Agreement
Of Limited Partnership Of
Lake Village Apartments, L.P.
Agreement
Of Limited Partnership Of
Lake Village Apartments, L.P.
This Agreement Of Limited Partnership is being entered into effective
as of the date written below by and between Elderly Living Development, Inc. as
the managing general partner (the "Managing General Partner") and Quad Cities
Redevelopment Resources, Inc., as the general partner (the "General Partner"),
WNC Housing Tax Credit Fund VI, L.P., Series 7, a California limited partnership
as the limited partner (the "Limited Partner"); WNC Housing, L.P., as the
special limited partner (the "Special Limited Partner"); and Elderly Living
Development, Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively referred to as the
"Withdrawing Original Partners").
RECITALS
WHEREAS, Lake Village Apartments, L.P., an Illinois limited partnership
(the "Partnership") filed a certificate of limited partnership on April 14, 1998
with the Illinois Secretary of State and filed a certificate of amendment to the
certificate of limited partnership with the Illinois Secretary of State on April
14, 1998.
WHEREAS, the Partners desire to enter into this Agreement to provide
for, among other things, (i) the payment of Capital Contributions by the Limited
Partner and the Special Limited Partner to the Partnership, (ii) the allocation
of Income, Losses, Tax Credits and distributions of Net Operating Income and
other cash funds of the Partnership among the Partners (iii) the respective
rights, obligations and interests of the Partners to each other and to the
Partnership, and (iv) certain other matters.
WHEREAS, the Partners desire hereby to amend and restate the Original
Partnership Agreement.
NOW, THEREFORE, in consideration of their mutual agreements herein set
forth, the Partners hereby agree to amend and restate the Original Partnership
Agreement in its entirety to provide as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Accountant" shall mean Friduss, Lukee, Schiff & Company 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
Accountants for cause if such Accountant fails to provide, or inaccurately
provides, the information required in Section 14.2 and 14.3 of this Agreement.
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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 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 and not subsequently recaptured or disallowed, representing % of the
LIHTC actually received by the Partnership, as shown on the applicable tax
returns of the Partnership.
Section 1.4 "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:
(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 1.5 "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 1.6 "Agreement" or "Partnership Agreement" shall mean this
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 1.7 "Assignee" shall mean a Person who has acquired all or a
portion of the Limited Partner's or the Special Limited Partner's beneficial
interest in the Partnership and who has not been substituted in the stead of the
transferor as a Partner.
Section 1.8 "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,
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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 1.9 "Break-even Operations" shall mean at such time as the
Partnership has Net Operating Income as determined by the Accountant and
approved by the Special Limited Partner.
Section 1.10 "Budget" shall mean the annual operating Budget of the
partnership as more fully described in Section 14.3 of this Agreement.
Section 1.11 "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 1.12 "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 1.13 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
Section 1.14 "Completion of Construction" shall mean the Completion of
Construction of the Project substantially in accordance with the Project
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Documents in order to obtain the required certificates of occupancy (or the
local equivalent) for all fifty (50) apartment units as evidenced by the
issuance of the certificate of occupancy by the governmental agency having
jurisdiction over the Project or by the issuance of the inspecting architect's
certification, in a form substantially similar to the form attached hereto as
Exhibit "E" and incorporated herein by this reference. Completion of
Construction further means that the construction shall be completed in good
quality, free and clear of all mechanic, material or similar liens; all other
expenses and costs must be paid with respect to the Project through completion,
including but not limited to costs of financing.
Section 1.15 "Compliance Period" shall mean the period set forth in Section
42 (i)(1) of the Code, as amended, or any successor statute.
Section 1.16 "Consent of the Special Limited Partner" shall mean the prior
written consent or approval of the Special Limited Partner.
Section 1.17 "Construction Contract" shall mean the construction contract
dated November 15, 2000 in the amount of $3,725,700, entered into between the
Partnership and the Contractor pursuant to which the Project is being
constructed.
Section 1.18 "Construction Loan" shall mean the loan obtained from Illinois
Housing Development Authority in the principal amount of $__________ at an
interest rate equal to _____% per annum for a term of __________ to provide
funds for the acquisition, renovation and/or construction and development of the
Project. 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.
Section 1.19 "Contractor" shall mean Twin Rivers Construction, which is the
general construction contractor for the Project. At or before Completion of
Construction, the Contractor shall provide the Partnership with a closeout
binder, which shall include, but is not limited to, as built drawings, all
operating manuals, and all manufacturing warranty agreements. In addition, the
Contractor shall provide the Partnership a one year warranty on all parts,
materials and work quality.
Section 1.20 "Debt Service Coverage" shall mean 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 "H" and
incorporated herein by this reference.
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Section 1.21 "Deferred Management Fee" shall have the meaning set forth in
Section 9.2(d) hereof.
Section 1.22 "Developer" shall mean Elderly Living Development, Inc.
Section 1.23 "Development Fee" shall mean the fee payable to the Developer
pursuant to Section 9.2(a) of this Agreement for services incident to the
development and construction of the Project in accordance with the Development
Fee Agreement between the 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 land or syndication activities.
Section 1.24 "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 1.25 "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 1.26 "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 1.27 "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 1.28 "General Partner(s)" shall mean Quad Cities Redevelopment
Resources, Inc., and such other Persons as are admitted to the Partnership as
additional or substitute General Partners pursuant to this Agreement.
Section 1.29 "Gross Asset Value" shall mean with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
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(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 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 1.29(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.29(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.29(d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section 1.29(a), Section 1.29(b), or Section 1.29(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 1.30 "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
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designated, classified or regulated, under any federal, state or local law,
regulation or ordinance including, without limitation, Compensation and
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 1.31 "Improvements" shall mean the fifty (50) unit apartment
complex for families, 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 1.32 "In-Balance" shall mean, on any occasion, when the amount of
the undisbursed Construction loan and the undisbursed Capital Contributions of
the Limited Partner and Special Limited Partner required to be paid in through
and including the issuance of a certificate of occupancy (or the local
equivalent) are sufficient in the following sums: (a) all costs of construction
to achieve Completion of Construction; (b) all costs of marketing, ownership,
maintenance and leasing of the Apartment Housing Units; and (c) all interest and
all other sums accruing or payable under the Construction Loan documents. In
making a determination that the financing is In-Balance, the Special Limited
Partner will also consider whether the undisbursed Capital Contributions of the
Limited Partner and Special Limited Partner, the Mortgage and other sources of
permanent financing (but not Cash Receipts) are adequate to retire the
Construction Loan at the earlier of the time of Mortgage closing and funding, or
maturity of the Construction Loan.
Section 1.33 "Incentive Management Fee" shall have the meaning set forth in
Section 9.2(f) hereof.
Section 1.34 "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 1.34 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 1.34 shall be subtracted
from such taxable income or loss;
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(c) in the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 1.29(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 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.
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.
Section 1.35 "Inspecting Architect" shall mean ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
Associates, Inc., or any successor thereto with the Consent of the Special
Limited Partner. The Inspecting Architect shall make regular inspections of the
construction site, to confirm that construction of the Improvements are in
conformance with the Plans and Specifications. The Inspecting Architect will
sign-off on all the draw requests made by the Contractor.
Section 1.36 "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;
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(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 Project 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 $10,000,000
aggregate on all properties;
(d) all Insurance polices shall name the Partnership as the named
insured and 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 1.37 "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 1.38 "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 1.39 "Involuntary Withdrawal" means any Withdrawal caused by the
dissolution or liquidation or incompetence, or Bankruptcy of a General Partner,
or the removal of a General Partner pursuant to Section 13.2 hereof.
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Section 1.40 "Land Acquisition Fee" shall mean the fee payable to the
General Partner in an amount equal to $4,950 for the General Partner's services
in locating, negotiating and closing on the purchase of the real property upon
which the Improvements are, or will be, erected.
Section 1.41 "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 1.42 "Limited Partner" shall mean WNC Housing Tax Credit Fund VI,
L.P., Series 7, 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 1.43 "Management Agent" shall mean the property management company
which oversees the property management functions for the Project and which is
on-site at the Project. The initial Management Agent shall be Heartland MGT,
Inc.
Section 1.44 "Management Agreement" shall mean the agreement between the
Partnership and the Management Agent for property management services. The
management fee shall equal 5.25% of gross revenues. Neither the Management
Agreement nor ancillary agreement shall provide for an initial rent-up fee nor a
set-up fee, nor any other similar pre-management fee payable to the Management
Agent.
Section 1.45 "Managing General Partner(s)" shall mean Elderly Living
Development, Inc., and such other Persons as are admitted to the Partnership as
additional or substitute Managing General Partners pursuant to this Agreement.
Section 1.46 "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 Project 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 made the
election to rent 20% at 40% of the apartment units to tenants with income less
than 30% at 50% of area median income, adjusted for family size and 28% at 60%
of the apartment units to tenants with income less than 22% at Market of area
median income. Notwithstanding the foregoing the General Partner has made the
election to rent 11 units at market rents, 14 units at 60% of the area median
income, adjusted for family size and 25 units at 50% or below the area median
income, adjusted for family size.
Section 1.47 "Mortgage" or "Mortgage Loan" shall mean the permanent
nonrecourse financing wherein the Partnership promises to pay: (a) Illinois
Housing Development Authority (IHDA), or its successor or assignee, the
principal sum of $1,300,000, plus interest on the principal not to exceed 8.05%
per annum over a term of 40 years and amortized over 40 years; and (b) (IHDA),
or its successor or assignee, the principal sum of $750,000, plus interest on
the principal not to exceed 1% per annum over a term of 30 years and
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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 Special Limited Partner a draft of the Mortgage
documents for review and approval. Based on the draft of the Mortgage documents,
if the terms of the Mortgage are not as specified above at the time of the
Mortgage closing and the Special Limited Partner determines in its discretion
that the Debt Service Coverage falls below 1.10 then at the request of the
Special Limited Partner the General Partner shall adjust the principal loan
amount and close on a Mortgage which will produce a 1.10 Debt Service Coverage.
The Mortgage funds shall be used to retire the Construction Loan and if there
are any funds remaining the Mortgage funds shall be used to retire any
outstanding hard construction costs including labor and materials.
Section 1.48 "Net Operating Income" shall mean the excess of revenues over
expenses determined as follows: (a) the excess of actual cash received on a cash
basis by the Partnership from all revenues of the Partnership from whatever
source derived, including, without limitation, TIF funds, rental income (but not
any subsidy thereof from the General Partner or an Affiliate thereof) and
laundry income, but excluding prepayments, security deposits and interest
thereon; (b) over all cash operating obligations of the Partnership (other than
those covered by Insurance) in accordance with the applicable budget adopted by
the Partnership in accordance with Section 14.3(k) of this Agreement (the
"Budget"), including, without limitation, the payment of the Mortgage, the
Management Agent fees (which shall be deemed to include that portion of such
fees which is deferred and not currently paid) and the funding of reserves in
accordance with Article VIII of this Agreement, and a reserve for all taxes or
payments in lieu of taxes and any other expenses which may reasonably be
expected to be paid in a subsequent period but which on an accrual basis are
allocable to the period in question, such as insurance premiums, audit, tax or
accounting expenses (excluding deductions for cost recovery of buildings,
improvements and personal property and amortization of any financing fees).
Without limiting the generality of the foregoing, the Partnership's gross
revenues for purposes of this Section shall not include Capital Contributions,
borrowings, any lump-sum payment or any other extraordinary receipt of funds.
Section 1.49 Nonrecourse Deductions" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).
Section 1.50 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).
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Section 1.51 "Operating Deficit" shall mean at any time when the
Partnership does not have Net Operating Income as determined by the Accountant
and approved by the Special Limited Partner.
Section 1.52 "Operating Deficit Guarantee Period" shall mean the period
commencing with the date of this Agreement and ending thirty months following
the two consecutive months of Break-Even Operations.
Section 1.53 "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 1.54 "Original General Partner" shall mean Elderly Living
Development, Inc.
Section 1.55 "Original Limited Partner" shall mean ▇▇▇▇ ▇▇▇▇▇▇▇▇.
Section 1.56 "Partner(s)" shall collectively mean the General Partner, the
Limited Partner, Managing General Partner and the Special Limited Partner or
individually may mean any Partner as the context dictates.
Section 1.57 "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.
Section 1.58 "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 1.59 "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 1.60 "Partnership" shall mean the limited partnership continued
under this Agreement.
Section 1.61 "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 1.62 "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.
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Section 1.63 "Person" shall collectively mean an individual,
proprietorship, trust, estate, partnership, joint venture, association, company,
corporation or other entity.
Section 1.64 "Plans and Specifications" shall mean the plans, blueprints,
and specifications manual 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. Any changes to the Plans and Specifications
after approval by the appropriate government building department shall require
the Consent of the Special Limited Partner.
Section 1.65 "Project" shall mean the property located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, as more fully described in Exhibit "A" attached
hereto and incorporated herein by this reference, and the Improvements.
Section 1.66 "Project Documents" shall mean all documents relating to the
Construction Loan and Mortgage Loan. It shall also include all documents
required by any governmental agency having jurisdiction over the Project in
connection with the development, construction and financing of the Project,
including but not limited to, the approved plans and specification for the
development and construction of the Project.
Section 1.67 "Projected Annual Tax Credits" shall mean LIHTC in the amount
of $318,588 for 2002, $397,114 per year for each of the years 2003 through 2011,
and $78,526 for 2012, 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 99.98% of the aggregate amount of LIHTC of $3,971,930
to be available to the Partnership; provided, however, that if the Actual Tax
Credit for 2002 is greater (or lesser than) $318,588 the Projected Annual Tax
Credit for the year 2012 shall be reduced (increased) by an amount equal to the
amount by which the Actual Credit for 2002 exceeds (is less than) $318,588.
Section 1.68 "Projected Tax Credits" shall mean LIHTC in the aggregate
amount of $3,971,930.
Section 1.69 "Qualified Tenants" shall mean any tenants who have incomes of
60% or less of the area median gross income, as adjusted for family size, so as
to make the Project eligible for LIHTC. Notwithstanding the foregoing 11 of the
units are to be considered market rate units and as such are not subject to
median gross income limitation.
Section 1.70 "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 Project must not exceed 30% of the applicable
income standards.
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Section 1.71 "Reporting Fee" shall have the meaning set forth in Section
9.2(e) hereof.
Section 1.72 "Revised Projected Tax Credits" shall have the meaning set
forth in Section 7.4(a) hereof.
Section 1.73 "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 Project 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 1.74 "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 Project.
Section 1.75 "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 1.76 "State" shall mean the State of Illinois.
Section 1.77 "State Tax Credit Agency" shall mean the state agency of
Illinois which has the responsibility and authorization to administer the LIHTC
program in Illinois, specifically the Illinois Housing Development Authority.
Section 1.78 "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 1.79 "Syndication Fee" shall mean the fee payable to the General
Partner in an amount equal to $10,000 for the General Partner's services in
forming the Partnership, locating and approving the Limited Partner and the
Special Limited Partner as the investors in the Partnership, negotiating and
finalizing this Partnership Agreement and for such other services referenced in
Treasury Regulation Section 1.709-2(B).
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Section 1.80 "Tax Credit" shall mean any credit permitted under the Code or
the law of any state against the federal or a state income tax liability of any
Partner as a result of activities or expenditures of the Partnership including,
without limitation, LIHTC.
Section 1.81 "Tax Credit Compliance Fee" shall mean the fee payable to the
General Partner in accordance with Section 9.2(g) of this Agreement.
Section 1.82 "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 or to avoid an event of
recapture in respect of the LIHTC.
Section 1.83 "Tax Credit Period" shall mean the ten year time period
referenced in Code Section 42(f)(1) over which the Projected Tax Credits are
allocated to the Partners. It is the intent of the Partners that the Projected
Tax Credits will be allocated during the Tax Credit Period and not a longer
term.
Section 1.84 "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 also insure against rights-of-way,
easements, or claims of easements, not shown by public records. During
construction of the Improvements, the Title Policy shall be in an amount equal
to the Construction Loan amount and the Limited Partner's Capital Contribution.
Upon Permanent Mortgage Commencement, the Title Policy shall be in an amount
equal to the Mortgage amount and the Limited Partner's Capital Contribution.
Section 1.85 "TRA 1986" shall mean the Tax Reform Act of 1986.
Section 1.86 "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 1.87 "Withdrawing" or "Withdrawal" (including the verb form
"Withdraw" and the adjectival forms "Withdrawing" and "Withdrawn") shall mean,
as to a General Partner, the occurrence of the dissolution, liquidation, 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.
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ARTICLE II
NAME
The name of the Partnership shall be "Lake Village Apartments, 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 Managing 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
The purpose of the Partnership is to acquire, construct, own and operate
the Project 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 to sell the Project. The Partnership shall not engage in
any business or activity which is not incident to the attainment of such
purpose.
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, 2049
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 Managing General Partner and
General Partner. The Managing General Partner and the General Partner shall make
a Capital Contribution in an amount required by the Mortgage lender.
Section 6.2 Construction and Operating Obligations; Managing General
Partner and General Partner Loans.
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(a) The Managing General Partner and the General Partner shall cause
Completion of Construction in accordance with the Project Documents, and shall
equip the Project 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. If costs and expenses 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 deficiencies. Any
such advances by the Managing General Partner and the General Partner shall not
change the Interest of any Partner in the Partnership and shall be considered a
cost overrun and not be repayable. In addition, if (1) the Improvements are not
completed on or before March 1, 2002 ("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); or (2) a foreclosure action is commenced
against the Partnership and is not dismissed within six months, 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 Interests 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, and 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.
(b) From Completion of Construction until two consecutive months of
Break-even Operations, the General Partner will personally provide Operating
Loans to pay any Operating Deficits; and for the balance of the Operating
Deficit Guarantee Period the General Partner will provide Operating Loans to pay
any Operating Deficits up to the aggregate maximum amount of $250,000. Each
Operating Loan shall be nonrecourse to the Partners, and shall be repayable out
of the available Net Operating Income or Sale or Refinancing Proceeds in
accordance with Article XI of this Agreement.
Section 6.3 Other General Partner Loans. After expiration of the Operating
Deficit Guarantee Period, with the Consent of the Special Limited Partner, 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 rate of 2% per annum above the then prevailing
prime or reference rate charged by Bank of America N.T. & S.A., Main Office, San
17
Francisco, California, 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 in contravention of this Section
shall be deemed an advance by the General Partner and such advance will bear no
interest and will be repaid in accordance with Article XI of this Agreement.
ARTICLE VII
CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
AND SPECIAL LIMITED PARTNER
Section 7.1 Original Limited Partner. The Original Limited Partner made a
Capital Contribution of $100. 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 he 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 $2,978,352, as may be
adjusted in accordance with Section 7.4 of this Agreement. The Capital
Contribution will be paid into an escrow account at First American Title Company
in accordance with the Escrow Agreement dated November 15, 2000 ("Escrow
Agreement"). The Limited Partner shall approve the release of the funds from the
escrow account as follows:
(a) $2,680,547, to be available to be disbursed as required on a
monthly basis in accordance with Sections 7.2(d),(e) and (f) of this Agreement
provided the Limited Partner has received and approved the following:
(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) verification that the Partnership has obtained Insurance
required during construction;
(5) a copy of the recorded grant deed (warranty deed);
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(6) execution of the Construction and Operating Budget
Agreement;
(7) the construction documents required pursuant to Section
14.3(a) of this Agreement, if not previously provided to the Limited Partner and
a determination by the Special Limited Partner that construction financing is
In-Balance; and
(8) approval of the Limited Partner's acquisition committee.
(b) $74,451 upon delivery to the Limited Partner:
(1) 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 Project;
(2) if not previously provided, a copy of the items provided
in Section 11.3(a);
(3) a certification signed by the architect in a form
substantially similar to the form attached hereto as Exhibit "E" and
incorporated herein by this reference, indicating that the Improvements have
been completed in accordance with the Project Documents;
(4) a letter from the Contractor in a form substantially
similar to the form attached hereto as Exhibit "G" 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;
(5) verification that the Partnership has obtained Insurance
required during operations; and
(6) a fully executed General Partner Certification in the
form attached hereto as Exhibit "D" and incorporated herein by this reference.
(c) $223,354 (as adjusted pursuant to Section 7.4(a) of this Agreement)
upon delivery to the Limited Partner:
(1) a copy of the current rent roll;
(2) copies of all initial 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) collected by the Management Agent, or
General Partner, verifying each tenant's eligibility as a Qualified Tenant;
(3) copies of the executed lease agreement with the tenants;
(4) a fully executed General Partner Certification;
19
(5) copies of all Mortgage documents and Title Insurance in an
amount equal to the Mortgage and the Limited Partner's Capital Contribution;
(6) a copy of the declaration of restrictive
covenants/extended use agreement entered into between the Partnership and the
State Tax Credit Agency;
(7) an audited construction cost certification (which includes
an itemized cost breakdown);
(8) the Accountant's final tax credit certification in a form
substantially similar to the form attached hereto as Exhibit "F" and
incorporated herein by this reference;
(9) Internal Revenue Code Form 8609, or any successor form;
and
(10) any documents previous not provided to the Limited
Partner but required pursuant to Sections 14.3(a), (b) and (c) in this
Agreement.
(d) On the 20th day of each month the Managing General Partner shall
submit to the Limited Partner a written itemized statement, signed by the
Managing General Partner and the general contractor ("Application for Payment")
setting forth:
(1) a description of the work performed, material supplied
and/or costs incurred or due for which disbursement is requested with respect
to any line item ("Item") shown in the Construction and Operating Budget
Agreement; and
(2) the total amount incurred, expended and /or due for each
requested Item less prior disbursements.
(3) Each Application for Payment by the Managing General
Partner shall constitute a representation and warranty by the Managing General
Partner that the Managing General Partner is in compliance
(e) On the 20th day of each month, except if such date falls on a
weekend, the Limited Partner's architect/engineer will visit the job site,
review the construction progress and approve the Application for Payment and
make a recommendation on the disbursement request. ("Limited Partner Review").
The Limited Partner Review shall be completed and authorized by the 23rd day of
each month, barring unforeseen events and/or weekends.
(f) Provided the Limited Partner Review recommends payment of the
Application for Payment, then the Limited Partner will notify the Escrow Agent
that funds can be disbursed to the general contractor on behalf of the Managing
General Partner. Escrow Agent shall disburse up to 90% of the maximum amount
20
allocated for such Item in the Application for Payment less prior disbursements.
The remaining 10% ("Retention") shall be held for the benefit or account of the
Managing General Partner upon completion of the Improvements in accordance with
the Plans and Specifications, governmental requirements and or evidence
satisfactory to lender of lien free completion.
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, the Partnership shall repurchase the Limited Partner's
Interest and/or the Special 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 has theretofore made in the
event that, for any reason, the Partnership shall fail to:
(a) cause the Project to be placed in service by March 1, 2002;
(b) achieve 90% occupancy of the Project by Qualified Tenants by
October 1, 2002;
(c) obtain Permanent Mortgage Commencement by October 1, 2002;
(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; and
(f) receive the Limited Partner's acquisition committee approval by
December 31, 2000.
Section 7.4 Reduction of Limited Partner's Capital Contribution.
(a) If the anticipated amount of Projected Tax Credits to be allocated
to the Limited Partner and Special Limited Partner as evidenced by IRS Form
8609, Schedule A thereto, and the audited construction cost certification
provided to the Limited Partner and Special Limited Partner are less than
$3,971,533 (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 reduced 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 75% of the Revised Projected Tax Credits so
21
anticipated to be allocated to the Limited Partner and Special Limited Partner.
If the Capital Contribution reduction referenced in this Section 7.4(a) is
greater than the remaining Capital Contribution to be paid by the Limited
Partner and the Special Limited Partner then the General Partner shall have
ninety days from the date the General Partner receives notice from either the
Limited Partner or the Special Limited Partner to pay the shortfall.
(b) The General Partner is required to use its best efforts to rent no
less than 78% of the Project's apartment units to Qualified Tenants throughout
the Compliance Period. If at the end of each calendar year during the first
three calendar years following the year in which the first building in the
Project is placed in service, the Actual Tax Credit for any fiscal year or
portion thereof is or will be less than the Projected Annual Tax Credit, or the
Revised Projected Tax Credit calculated on an annual basis ("Revised Projected
Annual Tax Credit"), if applicable (the "Annual Credit Shortfall"), then, unless
the Annual Credit Shortfall shall have previously been addressed under Section
7.4(a), the next Capital Contribution owed by the Limited Partner or the Special
Limited Partner shall be reduced by the Annual Credit Shortfall amount, and any
portion of such Annual Credit Shortfall in excess of such Capital Contribution
shall be applied to reduce succeeding Capital Contributions of the Limited
Partner or the Special Limited Partner. If the Annual Credit Shortfall is
greater than the Limited Partner's and Special Limited Partner's remaining
Capital Contributions then the General Partner shall pay to the Limited Partner
and Special Limited Partner the excess of the Annual Credit Shortfall over the
remaining Capital Contributions. The General Partner shall have ninety days to
pay the Annual Credit Shortfall from the date the General Partner receives
notice from either the Limited Partner or the Special Limited Partner.
(c) In the event that, for any reason, at any time after the first
three calendar years following the year in which the Project is placed in
service, there is an Annual Credit Shortfall, then, unless the Annual Credit
Shortfall shall have previously been addressed under Section 7.4(a) or Section
7.4(b), 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 instead 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 Project occurs prior to repayment in full of
the Annual Credit Shortfall then the excess will be paid in accordance with
Section 11.2(b). Notwithstanding, the foregoing provisions of this Section
7.4(c) the General Partner shall not be obligated to pay the Limited Partner or
Special Limited Partner any funds if the recapture of Tax Credits was the result
of an Act of Congress, a change in the law, or other acts beyond the control of
the General Partner.
(d) In the event there is: (1) a filing of a tax return by the
Partnership evidencing a reduction in the qualified basis or eligible basis of
the Apartment Housing causing a recapture of Tax Credits previously allocated to
the Limited Partner; (2) a reduction in the qualified basis or eligible basis of
22
the Apartment Housing for income tax purposes following an audit by the Internal
Revenue Service (IRS) resulting in a recapture or reduction 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/or the Special Limited
Partner are entitled under the terms of this Section 7.4, the General Partner
shall pay to the Limited Partner and the Special Limited Partner within sixty
days of receiving notice from the Limited Partner and/or the Special Limited
Partner the sum of (A) the amount of the Tax Credit recapture, (B) any interest
and penalties imposed on the Limited Partner or Special Limited Partner with
respect to such recapture, 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). Partner shall not be obligated
to pay the Limited Partner or Special Limited Partner any funds if the recapture
of Tax Credits was the result of an Act of Congress, a change in the law, or
other acts beyond the control of the General Partner.
Section 7.5 Capital Contribution of Special Limited Partner. The Special
Limited Partner shall make a Capital Contribution of $298 at the time of the
Limited Partner's Capital Contribution payment into escrow in accordance with
the Escrow Agreement. 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 Liability of Limited Partner and Special Limited Partner. The
Limited Partner and Special Limited Partner shall not be liable for any of the
debts, liabilities, contracts or other obligations of the Partnership. The
Limited Partner and Special 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.
ARTICLE VIII
WORKING CAPITAL AND RESERVES
Section 8.1 Operating and Maintenance Account. The General Partner, on
behalf of 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. Withdrawals from such
23
account shall be made only with the Consent of the Special Limited Partner. Any
balance remaining in the account at the time of a sale of the Project shall be
allocated and distributed equally between the General Partner and the Limited
Partner.
Section 8.2 Tax and Insurance Account.The General Partner, on behalf of 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 Project shall be allocated and
distributed equally between the General partner and the Limited Partner.
Section 8.3 Other Reserves. The General Partner, on behalf of the
Partnership, shall 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 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 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 or the consent of the Limited Partner where
required by this Agreement, and subject to the other limitations and
restrictions included in this Agreement, the Managing 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. 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,
24
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 $513,418 in accordance with the Development Fee Agreement entered into
by and between the Developer and the Partnership on the even date hereof. The
Development Fee Agreement provides, in part, that the Development Fee 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,
Land Acquisition Fee, Syndication Fee, survey and engineering costs, financing
costs, loan fees, building materials, labor and $256,709 of the Development Fee
to be paid $128,355 at the time of the Limited Partner's first Capital
Contribution payment referenced in 7.2(a) of this Agreement; and $128,354 at 50%
Completion of Construction as evidenced by the architect's certification,
provided if construction overruns are greater than 50% of the contingency amount
referenced in the construction budget then the second Development Fee payment
will be reduced (and deferred) in an amount equal to $1.00 for each dollar the
construction overrun is greater than 50% of the contingency amount. The
construction budget and contingency amount are specified in the Construction and
Operating Budget Agreement to be entered into between the Partners.
(c) If any Capital Contribution proceeds are remaining after Completion
of Construction and all construction costs, including the above referenced
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 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.
(d) The Partnership shall pay to the Management Agent a property
management fee for the leasing and management of the Project in an amount in
accordance with the Management Agreement. The term of the Management Agreement
shall not exceed one year, and the execution or renewal of any Management
Agreement shall be subject to the prior Consent of the Special Limited Partner.
(1) The General Partner shall, upon receiving any request of
the Mortgage lender requesting such action, dismiss the Management Agent as the
25
entity responsible for management of the Project under the terms of the
Management Agreement; or, the General partner shall dismiss the Management Agent
at the request of the Special Limited Partner.
(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.
(e) The Partnership shall pay to the Limited Partner a fee (the
"Reporting Fee") commencing in 2002 equal to $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 Agreement. The Reporting 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 of this Agreement; provided,
however, that if in any year Net Operating Income 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 Net Operating
Income, as provided in Section 11.1, or sufficient Sale or Refinancing Proceeds,
as provided in Section 11.2.
(f) The Partnership shall pay to the Managing General Partner an
Incentive Management Fee equal to 35% of the Net Operating Income for each
fiscal year of the Partnership commencing in 2002 for services incident to the
administration of the business and affairs of the Partnership, which services
shall include, but not limited to, 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 Project 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 Managing 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.
(g) The Partnership shall pay to the Managing General Partner through
the Compliance Period an annual Tax Credit Compliance Fee equal to 35% of the
Net Operating Income commencing in 2002 for the services of the Managing General
Partner in ensuring compliance by the Partnership and the Apartment Housing with
all Tax Credit rules and regulations. The Tax Credit Compliance Fee shall be
payable from Net Operating Income in the manner and priority set forth in
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Section 11.1 of this Agreement upon completion and delivery of the annual audit
pursuant to Section 14.2(a) of this Agreement. If the Tax Credit Compliance Fee
is not paid in any year it shall not accrue for payment in subsequent years.
Section 9.3 Specific Powers of the General Partner. Subject to the other
provisions of this Agreement, the Managing 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 the purpose of this Agreement as indicated in Article IV hereto;
(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 Management Agents
(provided that the selection of any Accountant or Management Agent has received
the Consent of the Special Limited Partner) and attorneys, on such terms as the
General Partner shall determine;
(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.
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(c) Upon any dissolution of the Partnership or any transfer of the
Project, no title or right to the possession and control of the Project 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 not avoid a recapture thereof on the part of
the former owners.
(d) Any conveyance or transfer of title to all or any portion of the
Project 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 the Managing General Partner's and General
Partner's Power and Authority. Notwithstanding the provisions of this Article
IX, the Managing General Partner and the General Partner shall not:
(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 or Managing General Partner
except as provided in this Agreement;
(f) admit a Person as a Limited Partner except as provided in this
Agreement;
(g) violate any provision of the Mortgage;
(h) cause the Project 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 Project;
(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;
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(l) commingle funds of the Partnership with the funds of another
Person; or
(m) take any action which requires the Consent of the Special Limited
Partner or the consent of the Limited Partner unless the Managing General
Partner has received said Consent.
Section 9.6 Restrictions on Authority of the Managing General Partner and
the General Partner. Without the Consent of the Special Limited Partner the
Managing General Partner and the General Partner shall not:
(a) sell, exchange, lease or otherwise dispose of the Project;
(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;
(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 or the Special Limited Partner;
(d) contract away the fiduciary duty owed to the Limited Partner and
the Special Limited Partner at common law;
(e) take any action which would cause the Project to fail to qualify,
or which would cause a termination or discontinuance of the qualification of the
Project, 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;
(f) make any expenditure of funds in excess of $10,000, or commit to
make any such expenditure, other than in response to an emergency, except as
provided for in the annual budget approved by the Special Limited Partner, as
provided in Section 14.3(i) hereof;
(g) cause the merger or other reorganization of the Partnership;
(h) dissolve the Partnership, except as provided in this Agreement;
(i) 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);
(j) become personally liable on or in respect of, or guarantee,
the Mortgage or any other indebtedness of the Partnership;
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(k) pay any salary, fees or other compensation to a General Partner or
any Affiliate thereof, except as authorized by Section 9.2 and Section 9.9
hereof or specifically provided for in this Agreement;
(l) terminate the services of the Accountant, Inspecting Architect,
Contractor or Management Agent, or terminate, amend or modify the Construction
Contract or any other Project Document, or grant any material waiver or consent
thereunder;
(m) cause the Partnership to redeem or repurchase all or any portion
of the Interest of a Partner;
(n) cause the Partnership to convert the Apartment Housing to
cooperative or condominium ownership;
(o) cause or permit the Partnership to make loans to the General
Partner or any Affiliate;
(p) bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the
Partnership; or
(q) agree or consent to any changes in the Plans and Specifications,
to any change orders, or to any of the terms and provisions of the
Construction Contract.
Section 9.7 Duties of Managing General Partner and the General Partner.
The Managing General Partner and 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;
(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
as defined in Section 1.34;
(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 Project to initially qualify, and to continue to qualify, for LIHTC; (2)
issuance of all necessary certificates of occupancy, including all governmental
30
approvals required to permit occupancy of all of the apartment units in the
Project; (3) compliance with all provisions of the Project Documents and (4) a
reservation and allocation of LIHTC from the State Tax Credit Agency;
(f) use its best efforts to keep the Project 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, 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 Project 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 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 Project, and shall take no action with respect to 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 Project in such a manner
that the Project will be eligible to receive LIHTC with respect to 100% of the
apartment units in the Project. 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 to allow the Partnership or its Partners to claim
the Tax Credit; (2) to file Form 8609 with respect to the Project as required,
for at least the duration of the Compliance Period; (3) to operate the Project
31
and cause the Management Agent to manage the Project so as to comply with the
requirements of Section 42 of the Code, as amended, or any successor thereto,
including, but not limited to, Section 42(g) and Section 42(i)(3) of the Code,
as amended, or any successors thereto; (4) to make all certifications required
by Section 42(l) of the Code, as amended, or any successor thereto; and (5) to
operate the Project and cause the Management Agent to manage the Project so 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 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 operating cash expenses and subject to the limitations on the
reimbursement of such expenses set forth herein. As used in this Section 9.8 the
term "operating cash expenses" shall mean, with respect to any fiscal period,
the amount of cash disbursed by the Partnership for Partnership business in that
period in the ordinary course of business for the payment of its operating
expenses, including, but not limited to expenses for advertising and promotion,
management, utilities, repair and maintenance, Insurance, Partner
communications, legal, accounting, statistical and bookkeeping services, use of
computing or accounting equipment, travel and telephone expenses, salaries and
direct expenses of Partnership employees while engaged in Partnership business,
and any other operational and administrative expenses necessary for the prudent
operation of the Partnership. Without limiting the generality of the foregoing,
"operating 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 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.
(b) Reimbursement to the Managing 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. The foregoing provisions of this
32
Section 9.8(b) shall not apply if the General Partner also serves as the
Management Agent. For the purposes of this Section 9.8(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 senior 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.
Section 9.9 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 Project. 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 9.10 Covenants, Representations and Warranties. The Managing
General Partner and the General Partner covenant, represent and warrant that the
following are presently true 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 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 provisions thereof.
(c) Improvements will be completed in a timely and workerlike manner in
accordance with all applicable requirements of all appropriate governmental
entities and the plans and specifications of the Project, as such plans and
33
specifications may be changed from time to time with the approval of Mortgage
lender, and any applicable governmental entities, if such approval shall be
required.
(d) The Project is being operated in accordance with standards and
procedures which are prudent and customary for the operation of properties
similar to the Project.
(e) Additional Improvements on the Project, if any, shall be completed
substantially in conformity with plans and specifications approved by the
Special Limited Partner.
(f) No Partner has or will have any personal liability with respect to
or has or will have personally guaranteed the payment of the Mortgage.
(g) The Partnership is in compliance with all construction and use
codes applicable to the Project and is not in violation of any zoning,
environmental or similar regulations applicable to the Project.
(h) 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 Project at the time of first occupancy
and throughout the term of the Partnership.
(i) 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.
(j) The Partnership has obtained Insurance written by an Insurance
Company.
(k) The Partnership owns the fee simple interest in the Project.
(l) 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.
(m) To the best of the Managing 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 Project and (2) no aboveground or
underground storage tanks are now or have ever been located on or under the
Project. The General Partner will not install or allow to be installed any
aboveground or underground storage tanks on the Project. The General Partner
covenants that the Project shall be kept free of Hazardous Materials and shall
not be used to generate, manufacture, refine, transport, treat, store, handle,
dispose of, transfer, produce or process Hazardous Materials, except in
connection with the normal maintenance and operation of any portion of the
34
Project. The General Partner shall comply, or cause there to be compliance, with
all applicable Federal, state and local laws, ordinances, rules and regulations
with respect to Hazardous Materials and shall keep, or cause to be kept, the
Project free and clear of any liens imposed pursuant to such laws, ordinances,
rules and regulations. The General Partner must promptly notify the 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
Project, any Improvements constructed on the Project, 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
Project.
(n) The Managing General Partner and the General Partner have not
executed and will not execute any agreements with provisions contradictory to,
or in opposition to, the provisions of this Agreement.
(o) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits, or the Revised Projected Tax Credits, if applicable.
(p) No charges, liens or encumbrances exist with respect to the Project
other than those which are created or permitted by the Project Documents or
Mortgage or are noted or excepted in the title policy for the Project.
(q) The buildings on the Project 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 Project will satisfy the Minimum
Set-Aside Test.
(r) All accounts of the Partnership required to be maintained under the
terms of the Project Documents, including, without limitation, any reserved in
accordance with Article VIII hereof, are currently funded to required levels,
including levels required by any authority.
(s) The Managing General Partner and the General Partner have not lent
or otherwise advanced any funds to the Partnership other than its Capital
Contribution and the Partnership has no unsatisfied obligation to make any
payments of any kind to the General Partner or any Affiliate thereof, except as
provided on Schedule One attached hereto and incorporated herein by this
reference.
(t) No event has occurred which constitutes a default under any of the
Project Documents.
35
(u) No event has occurred which has caused, and the Managing General
Partner and the General Partner have 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 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 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.
(v) 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 Project, has
occurred the continuing effect of which has: (1) materially or adversely
affected the operation of the Partnership or the Project; (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 Project; 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 Project only insofar as they or any of them are part of
the general public.
(w) Neither the Partnership nor the Managing General Partner nor the
General Partner have any liabilities, contingent or otherwise, which have not
been disclosed in writing to the Limited Partner and the Special Limited Partner
and which in the aggregate affect the ability of the Limited Partner to obtain
the anticipated benefits of its investment in the Partnership.
(x) The Managing General Partner has and shall maintain a net worth
equal to at least $1,000,000 computed in accordance with generally accepted
accounting principles.
(y) Upon signing of the Construction Loan and receipt of the
Construction Lender's written start order, the Managing General Partner will
cause construction of the Improvements to commence and thereafter will cause the
Contractor to diligently proceed with construction of the Improvements according
to the Plans and Specifications so that the Improvements can be completed by the
Completion Date.
36
(z) The Managing General Partner will use its best efforts to ensure
that any architect retained by the Partnership or Managing General Partner will
have a policy of professional liability insurance in an amount not less than
five hundred thousand dollars, which policy should remain in force for a period
of at least two years after the closing and funding of the Mortgage.
The General Partner shall be liable to the 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 as a result of any
material breach of the representations and warranties set forth in this Section
9.10.
Section 9.11 Option to Acquire. After expiration of the Compliance Period,
the General Partner may give notice (the "GP Notice") to the Limited Partner
that it desires to purchase the entire Interest of each of the Limited Partner
and the Special Limited Partner in the Partnership. Upon receipt by the Limited
Partner and the Special Limited Partner, the following events shall occur:
(a) The purchase price of the Interests shall be determined. The
purchase price shall be the greater of (i) the aggregate of the Fair Market
Value of the Interest of the Limited Partner and the Fair Market Value of the
Interest of the Special Limited Partner or (ii) the "Tax Amount" as hereinafter
defined. Notwithstanding the preceding, the purchase price shall be no less than
the principal amount of all outstanding indebtedness secured by the Project.
(b) The Limited Partner and the Special Limited Partner shall negotiate
with the General Partner for a period of 30 days after the GP Notice is received
to agree upon the Fair Market Value of their respective Interests. In the event
an agreement is not reached within such 30-day period, then the General Partner
or the Special Limited Partner may request that Fair Market Value be determined
in accordance with the process set forth below by sending notice (the "Appraisal
Notice") of same to the other party within 15 days of the expiration of the
30-day period. If an Appraisal Notice is not sent by either party within such
15-day period, then the General Partner's option shall expire.
(c) If the respective Fair Market Value of the Interests of the Limited
Partner and the Special Limited Partner are not agreed upon as provided above
and either the General Partner or the Special Limited Partner issues to the
other Person an Appraisal Notice, then the Fair Market Value of such Interests
shall be determined by an appraisal. The appraisal shall be conducted by an
independent appraiser satisfactory to the General Partner and the Special
Limited Partner or, in the event that a single independent appraiser cannot be
agreed upon within 30 days following the date of the Appraisal Notice, the
General Partner and the Special Limited Partner shall each select an independent
37
appraiser and the appraisers so selected shall select a third independent
appraiser. All appraisers so designated shall be experienced in accounting,
business or real estate appraisal. The appraiser or appraisers shall determine
the Fair Market Value of the Interest of each of the Limited Partner and the
Special Limited Partner. The decision of the appraisers (if more than one) shall
be made by the majority of such appraisers. The appraiser or appraisers shall
render a written report setting forth the Fair Market Value of such Interests,
which decision shall be rendered as expeditiously as possible by the appraiser
or appraisers and which decision shall be final and binding upon the parties.
The reasonable fees and expenses of the appraiser or appraisers shall be paid
one-half by the General Partner and one-half by the Limited Partner.
(d) The "Tax Amount" shall mean the dollar amount computed in the
following fashion:
(i) The Limited Partner and the Special Limited Partner shall
be deemed to have gain in an amount equal to the difference between their
respective basis in the Project and an amount equal to the total forgiveness of
debt which would be realized by the Limited Partner and the Special Limited
Partner computed as if the Limited Partner and the Special Limited Partner
abandoned their Interests in the Partnership on the date of the GP Notice. The
Tax Amount shall equal the deemed gain as computed above by a tax rate(s)
applied to such gain. The tax rate shall be the highest individual rate stated
in the Code applicable to the type of income (and if there is more than one rate
applicable because of more than one type of income, the different rates shall be
applied to the appropriate portions of such income). The Limited Partner shall
cooperate to expeditiously determine the Tax Amount.
(e) Following determination of the purchase price, the General Partner
shall have 30 days thereafter to determine whether the General Partner will
purchase the Interests of the Limited Partner and the Special Limited Partner at
the purchase price so determined. The General Partner shall exercise such right
by written notice to the Limited Partner and the Special Limited Partner within
such 30-day period, and if such right is not so exercised, the option shall
lapse in its entirety.
(f) If the General Partner determines to proceed with the purchase, the
purchase price shall be paid in cash, within 90 days following the giving of the
notice required by Section 9.11(e) and, in addition, interest shall be paid on
the purchase price from the date of the GP Notice, payable with the purchase
price, and calculated at the rate of interest set forth in Section 6.3 hereof.
38
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 99.98% to the Limited Partner, .01% to the Special Limited Partner,
.005% to the General Partner and .005% to the Managing General Partner.
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;
(2) second, an amount of Income sufficient to increase the
Limited Partner's positive Capital Account balance to its Capital Contribution
and to increase the Special Limited Partner's positive Capital Account balance
to an amount equal to its Capital Contribution, shall be allocated to the
Limited Partner and the Special Limited Partner, respectively;
(3) third, an amount of Income sufficient to increase the
General Partner's positive Capital Account balance to an amount equal to its
Capital Contribution; and
(4) the balance, if any, of such Income shall be allocated 30%
to the Limited Partner, 35% to the Managing General Partner and 35% to the
General Partner.
(b) As to Losses:
(1) an amount of Losses equal to the aggregate positive
balances (if any) in the Capital Accounts of all Partners having positive
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 Income and
Losses pursuant to Section 10.1 up to the date of the Sale or Refinancing) shall
be allocated to such Partners in proportion to their positive Capital Account
balances until all such Capital Accounts shall have zero balances; and
39
(2) the balance of any such Losses shall be allocated 99.98%
to the Limited Partner, .01% to the Special Limited Partner, .005% to the
Managing General Partner and .005% 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. In the event an allocation of 99.98% or .01% of each
item includable in the 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 as is necessary to allow the Limited Partner or the Special Limited
Partner to be allocated 99.98% and .01%, respectively, of the items of Income
and Project depreciation without creating or increasing an Adjusted Capital
Account Deficit for the Limited Partner or the Special Limited Partner, it being
the intent of the parties that the Limited Partner and the Special Limited
Partner always shall be allocated 99.98% and .01%, respectively, of the items of
Income not arising from a Sale or Refinancing and 99.98% and .01%, respectively,
of the Project 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
40
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.
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 99.98% to the Limited Partner, .01% to the Special Limited Partner,
.005% to the Managing General Partner and .005% 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).
41
(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
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) To the extent the Partnership has taxable interest income with
respect to deposits of Capital Contribution payments, such interest income shall
be specially allocated to the General Partner.
(j) 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.
(k) 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).
(l) 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
42
be equal to the net amount that would have been allocated to each such Partner
if the Issuance Items had not been realized.
(m) 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.
(n) Interest deduction on the Partnership indebtedness referred to in
Section 6.3 shall be allocated 100% 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, 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) shall be allocated among the Partners in accordance with applicable
law. Consistent with the foregoing, the Partners intend that LIHTC will be
allocated 99.98% to the Limited Partner, .01% to the Special Limited Partner,
.005% to the Managing General Partner and .005% to the General 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
such profits are insufficient, profits for subsequent taxable years) in an
43
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
Partnership profits are as follows: Limited Partner: 99.98%; Special Limited
Partner: .01%; Managing General Partner .005%; General Partner: .005%.
(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.
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 1.28(a) hereof).
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.29(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.
44
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 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 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
45
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 Development Fee;
(c) to pay the Operating Loans, if any, as referenced in Section 6.2(b)
of this Agreement, from the Net Operating Income remaining after reduction for
the payments made pursuant to subsections (a) and (b) of this Section 11.1;
(d) to pay the Incentive Management Fee;
(d) to pay the Tax Credit Compliance Fee; and
(e) to the Limited Partner in an amount equal to 30% of the remaining
Net Operating Income, to the Managing General Partner in an amount equal to 65%
of the remaining Net Operating Income, and to the General Partner in an amount
equal to 5% of the remaining Net Operating Income
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
shall deem reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership; and
(d) thereafter, 30% to the Limited Partner, 35% to the Managing General
Partner and 35% to the General Partner.
ARTICLE XII
TRANSFERS OF LIMITED
PARTNER'S INTEREST IN THE PARTNERSHIP
Section 12.1 Assignment of Interest. The Limited Partner and the Special
Limited Partner shall not have the right to assign all or any part of their
respective Interests to any other Person, whether or not a Partner, except upon
satisfaction of the following:
46
(a) by 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 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 Usbank or its
successors as collateral to secure a capital contribution loan without
satisfying the conditions of Section 12.1(a) and (b) above.
THE LIMITED PARTNERSHIP INTEREST AND THE SPECIAL LIMITED PARTNERSHIP
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's 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 or Special 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 following the
47
month which ends with the effective date 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 or Special Limited
Partner.
(a) An Assignee shall not have the right to become a Substitute Limited
Partner or substitute Special 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
or Special Limited Partner, or Usbank or its successors, may become a Substitute
Limited Partner or Substitute Special Limited Partner without the consent of the
General Partner.
(b) A nonadmitted transferee of a Limited Partner's Interest or Special
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
or Special 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.
(c) The General Partner may elect to treat a transferee of a
Partnership Interest who has not become a Substitute Limited Partner or
substitute Special Limited Partner as a Substitute Limited Partner or substitute
Special 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.
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 Mortgage lender, and the State Tax Credit Agency.
Withdrawal shall be conditioned upon the agreement of the Special Limited
48
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).
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 is:
(1) subject to Bankruptcy in accordance with this Agreement;
(2) committing any fraud, willful misconduct, material breach
of fiduciary duty or other negligent conduct in the performance of its duties
under this Agreement;
(3) convicted of, or entered into a plea of guilty to, a
felony related to the purpose of this Agreement;
(4) making personal use of Partnership funds or properties;
(5) violating the terms of the Mortgage and such violation
prompts Illinois Housing Development Authority, 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 or notice or the cure period under
the appropriate Mortgage document if longer;
(6) failing to provide any loan, advance, Capital Contribution
or any other payment to the Partnership required under this Agreement;
(7) failing to obtain the Consent of the Special Limited
Partner prior to any decision, act or omission under circumstances where this
Agreement requires that such consent be obtained;
(8) breaching any material representation, warranty or
covenant contained in this Agreement, or failing to perform any other material
action which may be required by this Agreement;
(9) violating any federal or state tax law which causes a
recapture of LIHTC; or
49
(10) failing during any six-month period during the Compliance
Period to cause at least 66% of the total apartment units in the Project 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.
(b) Written notice of the removal for cause of the General Partner
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. Such notice shall set forth
the reasons for the removal, if any, and the date upon which the removal is to
become effective.
(c) Upon receipt of such notice of removal for cause, the General
Partner shall cause an accounting to be prepared covering the transactions of
the Partnership from the end of the previous fiscal year through the date of
receipt of such notice, and thereafter it shall not sell or dispose of
Partnership assets under any circumstances. The accounting shall be completed by
the effective date of the removal and shall be in sufficient detail to
accurately and fully reflect the earnings or losses for the period and the
financial condition of the Partnership. If the General Partner fails to cause
the accounting to be prepared within 30 days of receipt of the notice of removal
for cause then the Limited Partner may cause the accounting to be prepared. The
expenses of the accounting shall be borne by the General Partner.
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 Project 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 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. Notwithstanding, the Withdrawing General Partner shall not be
responsible for any obligations which may arise following the effective date of
the Withdrawal, including without limitation any continuing guarantees for which
the General Partner and any affiliates may be responsible.
50
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 repaid any outstanding advances or
loans made by it to the Partnership or to be paid any amount for its former
Interest unless such forfeiture creates an unreasonable financial benefit to the
Partnership or Limited Partner. 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
Section 13.3(b)(3) 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) 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 Withdrawn 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
any payment for its Interest, 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) or to be
repaid any outstanding advances or loans made by it to the Partnership.
(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), 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. The purchase price
shall be paid by the Partnership by delivering to the General Partner or its
51
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.
(3) 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.
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
herein prior to expiration of such 60-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 or the Special Limited Partner's Interest in the Partnership.
52
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 become interested in the
Partnership, without the Consent of the Special Limited Partner which consent
shall not be unreasonably withheld.
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:
(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
amendments thereto;
(5) financial statements of the Partnership for the six most
recent fiscal years; and
(6) the Partnership's books and records for at least the
current and past three fiscal years.
(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 General Partner shall
promptly deliver to the 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
53
inspect and copy any of the foregoing, or any of the other books and records of
the Partnership or the Project at its own expense.
Section 14.2 Accounting Reports.
(a) By February 20 of each calendar year the General Partner shall
provide to the 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 Project is located.
(b) By March 1 of each calendar year the General Partner shall send to
the Limited Partner and the Special Limited Partner: (1) a 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 Project occurs, the General Partner shall send to the
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 and the Special Limited Partner the following reports.
(a) during construction, on a regular basis, but in no event less than
once a month, a copy of the Inspecting Architect's report and other construction
reports including, but not limited to, (1) the name of each person performing
work on the Improvements or providing materials for the Improvements, the work
performed or materials supplied by said person and the code number corresponding
to the line item in the Construction Budget which the person will be paid, (2)
an original AIA Document G702, or similar form acceptable to the Special Limited
54
Partner, (3) if not included in the Inspecting Architect's report or the AIA
Document G702, a line item break-down of the Construction Budget (which shall
include, description of work to be performed or materials to be supplied; total
dollar amount of the work or materials; dollar amount of work previously
completed and paid or materials supplied and paid; dollar amount of work or
materials to be paid per the current disbursement request; dollar amount of
materials stored; total dollar amount of work completed and stored as of the
current disbursement date; percentage of completion; dollar amount of work or
materials needed to complete the line item; and retainage), (4) a reconciliation
of the sources and uses to determine that the Construction Budget is in balance
and there are sufficient funds to complete the construction of the Improvements,
and (5) copies of lien releases, or waivers, from the Contractor and all
sub-contractors or material suppliers who were paid the previous month;
(b) During the rent-up phase, and continuing until the end of the first
six-month period during which the Project has a sustained occupancy of 95% or
better, by the twentieth 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 similar to the monthly initial tenant certification
worksheet included in Exhibit "H" attached hereto and incorporated herein by
this reference.
(c) A quarterly tax credit compliance report similar to the worksheet
included in Exhibit "H" 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 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) By September 15 of each year, an estimate of LIHTC for that year.
(e) If the Project receives a reservation of LIHTC in one year but will
not complete the construction and rent-up until a later year, the General
Partner will provide to the Limited Partner by December 31 of the year during
which the reservation is received an audited cost certification together with
the Accountant's work papers verifying that the Partnership has expended the
55
requisite 10% of the reasonably expected cost basis to meet the carryover test
provisions of Section 42 of the Code. Furthermore, if materials and supplies are
purchased to meet the 10% requirement then the General Partner shall provide to
the Limited Partner an opinion of counsel 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.
(f) During the Compliance Period, no later than the day 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.
(g) A quarterly report on operations, in the form attached hereto as
Exhibit "H", 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.
(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.
(i) By the payment date of the real estate property taxes each and
every year verification that the same has been paid in full.
(j) On or before March 15th of each calendar year, the General
Partner's updated financial statement as of December 31 of the previous year.
(k) On or before November 1 of each calendar year, a copy of the
following year's proposed operating budget. Each such budget shall contain an
amount required for reserves in accordance with Article VIII and for the payment
of real estate taxes, insurance, debt service and other payments. Such budget
shall only be adopted with the Consent of the Special Limited Partner.
(l) Notice of the occurrence, or of the likelihood of occurrence, of
any event which has had a material adverse effect upon the Project or the
Partnership, including, but not limited to, any breach of any of the
representations and warranties set forth in Section 9.10 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 after notice by the Limited Partner or Special
Limited Partner, the General Partner, using its own funds, shall pay as damages
the sum of $25 per day (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 does not fulfill its obligations under Section
56
14.3 within the time periods set forth therein, the General Partner, using its
own funds, shall pay as damages the sum of $100.00 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.
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
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.
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
with notice to the Special Limited 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.
(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.
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ARTICLE XV
DISSOLUTION, WINDING UP, TERMINATION
AND LIQUIDATION OF THE PARTNERSHIP
Section 15.1 Dissolution of Partnership. The Partnership shall be dissolved
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 elects to continue the business of the Partnership.
(b) The sale of the Project and the receipt in cash of the full amount
of the proceeds of such sale.
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 Mortgage lenders, 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 Limited Partner's Capital Contribution 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 Distributions 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 Special 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
58
shall be distributed to the Partners in accordance with Section 11.2, after
taking into account all allocations under Article X hereof.
(b) 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.
(c) For the purposes of Section 15.3(b), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the Fair Market
Value of such assets, taking into account the Fair Market Value of the
associated financing but subject to Section 7701(g) of the Code, and the
Partnership's adjusted basis in such assets for book purposes. Section 15.3(b)
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(b) 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 with the Consent of the Special Limited 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 Project 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
59
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 and
Special Limited Partner shall cease to be such 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 Managing 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 Managing 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 Managing General Partner determines to
include therein.
ARTICLE XVI
AMENDMENTS
This Agreement may be amended at any time by the Limited Partner. This
Agreement may not be amended by the General Partner absent the Consent of the
Special Limited Partner. Notwithstanding the foregoing, the Limited Partner will
not initiate an amendment to the Partnership, no amendment shall change the
Partnership to a general partnership; extend the term of the Partnership beyond
the date provided for in this Agreement; modify the limited liability of the
Limited Partner and the Special Limited Partner; allow the Limited Partner to
take control of the Partnership's business within the meaning of the Act; reduce
or defer the realization of any Partner's interest in allocations,
Distributions, capital or compensation hereunder, or increase any Partner's
obligations hereunder, without the consent of the Partner so affected; or change
the provisions of this Article XVI.
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ARTICLE XVII
MISCELLANEOUS
Section 17.1 Voting Rights.
(a) The Limited Partner shall have no right to vote upon any matters
affecting the Partnership, except as provided in this Agreement. Notwithstanding
the foregoing, the Limited Partner may, without the concurrence of the General
Partner:
(1) approve or disapprove, but not initiate, the Sale or
Refinancing of the Project;
(2) remove the General Partner and elect a substitute General
Partner as provided in this Agreement;
(3) elect a successor General Partner upon the Withdrawal of
the General Partner;
(4) approve or disapprove, but not initiate, the dissolution
of the Partnership; or
(5) subject to the provisions of Article XVI hereof, amend
this Agreement.
(b) On any matter where the Limited 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.
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.
61
Section 17.3 Notices. Any notice given pursuant to this Agreement may be
served personally on the Partner to be notified, 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:
To the Managing
General Partner: Elderly Living Development, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To the General Partner: Quad Cities Redevelopment Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Limited Partner: WNC Housing Tax Credit Fund VI, L.P., Series 7
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.
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(2) A change in the street address of the Partnership's
principal executive office.
(3) 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.
(4) The admission of a General Partner and that Partner's
address.
(5) 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 Tax Matters Partners. 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
63
of limitation with respect to all Partners; filing of a request for
administrative adjustment on behalf of the Partnership; filing by the Tax
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) 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
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.
(e) Nothing herein shall be construed as a waiver by the Limited
Partner of any of its rights under Chapter 631 of the Code. The General Partner
shall not enter into any settlement agreement purporting to bind the Limited
Partner without the Limited Partner's consent.
Section 17.11 Expiration of Compliance Period.
(a) Notwithstanding any provision hereof to the contrary (other than
this Section 17.11), the Special Limited Partner shall have the right at any
time after the beginning of the last year of the Compliance Period to require,
by written notice to the General Partner, that the General Partner promptly
submit a written request to the applicable State Tax Credit Agency pursuant to
Section 42(h) of the Code (or any successor provision) that such agency endeavor
to locate within one year from the date of such written request a purchaser for
the Project who will continue to operate the Project as a qualified low income
property, at a purchase price that is not less than the minimum amount set forth
in Section 42(h)(6) of the Code (or any successor provision). In the event that
the State Tax Credit Agency obtains an offer satisfying the conditions of the
preceding sentence, the General Partner shall promptly notify the Special
Limited Partner in writing with respect to the terms and conditions of such
offer, and, if the Special Limited Partner notifies the General Partner that
64
such offer should be accepted, the General Partner shall cause the Partnership
promptly to accept such offer and to proceed to sell the Project pursuant to
such offer.
(b) A sale of the Project prior to the end of the Compliance Period may
only take place if the conditions of Section 42(j)(6) of the Code (or any
successor provision) will be satisfied upon such sale by having the purchaser of
the Project post the required bond on behalf of the Partnership.
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 Receipt of Correspondence. The Partners agree that the
General Partner shall send to the Limited Partner and the Special Limited
Partner a copy of any correspondence relative to the Project's noncompliance
with the Mortgage, relative to the acceleration of the Mortgage and/or relative
to the disposition of the Project.
Section 17.17 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 all funds distributable to said
Partner to the extent of the amount of such obligation.
Remaining of this page was intentionally left blank.
65
IN WITNESS WHEREOF, this Agreement of Limited Partnership of Lake
Village Apartments, L.P., an Illinois limited partnership, is made and entered
into as of the 18th day of December, 2000.
MANAGING GENERAL PARTNER
Elderly Living Development, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
GENERAL PARTNER
Quad Cities Redevelopment Resources, Inc.,
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
LIMITED PARTNER
WNC Housing Tax Credit Fund VI, L.P., Series 7
By: WNC & Associates, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
WITHDRAWING ORIGINAL LIMITED PARTNER
Elderly Living Development, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
President
Signatures continued on next page...
66
SPECIAL LIMITED PARTNER
WNC HOUSING, L.P.
By: WNC & Associates, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
67
EXHIBIT A TO PARTNERSHIP AGREEMENT
LEGAL DESCRIPTION
A TRACT OF LAND LOCATED IN A PARTY OF THE SOUTHEAST QUARTER (SE-1/4) OF
SECTION TWENTY-SEVEN (27), TOWNSHIP 15 NORTH, RANGE ▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇.▇.,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. MORE PARTICULARLY BOUNDED AND DESCRIBED AS FOLLOWS AND
BEARINGS ARE FOR THE PURPOSE OF DESCRIPTION ONLY: COMMENCING AT AN IRON ROD AT
THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER (SE-1/4) OF SAID SECTION
TWENTY-SEVEN (27); THENCE S 89(Degree) 24'00" W, ALONG THE SOUTH LINE OF THE
SOUTHEAST QUARTER (SE-1/4 ) OF SAID SECTION TWENTY-SEVEN (27), A DISTANCE OF
413.70 FEET TO THE SOUTHEAST CORNER OF CANDLELIGHT PARK SUBDIVISION AND THE
PLACE OF BEGINNING; THENCE CONTINUING S 89(Degree) 24'00" W, ALONG THE SOUTHE
LINE OF THE SOUTHEAST QUARTER (SE-1/4) OF SAID SECTION TWENTY-SEVEN (27), A
DISTANCE OF 557.00 FEET TO THE SOUTHEAST CORNER OF KEWANEE LAND TRUST #101
SUBDIVISION #1; THENCE N 00(Degree) 11' 00" E, ALONG THE EAST LINE OF SAID
SUBDIVISION AND SAID EAST LINE EXTENDED 550.00 FEET; THENCE N 89(Degree) 24"00'
E 150.00 FEET; THENCE S 00(Degree) 11'00" W, 200.00 FEET; THENCE S 55(Degree)
58'03" E, 193.50 FEET; THENCE N 89(Degree) 24'00" EAST, 246.00 FEET TO THE
NORTHERLY EXTENSION OF THE WEST LINE OF SAID CANDLELIGHT PARK SUBDIVISION;
THENCE S 00(Degree) 07'00" W, ALONG SAID NORTHERLY EXTENSION AND CONTINUING
ALONG THE WEST LINE OF SAID CANDLELIGHT PARK SUBDIVISION, 240.02 FEET TO THE
PLACE OF BEGINNING AND CONTAINING 4.338 ACRES, MORE OR LESS. SUBJECT TO
RIGHT-OF-WAY OF A PUBLIC ROAD ALONG THE SOUTH SIDE OF THE ABOVE DESCRIBED TRACT
AND ALSO SUBJECT TO ALL EASEMENTS OF RECORD.
A-1
EXHIBIT B TO PARTNERSHIP AGREEMENT
FORM OF LEGAL OPINION
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Lake Village Apartments, 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
7, a California limited partnership (the "Limited Partner") in Lake Village
Apartments, L.P. (the "Partnership"), an Illinois limited partnership formed to
own, develop, (construct/-rehabilitate) finance and operate an apartment complex
for low-income persons (the "Apartment Complex") in Kewanee, ▇▇▇▇▇ County,
Illinois. The general partner(s) of the Partnership (is/are) Elderly Living
Development, Inc. (the "Managing General Partner") and Quad Cities Redevelopment
Resources, Inc. (the "General Partner").
In rendering the opinions stated below, we have examined and relied
upon the following:
(i) [Certificate of Limited Partnership];
(ii) [Agreement of Limited Partnership] (the "Partnership
Agreement");
(iii) A preliminary reservation letter from [State
Allocating Agency] (the "State Agency") dated
_________, 200___ conditionally awarding
$_______________ in Federal tax credits annually for
each of ten years and $_______________ in Illinois
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
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
_______________, 200__
Page 2
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 Illinois.
(c) The Partnership is validly existing under and subject to the laws
of IL 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 have been
admitted to the Partnership as limited partners of the 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
B-2
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
_______________, 200__
Page 3
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.
(i) Neither the General Partner(s) of the Partnership nor the Limited
Partner nor the Special 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 Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") from the State Agency. The final allocation
of the LIHTC 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.
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
B-3
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
_______________, 200__
Page 4
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
which 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 Lake
Village Apartments, L.P., an Illinois limited partnership (the "Partnership");
Elderly Living Development, Inc. (the "Managing General Partner") and Quad
Cities Redevelopment Resources, Inc., (the "General Partner"), for the benefit
of WNC Housing Tax Credit Fund VI, L.P., Series 7, a California limited
partnership (the "Investment Partnership"), and WNC & Associates, Inc. ("WNC").
WHEREAS, the Partnership proposes to admit the Investment Partnership
as a limited partner thereof pursuant to an 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 and the General Partner hereby
agree as follows for the benefit of the Investment Partnership and WNC.
1. Representations, Warranties and Covenants of the Partnership and the
General Partner
The Partnership and the General 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 and the General 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
and the General 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
C-1
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 is bound or any law, regulation,
judgment, decree or order applicable to the Partnership or any General Partner
or any of their respective properties; this Certification and Agreement
constitutes the valid and binding agreement of the Partnership and the General
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.
1.8 The General Partner agrees to take all actions necessary
to claim the Projected Tax Credit, including, without limitation, the filing of
Form(s) 8609 with the Internal Revenue Service.
1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.
C-2
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
Lake Village Apartments, L.P.
By: Elderly Living Development, Inc.
Managing General Partner
By: ____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
C-3
MANAGING GENERAL PARTNER
Elderly Living Development, Inc.
By: ____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
C-4
EXHIBIT D TO THE PARTNERSHIP AGREEMENT
MANAGING GENERAL PARTNER AND GENERAL PARTNER CERTIFICATION
This Managing General Partner and General Partner Certification is
being issued to WNC Housing Tax Credit Fund VI, L.P., Series 7 ("Limited
Partner") by Elderly Living Development, Inc. (the "Managing General
Partner(s)") and Quad Cities Redevelopment Resources, Inc., (the "General
Partner") of Lake Village Apartments, L.P., an Illinois limited partnership
("Partnership") in accordance with Section 7.2 of the Agreement of Limited
Partnership of the Partnership ("Partnership Agreement").
Capitalized terms used but not defined in this Managing General Partner
and General Partner Certification shall have the meanings given to them in the
Partnership Agreement.
WHEREAS, the Limited Partner is scheduled to make a Capital
Contribution to the Partnership;
WHEREAS, the Partnership Agreement requires the Managing General
Partner and General Partner to issue this Certification prior to the Limited
Partner's payment; and
WHEREAS, the Limited Partner shall rely on this Certification in
evaluating the continued merits of its investment in the Partnership;
NOW, THEREFORE, to induce the Limited Partner to make its scheduled
Capital Contribution to the Partnership, the Managing General Partner and the
General Partner represents and warrants to the Limited Partner that the
following are true and correct as of the date written below.
(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 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 Managing General Partner
nor the General Partner is in breach or violation of any provisions thereof.
(c) Improvements will be completed in a timely and workerlike manner in
accordance with all applicable requirements of all appropriate governmental
entities and the plans and specifications of the Project, as such plans and
specifications may be changed from time to time with the approval of Mortgage
lender, and any applicable governmental entities, if such approval shall be
required.
D-1
(d) The Project is being operated in accordance with standards and
procedures which are prudent and customary for the operation of properties
similar to the Project.
(e) Additional Improvements on the Project, if any, shall be completed
substantially in conformity with plans and specifications approved by the
Special Limited Partner.
(f) No Partner has or will have any personal liability with respect to,
or has or will have personally guaranteed the payment of, the Mortgage.
(g) The Partnership is in compliance with all construction and use
codes applicable to the Project and is not in violation of any zoning,
environmental or similar regulations applicable to the Project.
(h) 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 Project at the time of first occupancy
and throughout the term of the Partnership.
(i) The Partnership has obtained Insurance written by an Insurance
Company.
(j) The Partnership owns the fee simple interest in the Project.
(k) 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.
(l) The Partnership will require the Accountant to depreciate the
Improvements in accordance with Exhibit "I".
(m) To the best of the Managing General Partner's and 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 Project and (2) no
aboveground or underground storage tanks are now or have ever been located on or
under the Project. The General Partner will not install or allow to be installed
any aboveground or underground storage tanks on the Project. The Managing
General Partner and General Partner covenants that the Project shall be kept
free of Hazardous Materials and shall not be used to generate, manufacture,
refine, transport, treat, store, handle, dispose of, transfer, produce or
process Hazardous Materials, except in connection with the normal maintenance
and operation of any portion of the project. The Managing General Partner and
the General Partner shall comply, or cause there to be compliance, with all
D-2
applicable Federal, state and local laws, ordinances, rules and regulations with
respect to Hazardous Materials and shall keep, or cause to be kept, the Project
free and clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. The Managing General Partner and the General Partner must promptly
notify 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
Project, any Improvements constructed on the Project, or the soil, groundwater
or soil vapor, (4) if the Managing General Partner and 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, Managing General
Partner or General Partner arising out of or resulting from any Hazardous
Substance being present or released in, on or around any part of the Project.
(n) The Managing General Partner and the General Partner have not
executed and will not execute any agreements with provisions contradictory to,
or in opposition to, the provisions of the Partnership Agreement.
(o) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits, or the Revised Projected Tax Credits, if applicable.
(p) No charges or encumbrances exist with respect to the Project other
than those which are created or permitted by the Project Documents or are noted
or excepted in the title policy for the Project.
(q) The buildings on the Project 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 the Code, the Project will satisfy the Minimum
Set-Aside Test.
(r) 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.
(s) The Managing General Partner and the General Partner have not lent
or otherwise advanced any funds to the Partnership other than its Capital
Contribution and the Partnership has no unsatisfied obligation to make any
payments of any kind to the Managing General Partner and to the General Partner
or any Affiliate thereof, except as provided on Schedule One attached hereto and
incorporated herein by this reference.
(t) No event has occurred which constitutes a material default under
any of the Project Documents.
D-3
(u) No event has occurred which has caused, and the Managing General
Partner and the General Partner have 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 to be liable for
Partnership obligations; provided however, the Managing General Partner and the
General Partner shall not be in breach of this representation if all or a
portion of a 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 Managing General Partner and the General Partner are otherwise
authorized under this Agreement and; provided further, however, the Managing
General Partner and 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.
(v) 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 Project, has
occurred the continuing effect of which has: (1) materially or adversely
affected the operation of the Partnership or the Project; (2) materially or
adversely affected the ability of the Managing General Partner and the General
Partner to perform its obligations hereunder or under any other agreement with
respect to the Project; 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 Managing
General Partner, the General Partner, Affiliates of the Managing General Partner
and the General Partner or the Project only insofar as they or any of them are
part of the general public.
(w) Neither the Partnership nor the Managing General Partner nor the
General Partner has any liabilities, contingent or otherwise, which have not
been disclosed in writing to the Limited Partner and the Special Limited Partner
and which in the aggregate affect the ability of the Limited Partner to obtain
the anticipated benefits of its investment in the Partnership.
D-4
(x) The Managing General Partner and the General Partner collectively
have and shall maintain a net worth equal to at least $1,000,000 computed in
accordance with generally accepted accounting principles.
IN WITNESS WHEREOF, the undersigned have set their hands to this
Managing General Partner and General Partner Certification this ___ day of
_________________, 2000.
Elderly Living Development, Inc.
Managing General Partner
By: ____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
D-5
EXHIBIT E 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
Illinois, has prepared final working plans and detailed specifications for Lake
Village Apartments, L.P., an Illinois limited partnership (the "Partnership"),
between WNC Housing Tax Credit Fund VI, L.P., Series 7, a California limited
partnership ("Limited Partner") and the Partnership in connection with the
construction [rehabilitation] of improvements on certain real property located
in Kewanee, ▇▇▇▇▇ County, Illinois (the "Improvements").
The undersigned hereby certifies (i) that the Improvements have been completed
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 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.
-----------------------------------
Project Architect
Date: ____________________________
Confirmed by:
-----------------------------------
Managing General Partner
Date: ____________________________
E-1
EXHIBIT F TO THE PARTNERSHIP
[ACCOUNTANT'S CERTIFICATE]
[Accountant's Letterhead]
_______________, 2000
WNC Housing Tax Credit Fund VI, L.P., Series 7
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 7 (the "Limited Partner") of a limited partnership interest in Lake
Village Apartments, L.P., an Illinois limited partnership (the "Partnership")
which owns a certain parcel of land located in Kewanee, ▇▇▇▇▇ County, Illinois
and improvements thereon (the "Project"), the Limited Partner has requested our
certification as to the amount of low-income housing tax credits ("Tax Credits")
available with respect to the Project 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 Project of
$________________, a qualified basis (as defined in Section 42(c) of the Code)
of the Project of $_________________ and an applicable percentage (as defined in
Section 42(b) of the Code) of _____%.
Sincerely,
-------------------------
F-1
EXHIBIT G TO THE PARTNERSHIP AGREEMENT
[CONTRACTOR'S CERTIFICATE]
[Contractor's Letterhead]
_______________, 2000
WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Lake Village Apartments, L.P.
Dear Ladies and Gentlemen:
The undersigned, Twin Rivers Construction, (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 Kewanee, ▇▇▇▇▇ County, Illinois (hereinafter known as the "Project").
Contractor makes the following representations and warranties regarding Work at
the Project.
o Work on said Project has been performed and completed in accordance with the
plans and specifications for the Project.
o Contractor acknowledges that all amounts owed pursuant to the contract for
Work performed for Lake Village Apartments, L.P. is paid in full.
o Contractor acknowledges that Lake Village Apartments, L.P. is not in violation
with terms and conditions of the contractual documents related to the Project.
o Contractor warrants that all parties who have supplied Work for improvement of
the Project have been paid in full.
o 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.
Twin Rivers Construction
By:_________________________________________
Title:________________________________________
G-1
EXHIBIT H 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:
------------------------------------- -----------------------------------
------------------------------------ -----------------------------------
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_____________.
H-1
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
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Laundry Room
------------------------------------------------------------------------------
Common Areas
------------------------------------------------------------------------------
Carpet
------------------------------------------------------------------------------
Appliances
------------------------------------------------------------------------------
Lighting
------------------------------------------------------------------------------
Other
------------------------------------------------------------------------------
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Please describe in detail any major repairs:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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H-2
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
-------------------------------------------------------------------------------
H-3
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:
------------------------------------------------------------------------
------------------------------------------------------------------------
H-4
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
H-5
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 No. of No. in Income Income
No. 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:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant 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
-------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------
H-6
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)
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 No. Of Inc. Set- No. In Annual Income
No. Name Date Bdrms Pct. Aside Unit Income Limits
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Tenant Tenant Overall
Utility Gross Maximum Rent Tenat
Allow. Rent Rent Qualified Eligible
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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H-7
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 Estate
___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)?
H-8
TAX CREDIT COMPLIANCE MONITORING:
ANNUAL CERTIFICATION
As General Partner of Lake Village Apartments, L.P., I hereby certify as to
the following:
1. Lake Village Apartments, L.P. owns a 50 unit project ("Project") in
Kewanee, ▇▇▇▇▇ County, Illinois.
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 Project pursuant
to Section 42(g)(1) of the Internal Revenue Code ("Code").
3. The Project 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 Project is rent restricted as defined in Section
42(g)(2)of the Code.
5. Each unit in the Project is available for use by the general public and
not for use on a transient basis.
6. Each building in the Project 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 Project.
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 Project.
9. During the preceding calendar year when a unit in the Project became
vacant reasonable attempts were made to rent that unit to tenants whose incomes
met the income limitation applicable to the Project 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 Project 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 Project 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 Illinois
that the foregoing is true and correct.
Executed this ----- day of ---------at -------------, -----------------.
------------------------------------
H-9
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.
H-10
DEVELOPMENT FEE AGREEMENT
This DEVELOPMENT FEE AGREEMENT ("Agreement"), is entered into as of the
date written below by and between Elderly Living Development, Inc. ("Developer")
and Lake Village Apartments, L.P., an Illinois limited partnership ("Owner").
Developer and Owner collectively may be referred to as the "Parties" or
individually may be referred to as a "Party".
RECITALS
A. Owner has acquired the real property located in Kewanee, ▇▇▇▇▇
County, Illinois, as more particularly described in Exhibit A attached hereto
and incorporated herein (the "Real Property").
B. Owner intends to develop on the Real Property a unit low-income
rental housing complex and other related improvements, which is intended to
qualify for federal low-income housing tax credits (the "Project").
C. Prior to the date of this Agreement Developer has performed
substantial development services with respect to the Project as specified in
Section 2.3 of this Agreement. Developer has also agreed to oversee the
development of the Project until all construction work is completed and to
provide certain services relating thereto. The Parties recognize and acknowledge
that the Developer is, and has been, an independent contractor in all services
rendered to, and to be rendered to, the Owner pursuant to this Development Fee
Agreement.
D. Owner desires to commit its existing development agreement with
Developer into writing through this Development Fee Agreement for Developer's
services to manage, oversee, and complete development of the Project. Developer
desires to commit its existing development agreement with Owner into writing
through this Development Fee Agreement and Developer is willing to assign all
development rights to the Project to Owner, to undertake performance of such
development services, and to fulfill all obligations of the Developer set forth
in this Agreement, in consideration of Owner's restated promise to pay to
Developer the fee specified in this Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and the
mutual promises and undertakings in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Owner and Developer agree as follows.
1
SECTION I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall, when capitalized,
have the following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Construction Documents" means the contract documents between the Owner
and the Construction Lender pertaining to construction of the Project.
"Construction Lender" means Illinois Housing Development Authority,
which has committed to make a loan to finance construction of the Project.
"Construction Loan" means the loan to finance construction of the
Project, made to Owner by the Construction Lender.
"Contractor" means Twin Rivers Construction.
"Department" means the Illinois agency responsible for the reservation
and allocation of Tax Credits.
"Development Fee" means the fee for development services described in
Section 2 of this Agreement.
"Partnership Agreement" shall mean the Agreement of Limited Partnership
of Lake Village Apartments, L.P., an Illinois limited partnership, which
Partnership Agreement is incorporated herein by this reference. Any terms
capitalized but not defined herein shall have the meaning ascribed in the
Partnership Agreement.
"Tax Credits" means the low-income housing tax credits found in Section
42 of the Code, and all rules, regulations, rulings, notices and other
promulgations thereunder.
SECTION 2
ENGAGEMENT OF DEVELOPER; FEE; SERVICES
2.1 Engagement; Term. Owner hereby confirms the engagement of Developer
to act as developer of the Project, and to perform the various covenants and
obligations of the Developer under this Agreement. Developer hereby confirms and
accepts such engagement and agrees to perform fully and timely each and every
one of its obligations under this Agreement. The term of such engagement shall
commence on the date hereof and subject to the pre-payment provisions of Section
3 shall expire on December 31, 2009.
2.2 Development Fee. In consideration of Developer's prior activities
and Developer's agreement to provide development services during the term of
this Agreement, Owner agrees to pay the Developer a Development Fee in the
amount of $513,418. The Development Fee shall be payable in accordance with
Section 3 of this Agreement.
2
2.3 Development Services.
(a) Prior Services. Owner acknowledges that Developer has, prior to the
date hereof, performed substantial development services relating to the Project.
Such services (the "Prior Services") have included the following.
(1) Services Rendered Prior to December 31, 2000.
(A) Developer has negotiated and conferred with the
Contractor and recommended to the Owner to enter into a construction
contract with the Contractor for the building of the Apartment Housing.
(B) Developer has: estimated the cost of construction;
determined the construction period; prepared a monthly-estimated
construction chart reflecting the construction services required each month; and
prepared a preliminary construction budget.
(C) Developer has reviewed the plans and specifications for
compliance with design criteria and construction contracts.
(D) Developer has negotiated and conferred with public
authorities relating to traffic control, flood control and other matters
affecting the development of the Apartment Housing.
(E) Developer has negotiated, conferred with an architect
and recommended to the Owner to execute an architectural contract for the
planning and design of the Apartment Housing.
(F) Developer has placed its own capital at risk in
anticipation of the Apartment Housing being constructed, leased and Tax
Credits awarded.
(2) Other Prior Services.
(A) Developer has created, refined and analyzed the financial
projections for the Apartment Housing.
(B) Developer has negotiated, conferred, and worked with the
Apartment Housing architects, engineers and Contractor with regard to
preparation, refinement, and finalization of the plans and specifications for
the Apartment Housing, and projected construction schedules and costs.
(C) Developer has negotiated and conferred with the
Construction Lender to obtain the Construction Loan.
3
(D) Developer has negotiated and conferred with an insurance
carrier to provide a builder's risk policy during construction.
(b) Future Services. Developer hereby agrees to perform the following
development services for and as an agent of Owner.
(1) Construction and Development Matters. Developer shall
oversee construction of the Project on Owner's behalf, as provided in this
Section 2.3(b)(1). Owner shall allow Developer full access to the Project during
the construction period. Developer and Developer's agents shall perform their
work in a manner that minimizes interference with the management and operation
of the Project.
(A) Developer shall exert its best efforts to ensure
that the Contractor performs its obligations under the Construction
Documents in a diligent and timely manner.
(B) Developer shall participate in and provide
assistance with regard to pre-construction conferences and pre-construction
documents, including drawings, specifications, contracts, and schedules.
(C) Developer shall review all Construction
Documents, identify construction issues and participate in the resolution
of such issues.
(D) Developer shall attend construction progress
meetings at the Project site to monitor construction progress and advise
Owner and the Contractor with respect to the resolution of construction issues.
(E) Developer shall review the Contractor's monthly pay
applications.
(F) Developer shall monitor the Contractor's progress
with respect to the approved Project schedule and keep the Owner informed
of all pertinent Project issues and construction progress.
(G) Developer shall advise Owner with respect to
relations with engineers, architects, and other construction professionals.
(H) Developer shall be available for immediate
response in critical situations arising during the construction of the
Project.
(I) Developer shall coordinate relations with the City
of Carbon Cliff and other governmental authorities having jurisdiction over
development of the Project.
4
(c) Assignment of Development Rights. Developer hereby assigns to Owner
all rights to the development of the Project, including but not limited to, all
tangible and intangible rights arising with respect to the name Lake Village
Apartments, L.P., the design of the Project, the plans and specifications for
the Project and all rights arising under the agreements with Project architects,
engineers and other Project design and construction professionals.
SECTION 3
DEVELOPMENT FEE PAYMENTS
The Development Fee shall be paid to the Developer from Capital Contribution
payments received by the Owner in accordance with Section 9.2(b) of the
Partnership Agreement. If the Development Fee is not paid in full in accordance
with Section 9.2(b) of the Partnership Agreement then the balance of the
Development Fee shall be paid from available Net Operating Income in accordance
with the terms of Section 11.1 of the Partnership Agreement, but in no event
later than December 21, 2009. Also, if the Development Fee is not paid in full
in accordance with Section 9.2(b) of the Partnership Agreement then the unpaid
portion shall accrue interest at a rate equal to the 5-year Treasury money rate
in effect as of the date of the last Capital Contribution payment referenced in
Section 7.2(b) of this Agreement.
SECTION 4
TERMINATION
Neither Party to this Agreement shall have the right to terminate this
Agreement prior to the expiration of the term without cause. Owner may terminate
this Agreement without further liability, for cause, which shall mean any one of
the following:
(a) a material breach by Developer of its obligations under this
Agreement that is not cured within thirty (30) days after notice thereof (or, as
to any non-monetary obligations that is not reasonably capable of cure within 30
days, and provided that cure is commenced within 10 days of notice and
diligently pursued thereafter to completion, within such time as may reasonably
be necessary to complete such cure);
(b) a fraudulent or intentionally incorrect report by Developer to
Owner with respect to the Project; or
(c) any intentional misconduct or gross negligence by Developer with
respect to its duties under this Contract.
Upon proper termination of this Agreement by Owner pursuant to this
Section 4, all rights of Developer to receive unearned Development Fees pursuant
to this Agreement with respect to services not yet performed shall terminate.
Developer shall receive the full Development Fee for Prior Services and shall
receive a portion of the Development Fee for Future Services based on the
5
percentage of Completion of Construction of the Project at the time of
termination. Nothing in this Section 4 shall be deemed to prevent Owner from
bringing an action against Developer to recover fully all damages resulting from
any of the causes set forth in paragraphs (a), (b) or (c) above, or to prevent
Owner from contending in any action or proceeding that the Future Services were
not earned by Developer.
SECTION 5
GENERAL PROVISIONS
5.1 Notices. Notices required or permitted to be given under this
Agreement shall be in writing sent by registered or certified mail, postage
prepaid, return receipt requested, to the Parties at the following addresses, or
such other address as is designated in writing by the Party, the date of
registry thereof, or the date of certification receipt therefor being deemed the
date of such notice; provided, however, that any written communication
containing such information sent to a Party actually received by a Party shall
constitute notice for all purposes of this Agreement.
If to Developer: Elderly Living Development, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
If to Owner: Lake Village Apartments, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
5.2 Interpretation.
(a) Headings. The section headings in this Agreement are included for
convenience only; they do not give full notice of the terms of any portion of
this Agreement and are not relevant to the interpretation of any provision of
this Agreement.
(b) Relationship of the Parties. Neither Party hereto shall be deemed
an agent, partner, joint venturer, or related entity of the other by reason of
this Agreement and as such neither Party may enter into contracts or agreements
which bind the other Party.
(c) Governing Law. The Parties intend that this Agreement shall be
governed by and construed in accordance with the laws of the state of IL
applicable to contracts made and wholly performed within IL by persons domiciled
in IL.
(d) Severability. Any provision of this Agreement that is deemed
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without rendering invalid or unenforceable the remaining
provisions of this Agreement.
5.3 Integration; Amendment. This Agreement constitutes the entire
agreement of the Parties relating to the subject matter hereof. There are no
promises, terms, conditions, obligations, or warranties other than those
contained herein. This Agreement supersedes all prior communications,
representations, or agreements, verbal or written, among the Parties relating to
the subject matter hereof. This Agreement may not be amended except in writing.
6
5.4 Attorney' Fees. If any suit or action arising out of or related to
this Agreement is brought by any Party to any such document, the prevailing
Party shall be entitled to recover the costs and fees (including without
limitation reasonable attorneys' fees and costs of experts and consultants,
copying, courier and telecommunication costs, and deposition costs and all other
costs of discovery) incurred by such Party in such suit or action, including
without limitation to any post-trial or appellate proceeding.
5.5 Binding Effect. This Agreement shall bind and inure to the benefit
of, and be enforceable by, the Parties hereto and their respective successors,
heirs, and permitted assigns.
5.6 Assignment. Neither Party may assign this Agreement without the
consent of the other Party. No assignment shall relieve any Party of liability
under this Agreement unless agreed in writing to the contrary.
5.7 Third-Party Beneficiary Rights. No person not a Party to this
Agreement is an intended beneficiary of this Agreement, and no person not a
Party to this Agreement shall have any right to enforce any term of this
Agreement.
5.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all the Parties, notwithstanding that all Parties are not signatories to the
same counterpart.
5.9 Further Assurances. Each Party agrees, at the request of the other
Party, at any time and from time to time after the date hereof, to execute and
deliver all such further documents, and to take and forbear from all such
action, as may be reasonably necessary or appropriate in order more effectively
to perfect the transfers or rights contemplated herein or otherwise to confirm
or carry out the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Development Fee
Agreement to be executed as of ___________________, 2000.
DEVELOPER: Elderly Living Development, Inc.
By: ____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
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OWNER: Lake Village Apartments, L.P.
By: Elderly Living Development, Inc.,
Managing General Partner
By: ____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
8
EXHIBIT A
LEGAL DESCRIPTION
A TRACT OF LAND LOCATED IN A PARTY OF THE SOUTHEAST QUARTER (SE-1/4) OF SECTION
TWENTY-SEVEN (27), TOWNSHIP 15 NORTH, RANGE ▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇.▇., ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. MORE PARTICULARLY BOUNDED AND DESCRIBED AS FOLLOWS AND
BEARINGS ARE FOR THE PURPOSE OF DESCRIPTION ONLY:
COMMENCING AT AN IRON ROD AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER
(SE-1/4) OF SAID SECTION TWENTY-SEVEN (27); THENCE S 89(Degree) 24'00" W, ALONG
THE SOUTH LINE OF THE SOUTHEAST QUARTER (SE-1/4 ) OF SAID SECTION TWENTY-SEVEN
(27), A DISTANCE OF 413.70 FEET TO THE SOUTHEAST CORNER OF CANDLELIGHT PARK
SUBDIVISION AND THE PLACE OF BEGINNING; THENCE CONTINUING S 89(Degree) 24'00" W,
ALONG THE SOUTHE LINE OF THE SOUTHEAST QUARTER (SE-1/4) OF SAID SECTION
TWENTY-SEVEN (27), A DISTANCE OF 557.00 FEET TO THE SOUTHEAST CORNER OF KEWANEE
LAND TRUST #101 SUBDIVISION #1; THENCE N 00(Degree) 11' 00" E, ALONG THE EAST
LINE OF SAID SUBDIVISION AND SAID EAST LINE EXTENDED 550.00 FEET; THENCE N
89(Degree) 24"00' E 150.00 FEET; THENCE S 00(Degree) 11'00" W, 200.00 FEET;
THENCE S 55(Degree) 58'03" E, 193.50 FEET; THENCE N 89(Degree) 24'00" EAST,
246.00 FEET TO THE NORTHERLY EXTENSION OF THE WEST LINE OF SAID CANDLELIGHT PARK
SUBDIVISION; THENCE S 00(Degree) 07'00" W, ALONG SAID NORTHERLY EXTENSION AND
CONTINUING ALONG THE WEST LINE OF SAID CANDLELIGHT PARK SUBDIVISION, 240.02 FEET
TO THE PLACE OF BEGINNING AND CONTAINING 4.338 ACRES, MORE OR LESS. SUBJECT TO
RIGHT-OF-WAY OF A PUBLIC ROAD ALONG THE SOUTH SIDE OF THE ABOVE DESCRIBED TRACT
AND ALSO SUBJECT TO ALL EASEMENTS OF RECORD.
A
GUARANTY AGREEMENT
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of the agreement of Elderly Living
Development Inc. (the "Developer") to permit deferral of the $513,418 due from
Lake Village Apartments, L.P. an Illinois limited partnership ("Debtor") to the
Developer, the undersigned Guarantor(s), hereby unconditionally guaranty the
full and prompt payment when due, whether by acceleration or otherwise of that
certain Developer Fee from Debtor to the Developer, evidenced by the Development
Fee Agreement dated the even date herewith, and incorporated herein by this
reference. The foregoing described debt is referred to hereinafter as the
"Liabilities" or "Liability."
The undersigned further agree to pay all expenses paid or incurred by
the Developer in endeavoring to collect the Liabilities, or any part thereof,
and in enforcing the Liabilities or this Guaranty Agreement (including
reasonable attorneys' fees if collected or enforced by law or through an
attorney-at-law). The undersigned hereby represent and warrant that the
extension of credit or other financial accommodations by the Developer to Debtor
will be to the interest and advantage of the undersigned, and acknowledge that
this Guaranty Agreement is a substantial inducement to the Developer to extend
credit to Debtor and that the Developer would not otherwise extend credit to
Debtor.
The Developer may, from time to time, without notice to or consent of
the undersigned, (a) retain or obtain a security interest in any property to
secure any of the Liabilities or any obligation hereunder, (b) retain or obtain
the primary or secondary liability of any party or parties, in addition to the
undersigned, with respect to any of the Liabilities, (c) extend or renew for any
period (whether or not longer than the original period) or alter any of the
Liabilities, (d) release or compromise any Liability of the undersigned
hereunder or any Liability of any other party or parties primarily or
secondarily liable on any of the Liabilities, (e) release, compromise or
subordinate its title or security interest, or any part thereof, if any, in all
or any property now or hereafter securing any of the Liabilities or any
obligation hereunder, and permit any substitution or exchange for any such
property, and (f) resort to the undersigned for payment of any of the
Liabilities, whether or not the Developer shall have resorted to any property
securing any of the Liabilities or any obligation hereunder or shall have
preceded against any other party primarily or secondarily liable on any of the
Liabilities.
The undersigned hereby expressly waive: (a) notice of the existence or
creation of all or any of the Liabilities, (b) notice of any amendment or
modification of any of the instruments or documents evidencing or securing the
Liabilities, (c) presentment, demand, notice of dishonor and protest, (d) all
diligence in collection or protection of or realization upon the Liabilities or
1
any thereof, any obligation hereunder, or any security for any of the foregoing,
and (e) the right to require the Developer to proceed against Debtor on any of
the Liabilities.
In the event any payment of Debtor to the Developer is held to
constitute a preference under the bankruptcy laws, or if for any other reason
the Developer is required to refund such payment or pay the amount thereof to
any other party, such payment by Debtor to the Developer shall not constitute a
release of Guarantor from any Liability hereunder, but Guarantor agrees to pay
such amount to the Developer upon demand and this Guaranty shall continue to be
effective or shall be reinstated, as the case may be, to the extent of any such
payment or payments.
No delay or failure on the part of the Developer in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Developer of any right or remedy shall preclude other or future
exercise thereof or the exercise of any other right or remedy. No action of the
Developer permitted hereunder shall in any way impair or affect this Guaranty
Agreement. For the purpose of this Guaranty Agreement, the Liabilities of Debtor
to the Developer are guaranteed notwithstanding any right or power of Debtor or
anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
impair or affect the obligations of the undersigned hereunder.
Any payment from Guarantor directly to Developer in accordance with
this Agreement shall be classified and booked as a non-refundable cost overrun
payment from Guarantor to Debtor in consideration of this Guaranty Agreement and
then a payment by Debtor to Developer in consideration of the Development Fee
Agreement.
This Guaranty Agreement shall be binding upon the undersigned, and upon
the legal representatives, heirs, successors and assigns of the undersigned.
This Guaranty Agreement has been made and delivered in the state of IL
and shall be construed and governed under Illinois law.
Whenever possible, each provision of the Guaranty Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition of invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty Agreement.
Whenever the singular or plural number, masculine or feminine or neuter
is used herein, it shall equally include the other where applicable. In the
event this Guaranty Agreement is executed by more than one guarantor, this
Guaranty Agreement and the obligations hereunder are the joint and several
obligation of the undersigned.
2
Guarantor consents to the jurisdiction of the courts in the State of
Illinois and/or to the jurisdiction and venue of any United States District
Court in the State of Illinois having jurisdiction over any action or judicial
proceeding brought to enforce, construe or interpret this Guaranty. Guarantor
agrees to stipulate in any such proceeding that this Guaranty is to be
considered for all purposes to have been executed and delivered within the
geographical boundaries of the State of Illinois, even if it was, in fact,
executed and delivered elsewhere.
IN WITNESS WHEREOF, the undersigned have hereunto caused this Guaranty
Agreement to be executed as of _______________________, 2000.
Signed, sealed and delivered GUARANTOR:
---------
in the presence of:
----------------------------
Witness
--------------------------
____________________________ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Notary Public
My Commission Expires:
Address for Guarantor:
---------------------
____________________________ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
(▇▇▇▇▇▇ ▇▇▇▇) ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3
CONSTRUCTION AND OPERATING BUDGET
AGREEMENT
This Construction and Operating Budget Agreement ("Agreement") is
entered into as of the date written below by and between Lake Village
Apartments, L.P., an Illinois limited Partnership ("Owner"), Elderly Living
Development, Inc. ("Managing General Partner") and Quad Cities Redevelopment
Resources, Inc., ("General Partner"), WNC Housing Tax Credit Fund VI, L.P.,
Series 7, a California limited Partnership ("Limited Partner") and WNC Housing,
L.P., a California limited Partnership ("Special Limited Partner"). Owner,
General Partner, Limited Partner and Special Limited Partner collectively may be
referred to as the "Parties" or individually may be referred to as a "Party".
RECITALS
A. Owner has acquired the property site at Kewanee, ▇▇▇▇▇ County,
Illinois (the "Real Property").
B. Owner intends to develop on the Real Property a fifty (50) unit
low-income rental housing complex and other related improvements for elderly,
which is intended to qualify for federal low-income housing tax credits (the
"Project").
C. On the even date herewith a Partnership agreement for Lake Village
Apartments, L.P. ("Partnership Agreement") was entered into by and between
Elderly Living Development, Inc., as the managing general partner (the "Managing
General Partner") and Quad Cities Redevelopment Resources, Inc.,(the "General
Partner"), WNC Housing Tax Credit Fund VI, L.P., Series 7 as the limited partner
and WNC Housing, L.P. as the special limited partner (the Partnership Agreement
is incorporated herein by this reference as if the same were reproduced in full
and any capitalized terms not defined in this Agreement shall have the meaning
as defined in the Partnership Agreement).
D. In determining whether to be admitted into Lake Village Apartments,
L.P. and contribute funds to the development of the Project, the Limited Partner
and Special Limited Partner performed a due diligence review. Part of the due
diligence review included an analysis of the available sources of funds to
develop the Project, the cost of construction, the anticipated revenues
associated with the rental of the Project apartment units and the expenses
required to operate the Project.
E. The Parties recognize and acknowledge that the final construction
cost determination involves substantial negotiations with lenders, contractors
and governmental authorities.
1
F. The Parties recognize and acknowledge that a final operating budget
involves substantial negotiations with lenders and governmental authorities.
G. Limited Partner's and Special Limited Partner's decision to execute
the Partnership Agreement is based, in part, on their acceptance of the sources
of funds available to develop the Project, the cost of construction to build the
Project and the operating budget necessary to provide a positive Debt Service
Coverage.
Now Therefore, in consideration of the foregoing recitals and the
mutual promises and undertakings in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Owner and Developer agree as follows.
1. Source of Funds. Attached hereto as Exhibit "A" and incorporated
herein by this reference is the Project Source of Funds. The Source of Funds
have been specified in the Partnership Agreement as the Construction Loan, the
Mortgage, the Capital Contribution of the General Partner, the Capital
Contribution of the Limited Partner and the Capital Contribution of the Special
Limited Partner. Unless expressly permitted in the Partnership Agreement,
Consent of the Special Limited Partner is required for any change to the Source
of Funds.
2. Construction Proforma. Attached hereto as Exhibit "B" and
incorporated herein by this reference is the Construction Proforma. If the
construction costs 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 deficiencies.
3. Operating Proforma. Attached hereto as Exhibit "C" and incorporated
herein by this reference is the Operating Proforma. The Limited Partner and the
Special Limited Partner underwrote the subject transaction at a 1.10 Debt
Service Coverage. Notwithstanding, in the event the Net Operating Income does
not produce a 1.10 Debt Service Coverage as determined by the Special Limited
Partner then at the request of the Special Limited Partner the General Partner
shall reduce and/or refinance the principal of the Mortgage to an amount the
Special Limited Partner determines is adequate to produce a 1.10 Debt Service
Coverage.
4. Notices. Any notice given pursuant to this Agreement may be served
personally on the Party to be notified, 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:
To the Managing
General Partner: Elderly Living Development, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2
To the General Partner: Quad Cities Redevelopment Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Limited Partner: WNC Housing Tax Credit Fund VI, L.P., Series 7
c/o WNC & Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
To the Special
Limited Partner: WNC HOUSING, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
5. 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 Parties.
6. 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.
7. Captions. Captions to and headings of the Sections of this Agreement
are solely for the conveniences of the Parties, 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.
8. 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.
9. Governing Law. This Agreement and its application shall be governed
by the laws of Illinois.
10. 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.
In Witness Whereof, this Construction and Operating Budget Agreement is
made and entered into as of ________________, 2000.
MANAGING GENERAL PARTNER
Elderly Living Development, Inc.
By: ____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Signatures continued on next page...
3
LIMITED PARTNER
WNC Housing Tax Credit Fund VI, L.P., Series 7
By: WNC & Associates, Inc.,
General Partner
By: _________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
SPECIAL LIMITED PARTNER
WNC Housing, L.P.
By: WNC & Associates, Inc.,
General Partner
By: _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
4
EXHIBIT A
TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT
SOURCE OF FUNDS
A
EXHIBIT B
TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT
CONSTRUCTION PROFORMA
B
EXHIBIT C
TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT
OPERATING PROFORMA
C