missouri Limited Partner.
(j) Anything in this Section 7.4 to the contrary notwithstanding,
there shall be no adjustment in the Limited Partner's Capital Contribution
resulting from Actual Tax Credits allocated to the Limited Partner being less
than Projected Tax Credits, or in the Missouri Limited Partner's Capital
Contribution resulting from Missouri Tax Credits allocated to the Missouri
Limited Partner being less than Projected Missouri Tax Credits, if such
shortfall is a result of any of the following:
(1) Repeal, amendment or modification to Section 42 of the
Code or the regulations thereunder or repeal amendment or modification of
Sections 135.350 et. seq. Missouri Revised Statutes;
(2) Reduction in eligible basis resulting from MHDC's denial
to rebuild the Project after the occurrence of a cause beyond the control of the
Partnership, including, but not limited to, fire, windstorm, or other property
or casualty loss, or condemnation;
(3) Determination that the Limited Partner is not eligible to
be allocated the Projected Tax Credits or the Missouri Limited Partner is not
eligible to be allocated the Missouri Tax Credits for any reason, including, but
not limited to, application of the Code to the provisions of Article X of the
Partnership Agreement; and
(4) Any action or omission of the Limited Partner, Special
Limited Partner or Missouri Limited Partner.
Section 7.5 Capital Contribution of Special Limited Partner. The
Special Limited Partner shall make a Capital Contribution of $219.55 at the time
of the Limited Partner's Capital Contribution payment referenced in Section
7.2(a) upon the same conditions. The Special Limited Partner shall be in a
different class from the Limited Partner and, except as otherwise expressly
stated in this Agreement, shall not participate in any rights allocable to or
exercisable by the Limited Partner under this Agreement.
Section 7.6 Return of Capital Contribution. From time to time the
Partnership may have cash in excess of the amount required for the conduct of
the affairs of the Partnership, and the General Partner may, with the Consent of
the Special Limited Partner, determine that such cash should, in whole or in
part, be returned to the Partners, pro rata, in reduction of their Capital
Contribution. No such return shall be made unless all liabilities of the
Partnership (except those to Partners on account of amounts credited to them
pursuant to this Agreement) have been paid or there remain assets of the
Partnership sufficient, in the sole discretion of the General Partner, to pay
such liabilities.
28
Section 7.7 Liability of Limited Partner, Special Limited Partner and
Missouri Limited Partner. The Limited Partner, Special Limited Partner and
Missouri Limited Partner shall not be liable for any of the debts, liabilities,
contracts or other obligations of the Partnership. The Limited Partner, Special
Limited Partner and Missouri Limited Partner shall be liable only to make
Capital Contributions in the amounts and on the dates specified in this
Agreement and, except as otherwise expressly required hereunder, shall not be
required to lend any funds to the Partnership or, after their respective Capital
Contributions have been paid, to make any further Capital Contribution to the
Partnership.
Section 7.8 Missouri Limited Partner. The Missouri Limited Partner
shall be in a different class from the Limited Partner and, except as otherwise
expressly stated in this Agreement, shall not participate in any rights
allocable to or exercisable by the Limited Partner under this Agreement.
ARTICLE VIII
WORKING CAPITAL AND RESERVES
Section 8.1 Operating and Maintenance Account. The Partnership shall
establish an operating and maintenance account and shall deposit thereinto an
annual amount equal to $200 per residential unit per year for the purpose of
repairs, maintenance and capital repairs. Said deposit shall be made monthly in
equal installments. Any balance remaining in the account at the time of a sale
of the Apartment Housing shall be allocated and distributed equally between the
General Partner and the Limited Partner.
Section 8.2 Tax and Insurance Account. The Partnership, shall establish
a tax and insurance account ("T & I Account") for the purpose of making the
requisite Insurance premium payments and the real estate tax payments. The
annual deposit to the T & I Account shall equal the total annual Insurance
payment and the total annual real estate tax payment. Said amount shall be
deposited monthly in equal installments. Withdrawals from such account shall be
made only for its intended purpose. Any balance remaining in the account at the
time of a sale of the Apartment Housing shall be allocated and distributed
equally between the General Partner and the Limited Partner.
Section 8.3 Program Reserve Account. The Partnership shall establish a
program reserve account with MHDC from funds referenced in Section 7.2(b)(3) for
the purpose of funding the annual costs of the after school care program, the
program planning consultant ("Program Planning"), miscellaneous supplies and
equipment, and computer software and maintenance for a minimum of five years.
Section 8.4 Other Reserves. The General Partner, may establish out of
funds available to the Partnership a reserve account sufficient in its sole
discretion to pay any unforeseen contingencies which might arise in connection
29
with the furtherance of the Partnership business including, but not limited to,
(a) any rent subsidy required to maintain rent levels in compliance with the Tax
Credit Conditions; and (b) any real estate taxes, Insurance, debt service or
other payments for which other funds are not provided for hereunder or otherwise
expected to be available to the Partnership. The General Partner shall not be
liable for any good-faith estimate which it shall make in connection with
establishing or maintaining any such reserves nor shall the General Partner be
required to establish or maintain any such reserves if, in its sole discretion,
such reserves do not appear to be necessary.
ARTICLE IX
MANAGEMENT AND CONTROL
Section 9.1 Power and Authority of General Partner. Subject to the
Consent of the Special Limited Partner and the Consent of the Limited Partner
where required by this Agreement, and subject to the other limitations and
restrictions included in this Agreement, the General Partner shall have complete
and exclusive control over the management of the Partnership business and
affairs, and shall have the right, power and authority, on behalf of the
Partnership, and in its name, to exercise all of the rights, powers and
authority of a partner of a partnership without limited partners. If there is
more than one General Partner, the decision of a majority in Interest of the
General Partner shall be binding on all the General Partner. If there is more
than one General Partner, a majority in Interest of the General Partner may
appoint a Managing General Partner who shall administer the day to day affairs
of the Partnership and shall make decisions and take actions on behalf of the
Partnership in connection therewith. The Managing General Partner shall
regularly consult with, and report to, the other General Partners with respect
to its activities. If the Managing General Partner shall cease to be a General
Partner or shall resign as Managing General Partner, a majority in Interest of
the General Partners may choose a new Managing General Partner. No Limited
Partner or Special Limited Partner (except one who may also be a General
Partner, and then only in its capacity as General Partner within the scope of
its authority hereunder) shall have any right to be active in the management of
the Partnership's business or investments or to exercise any control thereover,
nor have the right to bind the Partnership in any contract, agreement, promise
or undertaking, or to act in any way whatsoever with respect to the control or
conduct of the business of the Partnership, except as otherwise specifically
provided in this Agreement.
Section 9.2 Payments to the General Partners and Others.
(a) The Partnership shall pay to the Developer a Development Fee in the
amount of $475,500 in accordance with the Development Services Agreement entered
into by and between the Developer and the Partnership on the even date hereof.
The Development Services Agreement provides, in part, that the Development Fee
30
shall first be paid from available proceeds in accordance with Section 9.2(b) of
this Agreement and if not paid in full then the balance of the Development Fee
will be paid in accordance with Section 11.1 of this Agreement.
(b) The Partnership shall utilize the proceeds from the Capital
Contributions paid pursuant to Section 7.2 and Section 7.5 of this Agreement for
development costs including, but not limited to, land costs, architectural fees,
survey and engineering costs, financing costs, loan fees, building materials,
labor and $475,500 of the Development Fee. If any Capital Contribution proceeds
are remaining after Completion of Construction and all construction costs,
excluding the unpaid Development Fee, are paid in full and the Construction Loan
retired, then the remainder shall: first be paid to the Developer in payment of
the unpaid Development Fee; second be paid to the General Partner as a reduction
of the General Partner's Capital Contribution; and any remaining Capital
Contribution proceeds shall be paid to the General Partner as a Partnership
oversight fee.
(c) The Partnership shall pay to the Management Agent a property
management fee for the leasing and management of the Apartment Housing in an
amount in accordance with the Management Agreement. The term of the Management
Agreement shall not exceed three years. If the Management Agent is an Affiliate
of the General Partner then commencing with the termination of the Operating
Deficit Guarantee Period, in any year in which the Apartment Housing has an
Operating Deficit, 40% of the management fee will be deferred ("Deferred
Management Fee"). Deferred Management Fees, if any, shall be paid to the
Management Agent in accordance with Section 11.1 of this Agreement.
(1) The General Partner shall, upon receiving any request of
the Mortgage lender requesting such action, dismiss the Management Agent for
cause as the entity responsible for management of the Apartment Housing under
the terms of the Management Agreement; or, the General Partner shall dismiss the
Management Agent at the request of the Special Limited Partner if such
Management Agent fails to provide or inaccurately provides in any material
respect, the information required in Section 14.1, 14.2 and 14.3 of this
Agreement.
(2) The appointment of any successor Management Agent is
subject to the Consent of the Special Limited Partner, which may only be sought
after the General Partner has provided the Special Limited Partner with accurate
and complete disclosure respecting the proposed Management Agent. The Consent of
the Special Limited Partner in reference to this Section shall not be
unreasonably withheld.
(d) The Partnership shall pay to the Limited Partner a fee (the
"Reporting Fee") commencing in 2001 equal to 15% of the remaining cash flow from
operations but in no event less than $1,000 for the Limited Partner's services
in monitoring the operations of the Partnership and for services in connection
with the Partnership's accounting matters and assisting with the preparation of
tax returns and the reports required in Sections 14.2 and 14.3 of this
31
Agreement. The Reporting Fee shall be payable within seventy-five (75) days
following each calendar year and shall be payable from remaining cash flow from
operating in the manner and priority set forth in Section 11.1 of this
Agreement; provided, however, that if in any year remaining cash flow from
operations is insufficient to pay the full $1,000, the unpaid portion thereof
shall accrue and be payable on a cumulative basis in the first year in which
there is sufficient remaining cash flow from operations, as provided in Section
11.1, or sufficient Sale or Refinancing Proceeds, as provided in Section 11.2.
(e) The Partnership shall pay to the General Partner an Incentive
Management Fee equal to 70% of the remaining cash flow from operations for each
fiscal year of the Partnership commencing in 2001 for overseeing the marketing,
lease-up and continued occupancy of the Partnership's apartment units, obtaining
and monitoring the Mortgage Loan, maintaining the books and records of the
Partnership, selecting and supervising the Partnership's Accountants,
bookkeepers and other Persons required to prepare and audit the Partnership's
financial statements and tax returns, and preparing and disseminating reports on
the status of the Apartment Housing and the Partnership, all as required by
Article XIV of this Agreement. The Partners acknowledge that the Incentive
Management Fee is being paid as an inducement to the General Partner to operate
the Partnership efficiently, to maximize occupancy and to increase the Net
Operating Income. The Incentive Management Fee shall be payable within
seventy-five (75) days following each calendar year and shall be payable from
Net Operating Income in the manner and priority set forth in Section 11.1. If
the Incentive Management Fee is not paid in any year it shall not accrue for
payment in subsequent years.
(f) The Partnership shall pay $15,000 to Crestwood Building Associates,
Inc. as a one time incentive fee for using its best efforts to obtain a certi-
ficate ofoccupancy in 2001 in order to allocated Tax Credits during 2001 as
specified in Section 7.4 (d) of this Agreement.
Section 9.3 Specific Powers of the General Partner. Subject to the
other provisions of this Agreement, the General Partner, in the Partnership's
name and on its behalf, may:
(a) hold, sell, transfer, lease or otherwise deal with any real,
personal or mixed property, interest therein or appurtenance thereto in
accordance with this Agreement;
(b) employ, contract and otherwise deal with, from time to time,
Persons whose services are necessary or appropriate in connection with
management and operation of the Partnership business, including, without
limitation, contractors, agents, brokers, Accountants and successor Management
Agents (provided that the selection of any Accountant or Agent has received the
Consent of the Special Limited Partner) and attorneys, on such terms as the
General Partner shall determine;
32
(c) bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the
Partnership;
(d) pay as a Partnership expense any and all costs and expenses
associated with the formation, development, organization and operation of the
Partnership, including the expense of annual audits, tax returns and LIHTC
compliance;
(e) deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(f) execute the Construction Loan and the Mortgage; and
(g) execute, acknowledge and deliver any and all instruments to
effectuate any of the foregoing.
Section 9.4 Authority Requirements. During the Compliance Period,
the following provisions shall apply.
(a) Each of the provisions of this Agreement shall be subject to, and
the General Partner covenants to act in accordance with, the Tax Credit
Conditions and all applicable federal, state and local laws and regulations.
(b) The Tax Credit Conditions and all such laws and regulations, as
amended or supplemented, shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successor and assigns, and
they shall control as to any terms in this Agreement which are inconsistent
therewith, and any such inconsistent terms of this Agreement shall be
unenforceable by or against any of the Partners.
(c) Upon any dissolution of the Partnership or any transfer of the
Apartment Housing, no title or right to the possession and control of the
Apartment Housing and no right to collect rent therefrom shall pass to any
Person who is not, or does not become, bound by the Tax Credit Conditions in a
manner that, in the opinion of counsel to the Partnership, would avoid a
recapture of Tax Credits thereof on the part of the former owners.
(d) Any conveyance or transfer of title to all or any portion of the
Apartment Housing required or permitted under this Agreement shall in all
respects be subject to the Tax Credit Conditions and all conditions, approvals
or other requirements of the rules and regulations of any authority applicable
thereto.
Section 9.5 Limitations on General Partner's Power and Authority. Not-
withstanding the provisions of this Article IX, the General Partner shall not:
33
(a) except as required by Section 9.4, act in contravention of this
Agreement;
(b) act in any manner which would make it impossible to carry on the
ordinary business of the Partnership;
(c) confess a judgment against the Partnership;
(d) possess Partnership property, or assign the Partner's right in
specific Partnership property, for other than the exclusive benefit of the
Partnership;
(e) admit a Person as a General Partner except as provided in this
Agreement;
(f) admit a Person as a Limited Partner, Missouri Limited Partner or
Special Limited Partner except as provided in this Agreement;
(g) violate any provision of the Mortgage;
(h) cause the Apartment Housing apartment units to be rented to anyone
other than Qualified Tenants;
(i) violate the Minimum Set-Aside Test or the Rent Restriction Test for
the Apartment Housing;
(j) cause any recapture of the Tax Credits;
(k) permit any creditor who makes a nonrecourse loan to the Partnership
to have, or to acquire at any time as a result of making such loan, any direct
or indirect interest in the profits, income, capital or other property of the
Partnership, other than as a secured creditor;
(l) commingle funds of the Partnership with the funds of another Per-
son; or
(m) take any action which requires the Consent of the Special Limited
Partner or the Consent of the Limited Partner or the Missouri Limited Partner
unless the General Partner has received said Consent.
Section 9.6 Restrictions on Authority of General Partner. Without Con-
sent of the Special Limited Partner, the General Partner shall not:
(a) sell, exchange, lease or otherwise dispose of the Apartment Hous-
ing;
(b) incur indebtedness other than the Construction Loan and Mortgage
Loan in the name of the Partnership, other than in the ordinary course of the
Partnership's business;
34
(c) engage in any transaction not expressly contemplated by this
Agreement in which the General Partner has an actual or potential conflict of
interest with the Limited Partner, the Missouri Limited Partner or the Special
Limited Partner;
(d) contract away the fiduciary duty owed to the Limited Partner, the
Missouri Limited Partner and the Special Limited Partner at common law;
(e) take any action which would cause the Apartment Housing to fail to
qualify, or which would cause a termination or discontinuance of the
qualification of the Apartment Housing, as a "qualified low income housing
project" under Section 42(g)(1) of the Code, as amended, or any successor
thereto, or which would cause the Limited Partner to fail to obtain the
Projected Tax Credits or which would cause the recapture of any LIHTC; or which
would cause the Missouri Limited Partner to fail to obtain the Projected
Missouri Tax Credits or which would cause the recapture of any Missouri Tax
Credits;
(f) cause the merger or other reorganization of the Partnership;
(g) dissolve the Partnership, except as provided in this Agreement;
(h) acquire any real or personal property (tangible or intangible) in
addition to the Apartment Housing the aggregate value of which shall exceed
$10,000 (other than easement or similar rights necessary or appropriate for the
operation of the Apartment Housing);
(i) become personally liable on or in respect of, or guarantee, the
Mortgage or any other mortgage indebtedness of the Partnership;
(j) pay any salary, fees or other compensation to a General Partner or
any Affiliate thereof, except as authorized by Section 9.2 and Section 9.8
hereof or specifically provided for in this Agreement;
(k) cause the Partnership to redeem or repurchase all or any portion of
the Interest of a Partner except as otherwise provided in this Agreement;
(l) cause the Partnership to convert the Apartment Housing to coopera-
tive or condominium ownership; or
(m) cause or permit the Partnership to make loans to the General
Partner or any Affiliate.
Section 9.7 Duties of General Partner. The General Partner agrees
that it shall at all times:
(a) diligently and faithfully devote such of its time to the business
of the Partnership as may be necessary to properly conduct the affairs of the
Partnership;
35
(b) file and publish all certificates, statements or other instruments
required by law for the formation and operation of the Partnership as a limited
partnership in all appropriate jurisdictions;
(c) cause the Partnership to carry Insurance from an Insurance Company;
(d) have a fiduciary responsibility for the safekeeping and use of all
funds and assets of the Partnership, whether or not in its immediate possession
or control and not employ or permit another to employ such funds or assets in
any manner except for the benefit of the Partnership;
(e) use its best efforts so that all requirements shall be met which
are reasonably necessary to obtain or achieve (1) compliance with the Minimum
Set-Aside Test, the Rent Restriction Test, and any other requirements necessary
for the Apartment Housing to initially qualify, and to continue to qualify, for
LIHTC and Missouri Tax Credits; (2) issuance of all necessary certificates of
occupancy, including all governmental approvals required to permit occupancy of
all of the apartment units in the Apartment Housing; (3) compliance with all
provisions of the Project Documents and (4) a reservation and allocation of
LIHTC and Missouri Tax Credits from the State Tax Credit Agency;
(f) use reasonable efforts to assure that the Apartment Housing is in
decent, safe, sanitary and good condition, repair and working order, ordinary
use and obsolescence excepted, and make or cause to be made from time to time
all necessary repairs thereto (including external and structural repairs) and
renewals and replacements thereof;
(g) pay from Partnership funds, before the same shall become delinquent
and before penalties accrue thereon all Partnership taxes, assessments and other
governmental charges against the Partnership or its properties, and all of its
other liabilities, except to the extent and so long as the same are being
contested in good faith by appropriate proceedings in such manners as not to
cause any material adverse effect on the Partnership's property, financial
condition or business operations, with adequate reserves provided for such
payments;
(h) permit, and cause the Management Agent to permit, the Special
Limited Partner and its representatives: (1) to have access to the Apartment
Housing and personnel employed by the Partnership and by the Management Agent at
all times during normal business hours after reasonable notice; (2) to examine
all agreements, LIHTC and Missouri Limited Partner compliance data and Plans and
Specifications; and (3) to make copies thereof;
(i) exercise good faith in all activities relating to the conduct of
the business of the Partnership, including the development, operation and
maintenance of the Apartment Housing, and shall take no action with respect to
36
the business and property of the Partnership which is not reasonably related to
the achievement of the purpose of the Partnership;
(j) make any Capital Contributions, advances or loans required to be
made by the General Partner under the terms of this Agreement;
(k) establish and maintain all reserves required to be established and
maintained under the terms of this Agreement;
(l) cause the Management Agent to manage the Apartment Housing in such
a manner that the Apartment Housing will be eligible to receive LIHTC and
Missouri Tax Credits with respect to 100% of the apartment units in the
Apartment Housing. To that end, the General Partner agrees, without limitation:
(1) to make all elections requested by the Special Limited Partner under Section
42 of the Code or the RsMO to allow the Partnership or its Partners to claim the
Tax Credit; (2) to file Form 8609 with respect to the Apartment Housing as
required, for at least the duration of the Compliance Period; (3) to operate the
Apartment Housing and cause the Management Agent to manage the Apartment Housing
so as to comply with the requirements of Section 42 of the Code and the
requirements of the RsMO, (4) to make all certifications required by Section
42(l) of the Code, or the RsMO, or any successors thereto; and (5) to operate
the Apartment Housing as to comply with all other Tax Credit Conditions; and
(m) perform such other acts as may be expressly required of it under
the terms of this Agreement.
Section 9.8 Obligations to Repair and Rebuild Apartment Housing. With
the approval of any lender, if such approval is required, any Insurance proceeds
received by the Partnership due to fire or other casualty affecting the
Apartment Housing will be utilized to repair and rebuild the Apartment Housing
in satisfaction of the conditions contained in Section 42(j)(4) of the Code and
to the extent required by any lender. Any such proceeds received in respect of
such event occurring after the Compliance Period shall be so utilized or, if
permitted by the Project Documents and with the Consent of the Special Limited
Partner, shall be treated as Sale or Refinancing Proceeds.
Section 9.9 Partnership Expenses.
(a) All of the Partnership's expenses shall be billed directly to and
paid by the Partnership to the extent practicable. Reimbursements to the General
Partner, or any of its Affiliates, by the Partnership shall be allowed only for
the Partnership's Cash Expenses unless the General Partner is obligated to pay
the same as an Operating Deficit during the Operating Deficit Guarantee Period,
and subject to the limitations on the reimbursement of such expenses set forth
herein. For purposes of this Section, Cash Expenses shall include fees paid by
the Partnership to the General Partner or any Affiliate of the General Partner
permitted by this Agreement and the actual cost of goods, materials and
37
administrative services used for or by the Partnership, whether incurred by the
General Partner, an Affiliate of the General Partner or a nonaffiliated Person
in performing the foregoing functions. As used in the preceding sentence,
"actual cost of goods and materials" means the actual cost of goods and
materials used for or by the Partnership and obtained from entities which are
not Affiliates of the General Partner, and actual cost of administrative
services means the pro rata cost of personnel (as if such persons were employees
of the Partnership) associated therewith, but in no event to exceed the amount
which would be charged by nonaffiliated Persons for comparable goods and
services. Notwithstanding, the "actual cost of goods and services" and
"administrative services" includes a profit payable to the General Partner or
affiliate in an amount not to exceed an amount which would be charged by
nonaffiliated persons for comparable goods and services.
(b) Reimbursement to the General Partner or any of its Affiliates of
operating cash expenses pursuant to Subsection (a) hereof shall be subject to
the following:
(1) no such reimbursement shall be permitted for services for
which the General Partner or any of its Affiliates is entitled to compensation
by way of a separate fee; and
(2) no such reimbursement shall be made for (A) rent or
depreciation, utilities, capital equipment or other such administrative items,
and (B) salaries, fringe benefits, travel expenses and other administrative
items incurred or allocated to any "controlling person" of the General Partner
or any Affiliate of the General Partner. For the purposes of this Section
9.9(b)(2), "controlling person" includes, but is not limited to, any Person,
however titled, who performs functions for the General Partner or any Affiliate
of the General Partner similar to those of: (i) chairman or member of the board
of directors; (ii) executive management, such as president, vice president or
executive vice president, corporate secretary or treasurer; (iii) senior
management, such as the vice president of an operating division who reports
directly to executive management; or (iv) those holding 5% or more equity
interest in such General Partner or any such Affiliate of the General Partner or
a person having the power to direct or cause the direction of such General
Partner or any such Affiliate of the General Partner, whether through the
ownership of voting securities, by contract or otherwise.
(c) Anything in the Partnership Agreement to the contrary
notwithstanding, the developer is authorized to obtain the Partnership's
property and casualty Insurance through Chubb Group of Insurance Companies,
which is reinsured by Rural Housing Reinsurance Company International, Ltd., an
entity in which the principle of the developer is a shareholder.
Section 9.10 General Partner Expenses. The General Partner or
Affiliates of the General Partner shall pay all Partnership expenses which are
not permitted to be reimbursed pursuant to Section 9.9 and all expenses which
are unrelated to the business of the Partnership.
38
Section 9.11 Other Business of Partners. Any Partner may engage
independently or with others in other business ventures wholly unrelated to the
Partnership business of every nature and description, including, without
limitation, the acquisition, development, construction, operation and management
of real estate projects and developments of every type on their own behalf or on
behalf of other partnerships, joint ventures, corporations or other business
ventures formed by them or in which they may have an interest, including,
without limitation, business ventures similar to, related to or in direct or
indirect competition with the Apartment Housing. Neither the Partnership nor any
Partner shall have any right by virtue of this Agreement or the partnership
relationship created hereby in or to such other ventures or activities or to the
income or proceeds derived therefrom. Conversely, no Person shall have any
rights to Partnership assets, incomes or proceeds by virtue of such other
ventures or activities of any Partner.
Section 9.12 Covenants, Representations and Warranties. The General
Partner covenants, represents and warrants that the following are presently
true, will be true at the time of each Capital Contribution payment made by the
Limited Partner and the Missouri Limited Partner and will be true during the
term of this Agreement, to the extent then applicable.
(a) The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner, the Missouri Limited Partner and the Special Limited Partner.
(b) The Partnership Agreement and the Project Documents are in full
force and effect and neither the Partnership nor the General Partner is in
breach or violation of any material provisions thereof.
(c) Improvements will be completed in a timely and workerlike manner
substantially in accordance with all applicable requirements of all appropriate
governmental entities and the Plans and Specifications of the Apartment Housing.
(d) Additional Improvements on the Project, if any shall be completed
substantially in conformity with Plans and Specifications approved by the
Special Limited Partner.
(e) All conditions to the funding of the Construction Loan have been
met.
(f) The Apartment Housing is being operated in accordance with
standards and procedures which are prudent and customary for the operation of
properties similar to the Apartment Housing.
39
(g) No Partner has or will have any personal liability with respect to
or has or will have personally guaranteed the payment of the Mortgage.
(h) The Partnership is in compliance in all material respects with all
construction and use codes applicable to the Apartment Housing and is not in
violation in any material respect of any zoning, environmental or similar
regulations applicable to the Apartment Housing.
(i) All appropriate public utilities, including sanitary and storm
sewers, water, gas and electricity, are currently available and will be
operating properly for all units in the Apartment Housing at the time of first
occupancy and throughout the term of the Partnership.
(j) All roads necessary for the full utilization of the Improvements
have either been completed or the necessary rights of way therefore have been
acquired by the appropriate governmental authority or have been dedicated to
public use and accepted by said governmental authority.
(k) The Partnership has obtained Insurance written by an Insurance
Company.
(l) The Partnership owns the fee simple interest in the Apartment
Housing.
(m) The Construction Contract has been entered into between the
Partnership and the Contractor; no other consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.
(n) The Partnership will require the Accountant to depreciate the
Improvements over a 27 1/2 year term. Site work, landscaping and personal
property (cabinets, appliances, carpet and window coverings) shall be broken out
separately from Improvements and depreciated over 7 years using the cost
recovery system, mid-year 200% declining balance depreciation method.
(o) To the best of the General Partner's knowledge: (1) no Hazardous
Substance has been disposed of, or released to or from, or otherwise now exists
in, on, under or around, the Apartment Housing and (2) no aboveground or
underground storage tanks are now or have ever been located on or under the
Apartment Housing. The General Partner will not install or allow to be installed
any aboveground or underground storage tanks on the Apartment Housing. The
General Partner covenants that the Apartment Housing shall be kept free of
Hazardous Substance and shall not be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce or process
Hazardous Substance, except in connection with the normal maintenance and
operation of any portion of the Apartment Housing. The General Partner shall
40
comply, or cause there to be compliance, with all applicable Federal, state and
local laws, ordinances, rules and regulations with respect to Hazardous
Substance and shall keep, or cause to be kept, the Apartment Housing free and
clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. The General Partner must promptly notify the Limited Partner,
Missouri Limited Partner and the Special Limited Partner in writing (3) if it
knows, or suspects or believes there may be any Hazardous Substance in or around
any part of the Apartment Housing, any Improvements constructed on the Apartment
Housing, or the soil, groundwater or soil vapor, (4) if the General Partner or
the Partnership may be subject to any threatened or pending investigation by any
governmental agency under any law, regulation or ordinance pertaining to any
Hazardous Substance, and (5) of any claim made or threatened by any Person,
other than a governmental agency, against the Partnership or General Partner
arising out of or resulting from any Hazardous Substance being present or
released in, on or around any part of the Apartment Housing.
(p) The General Partner has not executed and will not execute any
agreements with provisions contradictory to, or in opposition to, the provisions
of this Agreement.
(q) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits, or the Revised Projected Tax Credits, if applicable, and the
Partnership will allocate tot he Missouri Limited Partner the Projected Annual
Missouri Tax Credits, or the Revised Projected Missouri Tax Credits, if
applicable.
(r) No charges, liens or encumbrances exist with respect to the
Apartment Housing other than those which are created or permitted by the Project
Documents or Mortgage or are noted or excepted in the Title Policy.
(s) The buildings on the Apartment Housing site constitute or shall
constitute a "qualified low-income housing project" as defined in Section 42(g)
of the Code, and as amplified by the Treasury Regulations thereunder. In this
connection, not later than December 31 of the first year in which the Partners
elect the LIHTC to commence in accordance with the Code, the Apartment Housing
will satisfy the Minimum Set-Aside Test.
(t) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, without limitation, any
reserves in accordance with Article VIII hereof, are currently funded to
required levels, including levels required by any authority.
(u) The General Partner has not lent or otherwise advanced any funds to
the Partnership other than its Capital Contribution, or Operating Deficit Loan,
if applicable, and the Partnership has no unsatisfied obligation to make any
payments of any kind to the General Partner or any Affiliate thereof.
41
(v) No event has occurred which constitutes a default under any of the
Project Documents.
(w) No event has occurred which has caused, and the General Partner has
not acted in any manner which will cause (1) the Partnership to be treated for
federal income tax purposes as an association taxable as a corporation, (2) the
Partnership to fail to qualify as a limited partnership under the Act, or (3)
the Limited Partner or the Missouri Limited Partner to be liable for Partnership
obligations; provided however, the General Partner shall not be in breach of
this representation if all or a portion of a Limited Partner's or the Missouri
Limited Partner's agreed upon Capital Contributions are used to satisfy the
Partnership's obligations to creditors of the Partnership and such action by the
General Partner is otherwise authorized under this Agreement and; provided
further, however, the General Partner shall not be in breach of this
representation if the action causing the Limited Partner to be liable for the
Partnership obligations is undertaken by the Limited Partner or if the action
causing the Missouri Limited Partner to be liable for the Partnership
obligations is undertaken by the Missouri Limited Partner.
(x) No event or proceeding, including, but not limited to, any legal
actions or proceedings before any court, commission, administrative body or
other governmental authority, and acts of any governmental authority having
jurisdiction over the zoning or land use laws applicable to the Apartment
Housing, has occurred the continuing effect of which has: (1) materially or
adversely affected the operation of the Partnership or the Apartment Housing;
(2) materially or adversely affected the ability of the General Partner to
perform its obligations hereunder or under any other agreement with respect to
the Apartment Housing; or (3) prevented the completion of construction of the
Improvements in substantial conformity with the Project Documents, other than
legal proceedings which have been bonded against (or as to which other adequate
financial security has been issued) in a manner as to indemnify the Partnership
against loss; provided, however, the foregoing does not apply to matters of
general applicability which would adversely affect the Partnership, the General
Partner, Affiliates of the General Partner or the Apartment Housing only insofar
as they or any of them are part of the general public.
(y) Neither the Partnership nor the General Partner has any
liabilities, contingent or otherwise, which have not been disclosed in writing
to the Limited Partner, Missouri Limited Partner and the Special Limited Partner
and which in the aggregate affect the ability of the Limited Partner and the
Missouri Limited Partner to obtain the anticipated benefits of its investment in
the Partnership.
(z) The General Partner has and shall maintain a net worth equal to at
least $1,000,000 computed in accordance with generally accepted accounting
principles.
42
The General Partner shall be liable to the Limited Partner and the
Missouri Limited Partner for any costs, damages, loss of profits, diminution in
the value of its investment in the Partnership, or other losses, of every nature
and kind whatsoever, direct or indirect, realized or incurred by the Limited
Partner or the Missouri Limited Partner as a result of any material breach of
the representations and warranties set forth in this Section 9.12.
ARTICLE X
ALLOCATIONS OF INCOME, LOSSES AND CREDITS
Section 10.1 General. All items includable in the calculation of Income
or Loss not arising from a Sale or Refinancing, and all Tax Credits, shall be
allocated 99.97% to the Limited Partner, 0.01% to the Missouri Limited
Partner, 0.01% to the Special Limited Partner, and 0.01% to the General Partner.
Any and all Missouri Tax Credits shall be allocated to the Missouri Limited
Partner. Missouri Tax Credits are those Tax Credits under the State of Missouri
Tax Code deductible from income tax, otherwise payable to the State of Missouri.
Section 10.2 Allocations From Sale or Refinancing. All Income and
Losses arising from a Sale or Refinancing shall be allocated between the
Partners as follows:
(a) As to Income:
(1) first, an amount of Income equal to the aggregate negative
balances (if any) in the Capital Accounts of all Partners having negative
Capital Accounts (prior to taking into account the Sale or Refinancing and the
Distribution of the related Sale or Refinancing Proceeds, but after giving
effect to Distributions of Net Operating Income and allocations of other Income
and Losses pursuant to this Article X up to the date of the Sale or Refinancing)
shall be allocated to such Partners in proportion to their negative Capital
Account balances until all such Capital Accounts shall have zero balances; and
(2) second, the balance, if any, of such Income shall be
allocated 64.98% to the Limited Partner, .01% to the Special Limited Partner,
35% to the General Partner and 0.01% to the Missouri Limited Partner.
(b) Losses shall be allocated 99.97% to the Limited Partner, 0.01% to
the Missouri Limited Partner, 0.01% to the Special Limited Partner and 0.01% to
the General Partner.
(c) Notwithstanding the foregoing provisions of Section 10.2(a) and
(b), in no event shall any Losses be allocated to the Limited Partner or the
Special Limited Partner if and to the extent that such allocation would create
or increase an Adjusted Capital Account Deficit for the Limited Partner or the
Special Limited Partner or the Missouri Limited Partner. In the event an
allocation of 99.97%, 0.01%, 0.01% or 0.01% of each item includable in the
43
calculation of Income or Loss not arising from a Sale or Refinancing, would
create or increase an Adjusted Capital Account Deficit for the Limited Partner
or the Special Limited Partner, respectively, then so much of the items of
deduction other than projected depreciation shall be allocated to the General
Partner instead of the Limited Partner or the Special Limited Partner or the
Missouri Limited Partner and as is necessary to allow the Limited Partner, the
Special Limited Partner or the Missouri Limited Partner to be allocated
99.97%, 0.01%, 0.01% and 0.01%, respectively, of the items of Income and
Apartment Housing depreciation without creating or increasing an Adjusted
Capital Account Deficit for the Limited Partner, the Special Limited Partner or
the Missouri Limited Partner, it being the intent of the parties that the
Limited Partner, the Special Limited Partner and the Missouri Limited Partner
always shall be allocated 99.98%, 0.01%, 0.01% and 0.01%, respectively, of the
items of Income not arising from a Sale or Refinancing and 99.97%, 0.01%,
0.01% and 0.01%, respectively, of the Apartment Housing depreciation.
Section 10.3 Special Allocations. The following special allocations
shall be made in the following order.
(a) Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership Minimum Gain during any Partnership fiscal year,
each Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, notwithstanding any other provision of this Article X, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership fiscal year, each Person who
has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items of Partnership
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Person's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
44
The items to be so allocated shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(b) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.
(c) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible, provided that an allocation
pursuant to this Section 10.3(c) shall be made if and only to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 10.3 have been tentatively made as if
this Section 10.3(c) were not in the Agreement.
(d) In the event any Partner has a deficit Capital Account at the end
of any Partnership fiscal year which is in excess of the sum of (i) the amount
such Partner is obligated to restore, and (ii) the amount such Partner is deemed
to be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 10.3(d) shall be made if and only to the extent that such Partner would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 10.3 have been tentatively made as if this Section
10.3(d) and Section 10.3(c) hereof were not in the Agreement.
(e) Nonrecourse Deductions for any fiscal year shall be specially
allocated 99.97% to the Limited Partner, 0.01% to the Special Limited
Partner, 0.01% to the Missouri Limited Partner and 0.01% to the General Partner.
(f) Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).
(g) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the Partnership, the amount of such adjustment to the Capital
45
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event that Treasury Regulations
Section 1.704-1 (b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event that Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) To the extent the Partnership has taxable interest income with
respect to any promissory note pursuant to Section 483 or Section 1271 through
1288 of the Code:
(1) such interest income shall be specially allocated to the
Limited Partner to whom such promissory note relates; and
(2) the amount of such interest income shall be excluded from
the Capital Contributions credited to such Partner's Capital Account in
connection with payments of principal with respect to such promissory note.
(i) In the event the adjusted tax basis of any investment tax credit
property that has been placed in service by the Partnership is increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the Partners (as an item in the nature of income or gain) in the same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.
(j) Any reduction in the adjusted tax basis (or cost) of Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same proportions as the basis (or cost) of such property is allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).
(k) Any income, gain, loss or deduction realized as a direct or
indirect result of the issuance of an interest in the Partnership by the
Partnership to a Partner (the "Issuance Items") shall be allocated among the
Partners so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Agreement to each Partner, shall
be equal to the net amount that would have been allocated to each such Partner
if the Issuance Items had not been realized.
(l) If any Partnership expenditure treated as a deduction on its
federal income tax return is disallowed as a deduction and treated as a
distribution pursuant to Section 731(a) of the Code, there shall be a special
allocation of gross income to the Partner deemed to have received such
distribution equal to the amount of such distribution.
(m) The allocation to the General Partner of each material item of
Partnership income, loss, deduction or credit will not be less than 0.01% of
46
each such item at all times during the existence of the Partnership.
(n) Interest deduction on the Partnership indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.
(o) In the event all or part of the Incentive Management Fee is
disallowed by the Internal Revenue Service, then any interest or income
chargeable to the Partnership for such disallowance shall be allocated to the
General Partner.
Section 10.4 Curative Allocations. The allocations set forth in
Sections 10.2(c), 10.3(a), 10.3(b), 10.3(c), 10.3(d), 10.3(e), 10.3(f), and
10.3(g) hereof (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss, or deduction pursuant to this
Section 10.4. Therefore, notwithstanding any other provision of this Article X
(other than the Regulatory Allocations), with the Consent of the Special Limited
Partner and the General Partner shall make such offsetting special allocations
of Partnership income, gain, loss, or deduction in whatever manner the General
Partner, with the Consent of the Special Limited Partner, determines appropriate
so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Partner would have had if the Regulatory Allocations were not part of the
Agreement and all Partnership items were allocated pursuant to Sections 10.1,
10.2(a), 10.2(b), 10.3(h), 10.3(i), 10.3(j), 10.3(k), 10.3(l), 10.3(m), 10.3(n)
and 10.5. In exercising its authority under this Section 10.4, the General
Partner shall take into account future Regulatory Allocations under Section
10.3(a) and 10.3(b) that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 10.3(e) and 10.3(f).
Section 10.5 Other Allocation Rules.
(a) The basis (or cost) of any Partnership investment tax credit
property shall be allocated among the Partners in accordance with Treasury
Regulations Section 1.46-3(f)(2)(i). All Tax Credits (other than the investment
tax credit and the Missouri Tax Credit) shall be allocated among the Partners in
accordance with applicable law. Consistent with the foregoing, the Partners
intend that (1) LIHTC will be allocated 99.97% to the Limited Partner,
0.01% to the Missouri Limited Partner, 0.01% to the Special Limited Partner and
0.01% to the General Partner and (2) the Missouri Tax Credits will be allocated
100% to the Missouri Limited Partner.
(b) In the event Partnership investment tax credit property is disposed
of during any taxable year, profits for such taxable year (and, to the extent
47
such profits are insufficient, profits for subsequent taxable years) in an
amount equal to the excess, if any, of (1) the reduction in the adjusted tax
basis (or cost) of such property pursuant to Code Section 50(c), over (2) any
increase in the adjusted tax basis of such property pursuant to Code Section
50(c) caused by the disposition of such property, shall be excluded from the
profits allocated pursuant to Section 10.1 and Section 10.2(a) hereof and shall
instead be allocated among the Partners in proportion to their respective shares
of such excess, determined pursuant to Section 10.3(i) and 10.3(j) hereof. In
the event more than one item of such property is disposed of by the Partnership,
the foregoing sentence shall apply to such items in the order in which they are
disposed of by the Partnership, so the profits equal to the entire amount of
such excess with respect to the first such property disposed of shall be
allocated prior to any allocations with respect to the second such property
disposed of, and so forth.
(c) For purposes of determining the Income, Losses, or any other items
allocable to any period, Income, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partner with the Consent of the Special Limited Partner, using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.
(d) Solely for purposes of determining a Partner's proportionate share
of the "excess nonrecourse liabilities" of the Partnership within the meaning of
Treasury Regulations Section 1.752-3(a)(3), the Partners' interests in Partner-
ship profits are as follows: Limited Partner: 99.97%; Missouri Limited
Partner: 0.01%; Special Limited Partner: 0.01%; General Partner: 0.01%.
(e) To the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the General Partner shall endeavor to treat Distributions as having
been made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse
Debt only to the extent that such Distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner who is not a General Partner.
(f) Tax Credits shall be allocated 99.97% to the Limited Partner,
0.01% to the Missouri Limited Partner, 0.01% to the Special Limited Partner, and
0.01% to the General Partner. In the event there occurs a recapture of Tax
Credits previously allocated to the Partners, the responsibility for the
recapture of such Tax Credits shall be allocated in accordance with the
requirements of the Code and the Treasury Regulations; namely, to the Partners
(if permitted by applicable law) who are or are deemed to be Partners in the
year in which such recapture occurs, in accordance with their interests in the
losses of the Partnership for that year. Missouri Tax Credits shall be allocated
100% to the Missouri Limited Partner, which Missouri Limited Partner also shall
be allocated 100% of any recapture of Missouri Tax Credits.
48
Section 10.6 Tax Allocations: Code Section 704(c). In accordance with
Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 1.37(a) hereof).
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.37(b) hereof, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the General Partner with the Consent of the Special Limited Partner in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 10.6 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Person's Capital Account or share of Income, Losses, other
items, or distributions pursuant to any provision of this Agreement.
Section 10.7 Allocation Among Limited Partners. In the event that the
Interest of the Limited Partner hereunder is at any time held by more than one
Limited Partner all items which are specifically allocated to the Limited
Partner for any month pursuant to this Article X shall be apportioned among such
Persons according to the ratio of their respective profit-sharing interests in
the Partnership at the last day of such month.
Section 10.8 Allocation Among General Partners. In the event that the
Interest of the General Partner hereunder is at any time held by more than one
General Partner all items which are specifically allocated to the General
Partner for any month pursuant to this Article X shall be apportioned among such
Persons in such percentages as may from time to time be determined by agreement
among them without amendment to this Agreement or consent of the Limited Partner
or the Missouri Limited Partner or Consent of the Special Limited Partner.
Section 10.9 Modification of Allocations. The provisions of Articles X
and XI and other provisions of this Agreement are intended to comply with
Treasury Regulations Section 1.704 and shall be interpreted and applied in a
manner consistent with such section of the Treasury Regulations. In the event
that the General Partner determines, in its sole discretion, that it is prudent
to modify the manner in which the Capital Accounts of the Partners, or any debit
or credit thereto, are computed in order to comply with such section of the
Treasury Regulations, the General Partner may make such modification, but only
with the Consent of the Special Limited Partner, to the minimum extent
49
necessary, to effect the plan of allocations and Distributions provided for
elsewhere in this Agreement. Further, the General Partner shall make any
appropriate modifications, but only with the Consent of the Special Limited
Partner, in the event it appears that unanticipated events (e.g., the existence
of a Partnership election pursuant to Code Section 754) might otherwise cause
this Agreement not to comply with Treasury Regulation Section 1.704.
ARTICLE XI
DISTRIBUTION
Section 11.1 Distribution of Net Operating Income. Net Operating Income
for each fiscal year shall be distributed within seventy-five (75) days
following each calendar year and shall be applied in the following order of
priority:
(a) to pay the current Reporting Fee and then to pay any accrued
Reporting Fees which have not been paid in full from previous years;
(b) to pay the Deferred Management Fee, if any;
(c) to pay the interest and then principal on the Development Fee;
(d) to pay the Operating Loans, if any, as referenced in Section 6.3 of
this Agreement, limited to 50% of the Net Operating Income remaining after
reduction for the payments made pursuant to subsections (a) through (c) of this
Section 11.1;
(e) to pay the Incentive Management Fee; and
(f) the balance, 30% to the Limited Partner and 70% to the General
Partner.
Section 11.2 Distribution of Sale or Refinancing Proceeds. Sale or
Refinancing Proceeds shall be distributed in the following order:
(a) to the payment of the Mortgage and other matured debts and
liabilities of the Partnership, other than accrued payments, debts or other
liabilities owing to Partners or former Partners;
(b) to any accrued payments, debts or other liabilities owing to the
Partners or former Partners, including, but not limited to, accrued Reporting
Fees and Operating Loans, to be paid prorata if necessary;
(c) to the establishment of any reserves which the General Partner,
with the Consent of the Special Limited Partner and Missouri Limited Partner,
shall deem reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership; and
50
(d) thereafter, 64.98% to the Limited Partner, .01% to the Special
Limited Partner, 35% to the General Partner, and 0.01% to the Missouri Limited
Partner.
ARTICLE XII
TRANSFERS OF LIMITED
PARTNER'S INTEREST IN THE PARTNERSHIP
Section 12.1 Assignment of Limited Partner's Interest. The Limited
Partner, Special Limited Partner and Missouri Limited Partner shall have the
right to assign all or any part of their respective Interests to any other
Person, whether or not a Partner, upon satisfaction of the following:
(a) a written instrument in form and substance satisfactory to the
General Partner and its counsel, setting forth the name and address of the
proposed transferee, the nature and extent of the Interest which is proposed to
be transferred and the terms and conditions upon which the transfer is proposed
to be made, stating that the Assignee accepts and agrees to be bound by all of
the terms and provisions of this Agreement, and providing for the payment of all
reasonable expenses incurred by the Partnership in connection with such
assignment, including but not limited to the cost of preparing any necessary
amendment to this Agreement;
(b) upon consent of the General Partner to such assignment, which
consent shall not be unreasonably withheld; and
(c) upon receipt by the General Partner of the Assignee's written
representation that the Partnership Interest is to be acquired by the Assignee
for the Assignee's own account for long-term investment and not with a view
toward resale, fractionalization, division or distribution thereof.
(d) Notwithstanding any provision to the contrary, the Limited Partner
may assign its Interest to an Affiliate or assign its Interest to Southern
California Bank or its successors as collateral to secure a capital contribution
loan without satisfying the conditions of Sections 12.1(a) through (c) above.
THE LIMITED PARTNERSHIP INTEREST, THE MISSOURI LIMITED PARTNER AND THE
SPECIAL LIMITED PARTNER INTEREST DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED OR UNDER ANY STATE SECURITIES LAW. THESE
INTERESTS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Section 12.2 Effective Date of Transfer. Any assignment of a Limited
Partner's Interest or Special Limited Partner and Missouri Limited Partner's
51
Interest pursuant to Section 12.1 shall become effective as of the last day of
the calendar month in which the last of the conditions to such assignment are
satisfied.
Section 12.3 Invalid Assignment. Any purported assignment of an
Interest of a Limited Partner, Special Limited Partner or Missouri Limited
Partner otherwise than in accordance with Section 12.1 or Section 12.6 shall be
of no effect as between the Partnership and the purported assignee and shall be
disregarded by the General Partner in making allocations and Distributions
hereunder.
Section 12.4 Assignee's Rights to Allocations and Distributions. An
Assignee shall be entitled to receive allocations and Distributions from the
Partnership attributable to the Interest acquired by reason of any permitted
assignment from and after the first day of the calendar month of the transfer of
such Interest as provided in Section 12.2. The Partnership and the General
Partner shall be entitled to treat the assignor of such Partnership Interest as
the absolute owner thereof in all respects, and shall incur no liability for
allocations and Distributions made in good faith to such assignor, until such
time as the written instrument of assignment has been received by the
Partnership.
Section 12.5 Substitution of Assignee as Limited Partner, Special
Limited Partner or Missouri Limited Partner.
(a) An Assignee shall not have the right to become a Substitute Limited
Partner or Substitute Special Limited Partner or Missouri Limited Partner in
place of his assignor unless the written consent of the General Partner to such
substitution shall have been obtained, which consent, in the General Partner's
absolute discretion, may be withheld; except that an Assignee which is an
Affiliate of the Limited Partner, Special Limited Partner or Missouri Limited
Partner, or Southern California Bank or its successors, may become a Substitute
Limited Partner, Substitute Special Limited Partner or Substitute Missouri
Limited Partner without the consent of the General Partner.
(b) A nonadmitted transferee of a Limited Partner's Interest, Special
Limited Partner Interest or Missouri Limited Partner's Interest in the
Partnership shall only be entitled to receive that share of allocations,
Distributions and the return of Capital Contribution to which its transferor
would otherwise have been entitled with respect to the Interest transferred, and
shall have no right to obtain any information on account of the Partnership's
transactions, to inspect the Partnership's books and records or have any other
of the rights and privileges of a Limited Partner, Special Limited Partner or
Missouri Limited Partner, provided, however, that the Partnership shall, if a
transferee and transferor jointly advise the General Partner in writing of a
transfer of an Interest in the Partnership, furnish the transferee with
pertinent tax information at the end of each fiscal year of the Partnership.
52
(c) The General Partner may elect to treat a transferee of a
Partnership Interest who has not become a Substitute Limited Partner, Substitute
Special Limited Partner or Substitute Missouri Limited Partner as a Substitute
Limited Partner, Substitute Special Limited Partner or Substitute Missouri
Limited Partner, as the case may be, in the place of its transferor should the
General Partner determine in its absolute discretion that such treatment is in
the best interest of the Partnership.
Section 12.6 Death, Bankruptcy, Incompetency, etc. of a Limited
Partner. Upon the death, dissolution, adjudication of bankruptcy, or
adjudication of Incompetency or insanity of a Limited Partner, Special Limited
Partner or Missouri Limited Partner, such Partner's executors, administrators or
legal representatives shall have all the rights of a Limited Partner, Special
Limited Partner or Missouri Limited Partner, as the case may be, for the purpose
of settling or managing such Partner's estate, including such power as such
Partner possessed to constitute a successor as a transferee of its Interest in
the Partnership and to join with such transferee in making the application to
substitute such transferee as a Partner. However, such executors, administrators
or legal representatives will not have the right to become Substitute Limited
Partners, Substitute Special Limited Partners or Substitute Missouri Limited
Partners in the place of their respective predecessors-in-interest unless the
General Partner shall so consent.
ARTICLE XIII
WITHDRAWAL, REMOVAL AND REPLACEMENT OF
GENERAL PARTNER
Section 13.1 Withdrawal of General Partner.
(a) The General Partner may not Withdraw (other than as a result of an
Involuntary Withdrawal) without the Consent of the Special Limited Partner, and,
to the extent required, of Missouri Housing Development Commission. Withdrawal
shall be conditioned upon the agreement of the Special Limited Partner to be
admitted as a successor General Partner, or if the Special Limited Partner
declines to be admitted as a successor General Partner then on the agreement of
one or more Persons who satisfy the requirements of Section 13.5 of this
Agreement to be admitted as successor General Partner(s).
(b) Each General Partner shall indemnify and hold harmless the
Partnership and all Partners from its Withdrawal in violation of Section 13.1(a)
hereof. Each General Partner shall be liable for damages to the Partnership
resulting from its Withdrawal in violation of Section 13.1(a).
53
Section 13.2 Removal of General Partner.
(a) The Special Limited Partner or the Limited Partner, or both of
them, may remove the General Partner for cause if such General Partner, its
officers or directors, if applicable, has:
(1) been subject to Bankruptcy in accordance with this Agree-
ment;
(2) committed any fraud, willful misconduct, breach of
fiduciary duty or other grossly negligent conduct in the performance of its
duties under this Agreement;
(3) been convicted of, or entered into a plea of guilty to, a
felony;
(4) made personal use of Partnership funds or properties;
(5) violated the terms of the Mortgage and such violation
prompts Missouri Housing Development Commission to issue a default letter or
acceleration notice to the Partnership or General Partner and such violation has
not been cured within 30 days of such letter of notice;
(6) failed to provide any loan, advance, Capital Contribution
or any other payment to the Partnership, the Limited Partner or the Special
Limited Partner required under this Agreement;
(7) failed to obtain the Consent of the Special Limited Part-
ner prior to any decision, act or omission under circumstances where this Agree-
ment requires that such Consent to be obtained, required under this Agreement;
(8) breached in any material respect representation, warranty
or covenant contained in this Agreement, or failed in any material respect to
perform any action which may be required by this Agreement;
(9) caused the Projected Tax Credits to be allocated to the
Partners for a term longer than the Tax Credit Period unless the provisions of
Section 7.4(e) of this Agreement apply;
(10) violated any federal or state tax law which causes a
recapture of LIHTC for which payments have not been made as prescribed in
Section 7.4 of this Agreement; or
(11) failed during any six-month period during the Compliance
Period to cause at least 85% of the total apartment units in the Apartment
Housing to qualify for LIHTC, unless such failure is the result of Force Majeure
or unless such failure is cured within 120 days after the end of the six-month
period.
54
(b) The Limited Partner or Special Limited Partner shall provide the
General Partner with Written notice of the removal for cause of the General
Partner ("Removal Notice"). Such notice shall set forth the reasons for the
removal and shall be served by the Special Limited Partner or the Limited
Partner, or both of them, upon the General Partner either by certified or by
registered mail, return receipt requested, or by personal service. If Section
13.2(a)(2),(5),(6) or (7) is the basis for the removal for cause, then the
General Partner shall have thirty days from receipt of the Removal Notice in
which to cure the removal condition; except that in regard to the Mortgage the
cure period shall be the sooner of thirty days or ten days prior to the
expiration of the cure period referenced in the loan documents, if any. If the
condition for the removal for cause is not cured within the thirty day cure
period then the General Partner's removal shall become effective on the first
day following the expiration of the cure period, or, thirty-one days from the
General Partner's receipt of the Removal Notice. If the removal for cause is for
a condition referenced in Sections 13.2(a)(1), (3), (4), (9), (10) or (11) then
the removal shall become effective upon the General Partner's receipt of the
Removal Notice. Upon the General Partner's removal, the General Partner shall
deliver to the Special Limited Partner within five business days of the
termination of the cure period, or five business days of the Removal Notice all
Partnership books and records including all bank signature cards and an
authorization to change the signature on the signature cards from the General
Partner to the Special Limited Partner, or a successor general partner so
nominated by the Limited Partner and Special Limited Partner. The Partner's
recognize and acknowledge that if the General Partner fails to provide the
Partnership books and records upon the General Partner's removal then the
remaining Partners may suffer irreparable injury. Therefore, in the event the
General Partner does not adhere to the provisions of this Section 13.2(b), and
in addition to other rights or remedies which may be provided by law and equity
or this Agreement, the Limited Partner and/or Special Limited Partner shall have
the right to specific performance to compel the General Partner to perform its
obligation under this Section and the Limited Partner and/or Special Limited
Partner may bring such action, and other actions to enforce the removal, by way
of temporary and/or permanent injunctive relief.
Section 13.3 Effects of a Withdrawal. In the event of a Withdrawal, the
entire Interest of the Withdrawing General Partner shall immediately and
automatically terminate on the effective date of such Withdrawal, and such
General Partner shall immediately cease to be a General Partner, shall have no
further right to participate in the management or operation of the Partnership
or the Apartment Housing or to receive any allocations or Distributions from the
Partnership or any other funds or assets of the Partnership, except as
specifically set forth below. In the event of a Withdrawal, any or all executory
contracts, including but not limited to the Management Agreement, between the
Partnership and the Withdrawing General Partner or its Affiliates may be
terminated by the Partnership, with the Consent of the Special Limited Partner,
upon written notice to the party so terminated. Furthermore, notwithstanding
55
such Withdrawal, the Withdrawing General Partner shall be and shall remain,
liable as a General Partner for all liabilities and obligations incurred by the
Partnership or by the General Partner prior to the effective date of the
Withdrawal, or which may arise upon such Withdrawal. Any remaining Partner shall
have all other rights and remedies against the Withdrawing General Partner as
provided by law or under this Agreement. The General Partner agrees that in the
event of its Withdrawal it will indemnify and hold the Limited Partner, the
Missouri Limited Partner and the Special Limited Partner harmless from and
against all losses, costs and expenses incurred in connection with the
Withdrawal, including, without limitation, all legal fees and other expenses of
the Limited Partner, the Missouri Limited Partner and the Special Limited
Partner in connection with the transaction. The following additional provisions
shall apply in the event of a Withdrawal.
(a) In the event of a Withdrawal which is not an Involuntary
Withdrawal, the Withdrawing General Partner shall have no further right to
receive any future allocations or Distributions from the Partnership or any
other funds or assets of the Partnership, nor shall it be entitled to receive or
to be paid by the Partnership any further payments of fees (including fees which
have been earned but are unpaid) or to be paid any amount for its former
Interest. From and after the effective date of such Withdrawal, the former
rights of the Withdrawing General Partner to receive or to be paid such
allocations, Distributions, funds, assets, fees or repayments shall be assigned
to the other General Partner or General Partners (which may include the Special
Limited Partner), or if there is no other general partner of the Partnership at
that time, to the Special Limited Partner.
(b) In the event of an Involuntary Withdrawal, except as provided in
the preceding paragraph or in Section 13.3(b)(2) below, the Withdrawing General
Partner shall have no further right to receive any future allocations or
Distributions from the Partnership or any other funds or assets of the
Partnership, provided that accrued and payable fees (i.e., fees earned but
unpaid as of the date of Withdrawal) owed to the Withdrawing General Partner,
and any outstanding loans of the Withdrawing General Partner to the Partnership,
shall be paid to the Withdrawing General Partner in the manner and at the times
such fees and loans would have been paid had the Withdrawing General Partner not
Withdrawn. The Interest of the General Partner shall be purchased as follows.
(1) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), the
Partnership, with the Consent of the Special Limited Partner, may, but is not
obligated to, purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital. The purchase price of such
Interest shall be its Fair Market Value as determined by agreement between the
Withdrawing General Partner and the Special Limited Partner, or, if they cannot
agree, by arbitration in accordance with the then current rules of the American
56
Arbitration Association. The cost of such arbitration shall be borne equally by
the Withdrawing General Partner and the Partnership. The purchase price shall be
paid by the Partnership by delivering to the General Partner or its
representative the Partnership's non-interest bearing unsecured promissory note
payable, if at all, upon liquidation of the Partnership in accordance with
Section 11.2(b). The note shall also provide that the Partnership may prepay all
or any part thereof without penalty.
(2) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), and if the
Partnership does not purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital, then the Withdrawing General
Partner shall retain its Interest in such items, but such Interest shall be held
as a special limited partner.
(c) Notwithstanding the provisions of Section 13.3(b), if the
Involuntary Withdrawal arises from removal for cause as set forth in Section
13.2(a) hereof, the Withdrawing General Partner shall have no further right to
receive any future allocations or Distributions from the Partnership or any
other funds or assets of the Partnership, nor shall it be entitled to receive or
to be paid by the Partnership or any Partners or successor partners, any further
payments of fees (including fees which have been earned but remain unpaid)
further, the Withdrawing General Partner shall be repaid outstanding
obligations, advances, or loans only to the extent and in the amount such
obligations, advances or loans exceed amounts owed to the Partnership by the
Withdrawing General Partner by mutual agreement of the Withdrawing General
Partner and Special Limited Partner. If the Withdrawing General Partner and the
Special Limited Partner cannot reach an agreement within fifteen (15) business
days then the determination shall be made by arbitration in accordance with the
then current rules of the American Arbitration Association. The cost of such
arbitration shall be borne equally by the Withdrawing General Partner and the
Partnership.
Section 13.4 Successor General Partner. Upon the occurrence of an event
giving rise to a Withdrawal of a General Partner, any remaining General Partner,
or, if there be no remaining General Partner, the Withdrawing General Partner or
its legal representative, shall promptly notify the Special Limited Partner of
such Withdrawal (the "Withdrawal Notice"). Whether or not the Withdrawal Notice
shall have been sent as provided herein, the Special Limited Partner shall have
the right to become a successor General Partner (and to become the successor
managing General Partner if the Withdrawing General Partner was previously the
managing General Partner). In order to effectuate the provisions of this Section
13.4 and the continuance of the Partnership, the Withdrawal of a General Partner
shall not be effective until the expiration of 120 days from the date on which
occurred the event giving rise to the Withdrawal, unless the Special Limited
Partner shall have elected to become a successor General Partner as provided
57
herein prior to expiration of such 120-day period, whereupon the Withdrawal of
the General Partner shall be deemed effective upon the notification of all the
other Partners by the Special Limited Partner of such election.
Section 13.5 Admission of Additional or Successor General Partner. No
Person shall be admitted as an additional or successor General Partner unless
(a) such Person shall have agreed to become a General Partner by a written
instrument which shall include the acceptance and adoption of this Agreement;
(b) the Consent of the Special Limited Partner to the admission of such Person
as a substitute General Partner, which consent may be withheld in the discretion
of the Special Limited Partner, shall have been given; and (c) such Person shall
have executed and acknowledged any other instruments which the Special Limited
Partner shall reasonably deem necessary or appropriate to affect the admission
of such Person as a substitute General Partner. If the foregoing conditions are
satisfied, this Agreement shall be amended in accordance with the provisions of
the Act, and all other steps shall be taken which are reasonably necessary to
effect the Withdrawal of the Withdrawing General Partner and the substitution of
the successor General Partner. Nothing contained herein shall reduce the Limited
Partner's Interest, Missouri Limited Partner's Interest or the Special Limited
Partner's Interest in the Partnership.
Section 13.6 Transfer of Interest. Except as otherwise provided herein,
the General Partner may not Withdraw from the Partnership, or enter into any
agreement as the result of which any Person shall acquire an Interest in the
Partnership, without the Consent of the Special Limited Partner.
Section 13.7 No Goodwill Value. At no time during continuation of the
Partnership shall any value ever be placed on the Partnership name, or the right
to its use, or to the goodwill appertaining to the Partnership or its business,
either as among the Partners or for the purpose of determining the value of any
Interest, nor shall the legal representatives of any Partner have any right to
claim any such value. In the event of a termination and dissolution of the
Partnership as provided in this Agreement, neither the Partnership name, nor the
right to its use, nor the same goodwill, if any, shall be considered as an asset
of the Partnership, and no valuation shall be put thereon for the purpose of
liquidation or distribution, or for any other purpose whatsoever.
ARTICLE XIV
BOOKS AND ACCOUNTS, REPORTS,
TAX RETURNS, FISCAL YEAR AND BANKING
Section 14.1 Books and Accounts.
(a) The General Partner shall cause the Partnership to keep and
maintain at its principal executive office full and complete books and records
which shall include each of the following:
58
(1) a current list of the full name and last known business or
residence address of each Partner set forth in alphabetical order together with
the Capital Contribution and the share in Income and Losses of each Partner;
(2) a copy of the Certificate of Limited Partnership and all
certificates of amendment thereto, together with executed copies of any powers
of attorney pursuant to which any certificate has been executed;
(3) copies of the Partnership's federal, state and local
income tax information returns and reports, if any, for the six most recent
taxable years;
(4) copies of the original of this Agreement and all amend-
ments thereto;
(5) financial statements of the Partnership for the six most
recent fiscal years;
(6) the Partnership's books and records for at least the
current and past three fiscal years; and
(7) in regard to the first tenants to occupy the apartment
units in the Apartment Housing, copies of all tenant files including completed
applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, and income
certification forms (LIHTC specific).
(b) Upon the request of the Limited Partner, the Missouri Limited
Partner or the General Partner shall promptly deliver to the Limited Partner or
the Missouri Limited Partner, at the expense of the Partnership, a copy of the
information set forth in Section 14.1(a) above. The Limited Partner shall have
the right upon reasonable request and during normal business hours to inspect
and copy any of the foregoing, or any of the other books and records of the
Partnership or the Apartment Housing, at its own expense.
Section 14.2 Accounting Reports.
(a) By March 10 of each calendar year the General Partner shall provide
to the Limited Partner, Missouri Limited Partner and the Special Limited Partner
all tax information necessary for the preparation of their federal and state
income tax returns and other tax returns with regard to the jurisdiction(s) in
which the Partnership is formed and in which the Apartment Housing is located.
(b) By March 1 of each calendar year after the year in which the
Apartment Housing is placed in service, the General Partner shall send to the
Limited Partner, Missouri Limited Partner and the Special Limited Partner: (1) a
59
balance sheet as of the end of such fiscal year and statements of income,
Partners' equity and changes in cash flow for such fiscal year prepared in
accordance with generally accepted accounting principles and accompanied by an
auditor's report containing an opinion of the Partnership's Accountants; (2) a
report (which need not be audited) of any Distributions made at any time during
the fiscal year, separately identifying Distributions from Net Operating Income
for the fiscal year, Net Operating Income for prior years, Sale or Refinancing
Proceeds, and reserves; and (3) a report setting forth the amount of all fees
and other compensation and Distributions and reimbursed expenses paid by the
Partnership for the fiscal year to the General Partner or Affiliates of the
General Partner and the services performed in consideration therefor, which
report shall be verified by the Partnership's Accountants, with the method of
verification to include, at a minimum, a review of the time records of
individual employees, the costs of whose services were reimbursed, and a review
of the specific nature of the work performed by each such employee, all in
accordance with generally accepted auditing standards and, accordingly,
including such tests of the accounting records and such other auditing
procedures as the Accountants consider appropriate in the circumstances.
(c) Within 60 days after the end of each fiscal quarter in which a Sale
or Refinancing of the Apartment Housing occurs, the General Partner shall send
to the Limited Partner, the Missouri Limited Partner and the Special Limited
Partner a report as to the nature of the Sale or Refinancing and as to the
Income and Losses for tax purposes and proceeds arising from the Sale or
Refinancing.
Section 14.3 Other Reports. The General Partner shall provide to
the Limited Partner, Missouri Limited Partner and the Special Limited Partner
the following reports:
(a) a copy of the construction schedule and any updates to the
construction schedule and by the twentieth day of each month a copy of the pre-
vious month's Construction Loan draw requests and the Inspecting Architect's
application and certification of payment (AIA Document G702, or similar form
acceptable to the Limited Partner).
(b) during the rent-up phase, and continuing until the end of the first
six-month period during which the Apartment Housing has a sustained occupancy of
90% or better, by the twenty-fifth day of each month within such period a copy
of the previous month's rent roll (through the last day of the month) and a
tenant LIHTC compliance worksheet on the Management Agent's form which will be
similar to the monthly initial tenant certification worksheet included in
Exhibit "G" attached hereto and incorporated herein by this reference;
(c) a quarterly tax credit compliance report on the Management Agent's
form, which will be similar to the worksheet included in Exhibit "G" due on or
before April 30 of each year for the first quarter, July 31 of each year for the
second quarter, October 31 of each year for the third quarter and January 31 of
60
each year for the fourth quarter. In order to verify the reliability of the
information being provided on the compliance report the Limited Partner may
request a small sampling of tenant files to be provided. The sampling will
include, but not be limited to, copies of tenant applications, certifications
and third party verifications used to qualify tenants. If any inaccuracies are
found to exist on the tax credit compliance report or any items of noncompliance
are discovered then the sampling will be expanded as determined by the Limited
Partner;
(d) a quarterly report on operations, on the Management Agent's form,
which will be similar to the form attached hereto as Exhibit "G", due on or
before April 30 of each year for the first quarter of operations, July 31 of
each year for the second quarter of operations, October 31 of each year for the
third quarter of operations and January 31 of each year for the fourth quarter
of operations which shall include, but is not limited to, an unaudited income
statement showing all activity in the reserve accounts required to be maintained
pursuant to Section VIII of this Agreement, statement of income and expenses,
balance sheet, rent roll as of the end of each calendar quarter of each year,
and third party verification of current utility allowance;
(e) by September 15 of each year, an estimate of LIHTC and Missouri Tax
Credits for that year;
(f) if the Apartment Housing receives a reservation of LIHTC in one
year but will not complete the construction and rent-up until a later year, an
audited cost certification together with the Accountant's work papers verifying
that the Partnership has expended the requisite 10% of the reasonably expected
cost basis to meet the carryover test provisions of Section 42 of the Code. Such
certification shall be provided to the Limited Partner, the Missouri Limited
Partner and the Special Limited Partner by December 31 of the year during which
the reservation was received. Furthermore, if materials and supplies are
purchased to meet the 10% requirement then the General Partner shall provide to
the Limited Partner and the Missouri Limited Partner satisfactory evidence as
determined by the Special Limited Partner, that title to the materials and
supplies pass to the Partnership and that the Partnership bears the risk of loss
of the materials and supplies;
(g) during the Compliance Period, no later than 10 days any such
certification is filed, copies of any certifications which the Partnership must
furnish to federal or state governmental authorities administering the Tax
Credit program including, but not limited to, copies of all annual tenant
recertifications required under Section 42 of the Code;
(h) by the annual renewal date each and every year, an executed
original or certified copy of each and every Insurance policy or certificate
required by the terms of this Agreement;
61
(i) within sixty (60) days after the payment date of the real estate
property taxes each and every year verification that the same has been paid in
full;
(j) within seventy-five (75) days of the end of the General Partner's
fiscal year, a copy of the General Partner's updated financial statement of the
previous year;
(k) on or before November 15th of each calendar year, a copy of the
following year's proposed operating budget. Each such Budget shall contain all
the anticipated Cash Expenses of the Partnership. Such Budget shall only be
adopted with the Consent of the Special Limited Partner; and
(l) notice of the occurrence, or of the likelihood of occurrence, of
any event which has had a material adverse effect upon the Apartment Housing or
the Partnership, including, but not limited to, any breach of any of the
representations and warranties set forth in Section 9.12 of this Agreement, and
any inability of the Partnership to meet its cash obligations as they become
payable, within ten days after the occurrence of such event.
Section 14.4 Late Reports. If the General Partner does not fulfill its
obligations under Section 14.2(a) within the time periods set forth therein, the
General Partner, using its own funds, shall pay as damages the sum of $100 per
week (plus interest at the rate established by Section 6.3 of this Agreement) to
the Limited Partner until such obligations shall have been fulfilled. If the
General Partner shall so fail to pay, the General Partner and its Affiliates
shall forthwith cease to be entitled to any fees hereunder (other than the
Development Fee) and/or to the payment of any Net Operating Income or Sale or
Refinancing Proceeds to which the General Partner may otherwise be entitled
hereunder. Payments of fees and Distributions shall be restored only upon
payment of such damages in full. If the General Partner does not fulfill its
obligations under Section 14.2(b) and Section 14.3 within 30 days of receiving
written notice by the Limited Partner, then the General Partner and their
Affiliates shall forthwith cease to be entitled to any fees and cash flow from
operations referenced in Section 11.1 of this Agreement and to any Sale or
Refinancing Proceeds to which they may otherwise be entitled hereunder. Such
payments of fees and cash flow from operations referenced in Section 11.1 of
this Agreement and Sale and Refinancing Proceeds shall be restored only upon
delivery of such documents.
Section 14.5 Annual Site Visits. On an annual basis a representative of
the Limited Partner, at the Limited Partner's expense, will conduct a site visit
during normal business hours which will include, in part, an inspection of the
property, a review of the office and tenant files and an interview with the
property manager. The Limited Partner may, in its sole discretion, cancel all or
any part of the annual site visit.
62
Section 14.6 Tax Returns. The General Partner shall cause income tax
returns for the Partnership to be prepared and timely filed with the appropriate
federal, state and local taxing authorities.
Section 14.7 Fiscal Year. The fiscal year of the Partnership shall be
the calendar year or such other period as may be approved by the Internal
Revenue Service for federal income tax purposes.
Section 14.8 Banking. All funds of the Partnership shall be deposited
in a separate bank account or accounts as shall be determined by the General
Partner. All withdrawals therefrom shall be made upon checks signed by the
General Partner or by any person authorized to do so by the General Partner. The
General Partner shall provide to any Partner who requests same the name and
address of the financial institution, the account number and other relevant
information regarding any Partnership bank account.
Section 14.9 Certificates and Elections.
(a) The General Partner shall file the First Year Certificate within 90
days following the close of the taxable year during which Completion of
Construction occurs and thereafter shall timely file any certificates which the
Partnership must furnish to federal or state governmental authorities
administering the Tax Credit programs under Section 42 of the Code and Section
135.352 of the RsMO.
(b) The General Partner, with the Consent of the Special Limited
Partner, may, but is not required to, cause the Partnership to make or revoke
the election referred to in Section 754 of the Code, as amended, or any similar
provisions enacted in lieu thereof.
ARTICLE XV
DISSOLUTION, WINDING UP, TERMINATION
AND LIQUIDATION OF THE PARTNERSHIP
Section 15.1 Dissolution of Partnership. The Partnership shall be dis-
solved upon the expiration of its term or the earlier occurrence of any of the
following events.
(a) The effective date of the Withdrawal or removal of the General
Partner, unless (1) at the time there is at least one other General Partner
(which may be the Special Limited Partner if it elects to serve as successor
General Partner under Section 13.4 hereof) who will continue as General Partner,
or (2) within 120 days after the occurrence of any such event the Limited
Partner and the Missouri Limited Partner elects to continue the business of the
Partnership.
(b) The sale of the Apartment Housing and the receipt in cash of the
full amount of the proceeds of such sale.
63
Notwithstanding the foregoing, however, in no event shall the
Partnership terminate prior to the expiration of its term if such termination
would result in a violation of the Mortgage or any other agreement with or rule
or regulation of Missouri Housing Development Commission to which the
Partnership is subject.
Section 15.2 Return of Capital Contribution upon Dissolution. Except as
provided in Sections 7.3 and 7.4 of this Agreement, which provide for a
reduction or refund of the Capital Contribution of the Limited Partner and/or
the Missouri Limited Partner under certain circumstances, and which shall
represent the personal obligation of the General Partner, as well as the
obligation of the Partnership, each Partner shall look solely to the assets of
the Partnership for all Distributions with respect to the Partnership (including
the return of its Capital Contribution) and shall have no recourse therefor
(upon dissolution or otherwise) against any General Partner. No Partner shall
have any right to demand property other than money upon dissolution and
termination of the Partnership, and the Partnership is prohibited from such a
distribution of property absent the Consent of the Special Limited Partner.
Section 15.3 Distribution of Assets. Upon a dissolution of the
Partnership, the General Partner (or, if there is no General Partner then
remaining, such other Person(s) designated as the liquidator of the Partnership
by the Limited Partner or by the court in a judicial dissolution) shall take
full account of the Partnership assets and liabilities and shall liquidate the
assets as promptly as is consistent with obtaining the fair value thereof.
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership pursuant to Section
11.2(a) through and including 11.2(c), the remaining assets of the Partnership
shall be distributed to the Partners in accordance with the positive balances in
their Capital Accounts, after taking into account all allocations under Article
X hereof.
(b) In the event that a General Partner has a deficit balance in its
Capital Account following the Liquidation of the Partnership or its interest, as
determined after taking into account all Capital Account adjustments for the
Partnership taxable year in which such Liquidation occurs, such General Partner
shall pay to the Partnership the lesser of (1) the amount necessary to restore
such deficit balance to zero in compliance with Treasury Regulation Section
1.704-(b)(2)(ii)(b)(3), (2) 1.01% of the Capital Contribution less any prior
Capital Contributions made by the General Partner.
(1) The deficit reduction amount shall be paid by the General
Partner by the end of such taxable year (or, if later, within 90 days after the
date of Liquidation) and shall, upon Liquidation of the Partnership, be paid to
creditors of the Partnership or distributed to other Partners in accordance with
their positive Capital Account balances.
64
(c) With respect to assets distributed in kind to the Partners in
Liquidation or otherwise:
(1) unrealized appreciation or unrealized depreciation in the
values of such assets shall be deemed to be Income and Losses realized by the
Partnership immediately prior to the Liquidation or other Distribution event;
and
(2) such Income and Losses shall be allocated to the Partners
in accordance with Section 10.2 hereof, and any property so distributed shall be
treated as a Distribution of an amount in cash equal to the excess of such Fair
Market Value over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered.
(d) For the purposes of Section 15.3(c), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the Fair Market
Value of such assets, taking into account the Fair Market Value of the
associated financing but subject to Section 7701(g) of the Code, and the asset's
Gross Asset Value. Section 15.3(c) is merely intended to provide a rule for
allocating unrealized Income and Losses upon Liquidation or other Distribution
event, and nothing contained in Section 15.3(c) or elsewhere in this Agreement
is intended to treat or cause such Distributions to be treated as sales for
value. The Fair Market Value of such assets shall be determined by an
independent appraiser to be selected by the General Partner.
Section 15.4 Deferral of Liquidation. If at the time of liquidation the
General Partner or other liquidator shall determine that an immediate sale of
part or all of the Partnership assets could cause undue loss to the Partners,
the liquidator may, in order to avoid loss, but only with the Consent of the
Special Limited Partner, either defer liquidation and retain all or a portion of
the assets or distribute all or a portion of the assets to the Partners in kind.
In the event that the liquidator elects to distribute such assets in kind, the
assets shall first be assigned a value (by appraisal by an independent
appraiser) and the unrealized appreciation or depreciation in value of the
assets shall be allocated to the Partners' Capital Accounts, as if such assets
had been sold, in the manner described in Section 10.2, and such assets shall
then be distributed to the Partners as provided herein. In applying the
preceding sentence, the Apartment Housing shall not be assigned a value less
than the unamortized principal balance of any loan secured thereby.
Section 15.5 Liquidation Statement. Each of the Partners shall be
furnished with a statement prepared or caused to be prepared by the General
Partner or other liquidator, which shall set forth the assets and liabilities of
the Partnership as of the date of complete liquidation. Upon compliance with the
distribution plan as outlined in Sections 15.3 and 15.4, the Limited Partner,
Missouri Limited Partner and the Special Limited Partner shall cease to be such
65
and the General Partner shall execute, acknowledge and cause to be filed those
certificates referenced in Section 15.6.
Section 15.6 Certificates of Dissolution; Certificate of Cancellation
of Certificate of Limited Partnership.
(a) Upon the dissolution of the Partnership, the General Partner shall
cause to be filed in the office of, and on a form prescribed by the Secretary of
State of the State, a certificate of dissolution. The certificate of dissolution
shall set forth the Partnership's name, the Secretary of State's file number for
the Partnership, the event causing the Partnership's dissolution and the date of
the dissolution.
(b) Upon the completion of the winding up of the Partnership's affairs,
the General Partner shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State of the State, a certificate of
cancellation of the Certificate of Limited Partnership. The certificate of
cancellation of the Certificate of Limited Partnership shall set forth the
Partnership's name, the Secretary of State's file number for the Partnership,
and any other information which the General Partner determines to include
therein.
ARTICLE XVI
AMENDMENTS
This Agreement may be amended by a unanimous Consent of the Partners
after a meeting of the Partners, which meeting shall be held after proper notice
as provided in Section 17.2 of this Agreement. For purposes of this Article XVI,
a Partner shall grant its Consent to a proposed amendment unless such Partner
reasonably determines that the proposed amendment is adverse to the Partner's
Interest.
ARTICLE XVII
MISCELLANEOUS
Section 17.1 Voting Rights.
(a) The Missouri Limited Partner shall have no voting rights. The
Limited Partner shall have no right to vote upon any matters affecting the
Partnership, except as provided in this Agreement. At a meeting of the
Partnership, the Limited Partner may vote:
(1) to approve or disapprove the Sale or Refinancing of the
Apartment Housing;
(2) to remove the General Partner and elect a substitute Gen-
eral Partner as provided in this Agreement;
(3) to elect a successor General Partner upon the Withdrawal
of the General Partner;
66
(4) to approve or disapprove the dissolution of the Partner-
ship;
(5) subject to the provisions of Article XVI hereof, to amend
this Agreement; or
(6) to approve or disapprove the refinancing of the Mortgage.
(b) On any matter where any Partner has the right to vote, votes may
only be cast at a duly called meeting of the Partnership or through written
action without a meeting.
(c) The Special Limited Partner shall have the right to Consent to
those actions or inactions of the Partnership and/or General Partner as
otherwise set forth in this Agreement, and the General Partner is prohibited
from any action or inaction requiring such Consent unless such Consent has been
obtained.
Section 17.2 Meeting of Partnership. Meetings of the Partnership may be
called either (a) at any time by the General Partner; or (b) upon the General
Partner's receipt of a written or facsimile request from the Limited Partner
setting forth the purpose of such meeting. Within ten days after receipt of the
Limited Partner's written or facsimile request for a meeting, the General
Partner shall provide all Partners with written notice of the meeting (which
shall be by telephone conference, or at the principal place of business of the
Partnership or such other location referenced in the notice) to be held not less
than 15 days nor more than 30 days after receipt of such written or facsimile
request from the Limited Partner, which notice shall specify the time and place
of such meeting and the purpose or purposes thereof. If the General Partner
fails to provide the written notice of the meeting within ten days after receipt
of the Limited Partner's request to hold a meeting, then the Limited Partner may
provide the written notice of the meeting to all the Partners, which notice
shall specify the time and place of such meeting and the purpose or purposes
thereof. All meetings and actions of the Limited Partner shall be governed in
all respects, including matters relating to notice, quorum, adjournment,
proxies, record dates and actions without a meeting, by the applicable
provisions of the Act, as it shall be amended from time to time.
Section 17.3 Notices. Any notice given pursuant to this Agreement may
be served personally on the Partner to be notified, sent by a reputable
overnight delivery service or may be mailed, first class postage prepaid, to the
following address, or to such other address as a party may from time to time
designate in writing:
67
To the General Partner: Central Missouri Counties' Human Developmen,
a Non-Profit Corporation
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Limited Partner: WNC Housing Tax Credit Fund VI, L.P., Series 6
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
To the Missouri
Limited Partner: WNC Missouri Tax Credits XXXI, L.P.
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
To the Special
Limited Partner: WNC Housing, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Section 17.4 Successors and Assigns. All the terms and conditions of
this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the Partners.
Section 17.5 Recording of Certificate of Limited Partnership. If the
General Partner should deem it advisable to do so, the Partnership shall record
in the office of the County Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited Partnership, or any amendment thereto, after such Certificate or
amendment has been filed with the Secretary of State of the State.
Section 17.6 Amendment of Certificate of Limited Partnership.
(a) The General Partner shall cause to be filed, within 30 days after
the happening of any of the following events, an amendment to the Certificate of
Limited Partnership reflecting the occurrence of any of the following.
(1) a change in the name of the Partnership.
(2) a change in the address, or the Withdrawal, of a General
Partner, or a change in the address of the agent for service of process, or
appointment of a new agent for service of process.
(3) the admission of a General Partner and that Partner's
address; or
68
(4) the discovery by the General Partner of any false or
erroneous material statement contained in the Certificate of Limited Partnership
or any amendment thereto.
(b) The Certificate of Limited Partnership may also be amended in
conformity with this Agreement at any time in any other respect that the General
Partner determines.
(c) The General Partner shall cause the Certificate of Limited
Partnership to be amended, when required or permitted as aforesaid, by filing a
certificate of amendment thereto in the office of, and on a form prescribed by,
the Secretary of State of the State. The certificate of amendment shall set
forth the Partnership's name, the Secretary of State's file number for the
Partnership and the text of the amendment.
Section 17.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and said
counterparts shall constitute but one and the same instrument which may
sufficiently be evidenced by one counterpart.
Section 17.8 Captions. Captions to and headings of the Articles,
Sections and subsections of this Agreement are solely for the conveniences of
the Partners, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.
Section 17.9 Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
Section 17.10 Certain Provisions. If the operation of any provision of
this Agreement would contravene the provisions of applicable law, or would
result in the imposition of general liability on any Limited Partner, Special
Limited Partner or Missouri Limited Partner, such provisions shall be void and
ineffectual.
Section 17.11 Tax Matters Partner. All the Partners hereby agree that
the General Partner shall be the "Tax Matters Partner" pursuant to the Code and
in connection with any audit of the federal income tax returns of the
Partnership.
(a) The Tax Matters Partner shall furnish to each Partner notice and
information with respect to the following: closing conference with an examining
agent; proposed adjustments, rights of appeal, and requirements for filing a
protest; time and place of any appeals conference; acceptance by the Internal
Revenue Service of any settlement offer; consent to the extension of the period
of limitation with respect to all Partners; filing of a request for
administrative adjustment on behalf of the Partnership; filing by the Tax
69
Matters Partner or any other Partner of any petition for judicial review; filing
of any appeal with respect to any judicial determination; and a final judicial
redetermination.
(b) If the Tax Matters Partner shall determine to litigate any
administrative determination relating to federal income tax matters, then the
Tax Matters Partner shall litigate such matter in such court as the Tax Matters
Partner shall decide in its sole discretion.
(c) In discharging its duties and responsibilities, the Tax Matters
Partner shall act as a fiduciary (1) to the Limited Partner (to the exclusion of
the other Partners) insofar as tax matters related to the Tax Credits are
concerned, and (2) to all of the Partners in other respects.
(d) The Partners consent and agree that in connection with any audit of
the Partnership, or if the Tax Matters Partner withdraws from the Partnership or
the Tax Matters Partner becomes Bankrupt, then the Special Limited Partner may
become, in its sole discretion, a special general partner, and become the Tax
Matters Partner. The Limited Partner will make no claim against the Partnership
in respect of any action or omission by the Tax Matters Partner during such time
as the Special Limited Partner acts as the Tax Matters Partner.
Section 17.12 Number and Gender. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the Person or Persons may require.
Section 17.13 Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
all prior understandings and agreements between the parties, written or oral,
respecting this transaction are merged in this Agreement.
Section 17.14 Governing Law. This Agreement and its application shall
be governed by the laws of the State.
Section 17.15 Attorney's Fees. If a suit or action is instituted in
connection with an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to recover, in addition to costs, such sums
as the court may adjudge reasonable as attorney's fees, including fees on any
appeal.
Section 17.16 MHDC Requirements.
The Partnership is authorized to execute a deed of trust note and deed of trust
and security agreement in order to secure a loan to be made by the MHDC and to
execute an MHDC regulatory agreement (MHDC Regulatory Agreement) and such other
documents as may be required by MHDC, or any other lender in connection with
such loan.
70
Upon execution, the MHDC Regulatory Agreement shall be binding upon the
Partnership and all of the partners, whether they become Partners before or
after the execution of such MHDC Regulatory Agreement, and such Regulatory
Agreement shall remain binding upon the Partnership and the Partners so long as
a deed of trust and security agreement on the Partnership property is held by
MHDC or successors or assigns.
Any incoming Partner shall, as a condition of receiving an interest in the
Partnership, agree(s) to be bound by the deed of trust note, the deed of trust
and security agreement, the MHDC Regulatory Agreement and all other documents
required by MHDC, or any lender in connection with such loan to the same extent
and upon the same terms as the other Partners.
Upon dissolution of the Partnership, no title or right to possession and control
of the Partnership property, and no right to collect the rents therefrom, shall
pass to any Partnership or person who is not bound by the MHDC Regulatory
Agreement in a manner satisfactory to MHDC.
Any other provisions of this Partnership Agreement to the contrary
notwithstanding, so long as the Partnership property is encumbered by the deed
of trust and security agreement held by MHDC or its successor or assign: (1) no
distributions (as that term is defined in the MHDC Regulatory Agreement or
payments to any partner shall be made except as permitted by the terms of the
MHDC Regulatory Agreement; and, (2)the provisions contained in this section
shall not be deleted, amended or modified without prior written consent of MHDC.
If anything in this Agreement conflicts with the MHDC Regulatory Agreement, the
Regulatory Agreement shall prevail.
The Partnership shall be a single asset, single purpose entity.
Section 17.17 Receipt of MHDC Correspondence. By their signatures
below, the Partners agree that the General Partner shall send to the Limited
Partner, Missouri Limited Partner and Special Limited Partner a copy of any
correspondence relative to the Project's noncompliance with the Mortgage Note,
relative to the acceleration of the Mortgage Note and relative to the
disposition of the Project.
Section 17.18 Security Interest and Right of Set-Off. As security for
the performance of the respective obligations to which any Partner may be
subject under this Agreement, the Partnership shall have (and each Partner
hereby grants to the Partnership) a security interest in their respective
Interests of such Partner in all funds distributable to said Partner to the
extent of the amount of such obligation.
Section 17.19 Liability for Acts and Omissions.
(a) Neither the General Partner nor any Affiliate shall be liable, re-
sponsible or accountable in damages or otherwise to any of the Partners
of the Partnership for any act or omissions performed or omitted by them if
71
they determined in good faith that such action or omission was in the best
interests of the Partnership, and such course of action did not constitute neg-
ligence or misconduct by such Persons.
(b) The Partnership shall not incur the cost of that portion of any
insurance, other than public liability insurance, which insures any party
against any liability as to which such party is herein prohibited from being
indemnified.
(c) The General Partner shall not be required by this Agree-
ment to take any action requiring the expenditure of funds if Partnership funds
are not available.
IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership of Boonville Associates I, L.P., a Missouri limited partnership, is
made and entered into as of the ________ day of _________________, 2000.
GENERAL PARTNER
Central Missouri Counties' Human Development, a Non-profit Corporation,
By: ____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Director
WITHDRAWING LIMITED PARTNER
Crestwood Development, Inc.
By: ____________________________
▇▇▇▇▇▇▇ ▇. Vitor,
President
LIMITED PARTNER
WNC Housing Tax Credit Fund VI, L.P., Series 6
By: WNC & Associates, Inc.,
General Partner
By: _________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
Signatures continued on next page
72
SPECIAL LIMITED PARTNER
WNC Housing, L.P.
By: WNC & Associates, Inc.,
General Partner
By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President
MISSOURI LIMITED PARTNER
WNC Missouri Tax Credits XXXI, L.P.
By: WNC Advisors, LLC
General Partner
By: WNC & Associates, Inc.
Managing Member
By: ___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
73
EXHIBIT A TO PARTNERSHIP AGREEMENT
LEGAL DESCRIPTION
A tract of land proposed ▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ located in the Northeast
Quarter of Section Eleven (11) and in the Northwest Quarter of Section Twelve
(12), both in Township Forty-eith (48) North, Range Seventeen (17) West, ▇▇▇▇▇▇
County Missouri, being part of the tract described by the Quit-Claim Deed
recorded in Book 195, Page 186 and being more particularly described as follows:
Commencing at the Northwest corner of Section Twelve (12), Forty-eight (48),
Township Seventeen (17); thence with the Section line, North 84 degrees 46
minutes 55 seconds East 30.00 feet; thence leaving said section line, South 4
degrees 2 minutes 5 seconds East 190.00 feet to the point of beginning; thence
from the point of beginning, continuing South 4 degrees 2 minutes 3 seconds
East, 265.94 feet; thence South 50 degrees 25 minutes 40 seonds West, 680.60
feet to the Southwest line of the tract described by the Quit-Claim Deed
recorded in Book 195, Page 186; thence with said line, North 50 degrees 00
minutes 55 seconds West 191.97 feet to the right-of-way line of Route B; thence
North 46 degrees 36 minutes 50 seconds East, 16.89 feet; thence North 49 degrees
43 minutes 40 seconds West, 100.76 feet; thence North 4 degrees 57 minutes 5
seconds West, 440.00 feet; thence North 85 degrees 25 minutes 45 seconds East
757.99 feet to the point of beginning.
A-1
EXHIBIT B TO PARTNERSHIP AGREEMENT
FORM OF LEGAL OPINION
WNC Housing Tax Credit Fund VI, L.P., Series 6
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Boonville Associates I, L.P.
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the investment by WNC Housing Tax Credit Fund VI, L.P., Series
6, a California limited partnership (the "Limited Partner") and WNC Missouri Tax
Credits XXXI, L.P., a California limited partnership (the "Missouri Limited
Partner") in Boonville Associates I, L.P. (the "Partnership"), a Missouri
limited partnership formed to own, develop, construct, finance and operate an
apartment complex for low-income persons (the "Apartment Complex") in Boonville,
▇▇▇▇▇▇ County, Missouri. The general partner of the Partnership is Central
Missouri Counties' Human Development, a Non-Profit Corporation (the "General
Partners").
In rendering the opinions stated below, we have examined and relied
upon the following:
(i) [Certificate of Limited Partnership];
(ii) [Amended and Restated Agreement of Limited Partner-
ship](the "Partnership Agreement");
(iii) A preliminary reservation letter from [State
Allocating Agency] (the "State Agency") dated
_________, 199___ conditionally awarding
$_______________ in Federal tax credits annually for
each of ten years and $_______________ in California
tax credits annually for each of four years for the
Apartment Complex; and
(iv) Such other documents, records and instruments as we
have deemed necessary in order to enable us to render
the opinions referred to in this letter.
For purposes of rendering the opinions stated below we have assumed
that, in those cases in which we have not been involved directly in the
preparation, execution or the filing of a document, that (a) the document
reviewed by us is an original document, or a true and accurate copy of the
original document, and has not been subsequently amended, (b) the signatures on
each original document are genuine, and (c) each party who executed the document
had proper authority and capacity.
B-1
Based on the foregoing we are of the opinion that:
(a) ________________________, one of the General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of _____________________ and has full power and authority to enter into
and perform its obligations under the Partnership Agreement.
_____________________, one of the other General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of __________________ and has full power and authority to enter into and
perform its obligations under the Partnership Agreement.
(b) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Missouri.
(c) The Partnership is validly existing under and subject to the laws
of Missouri with full power and authority to own, develop,
[construct/rehabilitate], finance and operate the Apartment Complex and to
otherwise conduct business under the Partnership Agreement.
(d) Execution of the Partnership Agreement by the General Partner(s)
has been duly and validly authorized by or on behalf of the General Partner(s)
and, having been executed and delivered in accordance with its terms, the
Partnership Agreement constitutes the valid and binding agreement of the General
Partner(s), enforceable in accordance with its terms.
(e) The execution and delivery of the Partnership Agreement by the
General Partner(s) does not conflict with and will not result in a breach of any
of the terms, provisions or conditions of any agreement or instrument known to
counsel to which any of the General Partner(s) or the Partnership is a party or
by which any of them may be bound, or any order, rule, or regulation to be
applicable to any of such parties of any court or governmental body or
administrative agency having jurisdiction over any of such parties or over the
property.
(f) To the best of counsel's knowledge, after due inquiry, there is no
litigation or governmental proceeding pending or threatened against, or
involving the Apartment Complex, the Partnership or any General Partner which
would materially adversely affect the condition (financial or otherwise) or
business of the Apartment Complex, the Partnership or any of the Partners of the
Partnership.
(g) The Limited Partner and the Special Limited Partner and Missouri
Limited Partner have been admitted to the Partnership as limited partners of the
B-2
Partnership under law and are entitled to all of the rights of limited partners
under the Partnership Agreement. Except as described in the Partnership
Agreement, no person is a partner of or has any legal or equitable interest in
the Partnership, and all former partners of record or known to counsel have
validly withdrawn from the Partnership and have released any claims against the
Partnership arising out of their participation as partners therein.
(h) Liability of the Limited Partner for obligations of the Partnership
is limited to the amount of the Limited Partner's capital contributions required
by the Partnership Agreement and liability of the Missouri Limited Partner for
obligations of the Partnership is limited to the amount of the Missouri Limited
Partner's capital contributions required by the Partnership Agreement.
(i) Neither the General Partner(s) of the Partnership nor the Limited
Partner nor the Special Limited Partner and Missouri Limited Partner will have
any liability for the Mortgage represented thereby (as those terms are defined
in the Partnership Agreement, and the lender of the Mortgage Loan will look only
to its security in the Apartment Complex for repayment of the Mortgage Loan.
(j) The Partnership owns a fee simple interest in the Apartment
Complex.
(k) To the best of our actual knowledge and belief, after due inquiry,
the Partnership has obtained all consents, permissions, licenses, approvals, or
orders required by all applicable governmental or regulatory agencies for the
development, [construction/ rehabilitation] and operation of the Apartment
Complex, and the Apartment Complex conforms to all applicable Federal, state and
local land use, zoning, health, building and safety laws, ordinances, rules and
regulations.
(l) The non-profit General Partner: (I) is described within the
meaning of Section 509(a) and is exempt from tax under Section 501(c)(4) of the
Internal Revenue Code; (ii) is determined by the State Agency not to be
affiliated with or controlled by a for-profit organization; and (iii) one of the
exempt purposes of such non-profit General Partner includes the fostering of low
income housing.
(m) The non-profit General Partner owns an interest in the Apartment
Complex (directly or through a partnership) and materially participates [within
B-3
the meaning of Section 469(h)] in the development and operation of the Apartment
Complex through out the tax credit compliance period.
(n) The non-profit General Partner satisfies the requirements and
conditions of California Revenue and Taxation Code Sections 214(g) and 214.8
and, provided such requirements and conditions are maintained, the Partnership
shall be entitled to a property tax exemption within the meaning of those
Sections.
(o) The Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") and Missouri low income housing tax credits
("Missouri Tax Credits") from the State Agency. The final allocation of the
LIHTC and Missouri Tax Credits, and ultimately eligibility of the Apartment
Complex for such final allocation are subject to a series of requirements which
must be met, performed or achieved at various times prior to and after such
final allocation. Assuming all such requirements are met, performed or achieved
at the time or times provided by applicable laws and regulations, the Apartment
Complex will qualify for LIHTC and Missouri Tax Credits.
All of the opinions set forth above are qualified to the extent that
the validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the covenants, warranties or other provisions contained in any agreement. We
have not examined, and we express no opinion with respect to, the applicability
of, or liability under, any Federal, state or local law, ordinance or regulation
governing or pertaining to environmental matters, hazardous wastes, toxic
substances or the like.
We express no opinion as to any matter except those set forth above.
These opinions are rendered for use by the Limited Partner and its legal counsel
and the Missouri Limited Partner and its legal counsel. We acknowledge that each
such legal counsel will rely on this opinion in connection with federal income
tax opinions to be rendered by that firm. This opinion may not be delivered to
or relied upon by any other person or entity without our express written
consent.
Sincerely,
--------------------
B-4
EXHIBIT C TO PARTNERSHIP AGREEMENT
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of the date written below by
Boonville Associates I, L.P., a Missouri limited partnership (the
"Partnership"); Central Missouri Counties' Human Development Corporation, a
Non-profit Corporation (the "General Partner"); and Crestwood Development, Inc.,
(the "Original General Partner")for the benefit of WNC Housing Tax Credit Fund
VI, L.P., Series 6, a California limited partnership and WNC Missouri Tax
Credits XXXI, L.P., a California limited partnership (the "Investment
Partnerships"), and WNC & Associates, Inc. ("WNC").
WHEREAS, the Partnership proposes to admit the Investment Partnership
as a limited partner thereof pursuant to an Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), in
accordance with which the Investment Partnership will make substantial capital
contributions to the Partnership; and
WHEREAS, the Investment Partnership and WNC have relied upon certain
information and representations described herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Partnership Agreement and become a limited partner of the Partnership, and for
$1.00 and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Partnership, the General Partner and the
Original Limited Partner hereby agree as follows for the benefit of the
Investment Partnership and WNC.
1. Representations, Warranties and Covenants of the Partnership,
the General Partner and the Original Limited Partner
The Partnership, the General Partner and the Original Limited Partner
jointly and severally represent, warrant and certify to the Investment
Partnership and WNC that, with respect to the Partnership, as of the date
hereof:
1.1 The Partnership is duly organized and in good standing as
a limited partnership pursuant to the laws of the state of its formation with
full power and authority to own its apartment complex (the "Apartment Complex")
and conduct its business; the Partnership, the General Partner and the Original
Limited Partner have the power and authority to enter into and perform this
Certification and Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the General Partner and the Original Limited
C-1
Partner have been duly and validly authorized by all necessary action; the
execution and delivery of this Certification and Agreement, the fulfillment of
its terms and consummation of the transactions contemplated hereunder do not and
will not conflict with or result in a violation, breach or termination of or
constitute a default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which the Partnership or
any General Partner or Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Partnership or any General Partner
or Original Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and binding agreement of the
Partnership, the General Partner and the Original Limited Partner, enforceable
against each of them in accordance with its terms.
1.2 The General Partner has delivered to the Investment
Partnership, WNC or their affiliates all documents and information which would
be material to a prudent investor in deciding whether to invest in the
Partnership. All factual information provided to the Investment Partnership, WNC
or their affiliates either in writing or orally, did not, at the time given, and
does not, on the date hereof, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they are made.
1.3 Each of the representations and warranties contained in
the Partnership Agreement is true and correct as of the date hereof.
1.4 Each of the covenants and agreements of the Partnership
and the General Partner contained in the Partnership Agreement has been duly
performed to the extent that performance of any covenant or agreement is
required on or prior to the date hereof.
1.5 All conditions to admission of the Investment Partnership
as the investment limited partner of the Partnership contained in the
Partnership Agreement have been satisfied.
1.6 No default has occurred and is continuing under the
Partnership Agreement or any of the Project Documents (as such term is defined
in the Partnership Agreement) for the Partnership.
1.7 The Partnership will allocate to the Limited Partner the
Projected Annual Tax Credits, or the Revised Projected Tax Credits, if
applicable, and the Projected Missouri Tax Credits, if applicable.
1.8 The General Partner agrees to take all actions necessary
to claim the Projected Tax Credit and the Projected Missouri Tax Credit,
including, without limitation, the filing of Form(s) 8609 with the Internal
Revenue Service.
C-2
1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.
1.10 The Partnership has the sole responsibility to pay all
maintenance and operating costs, including all taxes levied and all insurance
costs, attributable to the Apartment Complex.
1.11 The Partnership, except to the extent it is protected by
insurance and excluding any risk borne by lenders, bears the sole risk of loss
if the Apartment Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.
1.12 No person or entity except the Partnership has the right
to any proceeds, after payment of all indebtedness, from the sale, refinancing,
or leasing of the Apartment Complex.
1.13 No General Partner is related in any manner to the
Investment Partnership, nor is any General Partner acting as an agent of the
Investment Partnership.
2. Miscellaneous
2.1 This Certification and Agreement is made solely for the
benefit of the Investment Partnership and WNC, and their respective successors
and assignees, and no other person shall acquire or have any right under or by
virtue of this Agreement.
2.2 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, all of
which together shall constitute one and the same instrument.
2.3 Capitalized terms used but not defined in this
Certification Agreement shall have the meanings given to them in the Partnership
Agreement.
IN WITNESS WHEREOF, this Certificate and Agreement is made and entered
into as of the day of ____________, 2000.
PARTNERSHIP
Boonville Associates I, L.P.
By: Central Missouri Counties' Human Development,
a Non-Profit Corporation,
General Partner
By: ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Director
C-3
GENERAL PARTNER
Central Missouri Counties' Human Development,
a Non-Profit Corporation
By: ____________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Director
ORIGINAL LIMITED PARTNER
Crestwood Development, Inc., a Missouri corporation
By: ___________________
▇▇▇▇▇▇▇ ▇. Vitor,
President
C-4
EXHIBIT D TO PARTNERSHIP AGREEMENT
FORM OF COMPLETION CERTIFICATE
(to be used when construction [rehabilitation] completed)
COMPLETION CERTIFICATE
The undersigned, an architect duly licensed and registered in the State of
Missouri, has reviewed the final working plans and detailed specifications for
Boonville Associates I, L.P., a Missouri limited partnership (the "Partnership")
in connection with the construction [rehabilitation] of improvements on certain
real property located in Boonville, ▇▇▇▇▇▇ County, Missouri (the
"Improvements").
The undersigned hereby certifies (i) that the Improvements have been completed
substantially in accordance with the aforesaid plans and specifications, (ii)
that a permanent certificate of occupancy and all other permits required for the
continued use and occupancy of the Improvements have been issued with respect
thereto by the governmental agencies having jurisdiction thereof, (iii) that the
Improvements are in compliance in all material respects with all requirements
and restrictions of all governmental authorities having jurisdiction over the
Improvements, including, without limitation, all applicable zoning, building,
environmental, fire, and health ordinances, rules and regulations and (iv) that
all contractors, subcontractors and workmen who worked on the Improvements have
been paid in full except for normal retainages and amounts in dispute.
-----------------------------------
Apartment Housing Architect
Date: ____________________________
Confirmed by:
-----------------------------------
General Partner
Date: ____________________________
D-1
EXHIBIT E TO THE PARTNERSHIP
[ACCOUNTANT'S CERTIFICATE]
[Accountant's Letterhead]
_______________, 200____
WNC Housing Tax Credit Fund VI, L.P., Series 6
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Partnership
Certification as to Amount
of Eligible Tax Credit Base
Gentlemen:
In connection with the acquisition by WNC Housing Tax Credit Fund VI, L.P.,
Series 6 (the "Limited Partner") of a limited partnership interest in Boonville
Associates I, L.P., a Missouri limited partnership (the "Partnership") which
owns a certain parcel of land located in Fredericktown, Madison County, Missouri
and improvements thereon (the "Apartment Housing"), the Limited Partner has
requested our certification as to the amount of low-income housing tax credits
("Tax Credits") available with respect to the Apartment Housing under Section 42
of the Internal Revenue Code of 1986, as amended (the "Code"). Based upon our
review of [the financial information provided by the Partnership] of the
Partnership, we are prepared to file the Federal information tax return of the
Partnership claiming annual Tax Credits in the amount of $_______________, which
amount is based on an eligible basis (as defined in Section 42(d) of the Code)
of the Apartment Housing of $________________, a qualified basis (as defined in
Section 42(c) of the Code) of the Apartment Housing of $_________________ and an
applicable percentage (as defined in Section 42(b) of the Code) of _____%.
Sincerely,
-------------------------
E-1
EXHIBIT F TO THE PARTNERSHIP AGREEMENT
[CONTRACTOR'S CERTIFICATE]
[Contractor's Letterhead]
_______________, 200____
WNC Housing Tax Credit Fund VI, L.P., Series 6
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Boonville Associates I, L.P.
Dear Ladies and Gentlemen:
The undersigned Crestwood Building Associates, Inc. (hereinafter referred to as
"Contractor"), has furnished or has contracted to furnish labor, services and/or
materials (hereinafter collectively referred to as the "Work") in connection
with the improvement of certain real property known as ________ located in
Boonville, ▇▇▇▇▇▇ County, Missouri (hereinafter known as the "Apartment
Housing").
Contractor makes the following representations and warranties regarding Work at
the Apartment Housing.
Work on said Apartment Housing has been performed and completed in
accordance with the plans and specifications for the Apartment Housing.
Contractor acknowledges that all amounts owed pursuant to the contract for
Work performed for Boonville Associates I, L.P. is paid in full.
Contractor acknowledges that Boonville Associates I, L.P. is not in
violation with terms and conditions of the contractual documents related to
the Apartment Housing.
Contractor warrants that all parties who have supplied Work for
improvement of the Apartment Housing have been paid in full.
Contractor acknowledges the contract to be paid in full and releases any
lien or right to lien against the above property.
The undersigned has personal knowledge of the matters stated herein and is
authorized and fully qualified to execute this document on behalf of the
Contractor.
(NAME OF COMPANY)
By:_________________________________________
Title:________________________________________
F-1
EXHIBIT G TO THE PARTNERSHIP
REPORT OF OPERATIONS
QUARTER ENDED:____________________________,200X
------------------------------------- -----------------------------------
LOCAL PARTNERSHIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
GENERAL PARTNER:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
FIRM NAME:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PROPERTY NAME:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
RESIDENT MANAGER:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ACCOUNTANT:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
FIRM:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
G-1
------------------------------------ -----------------------------------
MANAGEMENT COMPANY
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
ADDRESS:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CITY, STATE, ZIP:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
PHONE:
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
CONTACT:
------------------------------------- -----------------------------------
-------------------------------------------------------------------------------
OCCUPANCY INFORMATION
A. Number of Units_____ Number of RA Units_____ Number of Section 8 Tenants ____
B. Occupancy for the Quarter has: Increased ____ Decreased_____
Remained the Same _____
C. Number of: Move-Ins ______ Move-Outs __________ % of Occupancy ______
D. Average length of tenant residency: 1-6 months ______ 6-12 months ______
1-3 years ______ Over 4 years_____
E. Number of Basic rent qualified applicants on waiting list: ________
F. If the apartments are less than 90% occupied, please explain why and
describe what efforts are being made to lease-up remaining units.
---------------------------------------------------------------------------
G. On site manager: Full Time__________ Part Time____________.
If part-time, the number of hours per week_____________.
G-2
OPERATIONAL INFORMATION
Rent Schedule and Increases from Previous Quarter
Number Monthly Rent Rent Increases Effective
of Units Basic / Market Amount Percent Date
1 Bedroom ________ ______________ _________________ ________
2 Bedroom ________ ______________ _________________ ________
3 Bedroom ________ ______________ _________________ ________
PROPOSED MAINTENANCE
Completed Funded by
Type Description or Operations or Amount
Planned Reserves
------------------------------------------------------------------------------
Interior Painting
------------------------------------------------------------------------------
Exterior Painting
------------------------------------------------------------------------------
Siding
------------------------------------------------------------------------------
Roofing
------------------------------------------------------------------------------
Drainage
------------------------------------------------------------------------------
Paving
------------------------------------------------------------------------------
Landscaping
------------------------------------------------------------------------------
Playground
------------------------------------------------------------------------------
Community Room
------------------------------------------------------------------------------
Laundry Room
------------------------------------------------------------------------------
Common Areas
------------------------------------------------------------------------------
Carpet
------------------------------------------------------------------------------
Appliances
------------------------------------------------------------------------------
Lighting
------------------------------------------------------------------------------
Other
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Please describe in detail any major repairs:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
G-3
CONDITION OF PROPERTY
THE OVERALL APPEARANCE OF THE BUILDING(S) IS:
Excellent Good Fair Bad
THE OVERALL APPEARANCE OF THE GROUNDS IS:
Excellent Good Fair Bad
EXTERIOR CONDITION (Please Check Appropriate Box)
------------------------------------------------------------------------------
Type of Condition Excellent Good Fair Problems/Comments
------------------------------------------------------------------------------
Signage
-------------------------------------------------------------------------------
Parking Lots
-------------------------------------------------------------------------------
Office/Storage
-------------------------------------------------------------------------------
Equipment
-------------------------------------------------------------------------------
Community Building
-------------------------------------------------------------------------------
Laundry Room
-------------------------------------------------------------------------------
Benches/Playground
-------------------------------------------------------------------------------
Lawns, Plantings
-------------------------------------------------------------------------------
Drainage, Erosion
-------------------------------------------------------------------------------
Carports
-------------------------------------------------------------------------------
Fences
-------------------------------------------------------------------------------
Walks/Steps/Guardrails
-------------------------------------------------------------------------------
Lighting
-------------------------------------------------------------------------------
Painting
-------------------------------------------------------------------------------
Walls/Foundation
-------------------------------------------------------------------------------
Roof/Flashing/Vents
-------------------------------------------------------------------------------
Gutters/Splashblocks
-------------------------------------------------------------------------------
Balconies/Patios
-------------------------------------------------------------------------------
Doors Windows/Screens
-------------------------------------------------------------------------------
Elevators
-------------------------------------------------------------------------------
INTERIOR CONDITION
-------------------------------------------------------------------------------
Stairs
-------------------------------------------------------------------------------
Flooring
-------------------------------------------------------------------------------
Doors/Cabinets/Hardware
-------------------------------------------------------------------------------
Drapes/Blinds
-------------------------------------------------------------------------------
Interior Painting
-------------------------------------------------------------------------------
Refrig/Stoves/Sinks
-------------------------------------------------------------------------------
Bathroom/Tubs/Showers
Toilets
-------------------------------------------------------------------------------
G-4
FINANCIAL STATUS
A. Replacement Reserve is: Fully-funded Under-funded Amount
(complete attached schedule)
Tax/Insurance Escrow is: Fully-funded Under-funded Amount
(complete attached schedule)
Property is operating at a: Surplus Deficit Amount
If deficit, General Partner funding? Yes No Amount
Mortgage Payments are: On Schedule Delinquent Amount
Are the taxes current? Yes No
(please provide copy of paid tax ▇▇▇▇)
Is the insurance current? Yes No Renewal Date
(please provide copy of yearly renewal)
B. Please note and explain any significant changes in the following:
Administrative Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Repairs/Maintenance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Utility Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Taxes/Insurance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
C. Do you anticipate making a return to owner distribution? Yes No
Explanation:
------------------------------------------------------------------------
------------------------------------------------------------------------
D. Please explain in detail any change in the financial condition:
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Any insurance claims files? Yes______ No______
If yes, please explain:
------------------------------------------------------------------------
------------------------------------------------------------------------
G-5
SCHEDULE OF RESERVES
Replacement Tax & Insurance Other Total
Beginning Balance:
Deposits:
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
Total Deposits
----------- ---------- ------- -------
Authorized Disbursements:
Description:
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
Total Disbursements: ----------- ---------- -------- ------
Ending Balance: (1) ----------- ---------- -------- ------
Required Balance: ----------- ---------- -------- ------
Over/under funding: ----------- ---------- -------- ------
(1) Must agree with amount shown on the balance sheet.
Prepared By: Date:
-------------------------------------------------------------------------------
Firm: Telephone:
-------------------------------------------------------------------------------
Reminder: Please include the following documents:
1. Completed Report of Operations
2. Balance Sheet
3. Statement of Income & Expenses
4. Rent roll for quarter ending
5. Tax Credit Compliance Report
G-6
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
Fund: Tax Credit Set-Asides Information: Loan/Regulatory Set-Asides:
Property Name: [ ] 20/50 or [ ] 40/60 Election
Address: Does the 51% average apply?
[ ] Y [ ] N
Deeper Set-Aside __% @ 50% AMI
County:
Management Company
[ ] Multi-Family Contact Person:
[ ] Elderly
24 Number of Units Phone #
Number of Exempt
Units
LIHTC Project#
-----------------------------------------------------------------------------
Gross Move-In
Unit First Time Move-In # of # in Income Income
# Tenant Name Date Bdrms Sq. Ft. Set-Aside Unit Move-In Limits
-------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
-----------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
G-7
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Less Tenant
Income Income Asset Unit Rent Tenant Utility
Qualified Verification Verification Rent Subsidy Payment Allowance
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
YES
-------------------------------------------------------------------------------
G-8
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Tenant Overall
Gross Maximum Rent Tenant
Rent Rent Qualified Eligible
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
YES YES
-------------------------------------------------------------------------------
G-9
QUARTERLY TAX CREDIT COMPLIANCE REPORT
PROPERTY NAME
Quarter Ending: Tax Credit Set-Asides Information: Loan/Regulatory Set-Asides:
[ ] 20/50 or [ ] 40/60 Election
Does the 51% average apply? [ ] Y [ ] N
Deeper Set-Aside : ( List Details)
Property Address:
County: Allocation: Management Company:
[ ] Pre-1990 (Rent based on number of persons) Contact Person:
[ ] Elected to change No. Bedrm
[ ] Post-1989 (Based on number of Bedroom)
[ ] Multi-Family [ ] Elderly Phone No.
Number of Units
Number of Exempt Units Fax No.
Prepared by:
LIHTC Project#
-----------------------------------------------------------------------------
Gross Annual
Unit Tenant Move-In # Of Inc. Set- # In Annual Income
# Name Date Bdrms Pct. Aside Unit Income Limits
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
G-10
QUARTERLY TAX CREDIT COMPLIANCE REPORT
PROPERTY NAME
(CONTINUED)
Annual Tenant Less
Recert. Income Income Assets Unit Rent Tenant
Date Qualified Verified Verified Rent Subsidy Payment
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
G-11
Tenant Tenant Overall
Utility Gross Maximum Rent Tenat
Allow. Rent Rent Qualified Eligible
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
G-12
Tenant Tax Credit Compliance Audit
Document Transmittal Checklist
Unit Number Property Name Date
Tenant Name Completed By:
Initial _________ Annual________
Check Box for Type of Certification Management Company
This Section For WNC Use Only
Check Documents Being Sent
Received. Reviewed
___Internal Checklist or worksheet ___Initial - Rental Application/Rental
Agreement ___Initial - Questionnaire of Income/Assets ___Recertification -
Questionnaire of Income/Assets ___Recertification - Addendum to Lease
___Employment Verification ___Employment Termination Verification ___Military
Verification ___Verification of Welfare Benefits ___Verification of Social
Security Benefits ___Verification of Disability Benefits ___Unemployment
Verification ___Verification of Unemployment Compensation ___Verification
Worksmen Compensation ___Retirement/Annuities Verification ___Verification of
Veterans Pension ___Verification of Child Support ___Verification of Alimony
Support ___Disposed of Assets Last 2 yrs.
___Real
___Investment
___Assets Verifications (savings, stocks etc.)
___Trusts/with Current Tax Return
___Lump Sum Settlements
___Notarized Affidavit of Support
___Certification of Handicap
___Notarized Self-Employed-Tax Return
___Notarized statement of no income
___Tenant Certification
------------------------------------------------------------------------------
This Section For WNC Use Only
YES NO
Are all required forms completed? Are all required forms
dated? Did the Manager and Tenant sign all documents? Third
party verification of income completed? Third party
verification of assets completed?
Are verifications completed for all members 18 yrs. and
over?
Did all the members of the household 18 yrs. and
over sign all documents?
Is lease completed with a minimum of six months/ SRO
monthly?
Addendum completed?
Tenant Certification completed?
Are all members of the household full-time students?
Is utility allowance correct?
Is correct income limit being used?
Is correct rent limit being used?
For tenants with no income
Was notarized statement of no income obtained with tax
return?
or Were all sources verified (AFDC, Unemployment,
Soc. Sec., Disability)?
G-13
TAX CREDIT COMPLIANCE MONITORING:
ANNUAL CERTIFICATION
As General Partner of Boonville Associates I, L.P., I hereby certify as
to the following:
1. Boonville Associates I, L.P. owns a 24 unit project ("Apartment
Housing") in Fredericktown, Madison County, Missouri.
2. An annual income certification (including supporting documentation)
has been received from each tenant. The income certification reflects that the
tenant's income meets the income limitation applicable to the Apartment Housing
pursuant to Section 42(g)(1) of the Internal Revenue Code ("Code").
3. The Apartment Housing satisfies the requirements of the applicable
minimum set aside test as defined in Section 42(g)(1) of the Code.
4. Each unit within the Apartment Housing is rent restricted as defined
in Section 42(g)(2)of the Code.
5. Each unit in the Apartment Housing is available for use by the
general public and not for use on a transient basis.
6. Each building in the Apartment Housing is suitable for occupancy in
accordance with local health, safety, and building codes.
7. During the preceding calendar year, there had been no change in
the eligible basis, as defined in Section 42(d)of the Code, of any building
within the Apartment Housing.
8. All common area facilities included in the eligible basis of the
Apartment Complex are provided to the tenants on a comparable basis without a
separate fee to any tenant in the Apartment Housing.
9. During the preceding calendar year when a unit in the Apartment
Housing became vacant reasonable attempts were made to rent that unit to tenants
whose incomes met the income limitation applicable to the Apartment Housing
pursuant to Section 42(g)(1) of the Code and while that unit was vacant no units
of comparable or smaller size were rented to tenants whose income did not meet
the income limitation applicable to the Apartment Housing pursuant to Section
42(g)(1) of the Code.
10. If the income of a tenant in a unit increased above the limit
allowed in Section 42 (g)(2)(D)(ii), then the next available unit of comparable
or smaller size was rented to tenants whose incomes met the income limitation
applicable to the Apartment Housing pursuant to Section 42(g)(1) of the Code.
IN VERIFICATION OF THE FOREGOING ENCLOSED HEREWITH IS A COPY OF THE ANNUAL
INCOME CERTIFICATION RECEIVED FROM EACH TENANT IN THE PROJECT. UPON REQUEST I
WILL PROVIDE COPIES OF ALL DOCUMENTATION RECEIVED FROM THE TENANT TO SUPPORT
THAT CERTIFICATION.
I declare under penalty of perjury under the law of the State of
Missouri that the foregoing is true and correct.
Executed this day of at , .
------------------------------------
G-14
Calculation of Debt Service Coverage
Month 1 Month 2 Month 3
------------ ------------ ------------
INCOME
Gross Potential Rent
Other Income
Vacancy Loss
------------ ------------ ------------
Adjusted Gross Income
------------ ------------ ------------
OPERATING EXPENSES
Utilities
Maintenance
Management Fee
Administration
Insurance
Real Estate Taxes
Other Expenses
------------ ------------ ------------
Total Operating Expenses
------------ ------------ ------------
Net Operating Income (1)
Accrual adjustments for:
R/E Taxes
Insurance
Tax/ Accounting
Other
Replacement Reserves
------------ ------------ ------------
Income for DSC Calculation
============ ============ ============
Stabilized Debt Service / / / / / /
------------ ------------ ------------
Debt Service Coverage (2) / / / / / /
------------ ------------ ------------
Please submit this form along with the following supporting documentation:
Monthly Financial Reports (income statement, balance sheet, general ledger and
rent rolls) Operating Budget Copies of bank statements.
(1) This number should reconcile easily with the monthly financial statements
(2) The ratio between the Income for DSC calculation and Stabilized Debt
Service. As example, a 1.15 DSC means that for every $1.00 of Stabilized
Debt Service required to be paid there must be $1.15 of Net Operating
Income available.
G-15