SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 19, 1998
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(Exact name of registrant as specified in its charter)
California 333-24111 33-0745418
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 662-5565
N/A
Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
WNC Housing Tax Credit Fund VI, L.P., Series 5("Series 5") has acquired a
Local Limited Partnership Interest in Mansur Wood Living Center, L.P., an
Illinois limited partnership ("MANSUR"). The Local Limited Partnership owns a
single-family housing development in Carbon Cliff, Illinois (the "Property.")
The following tables contain information concerning the Property and the
Local Limited Partnership identified herein:
<TABLE>
LOCAL
ACTUAL OR LIMITED
ESTIMATED ESTIMATED PERMANENT PARTNER-
PROJECT CONSTRUC- DEVELOP- MORTGAGE SHIP'S YEAR
LOCAL NAME AND TION MENT COST NUMBER OF BASIC LOAN ANTICIPATED CREDITS
LIMITED NUMBER LOCATION COMPLETION (INCLUDING APARTMENT MONTHLY PRINCIPAL TAX CREDITS TO BE FIRST
PARTNERSHIP OF BUILDINGS OF PROPERTY DATE LAND COST) UNITS RENTS AMOUNT (1) AVAILABLE
<S> <C> <C> <C> <C> <C> <C>
MANSUR Mansur Wood Carbon Cliff December 1999 $10,935,484 46 2BR Units $304-673 $4,175,976 $9,044,610 2000
Living Center (Rock Island 69 3BR Units $351-790 VSB (2)
Apartments County),
Illinois
9 buildings
<FN>
(1) Low Income Housing Credits are available over a 10-year period. For the
year in which the credit first becomes available, Series 5 will receive
only that percentage of the annual credit which corresponds to the
number of months during which Series 5 was a limited partner of the
Local Limited Partnership, and during which the Property was completed
and in service.
(2) Valley State Bank ("VSB") will provide the mortgage loan for a term of
15 years at an annual interest rate not to exceed 8%. Principal and
interest will be payable monthly, based on a 30-year amortization
schedule. Outstanding principal will be due upon maturity.
</FN>
</TABLE>
2
<PAGE>
Carbon Cliff (MANSUR): Carbon Cliff (population 1,500) is in northwest
Illinois in Rock Island County, in the area known as the "Quad Cities," which
include Davenport, and Bettendorf, Iowa and Rock Island, and Moline, Illinois.
<TABLE>
LOCAL ESTIMATED
GENERAL SHARING RATIOS: ACQUISITION
LOCAL LOCAL PARTNER'S ALLOCATIONS (4) AND FEES PAYABLE
LIMITED GENERAL PROPERTY DEVELOPMENT SHARING RATIOS: SALE OR REFINANCING SERIES 5's CAPITAL TO FUND
PARTNERSHIP PARTNER MANAGER (1) FEE (2) CASH FLOW (3) PROCEEDS (5) CONTRIBUTIONS(6) MANAGER
<S> <C> <C> <C> <C> <C> <C>
MANSUR Elderly Living LDI $1,350,000 WNC: $5,000 98.99/.01/1 $6,446,347 $598,000
Development, Management LGP: 70% of 50/50
Inc. Corp. the balance
The balance:
50/50
<FN>
(1) The maximum annual management fee payable to the property manager generally
is determined pursuant to lender regulations. The Local General Partner is
authorized to employ either itself or one of its affiliates, or a third
party, as property manager for leasing and management of the Property so long
as the fee therefore does not exceed the amount authorized and approved by the
lender for the Property.
3
<PAGE>
(2) The Local Limited Partnership will pay its Local General Partner or an
affiliate of its Local General Partner a development fee in the amount set
forth, for services incident to the development and construction of the
Property, which services include: negotiating the financing commitments for the
Property; securing necessary approvals and permits for the development and
construction of the Property; and obtaining allocations of Low Income Housing
Credits. This payment will be made in installments after receipt of each
installment of the capital contributions made by Series 5.
(3) Reflects the amount of the net cash flow from operations, if any, to be
distributed to Series 5 ("WNC") and the Local General Partner ("LGP") of the
Local Limited Partnership for each year of operations. Generally, to the extent
that the specific dollar amounts which are to be paid to WNC are not paid
annually, they will accrue and be paid from sale or refinancing proceeds as an
obligation of the Local Limited Partnership.
(4) Subject to certain special allocations, reflects the respective percentage
interests in profits, losses and Low Income Housing Credits of (i) Series 5,
(ii) WNC Housing, L.P., an affiliate of the sponsor which is the special
limited partner, and (iii) the Local General Partner.
(5) Reflects the percentage interests of Series 5 and the Local General
Partner, in any net cash proceeds from sale or refinancing of the Property,
after payment of the mortgage loan and other Local Limited Partnership
obligations.
(6) Series 5 will make its capital contributions to the Local Limited
Partnership in stages, with each contribution due when certain conditions
regarding construction or operation of the Property have been fulfilled.
</FN>
</TABLE>
4
<PAGE>
Item 7. Financial Statements and Exhibits
a. Financial Statements of Businesses Acquired.
Inapplicable.
b. Proforma Financial Information
Proforma Balance Sheet, June 30, 1998 (Unaudited)
Notes to Proforma Balance Sheet
c. Exhibits
10.1 Amended and Restated Agreement of Limited
Partnership of Mansur Wood Living Center, L.P.
5
<PAGE>
<TABLE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
PROFORMA BALANCE SHEET
June 30, 1998
ASSETS
Historical Proforma Proforma
Balance Adjustments Balance
<S> <C> <C>
Cash and cash equivalents $ 11,960,295 $ 281,320
1,644,250
(23,240) $ 13,862,625
Subscriptions receivable 1,644,250 (1,644,250) 0
Loans receivable 380,194 380,194
Investment in limited partnerships 10,443,594 9,603,757
23,240 20,070,591
Other assets 27,432 0 27,432
------------ ----------- -----------
$ 24,455,765 $9,885,077 $34,340,842
============ ========= ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Payables to limited partnerships $2,874,296 $9,603,757 $12,478,053
Accrued fees and expenses due to general
partner and affiliates 1,035,683 0 1,035,683
----------- ----------- ----------
3,909,979 9,603,757 13,513,736
----------- --------- ----------
PARTNERS' CAPITAL
General partner (14,204) (507) (14,711)
Limited partners 20,559,990 281,827 20,841,817
------------ --------- ----------
Total partners' capital 20,545,786 281,320 20,827,106
------------ --------- ----------
$24,455,765 $9,885,077 $34,340,842
============ =========== ===========
- Unaudited -
See Accompanying Notes to Proforma Balance Sheet
FS-1
</TABLE>
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO PROFORMA BALANCE SHEET
NOTE 1 - GENERAL
The information contained in the following notes to the proforma balance sheet
is condensed from that which appears in the financial statements. Accordingly,
this proforma balance sheet should be reviewed in conjunction with the
financial statements and related notes thereto contained in the WNC Housing Tax
Credit Fund VI, L.P., Series 5 financial statements dated June 30, 1998. WNC
Housing Tax Credit Fund VI, L.P., Series 5 is referred to in these notes as the
"Partnership."
NOTE 2 - INTRODUCTION TO PROFORMA ADJUSTMENTS
As of June 30, 1998, the Partnership was admitted as majority limited partner in
ten limited partnerships (Bradley Villas Limited Partnership, Chillicothe Plaza
Apartments, L.P., Concord Apartment Partners, L.P., El Reno Housing Associates
Limited Partnership, Hillcrest Heights L.P., Hughes Villa Limited Partnership,
Mark Twain Senior Community Limited Partnership, Murfreesboro Villas Limited
Partnership, Spring Valley Terrace Apartments L.L.C. and United Development Co.,
L.P. 97.2). Subsequent to June 30, 1998, the Partnership has acquired a limited
partnership interest in two limited partnerships (United Development Co., L.P.
97.1 ("United 97.1")) and Mansur Wood Living Center ("Mansur"); and is
negotiating to acquire the limited partnership interest in one other
partnership ("Apt Housing Theodore"). These investments commit the Partnership
to capital contributions as follows:
APT HOUSING THEODORE $ 1,312,916
UNITED 97.1 1,844,494
MANSUR 6,446,347
---------
$ 9,603,757
In accordance with Article 11, Proforma Financial Information of Regulation
S-X of the Securities and Exchange Commission, the accompanying proforma balance
sheet was computed assuming that the three limited partnerships discussed above
were acquired at the end of the period presented. The first adjustment to cash
and the adjustment to partners' equity of $281,320, reflect the net proceeds
from July 1, 1998 to September 19, 1998 from issuance of 362 units of limited
partners' capital ($362,000 less notes receivable of $30,000, and commissions
and offering costs of $50,680). The second adjustment to cash and the
FS-2
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO PROFORMA FINANCIAL STATEMENTS (Continued)
NOTE 2 - INTRODUCTION TO PROFORMA ADJUSTMENTS (Continued)
adjustment to subscriptions receivable of $1,644,250 reflect the collection of
subscriptions receivable from the above sale of limited units and those units
previously sold. The adjustments to investment in limited partnerships and notes
payable to limited partnerships of $9,603,757 reflect the Partnership's
acquisition of the three limited partnership interests as if the Partnership's
date of acquisition was June 30, 1998. The second adjustment to investment in
limited partnerships and the third adjustment to cash of $23,240 reflect the
acquisition fee for the acquisition of the identified limited partnerships.
The three apartment complexes were under construction or rehabilitation during
the period presented and had no operations which should be reported. The
Partnership uses the equity method of accounting to account for its investments
in these local limited partnerships.
FS-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
Date: October 12, 1998 By: WNC & Associates, Inc.,
General Partner
By: /s/ JOHN B. LESTER, JR.
John B. Lester, Jr.,
President
6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
10.1 Amended and Restated Agreement of
Limited Partnership of Mansur Wood Living
Center, L.P.
Amended And Restated Agreement
Of Limited Partnership Of
Mansur Wood Living Center, L.P.
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS ......................................... 1
1.1 "Accountant" ................................... 1
1.2 "Act" .......................................... 2
1.3 "Actual Tax Credit"............................. 2
1.4 "Adjusted Capital Account Deficit" ............. 2
1.5 "Affiliate" .................................... 2
1.6 "Agreement" or "Partnership Agreement".......... 2
1.7 "Assignee" ..................................... 2
1.8 "Bankruptcy" or "Bankrupt"...................... 3
1.9 "Break-even Operations"......................... 3
1.10 "Capital Account" .............................. 3
1.11 "Capital Contribution" ......................... 3
1.12 "Code" ......................................... 3
1.13 "Completion of Construction".................... 4
1.14 "Compliance Period"............................. 4
1.15 "Consent of the Special Limited Partner"........ 4
1.16 "Construction Contract"......................... 4
1.17 "Construction Loan" ............................ 4
1.18 "Contractor" ................................... 4
1.19 "Debt Service Coverage"......................... 4
1.20 "Deferred Management Fee"....................... 5
1.21 "Developer"..................................... 5
1.22 "Development Fee" .............................. 5
1.23 "Distributions" ................................ 5
1.24 "Fair Market Value" ............................ 5
1.25 "First Year Certificate" ....................... 5
1.26 "Force Majeure"................................. 5
1.27 "General Partner" .............................. 5
1.28 "Gross Asset Value" ............................ 5
1.29 "Hazardous Substance"........................... 6
1.30 "Improvements".................................. 7
1.31 "Incentive Management Fee"...................... 7
1.32 "Income and Losses"............................. 7
1.33 "Insurance" .................................... 8
1.34 "Insurance Company" ............................ 9
1.35 "Interest" ..................................... 9
1.36 "Involuntary Withdrawal"........................ 9
1.37 "LIHTC"......................................... 9
1.38 "Limited Partner"............................... 9
1.39 "Management Agent".............................. 9
1.40 "Management Agreement".......................... 9
1.41 "Minimum Set-Aside Test"........................ 9
1.42 "Mortgage" or "Mortgage Loan"................... 10
1.43 "Net Operating Income........................... 10
1.44 "Nonrecourse Deductions"........................ 11
1.45 "Nonrecourse Liability"......................... 11
1.46 "Operating Deficit" ............................ 11
1.47 "Operating Deficit Guarantee Period"............ 11
1.48 "Operating Loans"............................... 11
<PAGE>
1.49 "Original Limited Partner" ..................... 11
1.50 "Partner(s)" ................................... 11
1.51 "Partner Nonrecourse Debt" ..................... 11
1.52 "Partner Nonrecourse Debt Minimum Gain" ........ 11
1.53 "Partner Nonrecourse Deductions" ............... 11
1.54 "Partnership" .................................. 11
1.55 "Partnership Minimum Gain" ..................... 11
1.56 "Permanent Mortgage Commencement" .............. 11
1.57 "Person" ....................................... 12
1.58 "Project" ...................................... 12
1.59 "Project Documents" ............................ 12
1.60 "Projected Annual Tax Credits" ................. 12
1.61 "Projected Tax Credits" ........................ 12
1.62 "Qualified Tenants" ............................ 12
1.63 "Rent Restriction Test" ........................ 12
1.64 "Reporting Fee"................................. 12
1.65 "Revised Projected Tax Credits"................. 12
1.66 "Sale or Refinancing"........................... 12
1.67 "Sale or Refinancing Proceeds" ................. 13
1.68 "Special Limited Partner"....................... 13
1.69 "State" ........................................ 13
1.70 "State Tax Credit Agency" ...................... 13
1.71 "Substitute Limited Partner" ................... 13
1.72 "Tax Credit" ................................... 13
1.73 "Tax Credit Conditions"......................... 13
1.74 "Tax Credit Period.............................. 13
1.75 "TIF"........................................... 14
1.75 "TRA 1986" ..................................... 14
1.76 "Treasury Regulations" ......................... 14
1.77 "Withdrawing" or "Withdrawal"................... 14
II. NAME ................................................ 14
III. PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE ........ 14
3.1 Principal Executive Office ..................... 14
3.2 Agent for Service of Process ................... 14
IV. PURPOSE ............................................. 15
V. TERM ................................................ 15
VI. GENERAL PARTNER'S CONTRIBUTIONS AND LOANS............ 15
6.1 Capital Contribution of General Partner......... 15
6.2 Construction and Operating Obligations;
General Partner Loans......................... 15
6.3 Other General Partner Loans..................... 16
VII. CAPITAL CONTRIBUTIONS OF LIMITED PARTNER............. 16
7.1 Original Limited Partner........................ 16
7.2 Capital Contribution of Limited Partner......... 17
7.3 Repurchase of Limited Partner's Interest........ 19
7.4 Reduction of Limited Partner's
Capital Contribution.......................... 20
7.5 Capital Contribution of Special Limited Partner. 21
<PAGE>
7.6 Liability of Limited Partner and Special
Limited Partner................................. 22
VIII. WORKING CAPITAL AND RESERVES ....................... 22
8.1 Operation and Maintenance Account............... 22
8.2 Tax and Insurance Account....................... 22
8.3 Other Reserves.................................. 22
IX. MANAGEMENT AND CONTROL .............................. 23
9.1 Power and Authority of General Partner ......... 23
9.2 Payments to the General Partners and Others .... 23
9.3 Specific Powers of the General Partner ......... 25
9.4 Authority Requirements.......................... 25
9.5 Limitations on General Partner's
Power and Authority ............................ 26
9.6 Restrictions on Authority of General Partner.... 27
9.7 Duties of General Partner ...................... 28
9.8 Partnership Expenses ........................... 29
9.9 Other Business of Partners ..................... 30
9.10 Covenants, Representations and Warranties....... 31
9.11 Option to Acquire............................... 34
X. ALLOCATIONS OF INCOME, LOSSES AND CREDITS ........... 36
10.1 General ........................................ 36
10.2 Allocations From Sale or Refinancing............ 36
10.3 Special Allocations............................. 37
10.4 Curative Allocations............................ 40
10.5 Other Allocation Rules.......................... 41
10.6 Tax Allocations: Code Section 704(c)........... 41
10.7 Allocation Among Limited Partners............... 42
10.8 Allocation Among General Partners .............. 42
10.9 Modification of Allocations .................... 42
XI. DISTRIBUTION ........................................ 43
11.1 Distribution of Net Operating Income ........... 43
11.2 Distribution of Sale or Refinancing Proceeds.... 43
XII. TRANSFERS OF LIMITED PARTNER'S INTEREST
IN THE PARTNERSHIP................................... 44
12.1 Assignment of Limited Partner's Interest ....... 44
12.2 Effective Date of Transfer ..................... 44
12.3 Invalid Assignment ............................. 44
12.4 Assignee's Rights to Allocations
and Distributions .............................. 45
12.5 Substitution of Assignee as Limited Partner
or Special Limited Partner........................ 45
XIII. WITHDRAWAL, REMOVAL AND REPLACEMENT OF GENERAL
PARTNER ............................................ 46
13.1 Withdrawal of General Partner .................. 46
13.2 Removal of General Partner ..................... 46
<PAGE>
13.3 Effects of a Withdrawal......................... 47
13.4 Successor General Partner....................... 49
13.5 Admission of Additional or Successor
General Partner ................................ 49
13.6 Transfer of Interest ........................... 50
XIV. BOOKS AND ACCOUNTS, REPORTS, TAX RETURNS,
FISCAL YEAR AND BANKING ............................. 50
14.1 Books and Accounts ............................. 50
14.2 Accounting Reports ............................. 51
14.3 Other Reports .................................. 51
14.4 Late Reports ................................... 53
14.5 Annual Site Visits.............................. 54
14.6 Tax Returns..................................... 54
14.7 Fiscal Year .................................... 54
14.8 Banking ........................................ 54
14.9 Certificates and Elections ..................... 54
XV. DISSOLUTION, WINDING UP, TERMINATION AND
LIQUIDATION OF THE PARTNERSHIP ...................... 55
15.1 Dissolution of Partnership ..................... 55
15.2 Return of Capital Contribution upon
Dissolution .................................... 55
15.3 Distributions of Assets ........................ 55
15.4 Deferral of Liquidation......................... 56
15.5 Liquidation Statement .......................... 56
15.6 Certificates of Dissolution; Certificate of
Cancellation of Certificate of Limited
Partnership .................................... 57
XVI. AMENDMENTS .......................................... 57
XVII. MISCELLANEOUS ...................................... 58
17.1 Voting Rights .................................. 58
17.2 Meeting of Partnership ......................... 58
17.3 Notices ........................................ 59
17.4 Successors and Assigns ......................... 59
17.5 Recording of Certificate of Limited
Partnership. ................................... 59
17.6 Amendment of Certificate of Limited
Partnership .................................... 59
17.7 Counterparts ................................... 60
17.8 Captions ....................................... 60
17.9 Saving Clause................................... 60
17.10 Tax Matters Partners........................... 60
17.11 Expiration of Compliance Period................ 61
17.12 Number and Gender ............................. 61
17.13 Entire Agreement .............................. 61
17.14 Governing Law ................................. 61
17.15 Attorney's Fees ............................... 61
17.16 Receipt of Correspondence ..................... 62
17.17 Security Interest and Right of Set-Off ........ 62
EXHIBIT A - Legal Description...................... A-1
<PAGE>
EXHIBIT B - Form of Legal Opinion.................. B-1 - B-4
EXHIBIT C - Certification and Agreement............ C-1 - C-4
EXHIBIT D - General Partner Certification.......... D-1 - D-5
EXHIBIT E - Form of Completion Certificate......... E-1
EXHIBIT F - Accountant's Certificate............... F-1
EXHIBIT G - Contractor's Letter.....................G-1
EXHIBIT H - Report of Operations................... H-1 - H-10
<PAGE>
Amended And Restated Agreement
Of Limited Partnership Of
Mansur Wood Living Center, L.P.
This Amended And Restated Agreement Of Limited Partnership is being
entered into effective as of the date written below by and between Elderly
Living Development, Inc., as the general partner (the "General Partner"), WNC
Housing Tax Credit Fund VI, L.P., Series 5, 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 John McChurch as the withdrawing limited partners (collectively, the
"Original Limited Partner").
RECITALS
WHEREAS, Mansur Wood Living Center, L.P., an Illinois limited
partnership (the "Partnership") recorded a certificate of limited partnership
with the Illinois Secretary of State on April 21, 1998. A partnership agreement
dated on November 1, 1997 was entered into by and between the General Partner
and the Original Limited Partner (the "Original Partnership Agreement").
WHEREAS, the Partners desire to enter into this Agreement to provide
for, among other things, (i) the continuation of the Partnership, (ii) the
admission of the Limited Partner and the Special Limited Partner as partners of
the Partnership, (iii) the liquidation of the Original Limited Partner's
Interest in the Partnership, (iv) the payment of Capital Contributions by the
Limited Partner and the Special Limited Partner to the Partnership, (v) the
allocation of Income, Losses, Tax Credits and distributions of Net Operating
Income and other cash funds of the Partnership among the Partners (vi) the
respective rights, obligations and interests of the Partners to each other and
to the Partnership, and (vii) 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:
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<PAGE>
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.
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, representing 98.99% 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 1.1 "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.
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<PAGE>
Section 1.2 "Agreement" or "Partnership Agreement" shall mean this
Amended and Restated Agreement of Limited Partnership, as it may be amended from
time to time. Words such as "herein," "hereinafter," "hereof," "hereto,"
"hereby" and "hereunder," when used with reference to this Agreement, refers to
this Agreement as a whole, unless the context otherwise requires.
Section 1.3 "Assignee" shall mean a Person who has acquired all or a
portion of the Limited Partner's beneficial interest in the Partnership and has
not become a Substitute Limited Partner.
Section 1.4 "Bankruptcy" or "Bankrupt" shall mean the making of an
assignment for the benefit of creditors, becoming a party to any liquidation or
dissolution action or proceeding, the commencement of any bankruptcy,
reorganization, insolvency or other proceeding for the relief of financially
distressed debtors, or the appointment of a receiver, liquidator, custodian or
trustee and, if any of the same occur involuntarily, the same not being
dismissed, stayed or discharged within 90 days; or the entry of an order for
relief under Title 11 of the United States Code. A Partner shall be deemed
Bankrupt if the Bankruptcy of such Partner shall have occurred and be
continuing.
Section 1.5 "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 1.6 "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 1.7 "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
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<PAGE>
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 1.8 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
Section 1.9 "Completion of Construction" shall mean the completion of
construction of the Project substantially in accordance with the Project
Documents in order to obtain the required certificates of occupancy (or the
local equivalent) for all 60 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 1.10 "Compliance Period" shall mean the period set forth in
Section 42 (i)(1) of the Code, as amended, or any successor statute.
Section 1.11 "Consent of the Special Limited Partner" shall mean the
prior written consent or approval of the Special Limited Partner.
Section 1.12 "Construction Contract" shall mean the construction
contract in the amount of $8,117,350, entered into between the Partnership and
the Contractor pursuant to which the Project is being constructed.
Section 1.13 "Construction Loan" shall mean the loan obtained from
Valley State Bank in the principal amount of $6,204,130 at an interest rate
equal to 7.5% per annum for a term of two years 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 1.14 "Contractor" shall mean Twin Rivers Construction, which is
the general construction contractor for the Project.
Section 1.15 "Debt Service Coverage" shall mean the ratio
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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.
Section 1.16 "Deferred Management Fee" shall have the meaning set forth
in Section 9.2(c) hereof.
Section 1.17 "Developer" shall mean Elderly Living Development, Inc.
Section 1.18 "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.
Section 1.19 "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 1.20 "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 1.21 "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 1.22 "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 1.23 "General Partner(s)" shall mean Elderly Living
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Development, Inc., and such other Persons as are admitted to the Partnership as
additional or substitute General Partners pursuant to this Agreement.
Section 1.24 "Gross Asset Value" shall mean with respect to any asset,
the asset's adjusted basis for federal income tax purposes, except as follows:
a) The initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the Fair Market Value of such asset, as 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 1.28(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.28(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.28(d).
If the Gross Asset Value of an asset has been determined
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or adjusted pursuant to Section 1.28(a), Section 1.28(b), or Section 1.28(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 1.25 "Hazardous Substance" shall mean and include any substance,
material or waste, including asbestos, petroleum and petroleum products
(including crude oil), that is or becomes designated, classified or regulated as
"toxic" or "hazardous" or a "pollutant" or that is or becomes similarly
designated, classified or regulated, under any federal, state or local law,
regulation or ordinance including, without limitation, Compensation and
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 1.26 "Improvements" shall mean the 115 unit apartment complex
for elderly built in accordance with the Project Documents.
Section 1.27 "Incentive Management Fee" shall have the meaning set forth
in Section 9.2(e) hereof.
Section 1.28 "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 1.32 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 1.32 shall
be subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to Section 1.28(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
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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 1.29 "Insurance" shall mean:
(a) during construction, the Insurance shall include builder's risk
insurance, liability insurance in the minimum amount of $1,000,000 per
occurrence with an aggregate of $2,000,000, and worker's compensation;
(b) during operations the Insurance shall include business interruption
coverage covering actual sustained loss for 12 months, worker's compensation,
hazard coverage (including but not limited to fire, or other casualty loss to
any structure or building on the 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
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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 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 1.30 "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 1.31 "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 1.32 "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.
Section 1.33 "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 1.34 "Limited Partner" shall mean WNC Housing Tax Credit Fund
VI, L.P., Series 5, 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 1.35 "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 LDI
Management Corporation.
Section 1.36 "Management Agreement" shall mean the agreement between the
Partnership and the Management Agent for property management services. The
management fee shall equal 3.5% of gross revenues. Neither the Management
Agreement nor ancillary agreement
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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 1.37 "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% of the apartment units to tenants with income
less than 30% of area median income, adjusted for family size.
Section 1.38 "Mortgage" or "Mortgage Loan" shall mean the permanent
nonrecourse financing wherein the Partnership promises to pay: (a) Valley State
Bank, or its successor or assignee, the principal sum of $4,175,976, plus
interest on the principal not to exceed 8% per annum over a term of 15 years and
amortized over 30 years. Where the context admits, the term "Mortgage" or
"Mortgage Loan" shall include any mortgage, deed, deed of trust, note,
regulatory agreement, security agreement, assumption agreement or other
instrument executed in connection with the Mortgage which is binding on the
Partnership; and in case any Mortgage is replaced or supplemented by any
subsequent mortgage or mortgages, the Mortgage shall refer to any such
subsequent mortgage or mortgages. In the event the terms of the Mortgage are not
as specified herein 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 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. 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 1.39 "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
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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 1.40 Nonrecourse Deductions" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).
Section 1.41 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).
Section 1.42 "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 1.43 "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 1.44 "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 1.45 "Original Limited Partner" shall collectively mean Elderly
Living Development, Inc. and John McChurch.
Section 1.46 "Partner(s)" shall collectively mean the General Partner,
the Limited Partner and the Special Limited Partner or individually may mean any
Partner as the context dictates.
Section 1.47 "Partner Nonrecourse Debt" shall have the meaning set forth
in Section 1.704-2(b)(4) of the Treasury Regulations.
Section 1.48 "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 1.49 "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 1.50 "Partnership" shall mean the limited partnership continued
under this Agreement.
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Section 1.51 "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 1.52 "Permanent Mortgage Commencement" shall mean the first date
on which all of the following have occurred: (a) the Construction Loan shall
have been repaid in full; (b) the Mortgage shall have closed and funded; and (c)
amortization of the Mortgage shall have commenced.
Section 1.53 "Person" shall collectively mean an individual,
proprietorship, trust, estate, partnership, joint venture, association, company,
corporation or other entity.
Section 1.54 "Project" shall mean the property site at Mansur
Court and 7th Avenue in Carbon Cliff, Rock Island County, Illinois,
as more fully described in Exhibit "A" attached hereto and incorporated herein
by this reference, and the Improvements.
Section 1.55 "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 specifications for the
development and construction of the Project.
Section 1.56 "Projected Annual Tax Credits" shall mean LIHTC in the
amount of $298,442 for 2000, $895,326 per year for each of the years 2001
through 2010, and $596,884 for 2011, which the General Partner has projected to
be the total amount of LIHTC which will be allocated to the Limited Partner by
the Partnership, constituting 98.99% of the aggregate amount of LIHTC of
$9,044,610 to be available to the Partnership; provided, however, that if the
Actual Tax Credit for 2000 is greater (or lesser than) $298,442 the Projected
Annual Tax Credit for the year 2011 shall be reduced (increased) by an amount
equal to the amount by which the Actual Credit for 2000 exceeds (is less than)
$298,442.
Section 1.57 "Projected Tax Credits" shall mean LIHTC in the aggregate
amount of $9,044,610.
Section 1.58 "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.
Section 1.59 "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 1.60 "Reporting Fee" shall have the meaning set forth in Section
9.2(d) hereof.
Section 1.61 "Revised Projected Tax Credits" shall have the meaning set
forth in Section 7.4(a) hereof.
Section 1.62 "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 1.63 "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 1.64 "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 1.65 "State" shall mean the State of Illinois.
Section 1.66 "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 1.67 "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 1.68 "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 1.69 "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
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qualify for the LIHTC or to avoid an event of recapture in respect of
the LIHTC.
Section 1.70 "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 1.71 "TIF" shall mean the tax increment financing the
Partnership will obtain from Village of Carbon Cliff ("TIF Agency").
Section 1.72 "TRA 1986" shall mean the Tax Reform Act of 1986.
Section 1.73 "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 1.74 "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.
ARTICLE II
NAME
The name of the Partnership shall be "Mansur Wood Living Center, 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 3919 17th Street, East Moline, Illinois 61244,
or at such other place or places within the State as the General Partner may
hereafter designate.
Section 3.2 Agent for Service of Process. The name of the agent for
service of process on the Partnership is John McChurch, whose address is 3919
17th Street, East Moline, Illinois 61244.
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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, 2048
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.
ARTICLE VI
GENERAL PARTNER'S CONTRIBUTIONS AND LOANS
Section 6.1 Capital Contribution of General Partner. The General
Partner shall make a Capital Contribution in an amount required by the Mortgage
lender.
Section 6.2 Construction and Operating Obligations; General Partner
Loans.
(a) 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 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 September 30, 2000 ("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, then at the Special Limited
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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 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.
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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 $500. Effective as of the date of this Agreement, the
Original Limited Partner's Interest has been liquidated and the Partnership has
reacquired the Original Limited Partner's Interest in the Partnership. The
Original Limited Partner acknowledges that it has no further interest in the
Partnership as a limited partner as of the date of this Agreement, and has
released all claims, if any, against the Partnership arising out of its
participation as a limited partner.
Section 7.2 Capital Contribution of Limited Partner. The Limited
Partner shall make a Capital Contribution in the amount of $6,446,347, as may
be adjusted in accordance with Section 7.4 of this Agreement. The Capital
Contribution will be paid into an escrow account at Valley State Bank in
accordance with the Escrow Agreement dated September 4, 1998
("Escrow Agreement"). The Limited Partner shall approve the release of the
funds from the escrow account as follows:
(a) $5,801,778, to be disbursed on a monthly basis in accordance with
Section 7.2(d), of this Agreement provided the Limited Partner has received 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 an ALTA owners title insurance policy naming the
Limited Partner as a co-insured and including a non- imputation and fairway
endorsement ("Title Insurance"). The Title Insurance shall be in an amount equal
to the Mortgage Loan and the Limited Partner's Capital Contribution;
(4) verification that the Partnership has obtained Insurance
required during construction;
(5) a copy of the recorded grant deed (warranty deed);
and
(6) execution of the Construction and Operating Budget
Agreement.
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(b) $161,142 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 construction
schedule and any updates to the construction schedule; and by the twentieth day
of each month a copy of the previous month's Construction Loan draw request and
the inspecting architect's application and certification of payment (AIA
Document G702, or similar form acceptable to the Limited Partner).
(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) $483,427 (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;
(5) copies of all Mortgage documents and Title Insurance in an
amount equal to the Mortgage and the Limited Partner's Capital Contribution;
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(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 General Partner shall submit to
the Limited Partner a written itemized statement, signed by the 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 General Partner shall
constitute a representation and warranty by the General Partner that the 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 by the 23rd day of each month,
barring unforseen 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 General
Partner. Escrow Agent shall disburse up to 90% of the maximum amount 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
General Partner upon completion of the Improvements in accordance with the Plans
and Specifications, governmental
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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 December 31,
2000;
(b) achieve 90% occupancy of the Project by Qualified Tenants by
December 31, 2001;
(c) obtain Permanent Mortgage Commencement by December 31, 2001;
(d) meet both the Minimum Set-Aside Test and the Rent Restriction Test
not later than December 31 of the first year the Partnership elects the LIHTC to
commence in accordance with the Code; and
(e) obtain a carryover allocation, within the meaning of Section 42 of
the Code, from the State Tax Credit Agency on or before December 31, 1998; and
(f) receive the Limited Partner's acquisition committee approval by
September 30, 1998.
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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
$8,954,164(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 0.72% of the Revised Projected Tax Credits
so 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
100% 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
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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 a reduction in the qualified basis of the
Project for income tax purposes following an audit by the Internal Revenue
Service (IRS) resulting in a recapture of Tax Credits previously claimed, then,
in addition to any other payments to which the Limited Partner and Special
Limited Partner are entitled under the terms of this Section 7.4, the General
Partner shall pay to the Limited Partner and the Special Limited Partner the sum
of (1) the deficiency assessed against the Limited Partner or Special Limited
Partner as a result of the Tax Credit recapture, (2) any interest and penalties
imposed on the Limited Partner or Special Limited Partner with respect to such
deficiency, and (3) 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 (1) and (2). Notwithstanding, the foregoing provisions of
this Section 7.4(d), 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.
Section 7.5 Capital Contribution of Special Limited Partner. The
Special Limited Partner shall make a Capital Contribution of $651 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
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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 $22,980 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
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
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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 General Partner shall have
complete and exclusive control over the management of the Partnership business
and affairs, and shall have the right, power and authority, on behalf of the
Partnership, and in its name, to exercise all of the rights, powers and
authority of a partner of a partnership without limited partners. If there is
more than one General Partner, all acts, decisions or consents of the General
Partners shall require the concurrence of all of the General Partners. No
actions taken without the authorization of all the General Partners shall be
deemed valid actions taken by the General Partners pursuant to this Agreement.
No Limited Partner or Special Limited Partner (except one who may also be a
General Partner, and then only in its capacity as General Partner within the
scope of its authority hereunder) shall have any right to be active in the
management of the Partnership's business or investments or to exercise any
control thereover, nor have the right to bind the Partnership in any contract,
agreement, promise or undertaking, or to act in any way whatsoever with respect
to the control or conduct of the business of the Partnership, except as
otherwise specifically provided in this Agreement.
Section 9.2 Payments to the General Partners and Others.
(a) The Partnership shall pay to the Developer a Development
Fee in the amount of $1,350,000. 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 Development Fee will be paid to the extent permitted
in Section 11.1 of this Agreement.
(b) The Partnership shall utilize the proceeds from the Capital
Contributions paid pursuant to Section 7.2 and Section 7.5 of this Agreement for
development costs including, but not limited to, land costs, architectural fees,
survey and engineering costs, financing costs, loan fees, building materials,
labor and $700,000 of the Development Fee to be paid $350,000 at the time of the
Limited Partner's first Capital Contribution payment referenced in Exhibit "A"
of the Escrow Agreement; and $350,000 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 Parties. 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
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General Partner as a reduction of the General Partner's Capital Contribution;
and any remaining Capital Contribution proceeds shall be paid to the General
Partner as a Partnership oversight fee.
(c) The Partnership shall pay to the Management Agent a property
management fee for the leasing and management of the 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
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.
(d) The Partnership shall pay to the Limited Partner a fee (the
"Reporting Fee") commencing in 1999 equal to $5,000 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 $5,000, 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.
(e) The Partnership shall pay to the General Partner an Incentive
Management Fee in accordance with Section 11.1 of this Agreement for each fiscal
year of the Partnership commencing in 1999 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 Incentive Management Fee shall be payable within
seventy-five (75) days following each
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calendar year and shall be payable from Net Operating Income in the manner and
priority set forth in Section 11.1. If the Incentive Management Fee is not paid
in any year it shall not accrue for payment in subsequent years.
(f) The Limited Partner will reimburse the General Partner in an amount
not to exceed $89,269 for costs incurred by the General Partner for a market
study, environmental study, engineering review, soils review, title
verification, carryover consultation and any other due diligence expenses
incurred by the General Partner and approved by the Limited Partner.
Section 9.3 Specific Powers of the General Partner. Subject
to the other provisions of this Agreement, the General Partner, in
the Partnership's name and on its behalf, may:
(a) hold, sell, transfer, lease or otherwise deal with any real,
personal or mixed property, interest therein or appurtenance thereto in
accordance with 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.
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(a) Each of the provisions of this Agreement shall be subject to, and
the General Partner covenants to act in accordance with, the Tax Credit
Conditions and all applicable federal, state and local laws and regulations.
(b) The Tax Credit Conditions and all such laws and regulations, as
amended or supplemented, shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successor and assigns, and
they shall control as to any terms in this Agreement which are inconsistent
therewith, and any such inconsistent terms of this Agreement shall be
unenforceable by or against any of the Partners.
(c) Upon any dissolution of the Partnership or any transfer of the
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 General Partner's Power and Authority.
Notwithstanding the provisions of this Article IX, 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 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;
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(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;
(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 General Partner has
received said Consent.
Section 9.6 Restrictions on Authority of General Partner.
Without consent of the Special Limited Partner 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;
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(g) cause the merger or other reorganization of the
Partnership; or
(h) dissolve the Partnership, except as provided in this Agreement.
Section 9.7 Duties of General Partner. The General Partner
agrees that it shall at all times:
(a) diligently and faithfully devote such of its time to the
business of the Partnership as may be necessary to properly conduct
the affairs of the Partnership;
(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
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;
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(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
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
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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 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
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.
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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 General
Partner covenants, represents and warrants 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
specifications may be changed from time to time with the approval of Valley
State Bank, 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
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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 over a 27.5 year term.
(m) To the best of the General Partner's knowledge: (1) no Hazardous
Substance has been disposed of, or released to or from, or otherwise now exists
in, on, under or around, the 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 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.
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(n) The General Partner has not executed and will not execute any
agreements with provisions contradictory to, or in opposition to, the provisions
of this Agreement.
(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 reserves in
accordance with Article VIII hereof, are currently funded to required levels,
including levels required by any authority.
(s) The General Partner has 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.
(u) No event has occurred which has caused, and the General Partner has
not acted in any manner which will cause (1) the Partnership to be treated for
federal income tax purposes as an association taxable as a corporation, (2) the
Partnership to fail to qualify as a limited partnership under the Act, or (3)
the Limited Partner 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.
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(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 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.
(x) The General Partner has and shall maintain a net worth equal to at
least $1,000,000 computed in accordance with generally accepted accounting
principles.
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.
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(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
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
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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.
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 98.99% to the Limited Partner, 0.01% to the Special Limited Partner
and 1% to the 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
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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 50%
to the Limited Partner and 50% 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
(2) the balance of any such Losses shall be allocated 98.99%
to the Limited Partner, 0.01% to the Special Limited Partner and 1% 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 98.99% or 0.01% 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 98.99% and 0.01%, 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 98.99% and 0.01%, respectively, of the items
of Income not arising from a Sale or Refinancing and 98.99% and 0.01%,
respectively, of the Project depreciation.
Section 10.3 Special Allocations. The following special
allocations shall be made in the following order.
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(a) Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership Minimum Gain during any Partnership fiscal year,
each Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704- 2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704- 2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, notwithstanding any other provision of this Article X, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership fiscal year, each Person who
has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items of Partnership
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Person's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
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.
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(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 98.99% to the Limited Partner, 0.01% to the Special Limited Partner
and 1% to the General Partner.
(f) Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).
(g) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704- 1(b)(2)(iv)(m)(2) or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the Partnership, the amount of such adjustment to the Capital
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.
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(i) In the event the adjusted tax basis of any investment tax credit
property that has been placed in service by the Partnership is increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the Partners (as an item in the nature of income or gain) in the same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.
(j) Any reduction in the adjusted tax basis (or cost) of Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same proportions as the basis (or cost) of such property is allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).
(k) Any income, gain, loss or deduction realized as a direct or
indirect result of the issuance of an interest in the Partnership by the
Partnership to a Partner (the "Issuance Items") shall be allocated among the
Partners so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Agreement to each Partner, shall
be equal to the net amount that would have been allocated to each such Partner
if the Issuance Items had not been realized.
(l) If any Partnership expenditure treated as a deduction on its
federal income tax return is disallowed as a deduction and treated as a
distribution pursuant to Section 731(a) of the Code, there shall be a special
allocation of gross income to the Partner deemed to have received such
distribution equal to the amount of such distribution.
(m) The allocation to the General Partner of each material item of
Partnership income, loss, deduction or credit will not be less than 1% of each
such item at all times during the existence of the Partnership.
(n) Interest deduction on the Partnership indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.
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,
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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 98.99% to the Limited Partner, 0.01% to the Special Limited Partner
and 1% 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
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.
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(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: 98.99%; Special Limited
Partner: 0.01%; General Partner: 1%.
(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 1.30(b) hereof, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the General Partner with the Consent of the Special Limited Partner in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 10.6 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Person's Capital Account or share of Income, Losses, other
items, or distributions pursuant to any provision of this Agreement.
Section 10.7 Allocation Among Limited Partners. In the event
that the Interest of the Limited Partner hereunder is at any time
held by more than one Limited Partner all items which are specifically allocated
to the Limited Partner for any month pursuant to this Article X shall be
apportioned among such Persons according to the ratio of their respective
profit-sharing interests in the Partnership at the last day of such month.
Section 10.8 Allocation Among General Partners. In the event
that the Interest of the General Partner hereunder is at any time
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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
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 from 70% of the Net Operating
Income remaining after reduction for the payments made pursuant to subsections
(a) through (c) of this Section 11.1; and
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(e) to the Limited Partner in an amount equal to 50% of the remaining
Net Operating Income and to the General Partner in an amount equal to 50% 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, 50% to the Limited Partner and 50% to the
General Partner.
ARTICLE XII
TRANSFERS OF LIMITED
PARTNER'S INTEREST IN THE PARTNERSHIP
Section 12.1 Assignment of Limited Partner's Interest. Except
assignments to the Southern California Bank to secure capital contribution
loans, the Limited Partner and 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 each of the following:
(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
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(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.
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
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.
(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
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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 Valley State Bank, and the State Tax Credit Agency.
Withdrawal shall be conditioned upon the agreement of the Special Limited
Partner to be admitted as a successor General Partner, or if the Special Limited
Partner declines to be admitted as a successor General Partner then on the
agreement of one or more Persons who satisfy the requirements of Section 13.5 of
this Agreement to be admitted as successor General Partner(s).
(b) Each General Partner shall indemnify and hold harmless the
Partnership and all Partners from its Withdrawal in violation of Section 13.1(a)
hereof. Each General Partner shall be liable for damages to the Partnership
resulting from its Withdrawal in violation of Section 13.1(a).
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;
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(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 Valley State Bank, 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
(10) failed during any six-month period during the Compliance
Period to cause at least 85% 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
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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 any continuing guarantees the General Partner may be
responsible.
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 ureasonable 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
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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) If the Involuntary Withdrawal arises from removal for
cause as set forth in Section 13.2(a) hereof, the Withdrawn General Partner
shall be entitled to receive as its sole compensation for its Interest in the
Partnership an amount equal to its positive Capital Account balance determined
as of the effective date of the removal, if any, payable upon the dissolution
and termination of the Partnership after all of the Partners have been
distributed the positive balances in their Capital Accounts.
(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
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
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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.
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.
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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.
(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
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.
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(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, a copy of the construction schedule and any
updates to the construction schedule; and by the twentieth day of each month a
copy of the previous month's Construction Loan draw request and the inspecting
architect's application and certification of payment (AIA Document G702, or
similar form acceptable to the Limited Partner).
(b) During the rent-up phase, and continuing until the end of the first
six-month period during which the 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.
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(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
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.
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(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
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
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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.
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.
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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 Valley State Bank, 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
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.
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(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 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 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.
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(b) Upon the completion of the winding up of the Partnership's affairs,
the General Partner shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State of the State, a certificate of
cancellation of the Certificate of Limited Partnership. The certificate of
cancellation of the Certificate of Limited Partnership shall set forth the
Partnership's name, the Secretary of State's file number for the Partnership,
and any other information which the General Partner determines to include
therein.
ARTICLE XVI
AMENDMENTS
This Agreement may be amended 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.
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
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(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.
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 General Partner: Elderly Living Development, Inc.
3919 17th Street
East Moline, Illinois 61244
cc: Douglas J. Antonio
Antonio and Associates
180 North LaSalle Street, Suite 225
Chicago, Illinois 60601
To the Limited Partner: WNC Housing Tax Credit Fund VI, L.P.,
Series 5
c/o WNC & Associates, Inc.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
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<PAGE>
To the Special
Limited Partner: WNC HOUSING, L.P.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
Section 17.4 Successors and Assigns. All the terms and
conditions of this Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Partners.
Section 17.5 Recording of Certificate of Limited Partnership. If the
General Partner should deem it advisable to do so, the Partnership shall record
in the office of the County Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited Partnership, or any amendment thereto, after such Certificate or
amendment has been filed with the Secretary of State of the State.
Section 17.6 Amendment of Certificate of Limited Partnership.
(a) The General Partner shall cause to be filed, within 30 days after
the happening of any of the following events, an amendment to the Certificate of
Limited Partnership reflecting the occurrence of any of the following.
(1) A change in the name of the Partnership.
(2) A change in the 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.
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<PAGE>
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 Special Limited 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; provided, however, that if the Special Limited Partner shall
withdraw from the Partnership or become Bankrupt, the General Partner shall
thereafter be the "Tax Matters Partner". If the Tax Matters Partner shall
determine to litigate any administrative determination relating to federal
income tax matters, it shall litigate such matter in such court as the Tax
Matters Partner shall decide in its sole discretion. In discharging its duties
and responsibilities, the Tax Matters Partner shall act as a fiduciary (i) to
the Limited Partner (to the exclusion of the other Partners) insofar as tax
matters related to the Tax Credits are concerned, and (ii) to all of the
Partners in other respects. 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.
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<PAGE>
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
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.
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<PAGE>
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.
IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership of Mansur Wood Living Center, L.P., an Illinois limited partnership,
is made and entered into as of the 19th day of September, 1998.
GENERAL PARTNER
Elderly Living Development, Inc.
By: /s/ John McChurch
John McChurch
Vice President and Chief Operating Officer
WITHDRAWING ORIGINAL LIMITED PARTNER
Elderly Living Development, Inc.
By: /s/ John McChurch
John McChurch
Vice President and Chief Operating Officer
/s/ John McChurch
John McChurch
LIMITED PARTNER
WNC Housing Tax Credit Fund VI, L.P., Series 5
By: WNC & Associates, Inc.,
General Partner
By: /s/ David N. Shafer
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<PAGE>
David N. Shafer,
Senior Vice President
SPECIAL LIMITED PARTNER
WNC HOUSING, L.P.
By: WNC & Associates, Inc.,
General Partner
By: /s/ David N. Shafer
David N. Shafer,
Senior Vice President
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<PAGE>
EXHIBIT A TO PARTNERSHIP AGREEMENT
LEGAL DESCRIPTION
TRACT I
That part of the Southeast quarter of Section Thirty-Two (32) South of the
Indian Boundary line in Township Eighteen (18) North Range One (1) East of the
Fourth Principal Meridian, described as follows:
Commencing on the Old Indian Boundary line, between Sections Number Thirty-two
(32) and Thirty-three (33) in township Number Eighteen (18) North Range Number
One (1) East of the Fourth Principal Meridian, thence running sough from said
corner Seventeen chains and Thirty-nine links; thence running West 23 chains and
75 links; thence North 16 chains and 31 links to said Old Indian Boundary line;
thence running East along said boundary line to the place of beginning,
containing Forty (40) acres more or less, and it being the Northeast part of the
Southeast Quarter of Section Number Thirty-two (32); South of said Old Indian
Boundary line, also known as Lot Number Ten (10) according to the Assessor's
Plat of 1863, said plat being recorded in the Recorder's Office in Plat Book 1
page 41; excepting therefrom the following described property:
Beginning at a point on the Flack and Bean Indian Boundary line 1059 feet East
of the West line of said Southeast Quarter of Section 32; thence South to a
point Southerly of and 180 feet perpendicularly distant from said Flack and Bean
Indian Boundary line; thence East parallel with said flack and Bean Indian
boundary line 610 feet; thence Northeasterly along a straight line to the
Southwest corner of Lot 16 according to the Assessor's Plat for 1863 in said
Southeast Quarter of Section 32, which Southwest corner is on said Flack and
Bean Indian Boundary line; thence West along said Flack and Bean Indian Boundary
line 850 feet, more or less, to the point of beginning, also;
Commencing on the Old Flack and Bean Indian Boundary line between Sections 32
and 33 in Township 18 North, Range 1 East of the Fourth Principal Meridian;
thence Westerly along said boundary line to a point on the present Westerly
right of way line of the original SBI Route 7, said point being the point of
beginning of the hereinafter described tract; thence Southerly along said right
of way line a distance of 60 feet; thence running Westerly parallel to said
boundary line to a point on the new Southeasterly right of way line of a highway
designated FAS 205; thence running Northeasterly along said new right of way
line to a point on the said boundary line;
A1
<PAGE>
thence Easterly along said boundary line to the point of beginning,
also;
Beginning at the intersection of the Flack and Bean Indian Boundary line as
occupied with the East line of Section 32 proceed Southerly along the East line
of the Southeast Quarter of Section 32, having an assumed bearing of South 00
14'04" East 1138.92 feet; thence North 89 40'56" West 532.17 feet to an iron
pipe monument stamped I.R.L.S. 1723; thence North 13 11'24" East 289.56 feet to
an iron pipe monument stamped I.R.L.S. 1723; thence North 19 47'29" East 141.69
feet to an iron pipe monument stamped I.R.L.S. 1723; thence North 53 37'53" East
154.27 feet to an iron pipe monument stamped I.R.L.S. 1723; thence North 11
43'38" East; 120.83 feet to an iron pipe monument stamped I.R.L.S. 1723; thence
North 16 10'32" East 172.77 feet to an iron pipe monument stamped I.R.L.S. 1723;
thence North 16 00'06" East; 198.11 feet to an iron pipe monument stamped
I.R.L.S. 1723; which point is on the Flack and Bean Indian Boundary line as
occupied; thence North 88 01'36" East along the Flack and Bean Indian Boundary
line as occupied 240.94 feet to the point of beginning; situated in the County
of Rock Island, in the State of Illinois.
There is no direct access to any public road.
TRACT II
The South 73 feet of that part of Lot Number Nine (9) according to the
Assessor's Plat for the year 1863 of the Southeast quarter of Section Number
Thirty-Two (32), Township Number Eighteen (18) North, Range Number One (1) East
of the Fourth Principal Meridian, described as follows:
Beginning on the Quarter Section line at a point 1,2000 feet North of the
Southwest corner of said Southeast Quarter; thence East 781.5 feet; thence North
162 feet; thence East parallel with the South line of the Quarter Section to the
Easterly edge of a 50 foot street for a point of commencement of this
description; thence East 300 feet more or less to the West line of a tract of
ground conveyed to William Wallace Wiltshire on February 28, 1842; thence North
on said West line 165 feet; thence West parallel to the south line of said
street; thence Southerly 165 feet, more or less to the point of commencement,
situated in Rock Island County, Illinois.
A2
<PAGE>
EXHIBIT B TO PARTNERSHIP AGREEMENT
FORM OF LEGAL OPINION
WNC Housing Tax Credit Fund VI, L.P., Series 5
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626
RE: Mansur Wood Living Center, 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
5, a California limited partnership (the "Limited Partner") in Mansur Wood
Living Center, 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 Carbon Cliff, Rock
Island County, Illinois. The general partner(s) of the Partnership (is/are)
Elderly Living Development, Inc., (the "General Partner(s)").
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
_________, 199___ conditionally awarding
$_______________ in Federal tax credits annually for
each of ten years and $_______________ in California
tax credits annually for each of four years for the
Apartment Complex; and
(iv) Such other documents, records and
instruments as we have deemed necessary in order to
enable us to render the opinions referred to in this
letter.
For purposes of rendering the opinions stated below we have assumed
that, in those cases in which we have not been involved directly in the
preparation, execution or the filing of a document, that (a) the document
reviewed by us is an original document, or a true and accurate copy of the
original document, and has not been subsequently amended, (b) the signatures on
each original document
B1
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
c/o WNC & Associates, Inc.
______________, 199__
Page 2
are genuine, and (c) each party who executed the document had proper
authority and capacity.
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
B2
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
c/o WNC & Associates, Inc.
______________, 199__
Page 3
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
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
B3
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
c/o WNC & Associates, Inc.
______________, 199__
Page 4
or affected by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally. We do not express any
opinion as to the availability of any equitable or specific remedy upon any
breach of any of the covenants, warranties or other provisions contained in any
agreement. We have not examined, and we express no opinion with respect to, the
applicability of, or liability under, any Federal, state or local law, ordinance
or regulation governing or pertaining to environmental matters, hazardous
wastes, toxic substances or the like.
We express no opinion as to any matter except those set forth above.
These opinions are rendered for use by the Limited Partner and its legal counsel
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,
- --------------------
B4
<PAGE>
EXHIBIT C TO PARTNERSHIP AGREEMENT
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of the date written below by Mansur
Wood Living Center, L.P., an Illinois limited partnership (the "Partnership");
Elderly Living Development, Inc., (the "General Partner"); and
______________________ (the "Original Limited Partner") for the benefit of WNC
Housing Tax Credit Fund VI, L.P., Series 5, 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 Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), in
accordance with which the Investment Partnership will make substantial capital
contributions to the Partnership; and
WHEREAS, the Investment Partnership and WNC have relied upon certain
information and representations described herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Partnership Agreement and become a limited partner of the Partnership, and for
$1.00 and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Partnership, the General Partner and the
Original Limited Partner hereby agree as follows for the benefit of the
Investment Partnership and WNC.
1. Representations, Warranties and Covenants of
the Partnership, the General Partner and the
Original Limited Partner
The Partnership, the General Partner and the Original Limited Partner
jointly and severally represent, warrant and certify to the Investment
Partnership and WNC that, with respect to the Partnership, as of the date
hereof:
1.1 The Partnership is duly organized and in good standing as
a limited partnership pursuant to the laws of the state of its formation with
full power and authority to own its apartment complex (the "Apartment Complex")
and conduct its business; the Partnership, the General Partner and the Original
Limited Partner have the power and authority to enter into and perform this
Certification and Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the General Partner and the Original Limited
Partner have been duly and validly authorized by all necessary action; the
execution and delivery of
MANSUR1.DPA
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<PAGE>
this Certification and Agreement, the fulfillment of its terms and consummation
of the transactions contemplated hereunder do not and will not conflict with or
result in a violation, breach or termination of or constitute a default under
(or would not result in such a conflict, violation, breach, termination or
default with the giving of notice or passage of time or both) any other
agreement, indenture or instrument by which the Partnership or any General
Partner or Original Limited Partner is bound or any law, regulation, judgment,
decree or order applicable to the Partnership or any General Partner or Original
Limited Partner or any of their respective properties; this Certification and
Agreement constitutes the valid and binding agreement of the Partnership, the
General Partner and the Original Limited Partner, enforceable against each of
them in accordance with its terms.
1.2 The General Partner has delivered to the Investment
Partnership, WNC or their affiliates all documents and information which would
be material to a prudent investor in deciding whether to invest in the
Partnership. All factual information provided to the Investment Partnership, WNC
or their affiliates either in writing or orally, did not, at the time given, and
does not, on the date hereof, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they are made.
1.3 Each of the representations and warranties contained in
the Partnership Agreement is true and correct as of the date hereof.
1.4 Each of the covenants and agreements of the Partnership
and the General Partner contained in the Partnership Agreement has been duly
performed to the extent that performance of any covenant or agreement is
required on or prior to the date hereof.
1.5 All conditions to admission of the Investment Partnership
as the investment limited partner of the Partnership contained in the
Partnership Agreement have been satisfied.
1.6 No default has occurred and is continuing under the
Partnership Agreement or any of the Project Documents (as such term is defined
in the Partnership Agreement) for the Partnership.
1.7 The Partnership will allocate to the Limited
Partner the Projected Annual Tax Credits, or the Revised Projected
Tax Credits, if applicable.
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.
MANSUR1.DPA
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<PAGE>
1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.
1.10 The Partnership has the sole responsibility to pay all
maintenance and operating costs, including all taxes levied and all insurance
costs, attributable to the Apartment Complex.
1.11 The Partnership, except to the extent it is protected by
insurance and excluding any risk borne by lenders, bears the sole risk of loss
if the Apartment Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.
1.12 No person or entity except the Partnership has the right
to any proceeds, after payment of all indebtedness, from the sale, refinancing,
or leasing of the Apartment Complex.
1.13 No General Partner is related in any manner to the
Investment Partnership, nor is any General Partner acting as an agent of the
Investment Partnership.
2. Miscellaneous
2.1 This Certification and Agreement is made solely for the
benefit of the Investment Partnership and WNC, and their respective successors
and assignees, and no other person shall acquire or have any right under or by
virtue of this Agreement.
2.2 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, all of
which together shall constitute one and the same instrument.
2.3 Capitalized terms used but not defined in this
Certification Agreement shall have the meanings given to them in the Partnership
Agreement.
MANSUR1.DPA
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<PAGE>
IN WITNESS WHEREOF, this Certificate and Agreement is made and entered
into as of the day of ____________, 1998.
PARTNERSHIP
Mansur Wood Living Center, L.P.
Elderly Living Development, Inc.
By: ____________________________
John McChurch
Vice President and Chief Operating Officer
GENERAL PARTNER
Elderly Living Development, Inc.
By: ____________________________
John McChurch
Vice President and Chief Operating Officer
ORIGINAL LIMITED PARTNER
By:
MANSUR1.DPA
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<PAGE>
EXHIBIT D TO THE PARTNERSHIP AGREEMENT
GENERAL PARTNER CERTIFICATION
This General Partner Certification is being issued to WNC Housing Tax
Credit Fund VI, L.P., Series 5 ("Limited Partner") by Elderly Living
Development, Inc., General Partner of Mansur Wood Living Center, L.P., an
Illinois limited partnership ("Partnership") in accordance with Section 7.2 of
the Amended and Restated Agreement of Limited Partnership of the Partnership
("Partnership Agreement").
Capitalized terms used but not defined in this 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 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 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 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 Valley
State Bank, and any applicable governmental entities, if such approval shall be
required.
MANSUR1.DPA
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<PAGE>
(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 over a 27.5 year term.
(m) To the best of the General Partner's knowledge: (1) no Hazardous
Substance has been disposed of, or released to or from, or otherwise now exists
in, on, under or around, the 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 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
MANSUR1.DPA
D2
<PAGE>
clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. 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
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 General Partner has 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 General Partner has 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 material default under
any of the Project Documents.
MANSUR1.DPA
D3
<PAGE>
(u) No event has occurred which has caused, and the General Partner has
not acted in any manner which will cause (1) the Partnership to be treated for
federal income tax purposes as an association taxable as a corporation, (2) the
Partnership to fail to qualify as a limited partnership under the Act, or (3)
the Limited Partner 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 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.
(x) The General Partner has and shall maintain a net worth equal to at
least $1,000,000 computed in accordance with generally accepted accounting
principles.
MANSUR1.DPA
D4
<PAGE>
IN WITNESS WHEREOF, the undersigned have set their hands to this
General Partner Certification this day of _________, 199___.
Elderly Living Development, Inc.
By: ____________________________
John McChurch
Vice President and Chief Operating Officer
MANSUR1.DPA
D5
<PAGE>
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
Mansur Wood Living Center, L.P., an Illinois limited partnership (the
"Partnership"), between WNC Housing Tax Credit Fund VI, L.P., Series 5, a
California limited partnership ("Limited Partner") and the Partnership in
connection with the construction [rehabilitation] of improvements on certain
real property located in Carbon Cliff, 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:
- -----------------------------------
General Partner
Date: ____________________________
E1
<PAGE>
EXHIBIT F TO THE PARTNERSHIP
[ACCOUNTANT'S CERTIFICATE]
[Accountant's Letterhead]
_______________, 199____
WNC Housing Tax Credit Fund VI, L.P., Series 5
c/o WNC & Associates, Inc.
3158 Redhill Ave., Suite 120
Costa Mesa, California 92626
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 5 (the "Limited Partner") of a limited partnership interest in Mansur
Wood Living Center, L.P., an Illinois limited partnership (the "Partnership")
which owns a certain parcel of land located in Carbon Cliff, Rock Island 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,
- -------------------------
F1
<PAGE>
EXHIBIT G TO THE PARTNERSHIP AGREEMENT
[CONTRACTOR'S CERTIFICATE]
[Contractor's Letterhead]
_______________, 199____
WNC Housing Tax Credit Fund VI, L.P., Series 5
c/o WNC & Associates, Inc.
3158 Redhill Avenue
Suite 120
Costa Mesa, California 92626
Re: Mansur Wood Living Center, 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 Carbon Cliff, Rock Island County, Illinois (hereinafter known as the
"Project").
Contractor makes the following representations and warranties regarding Work at
the Project.
Work on said Project has been performed and completed in accordance with
the plans and specifications for the Project.
Contractor acknowledges that all amounts owed pursuant to the contract for
Work performed for Mansur Wood Living Center, L.P. is paid in full.
Contractor acknowledges that Mansur Wood Living Center, L.P. is not in
violation with terms and conditions of the contractual documents related
to the Project.
Contractor warrants that all parties who have supplied Work for
improvement of the Project have been paid in full.
Contractor acknowledges the contract to be paid in full and
releases any lien or right to lien against the above property.
The undersigned has personal knowledge of the matters stated herein and is
authorized and fully qualified to execute this document on behalf of the
Contractor.
Twin Rivers Construction
By:_________________________________________
Title:________________________________________
G1
<PAGE>
EXHIBIT H TO THE PARTNERSHIP
REPORT OF OPERATIONS
QUARTER ENDED:____________________________,199X
- ------------------------------------- -----------------------------------
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:
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MANAGEMENT COMPANY
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
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- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CONTACT:
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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_____
H-1
<PAGE>
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-2
<PAGE>
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
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Interior Painting
- ------------------------------------------------------------------------------
Exterior Painting
- ------------------------------------------------------------------------------
Siding
- ------------------------------------------------------------------------------
Roofing
- ------------------------------------------------------------------------------
Drainage
- ------------------------------------------------------------------------------
Paving
- ------------------------------------------------------------------------------
Landscaping
- ------------------------------------------------------------------------------
Playground
- ------------------------------------------------------------------------------
Community Room
- ------------------------------------------------------------------------------
Laundry Room
- ------------------------------------------------------------------------------
Common Areas
- ------------------------------------------------------------------------------
Carpet
- ------------------------------------------------------------------------------
Appliances
- ------------------------------------------------------------------------------
Lighting
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Other
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Please describe in detail any major repairs:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
H-3
<PAGE>
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
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Parking Lots
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Office/Storage
- -------------------------------------------------------------------------------
Equipment
- -------------------------------------------------------------------------------
Community Building
- -------------------------------------------------------------------------------
Laundry Room
- -------------------------------------------------------------------------------
Benches/Playground
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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
H-4
<PAGE>
- -------------------------------------------------------------------------------
Doors/Cabinets/Hardware
- -------------------------------------------------------------------------------
Drapes/Blinds
- -------------------------------------------------------------------------------
Interior Painting
- -------------------------------------------------------------------------------
Refrig/Stoves/Sinks
- -------------------------------------------------------------------------------
Bathroom/Tubs/Showers
Toilets
- -------------------------------------------------------------------------------
H-5
<PAGE>
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 bill)
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
H-6
<PAGE>
Explanation:
------------------------------------------------------------------------
------------------------------------------------------------------------
D. Please explain in detail any change in the financial condition:
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Any insurance claims files? Yes______ No______
If yes, please explain:
------------------------------------------------------------------------
------------------------------------------------------------------------
H-7
<PAGE>
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-8
<PAGE>
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:
- -----------------------------------------------------------------------------
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BIN # Certificate of Occupancy Date:
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- -------------------------------------------------------------------------------
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BIN # Certificate of Occupancy Date:
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Tenant
Income Income Asset Unit Rent Tenant Utility
Qualified Verification Verification Rent Subsidy Payment Allowance
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------
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<PAGE>
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-9
<PAGE>
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
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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<PAGE>
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
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<PAGE>
Tenant Tenant Overall
Utility Gross Maximum Rent Tenat
Allow. Rent Rent Qualified Eligible
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H-10
<PAGE>
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
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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-11
<PAGE>
TAX CREDIT COMPLIANCE MONITORING:
ANNUAL CERTIFICATION
As General Partner of Mansur Wood Living Center, L.P., I hereby certify
as to the following:
1. Mansur Wood Living Center, L.P. owns a 115 unit project ("Project")
in Carbon Cliff, Rock Island 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 - 12
<PAGE>
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)
------------ ------------- ------------
H-13
<PAGE>
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-14
<PAGE>
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 Mansur Wood Living Center, 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 Carbon Cliff, Rock
Island 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.
1
<PAGE>
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.
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 Valley State Bank, 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 Amended and Restated Agreement
of Limited Partnership of Mansur Wood Living Center, 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
2
<PAGE>
amount of $1,350,000. The Development Fee shall be payable in accordance
with Section 3 of this Agreement.
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) Developer has made an application for Tax Credits to the
Department.
(2) Developer has negotiated, conferred and worked with the
Department to obtain a reservation of Tax Credits for the Owner on the Project.
(3) Developer has negotiated, conferred and worked with the
Department to obtain an allocation of Tax Credits for the Owner on the Project.
(4) Developer has negotiated and conferred with the
environmental engineer to provide a full environmental evaluation of the Real
Property.
(5) Developer has negotiated and conferred with a market
analyst to provide a full market feasibility study of the Project.
(6) Developer has negotiated, conferred and caused the Owner
to execute an architectural contract for the planning and design of the Project.
(7) Developer has created, refined and analyzed the financial
projections for the Project.
(8) Developer has negotiated, conferred, and worked with the
Project architects, engineers and Contractor with regard to preparation,
refinement, and finalization of the plans and specifications for the Project,
and projected construction schedules and costs.
(9) Developer has negotiated and conferred with the
Construction Lender to obtain the Construction Loan.
(10) 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.
3
<PAGE>
(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.
(2) Tax Credit Matters. From the date hereof through the
completion of construction of the Project, the Developer shall provide the
following services to owner with regard to the Tax Credits which services do not
constitute the rendering of legal or tax advice:
(A) Developer shall consult with and advise Owner
concerning construction issues that could affect the amount of Tax Credits
for which the Project is eligible.
(B) Developer shall consult with and advise Owner
with respect to the requirements of the Department as they relate to the
construction and development of the Project.
(C) Developer shall monitor construction progress
with respect to the Project schedule agreed to with the Department, if any.
(D) Developer shall coordinate and participate in any
conferences with the Department relating to the Project and construction
matters.
(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 Mansur Wood
Living Center, 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.
4
<PAGE>
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
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,
5
<PAGE>
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.
3919 17th Street
East Moline, Illinois 61244
If to Owner: Mansur Wood Living Center, L.P.
3919 17th Street
East Moline, Illinois 61244
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.
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.
6
<PAGE>
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 ___________________, 1998.
DEVELOPER: Elderly Living Development, Inc.
By: ____________________________
John McChurch
Vice President and
Chief Operating Officer
OWNER: Mansur Wood Living Center, L.P.
By: Elderly Living Development, Inc.
By: __________________________
John McChurch
Vice President and
Chief Operating Officer
7
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
TRACT I
That part of the Southeast quarter of Section Thirty-Two (32) South of the
Indian Boundary line in Township Eighteen (18) North Range One (1) East of the
Fourth Principal Meridian, described as follows:
Commencing on the Old Indian Boundary line, between Sections Number Thirty-two
(32) and Thirty-three (33) in township Number Eighteen (18) North Range Number
One (1) East of the Fourth Principal Meridian, thence running sough from said
corner Seventeen chains and Thirty-nine links; thence running West 23 chains and
75 links; thence North 16 chains and 31 links to said Old Indian Boundary line;
thence running East along said boundary line to the place of beginning,
containing Forty (40) acres more or less, and it being the Northeast part of the
Southeast Quarter of Section Number Thirty-two (32); South of said Old Indian
Boundary line, also known as Lot Number Ten (10) according to the Assessor's
Plat of 1863, said plat being recorded in the Recorder's Office in Plat Book 1
page 41; excepting therefrom the following described property:
Beginning at a point on the Flack and Bean Indian Boundary line 1059 feet East
of the West line of said Southeast Quarter of Section 32; thence South to a
point Southerly of and 180 feet perpendicularly distant from said Flack and Bean
Indian Boundary line; thence East parallel with said flack and Bean Indian
boundary line 610 feet; thence Northeasterly along a straight line to the
Southwest corner of Lot 16 according to the Assessor's Plat for 1863 in said
Southeast Quarter of Section 32, which Southwest corner is on said Flack and
Bean Indian Boundary line; thence West along said Flack and Bean Indian Boundary
line 850 feet, more or less, to the point of beginning, also;
Commencing on the Old Flack and Bean Indian Boundary line between Sections 32
and 33 in Township 18 North, Range 1 East of the Fourth Principal Meridian;
thence Westerly along said boundary line to a point on the present Westerly
right of way line of the original SBI Route 7, said point being the point of
beginning of the hereinafter described tract; thence Southerly along said right
of way line a distance of 60 feet; thence running Westerly parallel to said
boundary line to a point on the new Southeasterly right of way line of a highway
designated FAS 205; thence running Northeasterly along said new right of way
line to a point on the said boundary line; thence Easterly along said boundary
line to the point of beginning, also;
Beginning at the intersection of the Flack and Bean Indian Boundary line as
occupied with the East line of Section 32 proceed Southerly along the East line
of the Southeast Quarter of Section 32, having an assumed bearing of South 00
14'04" East 1138.92 feet; thence North 89 40'56" West 532.17 feet to an iron
pipe monument stamped I.R.L.S. 1723; thence North 13 11'24" East 289.56 feet to
an iron pipe monument stamped I.R.L.S. 1723; thence North 19 47'29" East 141.69
feet to an iron pipe monument stamped I.R.L.S. 1723; thence North 53 37'53" East
154.27 feet to an iron pipe monument stamped I.R.L.S. 1723; thence North 11
43'38" East; 120.83 feet to an iron pipe monument stamped I.R.L.S. 1723; thence
North 16 10'32" East 172.77 feet to an iron pipe monument stamped I.R.L.S. 1723;
thence North 16 00'06" East; 198.11 feet to an iron pipe monument stamped
I.R.L.S. 1723; which point is on the Flack and Bean Indian Boundary line as
occupied; thence North 88 01'36" East along the Flack and Bean Indian Boundary
line as occupied 240.94 feet to the point of beginning; situated in the County
of Rock Island, in the State of Illinois. There is no direct access to any
public road.
A-1
<PAGE>
TRACT II
The South 73 feet of that part of Lot Number Nine (9) according to the
Assessor's Plat for the year 1863 of the Southeast quarter of Section Number
Thirty-Two (32), Township Number Eighteen (18) North, Range Number One (1) East
of the Fourth Principal Meridian, described as follows:
Beginning on the Quarter Section line at a point 1,2000 feet North of the
Southwest corner of said Southeast Quarter; thence East 781.5 feet; thence North
162 feet; thence East parallel with the South line of the Quarter Section to the
Easterly edge of a 50 foot street for a point of commencement of this
description; thence East 300 feet more or less to the West line of a tract of
ground conveyed to William Wallace Wiltshire on February 28, 1842; thence North
on said West line 165 feet; thence West parallel to the south line of said
street; thence Southerly 165 feet, more or less to the point of commencement,
situated in Rock Island County, Illinois.
A-2
<PAGE>
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 $1,350,000 due
from Mansur Wood Living Center, 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
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
MANSUR1.DPA
1
<PAGE>
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.
Payment by the Guarantor under this Guaranty Agreement shall be
recorded as a capital contribution payment from the Guarantor to Debtor and,
subsequently, as a payment of the Development Fee from Debtor to Developer.
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.
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.
MANSUR1.DPA
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IN WITNESS WHEREOF, the undersigned have hereunto caused this Guaranty
Agreement to be executed as of _______________________, 1998.
Signed, sealed and delivered GUARANTOR:
in the presence of:
- ----------------------------
Witness
--------------------------
____________________________ John McChurch
--------------------------
Margaret McChurch
Notary Public
My Commission Expires:
Address for Guarantor:
____________________________ 3919 17th Street,
(NOTARY SEAL) East Moline, IL 61244
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MANSUR1.DPA
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CONSTRUCTION AND OPERATING BUDGET
AGREEMENT
This Construction and Operating Budget Agreement ("Agreement") is
entered into as of the date written below by and between Mansur Wood Living
Center, L.P., an Illinois limited Partnership ("Owner"), Elderly Living
Development, Inc., ("General Partner"), WNC Housing Tax Credit Fund VI, L.P.,
Series 5, 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 Mansur Court and 7th Avenue
in Carbon Cliff, Rock Island County, Illinois (the "Real Property").
B. Owner intends to develop on the Real Property a 115 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 Mansur Wood
Living Center, L.P. ("Partnership Agreement") was entered into by and between
Elderly Living Development, Inc., as the general partner ("General Partner"),
WNC Housing Tax Credit Fund VI, L.P., Series 5 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 Mansur Wood Living
Center, 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.
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
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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 General Partner: Elderly Living Development, Inc.
3919 17th Street
East Moline, Illinois 61244
To the Limited Partner: WNC Housing Tax Credit Fund VI, L.P.,
Series 5
c/o WNC & Associates, Inc.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
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To the Special
Limited Partner: WNC HOUSING, L.P.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
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.
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In Witness Whereof, this Construction and Operating Budget Agreement is
made and entered into as of ________________, 1998.
GENERAL PARTNER
Elderly Living Development, Inc.
By: ____________________________
John McChurch
Vice President and
Chief Operating Officer
LIMITED PARTNER
WNC Housing Tax Credit Fund VI, L.P., Series 5
By: WNC & Associates, Inc.,
General Partner
By: _________________________
David N. Shafer,
Senior Vice President
SPECIAL LIMITED PARTNER
WNC Housing, L.P.
By: WNC & Associates, Inc.,
General Partner
By: _______________________________
David N. Shafer,
Senior Vice President
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EXHIBIT A
TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT
SOURCE OF FUNDS
<PAGE>
EXHIBIT B
TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT
CONSTRUCTION PROFORMA
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EXHIBIT C
TO CONSTRUCTION AND OPERATING BUDGET AGREEMENT
OPERATING PROFORMA
