SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 1, 1999
AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 000-24843
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(State of Formation) (Commission File Number)
47-0810385
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(IRS Employer Identification Number)
Suite 400, 1004 Farnam Street,
Omaha, Nebraska 68102
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(Address of principal executive offices) (Zip Code)
(402) 444-1630
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(Registrants' telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets. Effective February 1, 1999,
America First Tax Exempt Investors, L.P. (the "Registrant") merged with
America First Tax Exempt Mortgage Fund Limited Partnership, a Delaware limited
partnership (the "Mortgage Fund") under the laws of the State of Delaware.
Pursuant to the Amended Agreement of Merger, dated June 12, 1998, by and
between the Registrant and the Mortgage Fund (the "Merger Agreement"), the
separate existence of the Mortgage Fund terminated as of the time of the
merger and the Registrant, as the surviving limited partnership of the merger,
succeeded to all of the assets and liabilities of the Mortgage Fund.
The principal assets of the Mortgage Fund that were acquired by the Registrant
as a result of said merge consisted of seven tax-exempt mortgage bonds secured
by apartment complexes. The following table sets forth certain information
with respect to the tax-exempt bonds that the Registrant acquired from the
Mortgage Fund as a result of the merger.
<TABLE>
<CAPTION>
Carrying
Property Name/ Number of Maturity Base Interest Amount at
Location Units Date Rate (1) December 31, 1998
- -------------- --------- -------- ------------- -----------------
<S> <C> <C> <C> <C>
Arama Apartments 293 07/01/10 8.5% $12,100,000
Miami, FL
Woodbridge Apts. 280 12/01/26 7.5% 12,600,000
of Bloomington III
Bloomington, IN
Shoals Crossing 176 12/01/09 8.5% 4,500,000
Atlanta, GA
Ashley Pointe 150 12/01/26 7.0% 6,700,000
at Eagle Crest
Evansville, IN
Woodbridge Apts. 190 12/01/26 7.5% 8,976,000
of Louisville II
Louisville, KY
Northwoods Lake Apts 492 12/01/06 8.5% 25,250,000
Duluth, GA
Ashley Square 144 12/01/09 8.5% 6,500,000
Des Moines, IA
TOTAL $76,626,000
Unrealized holding losses (5,500,000)
------------
Balance at December 31, 1998 (at estimated fair value) $71,126,000
</TABLE>
(1)In addition to the base interest rate shown, the bonds bear additional
contingent interest as defined in each revenue note which, when combined with
the base interest, is limited to a cumulative, noncompounded amount of from
10.5% to 16% per annum.
Under the terms of the Merger Agreement, the Registrant issued one Beneficial
Unit Certificate (a "BUC") representing an assigned limited partnership
interest in the Registrant for each outstanding BUC representing an assigned
limited partnership interest in the Mortgage Fund or a total of 9,979,128
BUCs. No other consideration was paid in connection with the merger.
America First Capital Associates Limited Partnership Two is the general
partner of both the Registrant and the Mortgage Fund. Accordingly, the merger
did not result in a change in control of the Registrant.
<PAGE> - 1 -
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Financial Statements of the Mortgage Fund as of, and for the three-year
period ended December 31, 1997 (incorporated by reference to Part II,
Item 8 of the Annual Report on Form 10-K for the year ended December 31,
1997 of the Mortgage Fund (SEC File No. 000-14314)).
Financial Statements of the Mortgage Fund as of, and for the nine-month
period ended September 30, 1998 (incorporated by reference to Part I,
Item 1 of the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 of the Mortgage Fund (SEC File No. 000-14314)).
(b) Pro Forma Financial Information.
Because the Registrant had no material assets, liabilities or operations
prior to the merger with the Mortgage Fund, there would be no material
difference between (i) pro forma financial statements of the Registrant
reflecting the merger and (ii) the historical financial statements of the
Mortgage Fund listed in item (a) above. Accordingly, separate pro forma
financial statements are not included in this report.
(c) Exhibits.
2(a) Amended Agreement of Merger, dated June 12, 1998, between the
Registrant and America First Tax Exempt Mortgage Fund Limited Partnership
(incorporated by reference to Exhibit 4.3 to Amendment No. 3 to the
Registration Statement on Form S-4 (No. 333-50513) filed by the Registrant
on September 14, 1998.
4(a) Form of Certificate of Beneficial Unit Certificate (incorporated by
reference to Exhibit 4.1 to the Registration Statement on Form S-4 (No.
333-50513) filed by the Registrant on April 17, 1998.
4(b) Agreement of Limited Partnership of the Registrant, dated
October 1, 1998.
<PAGE> - 2 -
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.
AMERICA FIRST TAX
EXEMPT INVESTORS, L. P., the Registrant
By America First Capital Associates Limited
Partnership Two, its general partner
By America First Companies L.L.C,
its general partner
By /s/ Michael Thesing
Michael Thesing, Vice President
and Principal Financial Officer
Dated: February 1, 1999
<PAGE> - 3 -
EXHIBIT 4(b)
AMERICA FIRST
TAX EXEMPT INVESTORS, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
<PAGE> - 4 -
TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS 7
ARTICLE II
NAME, PLACE OF BUSINESS, PURPOSE AND TERM
Section 2.01. Name 11
Section 2.02. Principal Office and Name and Address of Resident Agent 11
Section 2.03. Purpose 11
Section 2.04. Term 12
ARTICLE III
PARTNERS AND CAPITAL
Section 3.01. General Partner 12
Section 3.02. Limited Partner 12
Section 3.03. Partnership Capital 12
Section 3.04. Liability of Partners and BUC Holders 12
ARTICLE IV
DISTRIBUTIONS OF CASH; ALLOCATIONS OF INCOME AND LOSS
Section 4.01. Distributions of Net Interest Income 13
Section 4.02. Distributions of Net Residual Proceeds
and of Liquidation Proceeds 13
Section 4.03. Allocation of Income and Loss From Operations 13
Section 4.04. Allocation of Income and Loss Arising From
a Repayment, Sale or Liquidation 14
Section 4.05. Determination of Allocations and Distributions
Among Limited Partners and BUC Holders 14
Section 4.06. Capital Accounts 15
Section 4.07. Rights to Distributions 15
ARTICLE V
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
Section 5.01. Management of the Partnership 15
Section 5.02. Authority of the General Partner 15
Section 5.03. Authority of General Partner and Its
Affiliates To Deal With Partnership 17
Section 5.04. General Restrictions on Authority of
the General Partner 18
Section 5.05. Compensation and Fees 19
Section 5.06. Duties and Obligations of the General Partner 20
Section 5.07. Delegation of Authority 20
Section 5.08. Other Activities 21
Section 5.09. Limitation on Liability of the General Partner
and Initial Limited Partner; Indemnification 21
Section 5.10. Special Amendments to the Agreement 22
ARTICLE VI
CHANGES IN GENERAL PARTNERS
Section 6.01. Withdrawal of General Partner 22
Section 6.02. Admission of a Successor or Additional
General Partner 22
Section 6.03. Removal of a General Partner 22
Section 6.04. Effect of Incapacity of a General Partner 23
<PAGE> - 5 -
ARTICLE VII
TRANSFERABILITY OF BUCS AND LIMITED PARTNERS' INTERESTS
Section 7.01. Free Transferability of BUCs 23
Section 7.02. Restrictions on Transfers of BUCs and of
Interests of Limited Partners Other Than
the Initial Limited Partner 24
Section 7.03. Assignees of Limited Partners Other Than
the Initial Limited Partner 24
Section 7.04. Joint Ownership of Interests 25
ARTICLE VIII
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
Section 8.01. Events Causing Dissolution 25
Section 8.02. Liquidation 26
ARTICLE IX
BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS
Section 9.01. Books and Records 27
Section 9.02. Accounting Basis and Fiscal Year 27
Section 9.03. Reports 27
Section 9.04. Designation of Tax Matters Partner 28
Section 9.05. Expenses of Tax Matters Partner 28
ARTICLE X
MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS AND BUC HOLDERS
Section 10.01. Meetings 28
Section 10.02. Voting Rights of Limited Partners and BUC Holders 29
Section 10.03. Opinion Regarding Effect of Action by
Limited Partners and BUC Holders 30
Section 10.04. Other Activities 30
ARTICLE XI
ASSIGNMENT OF LIMITED PARTNERSHIP INTERESTS TO BUC HOLDERS AND RIGHTS OF
BUC HOLDERS
Section 11.01. Assignment of Limited Partnership Interests
to BUC Holders 30
Section 11.02. Rights of BUC Holders 31
Section 11.03. Voting by the Initial Limited Partner on Behalf
of BUC Holders 31
Section 11.04. Preservation of Tax Status 32
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Appointment of the General Partner as Attorney-in-Fact 32
Section 12.02. Signatures 33
Section 12.03. Amendments 33
Section 12.04. Binding Provisions 33
Section 12.05. Applicable Law 33
Section 12.06. Separability of Provisions 33
Section 12.07. Captions 33
Section 12.08. Entire Agreement 33
TESTIMONIUM 35
SCHEDULE A
<PAGE> - 6 -
AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
This Agreement is made as of October 1, 1998 by and between America First
Capital Associates Limited Partnership Two (the "General Partner") and America
First Fiduciary Corporation Number Five (the "Initial Limited Partner"), who
by joining in this Agreement agree to become partners in a limited partnership
under the laws of the State of Delaware.
ARTICLE I
DEFINED TERMS
The defined terms used in this Agreement shall, unless the context otherwise
requires, have the meanings specified in this Article I. The singular shall
include the plural and the masculine genders shall include the feminine and
neuter gender, and vice versa, as the context requires.
"Accountants" means such nationally recognized firm of independent public
accountants as shall be engaged from time to time by the General Partner on
behalf of the Partnership.
"Act" means the Delaware Revised Uniform Limited Partnership Act, which
consists of Title 6, Chapter 17 of the Delaware Code Annotated, as it may be
amended or revised from time to time, or any other provision of Delaware law
which may, from time to time, supersede part or all of the Delaware Revised
Uniform Limited Partnership Act.
"Administrative Fee" means the fee payable to the General Partner that is
described in Section 5.05(a) hereof.
"AFCA" means America First Capital Associates Limited Partnership Two, a
Delaware limited partnership, the General Partner.
"Affiliate" means, when used with reference to a specified Person, (i) any
Person who directly or indirectly controls or is controlled by or is under
common control with the specified Person, (ii) any Person who is (or has the
power to designate) an officer of, general partner in or trustee of, or serves
(or has the power to designate a person to serve) in a similar capacity with
respect to, the specified Person, or of which the specified Person is an
officer, general partner or trustee, or with respect to which the specified
Person serves in a similar capacity, and (iii) any Person who, directly or
indirectly, is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified Person is
directly or indirectly the owner of 10% or more of any class of equity
securities. An Affiliate of the Partnership or the General Partner does not
include any limited partner of the General Partner if such Person is not
otherwise an Affiliate of the Partnership or the General Partner.
"Agreement" means this Limited Partnership Agreement, as originally executed
and as amended from time to time.
"Bankruptcy" or "Bankrupt" as to any Person means the filing of a petition for
relief by such Person as debtor or bankrupt under the Bankruptcy Code of 1978
or like provision of law or insolvency of such Person as finally determined by
a court proceeding.
"Bond" or "Bonds" means the tax-exempt housing bonds issued by various state
or local authorities in order to provide construction and permanent financing
for apartment complexes and which are held by the Partnership from time to
time.
"BUC" means a Limited Partnership Interest which is credited to the Initial
Limited Partner on the books and records of the Partnership and assigned by
the Initial Limited Partner to a BUC Holder.
"BUC Holder" means any Person who has been assigned one or more Limited
Partnership Interests by the Initial Limited Partner pursuant to Section
11.01. A BUC Holder is not a Limited Partner and will have no right to be
admitted as a Limited Partner.
"Business Day" means any day other than a Saturday, Sunday or a day on which
banking institutions in either New York, New York or Omaha, Nebraska are
obligated by law or executive order to be closed.
<PAGE> - 7 -
"Capital Account" means the capital account of a Partner or a BUC Holder as
described in Section 4.06 hereof.
"Capital Contribution" means the total amount contributed to the capital of
the Partnership by or on behalf of all Partners or any class of Partners or by
any one Partner, as the context may require (or by the predecessor holders of
the Partnership Interests of such Persons) and, with respect to a BUC Holder,
the Capital Contribution of the Initial Limited Partner made on behalf of such
BUC Holder.
"Cause" means conduct which constitutes fraud, bad faith, negligence,
misconduct or breach of a fiduciary duty.
"Certificate" means the certificate of limited partnership filed pursuant to
Section 17-201 of the Act.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision or provisions of succeeding law.
"Consent" means either the consent given by a vote at a meeting called and
held in accordance with the provisions of Section 10.01 hereof or the written
consent, as the case may be, of a Person to do the act or thing for which the
consent is solicited, or the act of granting such consent, as the context may
require. Consent given after the act or thing is done with respect to which
the Consent is solicited shall be deemed to relate back to the date such act
or thing was done.
"Contingent Interest" means (i) any Interest Income paid from the net cash
flow of a Project (or any Residual Proceeds paid from the proceeds of a Sale
or refinancing of the Project), the payment of either of which is not required
under the terms of the Mortgage Investment unless there is specified cash flow
from a Project or other specified contingencies are satisfied, and (ii) any
amounts received by the Partnership on the sale or other disposition of a
Mortgage Investment other than amounts representing repayment of principal and
amounts constituting Interest Income.
"Counsel" means the law firm representing the General Partner in connection
with the operation of the Partnership or the law firm, if any, selected by the
General Partner to represent the Partnership.
"Distribution Date" means a Business Day selected by the General Partner for
the distribution of Net Interest Income or Net Residual Proceeds with respect
to a Distribution Period, which Business Day shall be no later than 60 days
following the last day of the Distribution Period to which such Distribution
Date relates.
"Distribution Period" means the period of time selected by the General Partner
for which the distribution of Net Interest Income or Net Residual Proceeds is
made, which period may be no longer than six calendar months.
"General Partner" means AFCA or any Person or Persons who, at the time of
reference thereto, have been admitted as successors to the Partnership
Interest of AFCA or as additional General Partners, in each such Person's
capacity as a General Partner.
"Incapacity" or "Incapacitated" means, as to any Person, death, the
adjudication of incompetency or insanity, Bankruptcy, dissolution,
termination, withdrawal pursuant to Section 6.01 or removal pursuant to
Section 6.03, as the case may be, of such Person.
"Income" means the taxable income of the Partnership as determined in
accordance with the Partnership's method of accounting and computed under
Section 703 of the Code; any item of taxable income required to be separately
stated on the Partnership's federal income tax return pursuant to Section
703(a)(1) of the Code; and any income of the Partnership excluded from the
gross income of the Partnership for federal income tax purposes under Section
103 of the Code.
"Initial Limited Partner" means America First Fiduciary Corporation Number
Five, a Nebraska corporation, or any Person or Persons who, at the time of
reference thereto, have been admitted to the Partnership, with the consent of
the General Partner, as successors to the Limited Partnership Interest of
America First Fiduciary Corporation Number Five.
<PAGE> - 8 -
"Interest Income" means all cash receipts of the Partnership with respect to
any period except for (i) Capital Contributions, (ii) amounts received by the
Partnership upon a Repayment or upon the sale or other disposition of a
Mortgage Investment, Tax Exempt Investment or other Partnership asset which do
not represent accrued interest on the Mortgage Investment or Tax Exempt
Investment other than accrued interest which represents accrued Contingent
Interest, or (iii) the proceeds of any loan to the Partnership or the
refinancing of any loan, including proceeds received from the reissuance of
any Mortgage Investment or Tax Exempt Investment.
"Limited Partner" means any Person who is a Limited Partner, including the
Initial Limited Partner, at the time of reference thereto, in such Person's
capacity as a Limited Partner of the Partnership. A BUC Holder is not a
Limited Partner and has no right to be admitted as a Limited Partner.
"Limited Partnership Interest" means the Partnership Interest held by a
Limited Partner, including the Limited Partnership Interests assigned to BUC
Holders.
"Liquidation Proceeds" means all cash receipts of the Partnership (other than
Operating Income and Sale Proceeds) arising from the liquidation of the
Partnership's assets in the course of the dissolution of the Partnership.
"Loss" means taxable losses of the Partnership, as determined in accordance
with the Partnership's method of accounting and computed under Section 703 of
the Code; any item of loss or expense required to be separately stated on the
Partnership's federal income tax return pursuant to Section 703(a)(1) of the
Code; and any expenditures of the Partnership not deductible in computing its
taxable income and not properly treated as a capital expenditure.
"Merger Agreement" means the Amended Agreement of Merger, dated June 12, 1998,
by and between the Partnership and the Prior Partnership pursuant to which the
Partnership and the Prior Partnership will be merged in accordance with the
provisions of the Act with the Partnership being the surviving partnership.
"Merger Date" means the effective date of the merger of the Partnership and
the Prior Partnership specified in the Merger Agreement.
"Monthly Record Date" means the last day of a calendar month.
"Mortgage Investment" means a direct or indirect interest in a tax-exempt
mortgage revenue bond secured by a Property, including residual interests in
one or more trusts which hold tax-exempt mortgage revenue bonds, and any other
loan (whether or not the interest thereon is exempt from federal income
taxation) secured by a mortgage on a Property on which the Partnership also
directly or indirectly holds a tax-exempt mortgage revenue bond.
"Net Interest Income" means, with respect to any Distribution Period, all
Interest Income received by the Partnership during such Distribution Period,
plus any amounts previously set aside as Reserves from Interest Income which
the General Partner releases from Reserves as being no longer necessary to
hold as part of Reserves, less (i) expenses of the Partnership (including fees
and reimbursements paid to the General Partner but excluding any expenses of
the Partnership which are directly attributable to the sale of a Mortgage
Investment or Tax Exempt Investment) paid from Interest Income during the
Distribution Period (other than operating expenses paid from previously
established Reserves), (ii) all cash payments made from Interest Income during
such Distribution Period to discharge Partnership indebtedness, and (iii) all
amounts from Interest Income set aside as Reserves or used to acquire
additional Mortgage Investments or Tax Exempt Investments during such
Distribution Period. Net Interest Income will consist of Net Interest Income
(Tier 1), Net Interest Income (Tier 2) and Net Interest Income (Tier 3).
During each Distribution Period the additions and deductions from Interest
Income set forth above shall be first applied against Net Interest Income
(Tier 1).
"Net Interest Income (Tier 1)" means, with respect to any Distribution Period,
all Net Interest Income, other than Contingent Interest, received by the
Partnership during such Distribution Period.
<PAGE> - 9 -
"Net Interest Income (Tier 2)" means, with respect to any Distribution Period,
all Net Interest Income representing Contingent Interest received by the
Partnership during such Distribution Period up to an amount which, when
combined with all prior amounts of Contingent Interest distributed pursuant to
Sections 4.02(b) and 4.03(b), aggregates 0.9% per annum of the principal
amount of the Mortgage Investments during the period such Mortgage Investments
are held by the Partnership or the Predecessor Partnership.
"Net Interest Income (Tier 3)" means, with respect to any Distribution Period,
all Net Interest Income representing Contingent Interest received by the
Partnership during such Distribution Period in excess of any Contingent
Interest included in Net Interest Income (Tier 2).
"Net Residual Proceeds" means, with respect to any Distribution Period, all
Residual Proceeds received by the Partnership during such Distribution Period,
plus any amounts previously set aside as Reserves from Residual Proceeds which
the General Partner releases from Reserves as being no longer necessary to
hold as part of Reserves, less (i) all expenses of the Partnership which are
directly attributable to a Repayment or sale or other disposition of a
Mortgage Investment or Tax Exempt Investment, (ii) all cash payments made from
Residual Proceeds during such Distribution Period to discharge Partnership
indebtedness and (iii) all amounts from Residual Proceeds set aside as
Reserves or used to acquire additional Mortgage Investments or Tax Exempt
Investments during such Distribution Period or held by the Partnership to
acquire additional Mortgage Investments or Tax Exempt Investments in future
Distribution Periods. Net Residual Income will consist of Net Residual Income
(Tier 1), Net Interest Residual (Tier 2) and Net Residual Income (Tier 3).
During each Distribution Period the additions and deductions from Residual
Income set forth above shall be first applied against Net Residual Income
(Tier 1).
"Net Residual Proceeds (Tier 1)" means, with respect to any Distribution
Period, all Net Residual Proceeds received by the Partnership during such
Distribution Period representing the principal amount of a Mortgage Investment
or Tax Exempt Investment which is the subject of a Repayment, sale or other
disposition, plus any amounts previously set aside as Reserves from Residual
proceeds which the General Partner releases from Reserves for distribution.
"Net Residual Proceeds (Tier 2)" means, with respect to any Distribution
Period, all Net Residual Proceeds representing Contingent Interest received by
the Partnership during such Distribution Period up to an amount which, when
combined with all prior amounts of Contingent Interest distributed pursuant to
Sections 4.02(b) and 4.03(b) and the Contingent Interest to be distributed by
the Partnership pursuant to Section 4.02(b) for the current Distribution
Period, aggregates 0.9% per annum of the principal amount of the Mortgage
Investments during the period such Mortgage Investments are held by the
Partnership or the Predecessor Partnership.
"Net Residual Proceeds (Tier 3)" means, with respect to any Distribution
Period, all Net Residual Proceeds representing Contingent Interest received by
the Partnership during such Distribution Period in excess of any Contingent
Interest included in Net Residual Proceeds (Tier 2).
"Notice" means a writing, containing the information required by this
Agreement to be communicated to any Person, personally delivered to such
Person or sent by registered, certified or regular mail, postage prepaid, to
such Person at the last known address of such Person.
"Partner" means the General Partner or any Limited Partner.
"Partnership" means the limited partnership created by this Agreement and
known as the America First Tax Exempt Investors, L.P., as said limited
partnership may from time to time be constituted.
"Partnership Interest" means 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 under this Agreement,
together with the obligations of such Partner to comply with all the terms and
provisions of this Agreement and the Act.
"Person" means any individual, partnership, corporation, trust, association or
other legal entity.
"Prior Partnership" means America First Tax Exempt Mortgage Fund Limited
Partnership, a Delaware limited partnership.
<PAGE> - 10 -
"Prior Partnership Agreement" means the Agreement of Limited Partnership,
dated November 11, 1985, of the Prior Partnership.
"Property" or "Properties" means the real property, including land and the
buildings thereon, which is secured by a mortgage or other similar encumbrance
backing a Mortgage Investment held by the Partnership.
"Regulations" means the United States Treasury Regulations promulgated or
proposed under the Code.
"Repayment" means the payment of the outstanding principal, and Contingent
Interest, is any, upon the maturity of a Mortgage Investment or Tax Exempt
Investment or at such earlier time as the Partnership may require the payment
of outstanding principal.
"Reserve" means such amount of funds as shall be withheld from Capital
Contributions, Interest Income or Residual Proceeds by the General Partner
from time to time in order to provide working capital for the Partnership and
which may be used for any purpose relating to the operation of the Partnership
and its Mortgage Investments and Tax Exempt Investments, including the
acquisition of additional Mortgage Investments and Tax Exempt Investments.
"Residual Proceeds" means all amounts received by the Partnership upon a
Repayment or upon the sale of or other disposition of a Mortgage Investment or
a Tax Exempt Investment or other Partnership asset except for amounts
representing accrued interest on a Mortgage Investment (other than accrued
Contingent Interest) or Tax Exempt Investment. Amounts representing accrued
interest (other than accrued Contingent Interest) received by the Partnership
upon a Repayment or upon the sale or other disposition of a Mortgage
Investment or Tax Exempt Investment shall be included in Interest Income.
Residual Proceeds will not include any amount received by the Partnership
representing proceeds from the securitization of a Mortgage Investment.
"Schedule A" means the schedule, as amended from time to time, of Partners'
names, addresses and Capital Contributions, which schedule, in its initial
form, is attached to and made a part of this Agreement.
"Tax Exempt Investments" means any securities, other than Mortgage
Investments, the interest on which is exempt from federal income taxation and
which are rated in one of the four highest rating categories by at least one
nationally recognized rating agency which are acquired by the Partnership and
not held in the Reserve.
"Tax Matters Partner" means the Partner designated as the Tax Matters Partner
of the Partnership by the General Partner pursuant to Section 9.04.
ARTICLE II
NAME, PLACE OF BUSINESS, PURPOSE AND TERM
Section 2.01. Name. The Partners have caused the formation a limited
partnership pursuant to the Act under the name of "America First Tax Exempt
Investors, L.P." The Partners and BUC Holders have entered into this
Agreement in order to set forth their respective rights and liabilities as
such, subject to the provisions of the Act unless otherwise provided herein.
Section 2.02. Principal Office and Name and Address of Resident Agent. The
address of the principal office and place of business of the Partnership,
unless hereafter changed by the General Partner, shall be Suite 400, 1004
Farnam Street, Omaha, Nebraska 68102. Notification of any change in the
Partnership's principal office and place of business shall be promptly given
by the General Partner to the Limited Partners and BUC Holders. The name and
address of the initial resident agent of the Partnership in the State of
Delaware is The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801. The resident agent may be changed by the General Partner.
Section 2.03. Purpose. The purpose of the Partnership is to acquire, hold,
sell and otherwise deal with tax-exempt mortgage bonds and other tax-exempt
instruments backed by multifamily residential properties. The Partnership
will pursue its purpose in order (i) to preserve and protect the Partnership's
capital, (ii) to provide regular cash distribution to the BUC Holders and
(iii) to provide a potential for an enhanced federally tax-exempt yield from
Contingent Interest payable from the net cash flow from the Properties and
from the net proceeds of a sale or refinancing of the Properties. The
<PAGE> - 11 -
Partnership is authorized to hold Mortgage Investments and Tax Exempt
Investments, to foreclose on Properties secured by Mortgage Investments, to
sell all or a portion of its interest in a Mortgage Investment and to reinvest
the proceeds therefrom in additional Mortgage Investments or Tax Exempt
Investments on such terms and conditions as the General Partner shall
determine in its sole discretion and to engage in any and all acts necessary,
appropriate, advisable or incidental to its purpose and to the conduct of its
business.
Section 2.04. Term. The Partnership began on the date of the filing of the
Certificate and shall continue in full force and effect until December 31,
2050 or until sooner dissolved pursuant to the provisions of this Agreement.
ARTICLE III
PARTNERS AND CAPITAL
Section 3.01. General Partner.
(a) The name, address and Capital Contribution of the General Partner
(which shall be measured by its capital account in the Prior Partnership on
the Merger Date) are set forth in Schedule A. The General Partner, as
such, shall not be required to make any additional Capital Contribution to
the Partnership, except as provided in paragraph (b) of this Section 3.01.
(b) Upon the dissolution and termination of the Partnership, the General
Partner will contribute to the Partnership an amount equal to the lesser of
(i) any deficit balance in its Capital Account or (ii) the excess of (A)
1.01% of the Capital Contributions of the Limited Partners to the
Partnership (including the Capital Contribution of the Initial Limited
Partner made on behalf of the BUC Holders) over (B) the amount of previous
Capital Contributions made by the General Partner to the Partnership.
Section 3.02. Limited Partner. The name, address and Capital Contribution of
the Limited Partner (which initially shall be measured by its capital account
in the Prior Partnership on the Merger Date) are as set forth in Schedule A.
The Capital Contribution made by the Initial Limited Partner shall be deemed
to have been made on behalf of, and as trustee for, the BUC Holders. Neither
the Initial Limited Partner nor the BUC Holders shall be required to make any
additional Capital Contribution to the Partnership. Other than to serve as
Initial Limited Partner, the Initial Limited Partner shall have no other
business purpose and shall not engage in any other activity or incur any
debts. The Initial Limited Partner agrees not to amend its articles of
incorporation with respect to the incurrence of debt without the written
Consent of a majority in interest of the BUC Holders.
Section 3.03. Partnership Capital.
(a) No Partner or BUC Holder shall be paid interest on any Capital
Contribution.
(b) Except as specifically provided in Section 6.03, the Partnership shall
not be required to redeem or repurchase any Partnership Interest or BUC and
no Partner or BUC Holder shall have the right to withdraw, or receive any
return of, his Capital Contribution. Under circumstances requiring a
return of any Capital Contribution, no Limited Partner or BUC Holder will
have the right to receive property other than cash.
(c) No Limited Partner or BUC Holder shall have any priority over any other
Limited Partner or BUC Holder as to the return of his Capital Contribution
or as to distributions.
(d) The General Partner shall have no liability for the repayment of the
Capital Contributions.
Section 3.04. Liability of Partners and BUC Holders. No Limited Partner or
BUC Holder shall be required to lend any funds to the Partnership or, after
his Capital Contribution has been paid, to make any further Capital
Contribution to the Partnership. The liability of any Limited Partner or BUC
Holder for the losses, debts, liabilities and obligations of the Partnership
shall, so long as the Limited Partner or BUC Holder complies with Section
5.01(b), be limited to his Capital Contribution and his share of any
undistributed Income of the Partnership. Notwithstanding the foregoing, it is
possible that, under applicable law, a Limited Partner or BUC Holder may be
<PAGE> - 12-
liable to the Partnership to the extent of previous distributions made to such
Limited Partner or BUC Holder if such distributions have caused the
liabilities of the Partnership to exceed the fair value of its assets. To the
extent that the Initial Limited Partner is required by law to return any
distributions or repay any amount, each BUC Holder who has received any
portion of such distributions agrees, by virtue of accepting such
distribution, to pay his proportionate share of such amount to the Initial
Limited Partner immediately upon Notice by the Initial Limited Partner to such
BUC Holder. In lieu of requiring return of such distributions from BUC
Holders, the General Partner may withhold future distributions of Net Interest
Income, Net Residual Proceeds or Liquidation Proceeds until the amount so
withheld equals the amount of the distributions the Initial Limited Partner is
required to repay or return regardless of whether the BUC Holders entitled to
receive such distribution were the same BUC Holders who actually received the
distribution required to be returned. In the event that the Initial Limited
Partner is determined to have unlimited liability for losses, debts,
liabilities and obligations of the Partnership, nothing set forth in this
Section shall be construed to require BUC Holders to assume any portion of
such liability.
ARTICLE IV
DISTRIBUTIONS OF CASH;
ALLOCATIONS OF INCOME AND LOSS
Section 4.01. Distributions of Net Interest Income.
(a) On each Distribution Date, all Net Interest Income (Tier 1 and Tier 3)
with respect to the related Distribution Period will be distributed 99% to
the Limited Partners and BUC Holders as a class and 1% to the General
Partner.
(b) On each Distribution Date, all Net Interest Income (Tier 2) will be
allocated 75% to the Limited Partners and BUC Holders as a class and 25% to
the General Partner.
Section 4.02. Distributions of Net Residual Proceeds and of Liquidation
Proceeds.
(a) On each Distribution Date, all amounts representing Net Residual
Proceeds (Tier 1 and Tier 3) will be distributed 100% to the Limited
Partners and BUC Holders as a class.
(b) On each Distribution Date, all distributions of Net Residual Proceeds
(Tier 2) will be allocated 75% to the Limited Partners and BUC Holders as a
class and 25% to the General Partner.
(c) All Liquidation Proceeds shall be applied and distributed in the
following amounts and order of priority:
(i) to the payment of the amounts and the establishment of the
reserves provided for in Section 8.02(b);
(ii) to the Partners and BUC Holders in accordance with the positive
balances in their respective Capital Accounts until such accounts are
reduced to zero; and
(iii) then to the Partners and BUC Holders giving effect to the
provisions of Section 4.02(a) as if such Liquidation Proceeds
constituted Net Residual Proceeds for purposes of such Section.
Section 4.03. Allocation of Income and Loss From Operations.
(a) Income and Loss shall be determined in accordance with the accounting
methods followed by the Partnership for federal income tax purposes and
otherwise in accordance with generally accepted accounting principles. For
purposes of determining the Income, Loss, tax credits or any other items
allocable to any period, Income, Loss, tax credits and any such other items
shall be determined on a daily, monthly or other basis, as determined by
the General Partner using any permissible method under Section 706 of the
Code and the Regulations thereunder. An allocation to a Partner of a share
of Income or Loss under this Section 4.03 shall be treated as an allocation
to such Partner of the same share of each item of income, gain, loss,
deduction and credit that is taken into account in computing such Income
and Loss.
<PAGE> - 13 -
(b) Subject to the provisions of Sections 4.03(c) and (d) and 5.04(m),
Income and Loss for each Distribution Period not arising from the sale or
other disposition of a Mortgage Investment or Tax Exempt Investment or the
liquidation of the Partnership shall be allocated 1% to the General Partner
and 99% to the Limited Partners and the BUC Holders as a class.
(c) Notwithstanding any provision hereof to the contrary, if a Partner has
a deficit Capital Account balance as of the last day of any fiscal year,
then all items of Income for such fiscal year shall be first allocated to
such Partner in the amount and in the manner necessary to eliminate such
deficit Capital Account balance.
(d) Notwithstanding any other provision of this Agreement, all allocations
of Income and Loss shall be subject to and interpreted in accordance with
Section 704 of the Code to the extent applicable. The foregoing
allocations are intended to comply with Section 704 of the Code and the
Regulations thereunder and shall be interpreted consistently therewith.
Section 4.04. Allocation of Income and Loss Arising From a Repayment, Sale
or Liquidation.
(a) Subject to Section 4.03(c), Income arising from a Repayment or a sale
or other disposition of a Mortgage Investment or Tax Exempt Investment or
from the liquidation of the Partnership assets shall be allocated (i)
first, to the General Partner in an amount equal to the Net Residual
Proceeds distributed to the General Partner from the transaction pursuant
to Section 4.02 and (ii) second, the balance to the Limited Partners and
the BUC Holders as a class.
(b) Loss arising from a Repayment or a sale or other disposition of a
Mortgage Investment or Tax Exempt Investment or from the liquidation
of Partnership assets shall be allocated among the Partners (including the
Initial Limited Partner on behalf of the BUC Holders) in the same manner as
Net Residual Proceeds or Liquidation Proceeds are allocated among the
Partners pursuant to Section 4.02.
Section 4.05. Determination of Allocations and Distributions Among Limited
Partners and BUC Holders.
(a) As of each Monthly Record Date during the term of the Partnership, a
determination shall be made of the amount of Income and Loss which, under
the Partnership's method of accounting, is properly attributable to the
month to which such Monthly Record Date relates and which was allocable to
the Limited Partners and BUC Holders as a class in accordance with Sections
4.04 and 4.05.
(b) As of the last day of each Distribution Period during the term of the
Partnership, a determination shall be made of the amount of Net Interest
Income and Net Residual Proceeds available to the Partnership during such
Distribution Period which was allocated for distribution to the Limited
Partners and BUC Holders in accordance with Sections 4.01 and 4.02;
provided, however, that the General Partner may elect to make the
determination under this Section 4.05(b) as of each Monthly Record Date.
(c) All allocations to the Limited Partners and the BUC Holders as a class
pursuant to Section 4.03 shall be made on a monthly basis among the Limited
Partners or BUC Holders who held of record a Limited Partnership Interest
or BUC as of the Monthly Record Date in the ratio that (i) the number of
Limited Partnership Interests or BUCs held of record by each such Limited
Partner or BUC Holder as of the Monthly Record Date bears to (ii) the
aggregate number of Limited Partnership Interests and BUCs outstanding on
each such Monthly Record Date.
(d) All allocations to the Limited Partners and the BUC Holders as a class
pursuant to Section 4.04 shall be made among the Limited Partners or BUC
Holders of record on the Monthly Record Date for the month during which the
Income or Expense arose from a Repayment, sale or other liquidation of a
Mortgage Investment or Tax Exempt Investment or liquidation of the
Partnership, in the ratio that (i) the number of Limited Partnership
Interests or BUCs held of record by each such Limited Partner or BUC Holder
on such Monthly Record Date bears to (ii) the number of Limited Partnership
Interests or BUCs outstanding on such Monthly Record Date.
<PAGE> - 14 -
(e) Net Interest Income and Net Residual Proceeds will be allocated to the
Limited Partners or BUC Holders of record on the last day of the
Distribution Period (or, if the General Partner so elects, on each Monthly
Record Date during such Distribution Period) in the ratio that (i) the
number of Limited Partnership Interests or BUCs owned of record by each
such Limited Partner or BUC Holder on each such date bears to (ii) the
number of Limited Partnership Interests or BUCs outstanding on such date.
Section 4.06. Capital Accounts. A separate Capital Account shall be
maintained and adjusted for each Partner in accordance with the Code and the
Regulations. There shall be credited to each Partner's Capital Account the
amount of such Partner's Capital Contribution (equal to the amount of its
capital account on the books and records of the Prior Partnership as of the
Merger Date) and such Partner's share of Income; and there shall be charged
against each Partner's Capital Account the amount of such Partner's share of
Loss and cash distributions. The Initial Limited Partner's Capital Account
shall be subdivided into separate Capital Accounts to reflect the interest of
each BUC Holder. Any items credited or charged to the BUC Holders shall be
reflected in the Capital Account of the Initial Limited Partner and in the
subaccounts reflecting the interest of each BUC Holder. Any person who
acquires a Limited Partnership Interest or a BUC from a Limited Partner or BUC
Holder shall have a Capital Account equal to the Capital Account of the
Limited Partner or BUC Holder from which such Limited Partnership Interest or
BUC was acquired.
Section 4.07. Rights to Distributions. Each holder of Partnership Interests
and BUCs shall look solely to the assets of the Partnership for all
distributions with respect to the Partnership, his Capital Contributions and
his share of Net Interest Income, Net Residual Proceeds and Liquidation
Proceeds and, except as provided in Section 3.01(b), shall have no recourse
therefor, upon dissolution or otherwise, against the General Partner or the
Initial Limited Partner. No Partner or BUC Holder shall have any right to
demand or receive property other than cash upon dissolution and termination of
the Partnership. All distributions pursuant to this Article IV are subject to
the provisions of Section 3.04.
ARTICLE V
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
Section 5.01. Management of the Partnership.
(a) The General Partner, within the authority granted to it under this
Agreement, shall have full, complete and exclusive discretion to manage and
control the business of the Partnership and to carry out the purposes of
the Partnership. In so doing, the General Partner shall use its best
efforts to take all actions necessary or appropriate to protect the
interests of the Limited Partners and the BUC Holders. All decisions made
for and on behalf of the Partnership by the General Partner shall be
binding upon the Partnership. Except as otherwise provided in this
Agreement, the General Partner shall have all the rights and powers and
shall be subject to all the restrictions and liabilities of a partner in a
partnership without limited partners.
(b) No Limited Partner or BUC Holder shall take part in the management or
control of the business of the Partnership or transact any business in the
name of the Partnership. No Limited Partner or BUC Holder shall have the
power or authority to bind the Partnership or to sign any agreement or
document in the name of the Partnership. No Limited Partner or BUC Holder
shall have any power or authority with respect to the Partnership except
insofar as the vote or Consent of the Limited Partners or BUC Holders shall
be expressly required or permitted by this Agreement.
Section 5.02. Authority of the General Partner.
(a) Subject to Sections 5.03 and 5.04, but otherwise without in any way
limiting the power and authority conferred on the General Partner by
Section 5.01(a), the General Partner, for and in the name and on behalf
of the Partnership, is hereby authorized, without limitation:
<PAGE> - 15 -
(i) to acquire, hold, refund, reissue, remarket, securitize, transfer,
foreclose upon, sell or otherwise deal with the Mortgage Investments
and Tax Exempt Investments (provided, that the acquisition by the
Partnership of any Tax Exempt Investment may not cause the aggregate
book value of all Tax Exempt Investments then held by the Partnership
to exceed 25% of the total assets of the Partnership) and to negotiate,
enter into, and deliver any and all agreements, documents and
instruments of any nature whatsoever with respect thereto on such
terms, and subject to such conditions, as it determines in its sole
discretion;
(ii) to acquire by purchase, lease, exchange or otherwise any real or
personal property to be used in connection with the business of the
Partnership; provided, however, that no property may be acquired from
the General Partner or its Affiliates except for goods and services
provided subject to the restrictions of Section 5.03;
(iii) to issue additional BUCs and to borrow money and issue evidences
of indebtedness and to secure the same by a pledge, lien, mortgage or
other encumbrance on any assets of the Partnership and to apply to
proceeds of such transactions to the acquisition of Mortgage
Investments and Tax Exempt Investments or such other proper Partnership
purpose as the General Partner shall determine in its sole discretion;
(iv) to employ agents, accountants, attorneys, consultants and other
Persons that are necessary or appropriate to carry out the business
and operations of The Partnership and to pay fees, expenses and other
compensation to such Persons; provided, that if such Persons are
Affiliates of the General Partner, the terms of such employment shall
be subject to the restrictions of Section 5.03;
(v) to pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend or compromise, upon such terms as it may determine
and upon such evidence as it may deem sufficient, any obligation, suit,
liability, cause of action or claim, including taxes, either in favor
of or against the Partnership;
(vi) except as otherwise expressly provided herein, to determine the
appropriate accounting method or methods to be used by the Partnership;
(vii) except as prohibited by this Agreement, to cause the Partnership
to make or revoke any of the elections referred to in the Code or any
similar provisions enacted in lieu thereof, including, but not limited
to, those elections provided for in Code Sections 108, 709 and 1017;
(viii) to amend the Certificate or this Agreement to reflect the
addition or substitution of Partners and to amend this Agreement as
provided in Section 12.03;
(ix) to deal with, or otherwise engage in business with, or provide
services to and receive compensation therefor from, any Person who has
provided or may in the future provide any services to, lend money to,
sell property to or purchase property from the General Partner or any
of its Affiliates;
(x) to obtain loans from the General Partner or its Affiliates,
provided that the requirements of Section 5.03(d)(iii) are met;
(xi) to establish and maintain the Reserve in such amounts as it deems
appropriate from time to time and to increase, reduce or eliminate the
Reserve as it deems appropriate from time to time;
(xii) to invest all funds not immediately needed in the operation of
the business including, but not limited to, (A) Capital Contributions,
(B) the Reserves or (C) Net Interest Income and Net Residual Proceeds
prior to their distribution to the Partners and BUC Holders or their
reinvestment in Mortgage Investments and Tax Exempt Investments;
(xiii) to acquire BUCs for the account of the Partnership in the
secondary trading market, provided that the BUCs are listed on The
Nasdaq Stock Market or a national securities exchange and to cause such
BUCs to be cancelled; and
<PAGE> - 16 -
(xiv) to engage in any kind of activity and to enter into, perform and
carry out contracts of any kind necessary or incidental to, or in
connection with, the accomplishment of the purposes of the Partnership.
(b) With respect to all of its obligations, powers and responsibilities
under this Agreement, the General Partner is authorized to execute and
deliver, for and on behalf of the Partnership, such notes and other
evidences of indebtedness, contracts, trust instruments, agreements,
assignments, deeds, loan agreements, mortgages, deeds of trust, leases and
such other documents as it deems proper, all on such terms and conditions
as it deems proper.
(c) No Person dealing with the General Partner shall be required to
determine the General Partner's authority to enter into any contract,
agreement or undertaking on behalf of the Partnership or to determine any
facts or circumstances bearing upon the existence of such authority. Any
Person dealing with the Partnership or the General Partner may rely upon a
certificate signed by the General Partner as to:
(i) the identity of the General Partner or any BUC Holder or Limited
Partner;
(ii) the existence or nonexistence of any fact or facts which
constitute a condition precedent to acts by the General Partner or are
in any other manner germane to the affairs of the Partnership;
(iii) the Persons who are authorized to execute and deliver any
instrument or document by or on behalf of the Partnership; or
(iv) any act or failure to act by the Partnership or as to any other
matter whatsoever involving the Partnership or any Partner.
Section 5.03. Authority of General Partner and Its Affiliates To Deal With
Partnership.
(a) The General Partner and its Affiliates may, and shall have the right
to, provide goods and services to the Partnership (including the right to
act as property manager of a Property or servicer of any Mortgage
Investment), subject to the conditions set forth in Section 5.03(b).
(b) The General Partner and its Affiliates shall not have the right to
contract or otherwise deal with the Partnership for the provision of goods
and services, except for those dealings, contracts or provisions of
services described in this Agreement. The provision of any goods and
services by the General Partner or its Affiliates shall be part of its or
their ordinary and ongoing business in which it or they have previously
engaged, independent of the activities of the Partnership and such goods
and services being provided shall be reasonable for and necessary to the
Partnership, shall actually furnished to the Partnership and (except as
provided in Section 5.05(f) hereof) shall be provided at the lower of the
actual cost of such goods or services or the competitive price charged for
such goods or services by independent parties for comparable goods and
services in the same geographic location and the provision of such goods
and services in all other respects meets the requirements of Section
5.03(c) and (d). The costs of verifying that the amounts paid to the
General Partner or its Affiliates for such goods and services meet the
foregoing standard may be reimbursed to the General Partner or its
Affiliates only to the extent that, when added to the costs of such goods
and services rendered, such sum does not exceed the competitive rate for
such goods and services.
(c) All goods and services provided by the General Partner or any
Affiliates pursuant to Section 5.03(b) shall be rendered pursuant to this
Agreement or a written contract, which contract precisely describes the
services to be rendered and all compensation to be paid and shall contain
a clause allowing termination without penalty on 60 days' Notice to the
General Partner by the vote of the majority in interest of the Limited
Partners and the BUC Holders (the Initial Limited Partner acting according
to direction of the BUC Holders). Any payment made to the General Partner
or any Affiliate for such goods and services shall be fully disclosed to
all Limited Partners and BUC Holders in the reports required under this
Agreement. Neither the General Partner nor any Affiliate shall, by the
making of lump sum payments to any other Person for disbursement by such
other Person, circumvent the provisions of Section 5.03(b), (c) or (d).
<PAGE> - 17 -
(d) The General Partner is prohibited from entering into any agreements,
contracts or arrangements on behalf of the Partnership with the General
Partner or any Affiliate of the General Partner under which:
(i) the General Partner or any Affiliate shall be given an exclusive
right to sell, or exclusive employment to sell, a Property;
(ii) the Partnership lends money to the General Partner or any
Affiliate of the General Partner; or
(iii) the General Partner or any Affiliate of the General Partner makes
a loan to the Partnership which provides for a prepayment penalty or
provides for an interest rate or other finance charges and fees which
are in excess of the lesser of (A) amounts charged by unrelated banks
on comparable loans to the Partnership or (B) the same rate as the
General Partner or such Affiliate paid to obtain the funds to make the
loan to the Partnership.
(e) Notwithstanding any provisions of this Section 5.03, neither the
General Partner nor any of its Affiliates shall:
(i) receive any rebate or give-up, or participate in any reciprocal
arrangement, which would circumvent the provisions of this Section
5.03; or
(ii) receive any compensation for providing insurance brokerage
services to the Partnership; or
(iii) charge the Partnership for, or take from any other Person, any
program management, real estate brokerage or mortgage servicing fee
with respect to Partnership property or assets.
(f) Nothing in this Section 5.03 shall prevent an Affiliate of the General
Partner from acquiring and holding debt securities or other interests
secured by a Property, provided that the Mortgage Investment held by the
Partnership that is secured by the same Property may not be junior or
subordinate to the interest held by such Affiliate.
Section 5.04. General Restrictions on Authority of the General Partner. In
exercising management authority and control of the Partnership, the General
Partner, on behalf of the Partnership and in furtherance of the business of
the Partnership, shall have the authority to perform all acts which the
Partnership is authorized to perform. However, the General Partner shall not
have any authority to:
(a) perform any act in violation of this Agreement or any applicable law or
regulation thereunder;
(b) do any act required to be approved or ratified by the Limited Partners
under the Act without Consent of the Limited Partners or the BUC Holders,
unless the right to do so is expressly otherwise given in this Agreement;
(c) sell or otherwise dispose of all or substantially all of the assets of
the Partnership in a single transaction without the Consent of a majority
in interest of the Limited Partners (including the Initial Limited Partner
acting on behalf of the BUC Holders) as provided in Section 10.02(a)(ii);
provided, however, that this subsection (c) shall not apply to (i) the
transfer of Mortgage Investments to a trust in connection with the
securitization thereof or to the sale of any interest in such trust, or
(ii) the sale of Partnership assets in connection with the liquidation
thereof after the dissolution of the Partnership;
(d) borrow money from the Partnership;
(e) dissolve the Partnership without the Consent of a majority in
interest of the Limited Partners (including the Initial Limited Partner
acting on behalf of the BUC Holders) as provided in Section 10.02(a)(iii);
(f) possess Partnership property, or assign the Partnership's rights in
specific Partnership property, for other than a Partnership purpose;
(g) admit a Person as a General Partner, except as provided in this
Agreement;
(h) admit a Person as a Limited Partner, except as provided in this
Agreement;
<PAGE> - 18 -
(i) sell, lease or lend Partnership assets to the General Partner or any
Affiliate of the General Partner or purchase or lease property from the
General Partner or its Affiliates, except as permitted by Section
5.02(a)(i);
(j) underwrite the securities of other issuers;
(k) do any act which would make it impossible to carry on the ordinary
business of the Partnership;
(l) knowingly perform any act that would subject any Limited Partner or BUC
Holder to liability as a general partner in any jurisdiction;
(m) allocate any Income or Loss (or any item thereof) to any Partner or BUC
Holder if, and only to the extent that, such allocation will cause the
determinations and allocations of Income or Loss (or any item thereof)
provided for in Article IV hereof not to be permitted by Section 704(b) of
the Code and the Regulations promulgated thereunder;
(n) confess a judgment against the Partnership;
(o) issue equity securities with rights and privileges senior to those of
the BUCs;
(p) make loans to the Partnership or accept loans on behalf of the
Partnership from the General Partner or any Affiliates of the General
Partner, except as provided in Section 5.03(d)(iii);
(q) amend this Agreement, except to the extent the right to amend this
Agreement is expressly provided for in other provisions of this Agreement;
or
(r) invest Partnership funds in (i) securities of other issuers, except for
Mortgage Investments, Tax Exempt Investments and temporary investments
pursuant to Section 5.02(a)(xii), (ii) land contracts, or (iii) unimproved
real estate not associated with a Property.
Section 5.05. Compensation and Fees.
(a) The Partnership will pay the General Partner an Administrative Fee
equal to 0.45% per annum of the outstanding principal balance of any
Mortgage Investment or Tax Exempt Investment for which an unaffiliated
party is not obligated to pay an "administrative fee" to the General
Partner under the terms of such Mortgage Investment of Tax Exempt
Investment. The Administrative Fee will be payable in equal monthly
installments in arrears based on the average outstanding principal
balance of such Mortgage Investments or Tax Exempt Investments held by the
Partnership during the previous month.
(b) Subject to Section 5.05(c), the Partnership will reimburse the General
Partner or its Affiliates on a monthly basis for the actual out-of-pocket
costs of direct telephone and travel expenses incurred by them on
Partnership business, direct out-of-pocket fees, expenses and charges paid
by them to third parties for rendering legal, auditing, accounting,
bookkeeping, computer, printing and public relations services, expenses of
preparing and distributing reports to Limited Partners and BUC Holders, an
allocable portion of the salaries and fringe benefits of employees of AFCA
or its Affiliates, insurance premiums (including premiums for liability
insurance which will cover the Partnership, the General Partner and its
general partner), the cost of compliance with all state and federal regula-
tory requirements and stock exchange or NASDAQ listing fees and charges and
other payments to third parties for services rendered to the Partnership.
(c) The Partnership will not reimburse the General Partner or its
Affiliates for the travel expenses of the president of the general partner
of the General Partner or for any items of general overhead, including, but
not limited to, rent, utilities or the use of computers, office equipment
or other capital items owned by the General Partner or its Affiliates. The
Partnership will not reimburse the General Partner or its general partner
for any salaries or fringe benefits of any partner of the General Partner
or of the officers or board of managers of its general partner regardless
of whether such persons provide services to the Partnership.
<PAGE> - 19 -
(d) The Accountants will verify on the basis of generally accepted auditing
standards that any amounts reimbursed by the Partnership pursuant to
Section 5.05(c) were incurred by the General Partner or its Affiliates in
connection with the conduct of the business and affairs of the Partnership
or the acquisition and management of its assets and were permissible
reimbursements pursuant to Section 5.05(c).
(e) In the event the Partnership becomes the equity owner of a Property,
due to the foreclosure of a Mortgage Investment or otherwise, the
Partnership will pay the General Partner an administrative fee of 0.45% of
the principal amount of the Mortgage Investment relating to such Property
and may pay the General Partner or an Affiliate a reasonable property
management fee in the event the General Partner deems it to be in the best
interest of the Partnership that it take over active management of the
Property. Notwithstanding anything in Section 5.03, the General Partner
may charge a property management fee not to exceed the lesser of (i) the
competitive price charged for multifamily property management services by
independent parties in the same geographic area as the managed Property or
(ii) 5% of the gross revenues of the managed Property, irrespective of the
General Partner's or such Affiliates cost for providing such services.
(f) Except as provided in this Agreement, the General Partner will receive
no compensation from the Partnership.
Section 5.06. Duties and Obligations of the General Partner.
(a) The General Partner shall devote to the affairs of the Partnership such
time as it deems necessary for the proper performance of its duties under
this Agreement, but neither the General Partner, its general partner nor
any officer or manager of its general partners shall be expected to devote
full time to the performance of such duties.
(b) The General Partner shall take such action as may be necessary or
appropriate for the classification of the Partnership as a partnership for
federal income tax purposes and for the continuation of the Partnership's
valid existence under the laws of the State of Delaware and in order to
qualify the Partnership under the laws of any jurisdiction in which the
Partnership is doing business or in which such qualification is necessary
or appropriate to protect the limited liability of the Limited Partners and
BUC Holders or in order to continue in effect such qualification. The
General Partner shall file or cause to be filed for recordation in the
office of the appropriate authorities of the State of Delaware, and in the
proper office or offices in each other jurisdiction in which the
Partnership is qualified, such certificates, including limited partnership
and fictitious name certificates, and other documents as are required by
the applicable statutes, rules or regulations of any such jurisdiction.
(c) The General Partner shall prepare or cause to be prepared and shall
file on or before the due date (or any extension thereof) any federal,
state or local tax returns required to be filed by the Partnership.
The General Partner shall cause the Partnership to pay any taxes payable by
the Partnership.
(d) The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or
not in the General Partner's possession or control. The General Partner
shall not employ, or permit another to employ, such funds or assets in any
manner except for the exclusive benefit of the Partnership. The General
Partner shall take all steps necessary to insure that the funds of the
Partnership are not commingled with the funds of any other entity. The
General Partner owes the same fiduciary duty to the BUC Holders as the
General Partner owes to the Limited Partners.
Section 5.07. Delegation of Authority. Subject to the provisions of this
Article V, the General Partner may delegate all or any of its powers, rights
and obligations under this Agreement and may appoint, employ, contract or
otherwise deal with any Person for the transaction of the business of the
Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve. Notwithstanding any such delegation, the General Partner shall
remain liable for any acts or omissions by such Person under the standards of
responsibility for the General Partner set forth herein.
<PAGE> - 20 -
Section 5.08. Other Activities. The General Partner and its Affiliates may
engage in or possess interests in other business ventures of every kind and
description for their own accounts, including, without limitation, serving as
general partner of other partnerships which own, either directly or through
interests in other partnerships, investments similar in nature to the Mortgage
Investments and Tax Exempt Investments. Neither the Partnership nor the
Partners or BUC Holders shall have any rights by virtue of this Agreement in
or to such other business ventures or to the income or profits derived
therefrom, and the pursuit of such ventures, even if competitive with the
business of the Partnership, shall not be deemed wrongful, improper or a
breach of fiduciary duty.
Section 5.09. Limitation on Liability of the General Partner and Initial
Limited Partner; Indemnification.
(a) Neither the General Partner, the Initial Limited Partner nor their
Affiliates (including the officers, managers and members of the general
partner of AFCA) shall be liable, responsible or accountable in damages or
otherwise to the Partnership or to any of the Limited Partners or BUC
Holders for any act or omission performed or omitted by such General
Partner or Initial Limited Partner in good faith and in a manner reasonably
believed by it to be within the scope of the authority granted to it by
this Agreement and in the best interests of the Partnership, provided that
such General Partner's or Initial Limited Partner's conduct did not
constitute Cause. The Partnership shall indemnify and hold harmless the
General Partner, the Initial Limited Partner and their Affiliates
(including the officers, managers and members of the general partner of
AFCA) against and for any loss, liability or damage incurred by any of them
or the Partnership by reason of any act performed or omitted to be
performed by them in connection with the business of the Partnership,
including all judgments, costs and attorneys' fees (which attorneys' fees
may be paid as incurred, except as provided in 5.09(b)) and any amounts
expended in settlement of any claims of liability, loss or damage, provided
that the indemnified Person's conduct did not constitute Cause. The
satisfaction of any indemnification obligation shall be from and limited to
Partnership assets, and no Limited Partner or BUC Holder shall have any
personal liability on account thereof. The termination of any action, suit
or proceeding, by judgment or settlement, shall not, of itself, create a
presumption that the indemnified Person did not act in good faith and in a
manner which is reasonably believed to be in or not opposed to the best
interest of the Partnership. Any indemnification under this subsection,
unless ordered by a court, shall be made by the Partnership only upon a
determination by independent legal counsel in a written opinion that
indemnification of the indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in this
Agreement. Notwithstanding any provision of this subsection to the
contrary, the General Partner shall be presumed to be personally liable to
creditors for the debts of the Partnership.
(b) Notwithstanding the provisions of Section 5.09(a), neither the General
Partner, the Initial Limited Partner nor any officer, director, manager,
partner, member, employee, agent, Affiliate, subsidiary or assign of the
General Partner, the Initial Limited Partner or the Partnership shall be
indemnified with regard to any liability, loss or damage incurred by them
in connection with any claim or settlement involving allegations that the
Securities Act of 1933, as amended, or any state securities laws were
violated by the General Partner or by any such other Person unless: (i)(A)
the General Partner or other Persons seeking indemnification are successful
in defending such action on the merits of each count involving such
violation, (B) such claims have been dismissed with prejudice on the merits
by a court of competent jurisdiction or (C) a court of competent
jurisdiction approves a settlement of such claims; and (ii) such
indemnification is specifically approved by a court of law which shall have
been advised as to the then current position of the Securities and Exchange
Commission regarding indemnification for violations of securities laws.
<PAGE> - 21 -
Section 5.10. Special Amendments to the Agreement.
(a) Any provision to the contrary herein notwithstanding, the General
Partner may, without the Consent of the Limited Partners or BUC Holders,
amend Sections 4.03, 4.04 and 4.05 of this Agreement on the advice of
Counsel or the Accountants and upon Notice to the Limited Partners and BUC
Holders mailed 10 days prior to the proposed effectiveness of such
amendment (unless earlier effectiveness is required by law) to the extent
necessary to ensure compliance with the Code and Regulations then in
effect, provided that such amendments do not materially adversely affect
the interests of the Limited Partners and BUC Holders in the sole
determination of the General Partner.
(b) New allocations made by the General Partner in reliance upon the advice
of Counsel or the Accountants pursuant to Section 5.10(a) shall be deemed
to be made pursuant to the fiduciary obligation of the General Partner to
the Partnership, the Limited Partners and the BUC Holders, and no such new
allocation shall give rise to any claim or cause of action by any Limited
Partner or BUC Holder.
(c) The General Partner may take such action as it deems necessary or
appropriate, including action with respect to the manner in which BUCs are
being or may be transferred or traded, in order to preserve the status of
the Partnership as a partnership rather than an association taxable as a
corporation for federal income tax purposes or to insure that BUC Holders
will be treated as limited partners for federal income tax purposes.
ARTICLE VI
CHANGES IN GENERAL PARTNERS
Section 6.01. Withdrawal of General Partner. The General Partner shall not
be entitled to voluntarily withdraw from the Partnership or to sell, transfer
or assign all or a portion of its Partnership Interest as General Partner
unless a substitute General Partner has been admitted in accordance with the
conditions of Section 6.02.
Section 6.02. Admission of a Successor or Additional General Partner. The
General Partner may at any time designate additional Persons to be General
Partners, whose Partnership Interest in the Partnership shall be such as shall
be agreed upon by the General Partner and such additional General Partners,
provided that the Partnership Interests of the Limited Partners and the BUC
Holders shall not be reduced thereby. A Person shall be admitted as a General
Partner of the Partnership only if each of the following conditions is
satisfied:
(a) The admission of such Person shall have been Consented to by a
majority in interest of the Limited Partners (including the Initial Limited
Partner voting on behalf of the BUC Holders) as a class;
(b) such Person shall have accepted and agreed to be bound by the terms and
provisions of this Agreement by executing a counterpart hereof, and such
documents or instruments as may be required or appropriate in order to
effect the admission of such Person as a General Partner shall have been
filed for recording, and all other actions required by law in connection
with such admission shall have been performed;
(c) if such Person is a corporation, it shall have provided the Partnership
evidence satisfactory to Counsel of its authority to become a General
Partner and to be bound by the terms and provisions of this Agreement; and
(d) the Partnership shall have received an opinion of Counsel that the
admission of such Person is in conformity with the Act and that none of the
actions taken in connection with the admission of such Person is in
violation of the Act.
Section 6.03. Removal of a General Partner. Subject to Section 10.02, a
majority in interest of the Limited Partners (including the Initial Limited
Partner voting on behalf of the BUC Holders) acting together as a class,
without the Consent or other action by the General Partner to be removed, may
remove any General Partner and, subject to the provisions of Sections 6.02 and
8.01(a), may elect a replacement therefor. After the Limited Partners vote to
remove a General Partner pursuant to this Section 6.03, they shall provide the
removed General Partner with Notice thereof, which Notice shall set forth the
date upon which such removal is to become effective, which date shall be no
earlier than the date upon which the General Partner receives such Notice.
<PAGE> - 22 -
Section 6.04. Effect of Incapacity of a General Partner.
(a) Upon the Incapacity of a General Partner, such General Partner shall
immediately cease to be a General Partner. If the Incapacitated General
Partner is not the sole General Partner, the business of the Partnership
shall be continued by the remaining General Partner who shall immediately
(i) give Notice to the Limited Partners and BUC Holders of such Incapacity
and (ii) prepare such amendments to this Agreement and execute and file for
recording such amendments or documents or other instruments necessary to
reflect the assignment, transfer, termination or conversion (as the case
may be) of the Partnership Interest of the Incapacitated General Partner.
If the Incapacitated General Partner is the sole General Partner, the
provisions of Section 8.01(a)(i) shall be applicable.
(b) Nothing in this Section 6.04 shall affect any rights, including the
rights to the payment of any fees under this Agreement, of the
Incapacitated General Partner which matured or were earned prior to the
Incapacity of such General Partner. Such Incapacitated General Partner
shall remain liable for all obligations and liabilities incurred by it as
General Partner before such Incapacity shall have become effective, but
shall be free from any obligations or liability as General Partner incurred
on account of the activities of the Partnership from and after the time
such Incapacity shall have become effective.
(c) The Partnership Interest of an Incapacitated General Partner shall be
converted into that of a Limited Partner with the same rights under Article
IV as such Incapacitated General Partner has prior to its Incapacity to
share in Income, Loss, Net Interest Income, Net Residual Proceeds and
Liquidation Proceeds. However, any Incapacitated General Partner which
becomes a Limited Partner pursuant to this paragraph (c) shall not have the
right to participate in the management of the affairs of the Partnership or
to vote on any matter requiring the Consent of the Limited Partners and
shall not be entitled to any portion of the Income, Loss, Net Interest
Income, Net Residual Proceeds or Liquidation Proceeds payable to the class
comprised of Limited Partners and BUC Holders. Notwithstanding the
conversion of a Incapacitated General Partner's Partnership Interest, a
successor or remaining General Partner shall have the right, but not the
obligation, to acquire the Partnership Interest of the Incapacitated
General Partner at the then fair market value of such Partnership Interest
The fair market value of the Incapacitated General Partner's Partnership
Interest shall be the sum of (i) the present value of future administrative
fees and Net Interest Income which would be paid to the Incapacitated
General Partner if the Incapacity had not occurred and (ii) the amount the
Incapacitated General Partner would receive upon dissolution and
termination of the Partnership, assuming that such dissolution or
termination occurred on the date of the event causing the Incapacity and
the assets of the Partnership were sold for their then fair market value
without any compulsion on the part of the Partnership to sell such assets.
The fair market value of such Partnership Interest shall be determined by
agreement of the Incapacitated General Partner and the successor or
remaining General Partner or, if they cannot agree, by arbitration in
accordance with the then current rules of the American Arbitration
Association. The expense of arbitration shall be borne equally by the
Incapacitated General Partner and the successor or remaining General
Partner.
(d) All parties hereto hereby agree to take all actions and to execute all
documents necessary or appropriate to effect the foregoing provisions of
this Section 6.04.
ARTICLE VII
TRANSFERABILITY OF BUCS AND LIMITED PARTNERS' INTERESTS
Section 7.01. Free Transferability of BUCs.
(a) BUCs shall be issued in registered form only and shall be freely
transferable (subject to compliance with federal or state securities law
and Section 7.02 or 11.04 of this Agreement); provided, however, nothing in
this Agreement shall impose any obligation on the General Partner, the
Partnership or any transfer agent to restrict or place conditions on the
transfer of BUCs.
(b) BUCs may be transferred only on the books and records of the
Partnership.
<PAGE> - 23 -
(c) A Person shall be recognized as a BUC Holder for all purposes on the
books and records of the Partnership as of the day on which the General
Partner (or other transfer agent appointed by the General Partner) receives
evidence of the transfer of a BUC to such Person which is satisfactory to
the General Partner. All BUC Holder rights, including voting rights,
rights to receive distributions and rights to receive reports, and all
allocations in respect of BUC Holders, including allocations of Income and
Loss, will vest in, and be allocable to, each BUC Holder as of the close of
business on such day.
(d) In order to record a transfer of a BUC on the Partnership's books and
records, the General Partner may require such evidence of transfer or
assignment and authority of the transferor or assignor, including signature
guarantees, and such additional documentation as the General Partner may
determine.
(e) The General Partner is hereby authorized to do all things necessary in
order to register the BUCs under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended, pursuant to the rules
and regulations of the Securities and Exchange Commission, to qualify the
BUCs with state securities regulatory authorities or to perfect exemptions
from qualification, to cause the BUCs to be listed on The NASDAQ Stock
Market or a national stock exchange and to any other actions necessary to
allow the resale of BUCs by the BUC Holders.
Section 7.02. Restrictions on Transfers of BUCs and of Interests of Limited
Partners Other Than the Initial Limited Partner.
(a) If any sale, assignment, pledge or transfer of a Limited Partnership
Interest, other than by the Initial Limited Partner, or of a BUC, when
considered with all other sales, assignments, pledges or transfers of
Partnership Interests and BUCs within the previous 12-month period, may
result in the transfer (within the meaning of Section 708 of the Code and
Regulations promulgated thereunder) of more than 45% of the Partnership
Interest and BUCs, then the sale, assignment, pledge or transfer of a
Limited Partnership Interest or a BUC may be suspended or deferred by the
General Partner; provided, however, that the General Partner will have no
obligation to suspend or defer any such sale, assignment, pledge or
transfer. The seller, assignor, pledgor or transferor shall be notified of
such deferral, and any transaction deferred pursuant to this provision
shall be effected (in chronological order to the extent practicable) as of
the first day of the next succeeding period as of which such transaction
can be effected without either termination of the Partnership for tax
purposes or any material adverse effects from such termination. In the
event transactions are suspended, the General Partner shall give written
Notice of such suspension to all Limited Partners and BUC Holders as soon
as practicable.
(b) A Limited Partner (other than the Initial Limited Partner) may assign
his Limited Partnership Interests only by a duly executed written
instrument of assignment, the terms of which are not in contravention of
any of the provisions of this Agreement. Within 30 days after an
assignment of Limited Partnership Interests (other than by the Initial
Limited Partner) which occurs without a transfer of record ownership of
such Limited Partnership Interests, the assignor shall give Notice of such
assignment to the General Partner.
(c) The provisions of this Section 7.02 and of Section 7.03 shall not apply
to the transfer and assignment by the Initial Limited Partner of Limited
Partnership Interests to BUC Holders in accordance with Section 11.01(a).
Section 7.03. Assignees of Limited Partners Other Than the Initial Limited
Partner.
(a) If a Limited Partner other than the Initial Limited Partner dies, his
executor, administrator or trustee, or, if he is adjudicated incompetent,
his committee, guardian or conservator, or, if he becomes Bankrupt, the
trustee or receiver of his estate, shall have all the rights of a Limited
Partner for the purpose of settling or managing his estate and such power
as the deceased or incompetent Limited Partner possessed to assign all or
any part of his Limited Partnership Interests and to join with the assignee
thereof in satisfying any conditions precedent to such assignee becoming a
Limited Partner. The Incapacity of a Limited Partner shall not dissolve
the Partnership.
<PAGE> - 24 -
(b) The Partnership need not recognize for any purpose any assignment of
all or any fraction of the Limited Partnership Interests of a Limited
Partner other than the Initial Limited Partner unless there shall have
been filed with the Partnership and recorded on the Partnership's books a
duly executed and acknowledged counterpart of the instrument effecting such
assignment, and unless such instrument evidences the written acceptance by
the assignee of all of the terms and provisions of this Agreement, contains
a representation that such assignment was made in accordance with all
applicable laws and regulations (including any investor suitability
requirements) and in all other respects is satisfactory in form and
substance to the General Partner.
(c) Any Limited Partner other than the Initial Limited Partner who shall
assign all of his Limited Partnership Interests shall cease to be a Limited
Partner of the Partnership, except that unless and until a Limited Partner
is admitted in his place, such assigning Limited Partner shall retain the
statutory rights and liabilities of an assignor of a limited partnership
interest under the Act.
(d) An assignee of Limited Partnership Interests (other than a BUC Holder)
may become a Limited Partner only if each of the following conditions is
satisfied:
(i) the instrument of assignment sets forth the intentions of the
assignor that the assignee succeed to the assignor's Limited
Partnership Interest in his place;
(ii) the assignee shall have fulfilled the requirements of Sections
7.03(b) and 12.03(b);
(iii) the assignee shall have paid all reasonable legal fees and filing
costs incurred by the Partnership in connection with his substitution
as a Limited Partner; and
(iv) the assignee shall have received the Consent of the General
Partner, which Consent the General Partner may withhold in its sole
discretion.
(e) This Agreement and the Certificate shall be amended as necessary to
recognize the admission of any Limited Partners and shall be submitted in a
timely manner for filing with the Delaware Secretary of State. Assignees
of Limited Partnership Interests (other than a BUC Holder) shall be
recognized as such, to the extent set forth in Section 7.03(b) or 7.03(d),
as of the day on which the Partnership has received the instrument of
assignment and all of the other conditions to the assignment are satisfied.
(f) An assignee of Limited Partnership Interests (other than a BUC Holder)
who does not become a Limited Partner and who desires to make a further
assignment of his Limited Partnership Interests shall be subject to all of
the provisions of this Article VII to the same extent and in the same
manner as a Limited Partner desiring to make an assignment of Limited
Partnership Interests.
Section 7.04. Joint Ownership of Interests. Subject to the other provisions
of this Agreement, a Limited Partnership Interest or BUC may be acquired by
two or more Persons, who shall, at the time they acquire such Limited
Partnership Interest or BUC, indicate to the Partnership whether the Limited
Partnership Interest or BUC is being held by them as joint tenants with the
right of survivorship, as tenants-in-common or as community property. In the
absence of any such designation, joint owners shall be presumed to hold such
Limited Partnership Interest or BUC as tenants-in-common. The Consent of such
joint Limited Partners or BUC Holders shall not require the action or vote of
all owners of any such jointly held Limited Partnership Interest or BUC.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
Section 8.01. Events Causing Dissolution.
(a) The Partnership shall dissolve upon the happening of any of the
following events:
<PAGE> - 25 -
(i) ninety days following the Incapacity of a General Partner who is
at that time the sole General Partner, unless all of the remaining
Partners (it being understood that, notwithstanding any other provision
herein to the contrary, for purposes of this provision the Initial
Limited Partner shall act solely in accordance with the direction of a
majority in interest of the BUC Holders) agree in writing to continue
the business of the Partnership and a successor General Partner
satisfying the standards set forth in Section 6.02 is designated within
90 days of the occurrence of such an Incapacity;
(ii) the passage of 180 days after the repayment, sale or other
disposition of all of the Mortgage Investments and Tax Exempt
Investments and substantially all other assets, if any, held by the
Partnership;
(iii) the election by a majority in interest of the Limited Partners
(including the Initial Limited Partner voting on behalf of the BUC
Holders) pursuant to Section 10.02(a)(iii) or the election by the
General Partner to dissolve the Partnership pursuant to Section 5.04(e)
with the Consent of a majority in interest of the Limited Partners
thereto;
(iv) the expiration of the term of the Partnership specified in Section
2.04; or
(v) any other event causing the dissolution of the Partnership under
the laws of the State of Delaware.
(b) Dissolution of the Partnership shall be effective on the day on which
the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until a certificate of cancellation is filed with the
Delaware Secretary of State and the assets of the Partnership are
distributed as provided in Section 8.02. Notwithstanding the dissolution
of the Partnership, prior to the termination of the Partnership, the
business of the Partnership and the affairs of the Partners shall continue
to be governed by this Agreement.
(c) The obligations imposed on the General Partner by Article IX of the
Agreement will cease upon the termination of the Partnership.
Section 8.02. Liquidation.
(a) Upon dissolution of the Partnership, unless all of the Partners elect
to reform the Partnership (it being understood that, notwithstanding any
other provision herein to the contrary, for purposes of this provision the
Initial Limited Partner shall act solely in accordance with the direction
of a majority in interest of the BUC Holders), the General Partner shall
liquidate the assets of the Partnership and shall apply and distribute the
proceeds thereof as contemplated by this Section 8.02 and Article IV and
cause the cancellation of the Certificate in accordance with the Act. If
there is no General Partner, a majority in interest of the Limited Partners
(including the Initial Limited Partner voting on behalf of the BUC Holders)
may elect a liquidator to liquidate the assets of the Partnership and
perform the functions of the General Partner set forth in this Section
8.02.
(b) After payment of the expenses of the liquidation and of liabilities
owing to creditors of the Partnership (including the repayment of any loans
from the General Partner or its Affiliates), the General Partner may set
aside as a reserve such amount as it deems reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Partnership
which may be paid over by the General Partner to a bank, to be held in
escrow for the purpose of paying any such contingent or unforeseen
liabilities or obligations, and, at the expiration of such period as the
General Partner may deem advisable, the amount in such reserve shall be
distributed in the manner set forth in Section 4.0 2(b) among the Partners
and BUC Holders who would have been entitled to receive such amounts had
such amounts not been placed in such reserves.
<PAGE> - 26 -
(c) Notwithstanding the foregoing, if the General Partner or liquidator
shall determine that an immediate sale of part or all of the Partnership's
assets would cause undue loss to the Partners or the BUC Holders, the
General Partner or liquidator may, after giving Notice to the Limited
Partners and BUC Holders, and to the extent not then prohibited by any
applicable law of any jurisdiction in which the Partnership is then formed
or qualified, defer liquidation and withhold from distribution for a
reasonable time any assets of the Partnership, except those assets
necessary to satisfy the Partnership's debts and obligations.
ARTICLE IX
BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS
Section 9.01. Books and Records. The Partnership shall maintain its books
and records at its principal office. The Partnership's books and records shall
be available during ordinary business hours for examination and copying there
at the reasonable request, and at the expense, of any Partner or BUC Holder or
his duly authorized representative, or copies of such books and records may be
requested in writing by any Partner or BUC Holder or his duly authorized
representative, provided that the reasonable costs of fulfilling such request,
including copying expenses, shall be paid by the Partner or BUC Holder making
such request. The Partnership's books and records shall include the following:
(a) a current list of the full name, last known home or business address
and Partnership Interest of each Partner and BUC Holder set forth in
alphabetical order;
(b) a copy of this Agreement and the Certificate, together with executed
copies of any powers of attorney pursuant to which such Certificate, and
any amendments thereto, have been executed;
(c) copies of the Partnership's federal, state and local income tax returns
and reports, if any, for the three most recent years; and
(d) copies of all financial statements of the Partnership for the three
most recent years.
Section 9.02. Accounting Basis and Fiscal Year. The books and records of the
Partnership initially shall be kept on the accrual method. The Partnership
will use a fiscal year identical to its taxable year. Unless permission is
granted by the Internal Revenue Service to use a taxable year other than the
calendar year, the Partnership will use a calendar year taxable year.
Section 9.03. Reports.
(a) Within 60 days after the end of each of the first three quarters of
each fiscal year, the General Partner shall send to each Person who was a
Limited Partner or a BUC Holder during such quarter a balance sheet and
statements of income, changes in Partners' capital and cash flow of the
Partnership (all prepared in accordance with generally accepted accounting
principles but none of which need be audited) and a statement showing
distributions of Net Interest Income and Net Residual Proceeds during such
quarter, which need not be audited, together with a report of the
activities of the Partnership during such quarter.
(b) Within 75 days after the end of each fiscal year, the General Partner
shall send to each Person who was a Limited Partner or a BUC Holder at any
time during the year then ended such tax information relating to the
Partnership as shall be necessary for the preparation by such Limited
Partner or BUC Holder of his federal income tax return and required state
income and other tax returns.
(c) Within 120 days after the end of each fiscal year, the General Partner
shall send to each Person who was a Limited Partner or BUC Holder at any
time during the year then ended a report including (i) the balance sheet of
the Partnership as of the end of such year and statements of income,
changes in Partners' capital and cash flow of the Partnership for such
year, all of which shall be prepared in accordance with generally accepted
accounting principles and accompanied by a report of the Accountants
containing an opinion of the Accountants, (ii) a report of the activities
of the Partnership during such year and (iii) a statement (which need not
be audited) showing cash distributions per Limited Partnership Interest and
per BUC during such year in respect of such year, which statement shall
<PAGE> - 27 -
identify distributions of (a) Net Interest Income and Net Residual Proceeds
received by the Partnership during such year, (b) Net Interest Income and
Net Residual Proceeds received during prior years which had been held in
the Reserve and (c) cash placed in Reserves during such year. The
Partnership's annual report will include a detailed statement of (i) the
amount of the fees, if any, paid to the General Partner pursuant to
Section 5.05(e) hereof and (ii) the amounts actually reimbursed to the
General Partner and its Affiliates pursuant to Section 5.05(b) hereof.
The Accountants will certify that the amounts actually reimbursed to the
General Partner pursuant to Section 5.05(b) were costs incurred by the
General Partner in connection with the conduct of the business and affairs
of the Partnership or the acquisition and management of its assets and were
permissible reimbursements under this Agreement. The methods of
verification used by the Accountants will be in accordance with generally
accepted auditing standards and include such tests of the accounting
records and other auditing procedures which the Accountants consider
appropriate.
Section 9.04. Designation of Tax Matters Partner. The General Partner is
hereby authorized to designate itself or any other General Partner as Tax
Matters Partner of the Partnership, as provided in Section 6231 of the Code
and the Regulations promulgated thereunder. Each Partner, by execution of
this Agreement, and each BUC Holder, by acceptance of his BUCs, consents to
such designation of the General Partner as the Tax Matters Partner and agrees
to execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate
to evidence the appointment of the General Partner as such.
Section 9.05. Expenses of Tax Matters Partner. The Partnership shall
reimburse the Tax Matters Partner for all expenses, including legal and
accounting fees, and shall indemnify him for claims, liabilities, losses and
damages incurred in connection with any administrative or judicial proceeding
with respect to the tax liability of the Partners and BUC Holders. The
payment of all such expenses and indemnification shall be made before any
distributions are made from Net Interest Income, Net Residual Proceeds or
Liquidation Proceeds. Neither the General Partner, nor any Affiliate, nor any
other Person shall have any obligation to provide funds for such purpose. The
taking of any action and the incurring of any expense by the Tax Matters
Partner in connection with any such proceeding, except to the extent required
by law, is a matter in the sole discretion of the Tax Matters Partner, and the
provisions on limitations of liability of the General Partner and
indemnification set forth in Section 5.09 of this Agreement shall be fully
applicable to the Tax Matters Partner in its capacity as such.
ARTICLE X
MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS
AND BUC HOLDERS
Section 10.01. Meetings.
(a) The General Partner may call a meeting of the Limited Partners and BUC
Holders for any purpose or call for a vote of the Limited Partners and BUC
Holders without a meeting or otherwise solicit the consent of the Limited
Partners and BUC Holders at any time and the General Partner shall call for
such a meeting or vote without a meeting or solicit the consents of the
Limited Partners and BUC Holders upon receipt of a written request for such
a meeting, vote or solicitation signed by 10% or more in interest of the
Limited Partners (it being understood that the Initial Limited Partner will
act in accordance with the directions of the BUC Holders). Any such
meeting shall be held not less than 15 days nor more than 60 days after the
receipt of such request. Any such request shall state the purpose of the
proposed meeting and the matters proposed to be acted upon at such meeting,
and no matter may be acted upon at the meeting other than as set forth in
such request or as otherwise permitted by the General Partner. Meetings
shall be held at the principal office of the Partnership or at such other
place as may be designated by the General Partner or, if the meeting is
called upon the request of the Limited Partners (including the Initial
Limited Partner acting on behalf of the BUC Holders), as designated by such
Limited Partners (including the Initial Limited Partner acting on behalf of
the BUC Holders).
(b) Notice of any meeting to be held pursuant to Section 10.01(a) shall be
given (in person or by certified mail) within 10 days of the receipt by the
General Partner of the request for such meeting to each Limited Partner at
<PAGE> - 28 -
his record address, or at such other address which he may have furnished in
writing to the General Partner and to the BUC Holders at the address shown
on the Partnership's books and records kept in accordance with Section
9.01. Such Notice shall state the place, date and hour of the meeting
and shall indicate that the Notice is being issued at the direction of, or
by, the Partner(s) calling the meeting. The Notice shall state the record
date established in Section 10.01(c) and state the purpose of the meeting.
If a meeting is adjourned to another time or place, and if an announcement
of the adjournment of time or place is made at the meeting, it shall not be
necessary to give Notice of the adjourned meeting. The presence in person
or by proxy of a majority in interest of the Limited Partners (including
the Initial Limited Partner acting for and at the direction of the BUC
Holders) considered as a class shall constitute a quorum at all meetings of
the Partners and BUC Holders; provided, however, that if no such quorum is
present, holders of a majority in interest of the Limited Partners
considered as a class (it being understood that the Initial Limited Partner
shall be present at the direction of the BUC Holders and only to the extent
of such direction) so present or so represented may adjourn the meeting
from time to time without further Notice, until a quorum shall have been
obtained. No Notice of the time, place or purpose of any meeting of
Limited Partners and BUC Holders need be given (i) to any Limited Partner
or BUC Holder who attends in person or is represented by proxy, except for
a Partner attending a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business on the ground
that the meeting is not lawfully called or convened, or (ii) to any Limited
Partner or BUC Holder entitled to such Notice who, in writing, executed and
filed with the records of the meeting, either before or after the time
thereof, waives such Notice.
(c) For the purpose of determining the Limited Partners entitled to vote at
any meeting of the Limited Partners and BUC Holders, and the BUC Holders
entitled to receive Notice of and direct the voting of the Initial Limited
Partner at any such meeting, or any adjournment thereof, or to act by
written Consent without a meeting, the General Partner or the Limited
Partners or the BUC Holders requesting such meeting or vote pursuant to
Section 11.03(a) may fix, in advance, a date as the record date of any such
determination of Limited Partners and BUC Holders. Such date shall not be
more than 60 days nor less than 15 days before any such meeting or not more
than 60 days prior to the initial solicitation of Consents from the Limited
Partners and BUC Holders.
(d) At each meeting of Limited Partners and BUC Holders, the Limited
Partners and BUC Holders present or represented by proxy shall elect such
officers and adopt such rules for the conduct of such meeting as they shall
deem appropriate.
Section 10.02. Voting Rights of Limited Partners and BUC Holders.
(a) Subject to Section 10.03, a majority in interest of the Limited
Partners (it being understood that the Initial Limited Partner shall act
at the direction of the BUC Holders), without the concurrence of the
General Partner, may: (i) amend this Agreement, provided that the
concurrence of the General Partner shall be required for any amendment to
this Agreement which modifies the compensation or distributions to which
the General Partner is entitled or which affects the duties of the General
Partner; (ii) approve or disapprove the sale or other disposition of all or
substantially all of the Partnership's assets in a single transaction in
the circumstances provided by Section 5.04(c); (iii) dissolve the
Partnership; and (iv) remove any General Partner and elect a successor
therefor, which successor shall become a General Partner only in accordance
with Section 6.02. Amendments to this Agreement may be proposed at any
time by a writing signed by 10% or more in interest of the Limited Partners
(it being understood that the Initial Limited Partner will act in
accordance with the direction of the BUC Holders).
(b) A Limited Partner shall be entitled to cast one vote for each Limited
Partnership Interest which he owns, and a BUC Holder shall be entitled to
direct the Initial Limited Partner to cast one vote for each BUC which he
owns (it being understood that the Initial Limited Partner will act at the
direction of the BUC Holders) at a meeting, in person, by written proxy or
by a signed writing directing the manner in which he desires that his vote
be cast, which writing must be received by the General Partner prior to the
adjournment sine die of such meeting. In the alternative, BUC Holders may
Consent to actions without a meeting, by a signed writing identifying the
<PAGE> - 29 -
action taken or proposed to be taken. Every proxy must be signed by the
Limited Partner or BUC Holder or his attorney-in-fact. No proxy shall be
valid after the expiration of 12 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Limited Partner or the BUC Holder executing it by Notice to
the Person to whom the proxy was given. Written Consents may be
irrevocable if stated in a writing delivered to BUC Holders at the time at
which their Consent is solicited. Only the votes or Consents of Limited
Partners or BUC Holders of record on the record date established pursuant
to Section 10.01(c), whether at a meeting or otherwise, shall be counted.
The General Partner shall not be entitled to vote in its capacity as
General Partner. The laws of the State of Delaware pertaining to the
validity and use of corporate proxies shall govern the validity and use of
proxies given by the Limited Partners and BUC Holders, except to the extent
such laws are inconsistent with this Agreement. The BUC Holders may give
proxies only to the Initial Limited Partner. The Initial Limited Partner
will vote in accordance with the directions of the BUC Holders so that each
BUC will be voted separately.
(c) Reference in this Agreement to a specified percentage in interest of
the Limited Partners and BUC Holders means the Limited Partners and BUC
Holders whose combined Capital Contributions (it being understood that the
BUC Holders' Capital Contributions were made by the Initial Limited
Partner) represent the specified percentage of the Capital Contributions of
all Limited Partners and BUC Holders.
Section 10.03. Opinion Regarding Effect of Action by Limited Partners and BUC
Holders. Prior to any vote or Consent by Limited Partners or BUC Holders that
might (i) materially affect the tax status of the Partnership, (ii) impair the
limited liability of the Limited Partners or BUC Holders, or (iii) result in
the dissolution or termination of the Partnership, the Partnership will
provide Limited Partners and BUC Holders written advice from Counsel as to the
possible and most likely consequences of such vote or Consent with respect
thereto.
Section 10.04. Other Activities. The Limited Partners and BUC Holders may
engage in or possess interests in other business ventures of every kind and
description for their own accounts, including without limitation serving as
general or limited partners of other partnerships which own, either directly
or through interests in other partnerships, investments similar in nature to
the Mortgage Investments and the Tax Exempt Investments. Neither the
Partnership nor any of the Partners or BUC Holders shall have any rights by
virtue of this Agreement in or to such business ventures or to the income or
profits derived therefrom.
ARTICLE XI
ASSIGNMENT OF LIMITED PARTNERSHIP INTERESTS TO
BUC HOLDERS AND RIGHTS OF BUC HOLDERS
Section 11.01. Assignment of Limited Partnership Interests to BUC Holders.
(a) Except as otherwise provided herein, the Initial Limited Partner, by
the execution of this Agreement, irrevocably assigns to the Persons who are
BUC Holders of the Prior Partnership as of the Merger Date, all of the
Initial Limited Partner's rights and interest in its Partnership Interest.
The rights and interest so transferred and assigned shall include, without
limitation, the following:
(i) all rights to receive distributions of Net Interest Income
pursuant to Section 4.01;
(ii) all rights to receive Net Residual Proceeds and Liquidation
Proceeds pursuant to Section 4.02;
(iii) all rights in respect of allocations of Income and Loss pursuant
to Sections 4.03 and 4.04;
(iv) all rights in respect of determinations of allocations and
distributions pursuant to Section 4.05;
(v) all rights to inspect records and to receive reports pursuant to
Article IX;
<PAGE> - 30 -
(vi) all rights to vote on Partnership matters pursuant to Article X;
and (vii) all rights which Limited Partners have, or may have in the
future, under the Act, except as otherwise provided herein.
Notwithstanding the foregoing, the Partnership may issue additional
BUCs from time to time as determined by the General Partner, in which
case the foregoing assignment will be deemed to include an assignment
to the holders of such additional BUCs and such additional BUCs shall
participate in the rights and interest of the Initial Limited Partner
to the same extent as the BUCs existing on the Merger Date. All
Persons becoming BUC Holders shall be bound by the terms and conditions
of, and shall be entitled to all rights of, Limited Partners under this
Agreement.
(b) The Initial Limited Partner shall remain as Initial Limited Partner on
the books and records of the Partnership notwithstanding the assignment of
all of its Limited Partnership Interest until such time as the Initial
Limited Partner transfers its position as Initial Limited Partner to
another Person with the Consent of the General Partner. Other than
pursuant to Section 11.01(a), the Initial Limited Partner may not transfer
or assign a Limited Partnership Interest without the prior written Consent
of the General Partner.
(c) The General Partner, by the execution of this Agreement, irrevocably
Consents to and acknowledges on behalf of itself and the Partnership that
(i) the foregoing assignment pursuant to Section 11.01(a) by the Initial
Limited Partner to the BUC Holders of the Initial Limited Partner's rights
and interest in the Limited Partnership Interests is valid and binding on
the Partnership and the General Partner, and (ii) the BUC Holders are
intended to be third-party beneficiaries of all rights and privileges of
the Initial Limited Partner in respect of the Limited Partnership
Interests. The General Partner covenants and agrees that, in accordance
with the foregoing transfer and assignment, all the Initial Limited
Partner's rights and privileges in respect of the Limited Partnership
Interests assigned to the BUC Holders may be exercised by the BUC Holders,
including, without limitation, those listed in Section 11.01(a).
Section 11.02. Rights of BUC Holders.
(a) Limited Partners (including the Initial Limited Partner but only with
respect to its own Limited Partnership Interests) and BUC Holders shall
share pari passu on the basis of one Limited Partnership Interest for one
BUC, and shall be considered as a single class with respect to all rights
to receive distributions of Net Interest Income, Net Residual Proceeds
and Liquidation Proceeds, allocations of Income and Loss, and other
determinations of allocations and distributions pursuant to this Agreement.
(b) Limited Partners (including the Initial Limited Partner voting on
behalf of the BUC Holders) shall vote on all matters in respect of which
they are entitled to vote (either in person, by proxy or by written
Consent), as a single class with each entitled to one vote.
(c) A BUC Holder is entitled to the same duty (including any fiduciary duty
created by law) from the General Partner as the General Partner owes to a
Limited Partner and may sue the General Partner to enforce the same. A BUC
Holder may bring a derivative action against any Person (including the
General Partner) to enforce any right of the Partnership to recover a
judgment to the same extent as a Limited Partner has such a right under the
Act.
(d) A BUC Holder is not a Limited Partner and has no right to be admitted
to the Partnership as such.
Section 11.03. Voting by the Initial Limited Partner on Behalf of BUC
Holders.
(a) Subject to Section 8.01(a)(i), the Initial Limited Partner hereby
agrees that, with respect to any matter on which a vote of the Limited
Partners is taken, the Consent of the Limited Partners is required or any
other action of the Limited Partners is required or permitted, it will not
vote its Limited Partnership Interest or grant such Consent or take such
action (other than solely administrative actions as to which the Initial
Limited Partner has no discretion) except for the sole benefit of, and in
<PAGE> - 31 -
accordance with the written instructions of, the BUC Holders with respect
to their BUCs. The Initial Limited Partner (or the Partnership on behalf
of the Initial Limited Partner) will provide Notice to the BUC Holders
containing information regarding any matters to be voted upon or as to
which any Consent or other action is requested or proposed. The
Partnership and the General Partner hereby agree to permit BUC Holders to
attend any meetings of Partners and the Initial Limited Partner shall,
upon the written request of BUC Holders owning BUCs which represent in the
aggregate 10% or more of all of the outstanding BUCs, request the General
Partner to call a meeting of Partners pursuant to Section 10.01 or to
submit a matter to the Initial Limited Partner without a meeting pursuant
to this Agreement. The General Partner shall give the BUC Holders Notice
of any meeting to be held pursuant to Section 10.01(a) at the same time
and manner as such Notice is required to be given to the Initial Limited
Partner pursuant to Section 10.01(b).
(b) The Initial Limited Partner will exercise its right to vote or Consent
to any action under this Agreement in accordance with the written
instructions of holders of BUCs outstanding as of the relevant record date.
In addition, holders of a majority of the BUCs outstanding may instruct the
Initial Limited Partner to take, and upon receipt of such instruction, the
Initial Limited Partner shall take, the actions permitted by Section 10.02.
(c) The Initial Limited Partner will mail to any BUC Holder (at the address
shown on the Partnership's records kept in accordance with Section 9.01(a))
any report, financial statement or other communication received from the
Partnership or the General Partner with respect to the Limited Partnership
Interests held by the Initial Limited Partner (including, without
limitation, any financial statement or report or tax information provided
pursuant to Section 9.03). In lieu of mailing of any such document by the
Initial Limited Partner, the Initial Limited Partner may, at its option,
request the General Partner to mail any such communications directly to the
BUC Holders, and the Initial Limited Partner shall be deemed to have
satisfied its obligations under this Section 11.03(b) upon its receipt of
written notification from the General Partner that any such communication
has been mailed, postage prepaid, to all of the BUC Holders at the
addresses shown on the Partnership's records.
Section 11.04. Preservation of Tax Status. With the Consent of each BUC
Holder so affected, the General Partner may at any time cause such BUC Holder
to become a Limited Partner and may take such other action with respect to the
manner in which BUCs are being or may be transferred or traded as it may deem
necessary or appropriate, in order to preserve the status of the Partnership
as a partnership rather than an association taxable as a corporation for
federal income tax purposes or to insure that BUC Holders will be treated as
limited partners for federal income tax purposes.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Appointment of the General Partner as Attorney-in-Fact.
(a) Each Limited Partner by the execution of this Agreement irrevocably
constitutes and appoints, with full power of substitution, the General
Partner as his true and lawful attorney-in-fact with full power and
authority in his name, place and stead to execute, certify, acknowledge,
deliver, swear to, file and record at the appropriate public offices such
documents as may be necessary or appropriate to carry out the provisions of
this Agreement, including, but not limited to:
(i) the Certificate and amendments thereto, and all certificates and
other instruments (including counterparts of this Agreement), and any
amendments thereof, which any such Person deems appropriate to form,
qualify or continue the Partnership as a limited partnership (or a
partnership in which the Limited Partners will have limited liability
comparable to that provided by the Act on the date thereof) in a
jurisdiction in which the Partnership may conduct business or in which
such formation, qualification or continuation is, in the opinion of
any such Person, necessary to protect the limited liability of the
Limited Partners and BUC Holders;
(ii) any other instrument or document which may be required to be
filed by the Partnership under federal law or under the laws of any
state in which any such Person deems it advisable to file;
<PAGE> - 32 -
(iii) all amendments to this Agreement adopted in accordance with the
terms hereof and all instruments which any such Person deems
appropriate to reflect a change or modification of the Partnership in
accordance with the terms of this Agreement; and
(iv) any instrument or document, including amendments to this
Agreement, which may be required to effect the continuation of the
Partnership, the admission of a Limited Partner or an additional or
successor General Partner or the dissolution and termination of the
Partnership (provided such continuation, admission or dissolution and
termination are in accordance with the terms of this Agreement) or to
reflect any reductions in amount of Capital Accounts.
(b) The appointment by each Limited Partner of each of such Persons as his
attorney-in-fact is irrevocable and shall be deemed to be a power coupled
with an interest, in recognition of the fact that each of the Partners
under this Agreement will be relying upon the power of such Persons to act
as contemplated by this Agreement in any filing and other action by them on
behalf of the Partnership, and such power shall survive the Incapacity of
any Person hereby giving such power and the transfer or assignment of all
or any part of the Limited Partnership Interests of such Person; provided,
however, that in the event of a transfer by a Limited Partner of all or any
part of his Limited Partnership Interests, the foregoing power of attorney
shall survive such transfer only until such time as the transferee is
admitted to the Partnership as a Limited Partner and all required documents
and instruments are duly executed, filed and recorded to effect such
substitution.
Section 12.02. Signatures. Each Limited Partner and any additional or
successor General Partner shall become a signatory hereto by signing such
number of counterpart signature pages to this Agreement and such other
instrument or instruments in such manner and at such time as the General
Partner shall determine. By so signing, each Limited Partner, successor
General Partner or additional General Partner, as the case may be, shall be
deemed to have adopted, and to have agreed to be bound by, all the provisions
of this Agreement, as amended from time to time; provided, however, that no
such counterpart shall be binding unless and until it has been accepted by the
General Partner.
Section 12.03. Amendments.
(a) In addition to any amendments otherwise authorized herein, amendments
may be made to this Agreement or the Certificate from time to time by the
General Partner, without the Consent of the Limited Partners or the BUC
Holders, (i) to add to the representations, duties or obligations of the
General Partner or surrender any right or power granted to the General
Partner in this Agreement; (ii) to cure any ambiguity or correct or
supplement any provision in this Agreement which may be inconsistent with
the manifest intent of this Agreement, if such amendment is not materially
adverse to the interests of Limited Partners and BUC Holders in the sole
judgment of the General Partner; (iii) to delete or add to any provision
of this Agreement required to be deleted or added to based upon comments by
the staff of the Securities and Exchange Commission or other federal agency
or by a state securities commissioner; (iv) to delete, add or revise any
provision of this Agreement that may be necessary or appropriate, in the
General Partner's judgment, to insure that the Partnership will be treated
as a partnership, and that each BUC Holder and each Limited Partner will be
treated as a limited partner, for federal income tax purposes; (v) to
reflect the withdrawal, removal or admission of Partners; and (vi) to
reflect a change in the name or address of the Partnership's registered
agent in the State of Delaware; provided, however, that no amendment shall
be adopted pursuant to this Section 12.03(a) unless the adoption thereof
(A) is consistent with Section 5.01 and is not prohibited by Section 5.04;
(B) does not affect the distribution of Net Interest Income, Net Residual
Proceeds or Liquidation Proceeds or the allocation of Income or Loss
(except as provided in Section 5.10); (C) does not, in the sole judgment of
the General Partner after consultation with Counsel, affect the limited
liability of the Limited Partners or the BUC Holders or cause the
Partnership not to be treated as a partnership for federal income tax
purposes; and (D) does not amend this Section 12.03(a).
(b) If this Agreement shall be amended as a result of substituting a
Limited Partner, the amendment to this Agreement shall be signed by the
General Partner, the Person to be substituted and the assigning Limited
<PAGE> - 33 -
Partner. If this Agreement shall be amended to reflect the designation of
an additional General Partner, such amendment shall be signed by the other
General Partners and by such additional General Partner. If this Agreement
shall be amended to reflect the withdrawal of a General Partner when the
business of the Partnership is being continued, such amendment shall be
signed by the withdrawing General Partner and by the remaining or successor
General Partner. In the event the withdrawing General Partner or the
assigning Limited Partner does not sign such an amendment within 30 days
following its withdrawal or substitution, the remaining or successor
General Partners are hereby appointed by the withdrawing General Partner
or the assigning Limited Partner as its attorney-in-fact for purposes of
signing such amendment.
(c) In making any amendments, there shall be prepared and filed by the
General Partner for recording such documents and certificates as shall be
required to be prepared and filed under the Act and in any other
jurisdictions under the laws of which the Partnership is then qualified.
Section 12.04. Binding Provisions. The covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the heirs,
executors, administrators, personal representatives, successors and assigns of
the respective parties hereto.
Section 12.05. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware.
Section 12.06. Separability of Provisions. Each provision of this Agreement
shall be considered separable and if for any reason any provision or
provisions hereof are determined to be invalid and contrary to any law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid.
Section 12.07. Captions. Article and Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text.
Section 12.08. Entire Agreement. This Agreement, together with Schedule A
hereto, sets forth all, and is intended by all parties to be an integration of
all, of the promises, agreements and understandings among the parties hereto
with respect to the Partnership, the Partnership business and the property of
the Partnership, and there are no promises, agreements, or understandings,
oral or written, express or implied, among them other than as set forth,
incorporated or contemplated in this Agreement.
<PAGE> - 34 -
IN WITNESS WHEREOF, the parties have signed this Agreement as of the 1st day
of October, 1998.
GENERAL PARTNER:
AMERICA FIRST CAPITAL ASSOCIATES
LIMITED PARTNERSHIP TWO
By America First Companies L.L.C.,
General Partner
By /s/ Michael B. Yanney
Michael B. Yanney, President
INITIAL LIMITED PARTNER:
AMERICA FIRST FIDUCIARY
CORPORATION NUMBER FIVE
By /s/ Michael B. Yanney
Michael B. Yanney, President
<PAGE> - 35 -
SCHEDULE A
GENERAL PARTNER:
America First Capital $[ ]
Associates Limited
Partnership Two
Suite 400
1004 Farnam Street
Omaha, NE 68102
INITIAL LIMITED PARTNER:
America First Fiduciary $[ ]
Corporation Number Five
Suite 400
1004 Farnam Street
Omaha, NE 68102
<PAGE> - 36 -
