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): October 15, 1996
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(Exact name of registrant as specified in its charter)
California 33-91136 33-0707612
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 662-5565
N/A
Former name or former address, if changed since last report)
wncnat5-14/95.edg
<PAGE>
Item 2. Acquisition or Disposition of Assets
WNC Housing Tax Credit Fund V, L.P., Series 4 ("SERIES 4") has acquired
a Local Limited Partnership Interest in Ogallalla Apartments I Limited
Partnership ("OGALLALLA" or the "Local Limited Partnership"). OGALLALLA owns the
Ogallalla Apartments (the "Apartment Complex") in Ogallalla, Nebraska.
The following tables contain information concerning the Apartment
Complex and the Local Limited Partnership identified herein:
<TABLE>
LOCAL
LIMITED YEAR
ESTIMATED PERMANENT PARTNERSHIP'S CREDITS
PROJECT CONSTRUC- ESTIMATED MORTGAGE ANTICIPATED TO BE
LOCAL NAME AND TION DEVELOPMENT COST NUMBER OF BASIC LOAN AGGREGATE FIRST
LIMITED NUMBER OF LOCATION OF COMPLETION (INCLUDING APARTMENT MONTHLY PRINCIPAL TAX CREDITS AVAIL-
PARTNERSHIP BUILDINGS PROPERTY DATE LAND COST) UNITS RENTS AMOUNT (1) ABLE
- ------------ ----------- ------------ ------------ ------------------ ------------- ---------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
OGALLALLA Ogallalla Ogallalla March $1,029,400 10 2BR units $310 $400,000 $723,170 1997
Apartments (Keith 1997 6 3BR $390 FNBO(2)
County), units
8 Nebraska
buildings
- ------------ ----------- ------------ ------------ ------------------ ------------- ---------- ------------ ------------- ---------
<FN>
(1) Low Income Housing Credits are available over a 10-year period. For the
year in which the credit first becomes available, SERIES 4 will receive
only that percentage of the annual credit which corresponds to the
number of months during which SERIES 4 was a limited partner of the
Local Limited Partnership, and during which the Apartment Complex was
completed and in service.
(2) First National Bank of Omaha ("FNBO") will provide the mortgage loan
for a term of 15 years at an annual interest rate of 9%. Principal and
interest will be payable monthly based on a 25-year amortization
schedule.
</FN>
</TABLE>
Ogallalla (OGALLALLA): Ogallalla (population 5,000) is the county seat of Keith
County, in the western part of Nebraska, near the intersection of Interstate
Highway 80, U. S. Highway 30 and State Highway 61, approximately 110 miles south
of Rapid City, South Dakota. Lake McConaughy, which is the largest lake in
Nebraska, is five miles north of Ogallalla, and plays a role in the area economy
by generating tourism. The major employers for Ogallalla residents are American
Shizuki (capacitors), Ogallalla Electronics Mfg. Co. (electronic and magetic
components) and U.S. Aprons (aprons, dog beds, decoy bags).
<TABLE>
SHARING ESTIMATED
RATIOS: SERIES 4's ACQUISITION
ALLOCATIONS CAPITAL FEES PAYABLE
LOCAL LOCAL SHARING (4) AND CONTRI-BUTIONTO FUND
LIMITED GENERAL PROPERTY DEVELOPMENT RATIOS: SALE OR (6) MANAGER
PARTNERSHIP PARTNER MANAGER (1) FEE (2) CASH FLOW REFINANCING
(3) PROCEEDS (5)
- --------------- ------------------ --------------- -------------- ------------ --------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
OGALLALLA Most Worshipful Retro $125,550 WNC: 98.99/.01/1 $400,885 $40,000
Prince Hall Management Greater 50/50
Grand Lodge Group, Inc. of 15% or
$500
LGP: 40% of
the balance
The
balance:
50/50
- --------------- ------------------ --------------- -------------- ------------ --------------- ------------ -------------
<FN>
(1) The maximum annual management fee payable to the property manager generally
is determined pursuant to lender regulations. The Local General Partner is
authorized to employ either itself or one of its affiliates, or a third party,
as property manager for leasing and management of the Apartment Complex so long
as the fee therefor does not exceed the amount authorized and approved by the
lender for the Apartment Complex.
(2) The Local Limited Partnership will pay its Local General Partner a
development fee in the amount set forth, for services incident to the
development and construction of the Apartment Complex, which services include:
negotiating the financing commitments for the Apartment Complex; securing
necessary approvals and permits for the development and construction of the
Apartment Complex; and obtaining allocations of Low Income Housing Credits. This
payment will be made in installments after receipt of each installment of the
capital contribution made by SERIES 4.
2
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(3) Reflects the amount of the net cash flow from operations, if any, to be
distributed to SERIES 4 ("WNC") and the Local General Partner ("LGP") of the
Local Limited Partnership for each year of operations. Generally, to the extent
that the specific dollar amounts which are to be paid to WNC are not paid
annually, they will accrue and be paid from sale or refinancing proceeds as an
obligation of the Local Limited Partnership.
(4) Subject to certain special allocations, reflects the respective percentage
interests in profits, losses and Low Income Housing Credits of SERIES 4, WNC
Housing, L.P., an Affiliate of the Sponsor which is the special limited partner
of OGALLALLA, and the Local General Partner.
(5) Reflects the percentage interests of SERIES 4 and the Local General Partner
in any net cash proceeds from sale or refinancing of the Apartment Complex,
after payment of the mortgage loan and other Local Limited Partnership
obligations (see, e.g., note 3), and the following, in the order set forth: the
capital contribution of SERIES 4; the capital contribution of the special
limited partner; and, the capital contribution of the Local General Partner.
(6) SERIES 4 will make its capital contributions to the Local Limited
Partnership in stages, with each contribution due when certain conditions
regarding construction or operations of the Apartment Complex have been
fulfilled.
</FN>
</TABLE>
3
<PAGE>
Item 7. Financial Statements and Exhibits
a. Financial Statements of Businesses Acquired.
Not Applicable
b. Proforma Financial Information
Proforma Financial Information will be filed upon
availability.
c. Exhibits
10.1 Amended and Restated Agreement of Limited Partnership
of Ogallalla Apartments I Limited Partnership
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
Date: October 21, 1996 By: WNC & Associates, Inc.,
----------------
General Partner
By:/s/ JOHN B. LESTER, JR.
John B. Lester, Jr.,
President
5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
10.1 Amended and Restated Agreement of Limited Partnership of
Ogallalla Apartments I Limited Partnership
6
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
OGALLALLA APARTMENTS I LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS ......................................... 1
1.1 "Accountant" ................................... 1
1.2 "Act" .......................................... 2
1.3 "Actual Tax Credit"............................. 2
1.4 "Adjusted Capital Account Deficit" ............. 2
1.5 "Affiliate" .................................... 2
1.6 "Agreement" or "Partnership Agreement".......... 2
1.7 "Assignee" ..................................... 2
1.8 "Bankruptcy" or "Bankrupt"...................... 3
1.9 "Capital Account" .............................. 3
1.10 "Capital Contribution" ......................... 3
1.11 "Cash Flow From Operations" .................... 3
1.12 "Code" ......................................... 4
1.13 "Completion of Construction".................... 4
1.14 "Compliance Period"............................. 4
1.15 "Consent of the Special Limited Partner"........ 4
1.16 "Construction Contract"......................... 4
1.17 "Construction Loan" ............................ 4
1.18 "Contractor" ................................... 4
1.19 "Debt Service Coverage"......................... 4
1.20 "Deferred Management Fee"....................... 5
1.21 "Developer"..................................... 5
1.22 "Development Fee" .............................. 5
1.23 "Distributions" ................................ 5
1.24 "Fair Market Value" ............................ 5
1.25 "First Year Certificate" ....................... 6
1.26 "General Partner" .............................. 6
1.27 "Gross Asset Value" ............................ 6
1.28 "Hazardous Substance"........................... 7
1.29 "Improvements".................................. 7
1.30 "Incentive Management Fee"...................... 7
1.31 "Income and Losses"............................. 7
1.32 "Insurance" .................................... 8
1.33 "Insurance Company" ............................ 9
1.34 "Interest" ..................................... 9
1.35 "Involuntary Withdrawal"........................ 9
1.36 "LIHTC"......................................... 9
1.37 "Limited Partner"............................... 9
1.38 "Management Agent".............................. 9
1.39 "Management Agreement".......................... 9
1.40 "Managing General Partner"...................... 9
1.41 "Minimum Set-Aside Test"........................ 9
1.42 "Mortgage" or "Mortgage Loan"................... 9
1.43 "Mortgage Note"................................. 10
1.44 "Nonrecourse Deductions"........................ 10
1.45 "Nonrecourse Liability"......................... 10
i
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1.46 "Operating Deficit" ............................ 10
1.47 "Operating Deficit Guarantee Period"............ 10
1.48 "Operating Loans"............................... 10
1.49 "Original Limited Partner" ..................... 10
1.50 "Partner" ...................................... 10
1.51 "Partner Nonrecourse Debt" ..................... 11
1.52 "Partner Nonrecourse Debt Minimum Gain" ........ 11
1.53 "Partner Nonrecourse Deductions" ............... 11
1.54 "Partnership" .................................. 11
1.55 "Partnership Minimum Gain" ..................... 11
1.56 "Permanent Mortgage Commencement" .............. 11
1.57 "Person" ....................................... 11
1.58 "Project" ...................................... 11
1.59 "Project Documents" ............................ 11
1.60 "Projected Annual Tax Credits" ................. 11
1.61 "Projected Tax Credits" ........................ 12
1.62 "Qualified Tenants" ............................ 12
1.63 "Rent Restriction Test" ........................ 12
1.64 "Reporting Fee"................................. 12
1.65 "Revised Projected Tax Credits"................. 12
1.66 "Sale or Refinancing"........................... 12
1.67 "Sale or Refinancing Proceeds" ................. 12
1.68 "Special Limited Partner"....................... 12
1.69 "State" ........................................ 12
1.70 "State Tax Credit Agency" ...................... 13
1.71 "Substitute Limited Partner" ................... 13
1.72 "Tax Credit" ................................... 13
1.73 "Tax Credit Conditions"......................... 13
1.74 "TRA 1986" ..................................... 13
1.75 "Treasury Regulations" ......................... 13
1.76 "Withdrawing" or "Withdrawal"................... 13
II. NAME ................................................ 13
III. PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE ........ 13
3.1 Principal Executive Office ..................... 13
3.2 Agent for Service of Process ................... 14
IV. PURPOSE ............................................. 14
V. TERM ................................................ 14
VI. GENERAL PARTNER'S CONTRIBUTIONS AND LOANS............ 14
6.1 Capital Contribution of General Partner......... 14
6.2 Construction and Operating Obligations;
General Partner Loans......................... 14
6.3 Other General Partner Loans..................... 15
VII. CAPITAL CONTRIBUTIONS OF LIMITED PARTNER............. 16
7.1 Original Limited Partner........................ 16
7.2 Capital Contribution of Limited Partner......... 16
ii
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7.3 Repurchase of Limited Partner's Interest........ 18
7.4 Reduction of Limited Partner's
Capital Contribution.......................... 19
7.5 Capital Contribution of Special Limited Partner. 20
7.6 Return of Capital Contribution.................. 20
7.7 Liability of Limited Partner and Special
Limited Partner................................. 21
VIII. WORKING CAPITAL AND RESERVES ....................... 21
8.1 Operating and Maintenance Reserve and
Replacement Reserve Account..................... 21
8.2 Other Reserves.................................. 21
IX. MANAGEMENT AND CONTROL .............................. 21
9.1 Power and Authority of General Partner ......... 21
9.2 Payments to the General Partners and Others .... 22
9.3 Specific Powers of the General Partner ......... 23
9.4 Authority Requirements.......................... 25
9.5 Limitations on General Partner's
Power and Authority .......................... 25
9.6 Restrictions on Authority of General Partner.... 26
9.7 Duties of General Partner ...................... 27
9.8 Partnership Expenses ........................... 28
9.9 General Partner Expenses ....................... 29
9.10 Other Business of Partners ..................... 29
9.11 Covenants, Representations and Warranties....... 30
9.12 Right of First Refusal.......................... 33
X. ALLOCATIONS OF INCOME, LOSSES AND CREDITS ........... 33
10.1 General ........................................ 33
10.2 Allocations From Sale or Refinancing............ 34
10.3 Special Allocations............................. 35
10.4 Curative Allocations............................ 38
10.5 Other Allocation Rules.......................... 38
10.6 Tax Allocations: Code Section 704(c)........... 39
10.7 Allocation Among Limited Partners............... 40
10.8 Allocation Among General Partners .............. 40
10.9 Modification of Allocations .................... 40
XI. DISTRIBUTION ........................................ 40
11.1 Distribution of Cash Flow From Operations ...... 40
11.2 Distribution of Sale or Refinancing Proceeds.... 41
XII. TRANSFERS OF LIMITED PARTNER'S INTEREST
IN THE PARTNERSHIP................................... 42
12.1 Assignment of Limited Partner's Interest ....... 42
12.2 Effective Date of Transfer ..................... 42
12.3 Invalid Assignment ............................. 42
iii
<PAGE>
12.4 Assignee's Rights to Allocations
and Distributions ............................ 43
12.5 Substitution of Assignee as Limited Partner
or Special Limited Partner...................... 43
12.6 Death, Bankruptcy, Incompetency, etc.
of a Limited Partner ........................... 43
XIII. WITHDRAWAL, REMOVAL AND REPLACEMENT OF GENERAL
PARTNER ............................................ 44
13.1 Withdrawal of General Partner .................. 44
13.2 Removal of General Partner ..................... 44
13.3 Effects of a Withdrawal......................... 45
13.4 Successor General Partner....................... 47
13.5 Admission of Additional or Successor
General Partner .............................. 48
13.6 Transfer of Interest ........................... 48
13.7 No Goodwill Value............................... 48
XIV. BOOKS AND ACCOUNTS, REPORTS, TAX RETURNS,
FISCAL YEAR AND BANKING ............................. 49
14.1 Books and Accounts ............................. 49
14.2 Accounting Reports ............................. 49
14.3 Other Reports .................................. 50
14.4 Late Reports ................................... 52
14.5 Annual Site Visits.............................. 52
14.6 Tax Returns..................................... 52
14.7 Fiscal Year .................................... 52
14.8 Banking ........................................ 53
14.9 Certificates and Elections ..................... 53
XV. DISSOLUTION, WINDING UP, TERMINATION AND
LIQUIDATION OF THE PARTNERSHIP ...................... 53
15.1 Dissolution of Partnership ..................... 53
15.2 Return of Capital Contribution upon
Dissolution .................................. 53
15.3 Distributions of Assets ........................ 54
15.4 Deferral of Liquidation......................... 55
15.5 Liquidation Statement .......................... 55
15.6 Certificates of Dissolution; Certificate of
Cancellation of Certificate of Limited
Partnership .................................. 56
XVI. AMENDMENTS .......................................... 56
XVII. MISCELLANEOUS ...................................... 56
17.1 Voting Rights .................................. 57
17.2 Meeting of Partnership ......................... 57
17.3 Notices ........................................ 58
17.4 Successors and Assigns ......................... 58
iv
<PAGE>
7.5 Recording of Certificate of Limited
Partnership. ................................... 58
17.6 Amendment of Certificate of Limited
Partnership .................................... 58
17.7 Counterparts ................................... 59
17.8 Captions ....................................... 59
17.9 Saving Clause................................... 59
17.10 Tax Matters Partners........................... 59
17.11 Expiration of Compliance Period................ 60
17.12 Number and Gender ............................. 60
17.13 Entire Agreement .............................. 61
17.14 Governing Law ................................. 61
17.15 Attorney's Fees ............................... 61
17.16 Receipt of Correspondence ..................... 61
17.17 Security Interest and Right of Set-Off ........ 61
EXHIBIT A - Legal Description...................... A-1
EXHIBIT B - Form of Legal Opinion.................. B-1 - B-4
EXHIBIT C - Certification and Agreement............ C-1 - C-4
EXHIBIT D - General Partner Certification.......... D-1 - D-5
EXHIBIT E - Form of Completion Certificate......... E-1
EXHIBIT F - Accountant's Certificate............... F-1
EXHIBIT G - Report of Operations................... G-1 - G-10
DEVELOPMENT FEE AGREEMENT
GUARANTY AGREEMENT
v
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
OGALLALLA APARTMENTS I LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is being entered
into effective as of the date written below by and between MOST WORSHIPFUL
PRINCE HALL GRAND LODGE, FREE AND ACCEPTED MASONS OF OKLAHOMA and RETRO
DEVELOPMENT, INC. as the general partners (collectively referred to as the
"General Partner"), WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4 as the limited
partner (the "Limited Partner"), WNC Housing, L. P. as the special limited
partner (the "Special Limited Partner") and DOUGLAS E. HINER as the withdrawing
limited partner (the "Original Limited Partner").
RECITALS
WHEREAS, OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska limited
partnership (the "Partnership") recorded a certificate of limited partnership
with the Nebraska Secretary of State on November 21, 1995. A partnership
agreement dated November 17, 1995 was entered into by and between the General
Partner and the Original Limited Partner.
WHEREAS, the Partners desire to enter into this Agreement to provide for,
among other things, (i) the continuation of the Partnership, (ii) the admission
of Most Worshipful Prince Hall Grand Lodge, Free and Accepted Masons of Oklahoma
as the Managing General Partner, the Limited Partner and the Special Limited
Partner as partners of the Partnership, (iii) the liquidation of the Original
Limited Partner's Interest in the Partnership, (iv) the payment of Capital
Contributions by the Limited Partner and the Special Limited Partner to the
Partnership, (v) the allocation of Income, Losses, Tax Credits and distributions
of Cash Flow From Operations and other cash funds of the Partnership among the
Partners (vi) the respective rights, obligations and interests of the Partners
to each other and to the Partnership, and (vii) certain other matters.
WHEREAS, the Limited Partner, the Special Limited Partner and the General
Partner desire hereby to amend and restate the Limited Partnership Agreement of
the Partnership dated November 17, 1995.
NOW, THEREFORE, in consideration of their mutual agreements herein set
forth, the Partners hereby agree to amend and restate the Agreement of Limited
Partnership of OGALLALLA APARTMENTS I LIMITED PARTNERSHIP in its entirety to
provide as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Accountant" shall mean Jean B. Starr, or such other firm
of independent certified public accountants as may be engaged for the
Partnership by the General Partner with the Consent of the Special Limited
1
<PAGE>
Partner. Notwithstanding any provision of this Agreement to the contrary, the
Special Limited Partner shall have the unfettered discretion to dismiss the
Accountants.
Section 1.2 "Act" shall mean the laws of the State governing limited
partnerships, as now in effect and as the same may be amended from time to time.
Section 1.3 "Actual Tax Credit" shall mean as of any point in time, the
total amount of the LIHTC actually allocated by the Partnership to the Limited
Partner, representing 98.99% of the LIHTC actually received by the Partnership,
as shown on the applicable tax returns of the Partnership.
Section 1.4 "Adjusted Capital Account Deficit" shall mean with respect
to any Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of the relevant fiscal period, after giving effect to the
following adjustments:
(a) Credit to such Capital Account any amounts which such Partner is
obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted consistently therewith.
Section 1.5 "Affiliate" shall mean (a) any Person directly or
indirectly controlling, controlled by, or under common control with another
Person; (b) any Person owning or controlling 10% or more of the outstanding
voting securities of such other Person; (c) any officer, director, trustee, or
partner of such other Person; and (d) if such Person is an officer, director,
trustee or general partner, any other Person for which such Person acts in any
such capacity.
Section 1.6 "Agreement" or "Partnership Agreement" shall mean this
Amended and Restated Agreement of Limited Partnership, as it may be amended from
time to time. Words such as "herein," "hereinafter," "hereof," "hereto,"
"hereby" and "hereunder," when used with reference to this Agreement, refers to
this Agreement as a whole, unless the context otherwise requires.
Section 1.7 "Assignee" shall mean a Person who has acquired all or a
portion of the Limited Partner's beneficial interest in the Partnership and has
not become a Substitute Limited Partner.
2
<PAGE>
Section 1.8 "Bankruptcy" or "Bankrupt" shall mean the making of an
assignment for the benefit of creditors, becoming a party to any liquidation or
dissolution action or proceeding, the commencement of any bankruptcy,
reorganization, insolvency or other proceeding for the relief of financially
distressed debtors, or the appointment of a receiver, liquidator, custodian or
trustee and, if any of the same occur involuntarily, the same not being
dismissed, stayed or discharged within 90 days; or the entry of an order for
relief under Title 11 of the United States Code. A Partner shall be deemed
Bankrupt if the Bankruptcy of such Partner shall have occurred and be
continuing.
Section 1.9 "Capital Account" shall mean, with respect to each Partner,
the account maintained for such Partner comprised of such Partner's Capital
Contribution as increased by allocations to such Partner of Partnership Income
(or items thereof) and any items in the nature of income or gain which are
specially allocated pursuant to Section 10.3 or 10.4 hereof, and decreased by
the amount of any Distributions made to such Partner, and allocations to such
Partner of Partnership Losses (or items thereof) and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 10.3 or
10.4 hereof.
In the event of any transfer of an interest in the Partnership in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest.
The foregoing definition and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), as amended or any successor thereto, and
shall be interpreted and applied in a manner consistent with such Treasury
Regulation.
Section 1.10 "Capital Contribution" shall mean the total amount of
money, or the Gross Asset Value of property contributed to the Partnership, if
any, by all the Partners or any class of Partners or any one Partner as the case
may be (or by a predecessor-in-interest of such Partner or Partners), reduced by
any of such capital which shall have been returned pursuant to Section 7.3, 7.4
or 7.5 of this Agreement. A loan to the Partnership by a Partner shall not be
considered a Capital Contribution.
Section 1.11 "Cash Flow From Operations" shall mean gross receipts (not
including any subsidy for rental income from the General Partner or an Affiliate
thereof, prepayments of rent, security deposits and interest thereon, Capital
Contributions, Sale or Refinancing Proceeds or proceeds of Partnership
borrowings) from Partnership operations, determined on a cash basis, less debt
payments, capital expenditures to the extent not paid from borrowings or
reserves, amounts set aside as reserves pursuant to Article VIII and operating
expenses associated with rental and maintenance of the Project; but excluding
deductions for cost recovery of buildings, improvements and personal property,
and amortization of any financing fees.
3
<PAGE>
Section 1.12 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
Section 1.13 "Completion of Construction" shall mean the completion of
construction of the Project substantially in accordance with the Project
Documents in order to obtain the required certificates of occupancy (or the
local equivalent) for all sixteen (16) apartment units as evidenced by the
issuance of the certificate of occupancy by the governmental agency having
jurisdiction over the Project or by the issuance of the inspecting architect's
certification, in a form substantially similar to that attached hereto as
Exhibit E. The construction shall be completed in good workmanlike manner, free
and clear of all mechanic's, materialmen's or similar liens, and all other
expenses and costs, including but not limited to costs of financing, must be
paid with respect to the Project through completion.
Section 1.14 "Compliance Period" shall mean the period set forth in
Section 42 (i)(1) of the Code, as amended, or any successor statute.
Section 1.15 "Consent of the Special Limited Partner" shall mean the
prior written consent or approval of the Special Limited Partner.
Section 1.16 "Construction Contract" shall mean the construction
contract in the amount of $________, entered into between the Partnership and
the Contractor pursuant to which the Project is being constructed.
Section 1.17 "Construction Loan" shall mean the loan obtained from
First National Bank of Omaha in the principal amount of $700,000 at an interest
rate equal to 1/2% per annum greater than the First National Bank of Omaha Base
Rate per annum for a term of 9 months to provide funds for the acquisition,
renovation and/or construction and development of the Project. Where the context
admits, the term "Construction Loan" shall include any deed, deed of trust,
note, security agreement, assumption agreement or other instrument executed in
connection with the Construction Loan which is binding on the Partnership.
Section 1.18 "Contractor" shall mean Retro Development, Inc., which is
the general construction contractor for the Project.
Section 1.19 "Debt Service Coverage" shall mean the ratio between the
net operating income and the debt service required to be paid on the
Mortgage(s); as example, a 1.15 Debt Service Coverage means that for every $1.00
of debt service required to be paid there must be $1.15 of net operating income
available. For purposes of this definition net operating income is the actual
receipt on a cash basis by the Partnership of revenues from operations of the
4
<PAGE>
Partnership, including, without limitation, rental income (but not any subsidy
thereof from the General Partner or an Affiliate thereof), but excluding
prepayments, security deposits and interest thereon, less all cash operating
obligations of the Partnership (other than those covered by insurance) in
accordance with the applicable budget adopted by the Partnership in accordance
with Section 14.3(j) of this Agreement (the "Budget"), including, without
limitation, the payment of Management Agent fees (which shall be deemed to
include that portion of such fees which is deferred and not currently paid) and
the funding of reserves in accordance with Article VIII of this Agreement, and a
reserve for all taxes or payments in lieu of taxes and any other expenses which
may reasonably be expected to be paid in a subsequent period but which on an
accrual basis are allocable to the period in question, such as insurance
premiums, audit, tax or accounting expenses. Without limiting the generality of
the foregoing, the Partnership's gross revenues for purposes of this Section
shall not include Capital Contributions, borrowings, any lump-sum payment or any
other extraordinary receipt of funds thereby, or interest or any other income
earned on investment of its funds, and unless otherwise provided in a Budget,
the cash operating obligations of the Partnership shall be deemed to include
real estate taxes for the period at the fully assessed rate. A worksheet for the
calculation of Debt Service Coverage is found in the Report of Operations
exhibit attached to this Agreement and incorporated herein by this reference.
Section 1.20 "Deferred Management Fee" shall have the meaning set forth
in Section 9.2(c) hereof.
Section 1.21 "Developer" shall mean Retro Development, Inc.
Section 1.22 "Development Fee" shall mean the fee payable to the
Developer pursuant to Section 9.2(a) of this Agreement for services incident to
the development and construction of the Project in accordance with the
Development Fee Agreement between the Partnership and the Developer dated the
even date herewith and incorporated herein by this reference.
Section 1.23 "Distributions" shall mean the total amount of money, or
the Gross Asset Value of property (net of liabilities securing such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code), distributed to Partners with respect to their
Interests in the Partnership, but shall not include any payments to the General
Partner or its Affiliates for fees or other compensation as provided in this
Agreement or any guaranteed payment within the meaning of Section 707(c) of the
Code, as amended, or any successor thereto.
Section 1.24 "Fair Market Value" shall mean, with respect to any
property, real or personal, the price a ready, willing and able buyer would pay
to a ready, willing and able seller of the property, provided that such value is
reasonably agreed to between the parties in arm's-length negotiations and the
parties have sufficiently adverse interests.
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Section 1.25 "First Year Certificate" shall mean the certificate to be
filed by the General Partner with the Secretary of the Treasury as required by
Code Section 42(1)(1), as amended, or any successor thereto.
Section 1.26 "General Partner" shall collectively mean RETRO
DEVELOPMENT, INC., MOST WORSHIPFUL PRINCE HALL GRAND LODGE, FREE AND ACCEPTED
MASONS OF OKLAHOMA and such other Persons as are admitted to the Partnership as
additional or substitute General Partners pursuant to this Agreement.
Section 1.27 "Gross Asset Value" shall mean with respect to any asset,
the asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the Fair Market Value of such asset, as determined
by the contributing Partner and the General Partner, provided that, if the
contributing Partner is a General Partner, the determination of the Fair Market
Value of a contributed asset shall be determined by appraisal;
(b) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective Fair Market Values, as determined by the General
Partner, as of the following times: (1) the acquisition of an additional
Interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (2) the distribution by the Partnership
to a Partner of more than a de minimis amount of Partnership property as
consideration for an Interest in the Partnership; and (3) the liquidation of the
Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to
clauses (1) and (2) above shall be made only with the Consent of the Special
Limited Partner and only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the Fair Market Value of such asset on the
date of distribution as determined by the distributee and the General Partner,
provided that, if the distributee is a General Partner, the determination of the
Fair Market Value of the distributed asset shall be determined by appraisal; and
(d) The Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
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pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section
10.3(g) hereof; provided however, that Gross Asset Values shall not be adjusted
pursuant to this Section 1.27(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.27(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.27(d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section 1.27(a), Section 1.27(b), or Section 1.27(d) hereof, such
Gross Asset Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Income and Losses.
Section 1.28 "Hazardous Substance" shall mean and include any
substance, material or waste, including asbestos, petroleum and petroleum
products (including crude oil), that is or becomes designated, classified or
regulated as "toxic" or "hazardous" or a "pollutant" or that is or becomes
similarly designated, classified or regulated, under any federal, state or local
law, regulation or ordinance including, without limitation, Compensation and
Liability Act of 1980, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, and the
regulations adopted and publications promulgated pursuant thereto.
Section 1.29 "Improvements" shall mean the construction of a sixteen
(16) unit apartment complex for families in a good and workmanlike manner
substantially in accordance with the plans and specifications and Project
Documents.
Section 1.30 "Incentive Management Fee" shall have the meaning set
forth in Section 9.2(e) hereof.
Section 1.31 "Income and Losses" shall mean, for each fiscal year or
other period, an amount equal to the Partnership's taxable income or loss for
such year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Income or Losses pursuant
to this Section 1.31 shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Income and Losses pursuant to this Section 1.31 shall be subtracted
from such taxable income or loss;
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(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 1.27(a) or (b) hereof, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Income and Losses;
(d) Gain or loss resulting from any disposition of Partnership assets
with respect to which gain or loss is recognized for federal income purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account depreciation for such fiscal year or other period,
computed as provided below; and
(f) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Sections 10.3 or 10.4 hereof shall not
otherwise be taken into account in computing Income or Losses.
Depreciation for each fiscal year or other period shall be calculated
as follows: an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period for federal income tax purposes, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis. Provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by the General Partner.
Section 1.32 "Insurance" shall mean casualty coverage, including but
not limited to, fire or other casualty loss to any structure or building on the
Project in an amount equal to the full replacement value of the damaged property
without deduction for depreciation; shall include comprehensive general
liability coverage against liability claims for bodily injury or property damage
arising out of Project operations in an amount equal to $1,000,000; and shall
include an umbrella liability coverage in an amount equal to $1,000,000 to
protect against claims in excess of the limits of the other primary policies
required herein. All Insurance policies shall provide that they are not subject
to cancellation without 30 days prior written notice to the Limited Partner and
shall not contain any co-insurance provisions.
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Section 1.33 "Insurance Company" shall mean any insurance company
engaged by the General Partner for the Partnership with the Consent of the
Special Limited Partner which Insurance Company shall have an A rating or better
for financial safety by A.M. Best or Standard & Poor's.
Section 1.34 "Interest" shall mean the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled hereunder and
the obligation of such Partner to comply with the terms of this Agreement.
Section 1.35 "Involuntary Withdrawal" means any Withdrawal caused by
the death, adjudication of insanity or incompetence, or Bankruptcy of a General
Partner, or the removal of a General Partner pursuant to Section 13.2 hereof.
Section 1.36 "LIHTC" shall mean the low-income housing tax credit
established by TRA 1986 and which is provided for in Section 42 of the Code, as
amended, or any successor thereto.
Section 1.37 "Limited Partner" shall mean WNC HOUSING TAX CREDIT FUND
V, L.P., SERIES 4, a California limited partnership, and such other Persons as
are admitted to the Partnership as additional or Substitute Limited Partners
pursuant to this Agreement.
Section 1.38 "Management Agent" shall mean the property management
company which oversees the property management functions for the Project and
which is on-site at the Project. The initial Management Agent shall be Retro
Management Group, Inc.
Section 1.39 "Management Agreement" shall mean the agreement between
the Partnership and the Management Agent for property management services.
Section 1.40 "Managing General Partner" shall mean MOST WORSHIPFUL
PRINCE HALL GRAND LODGE, FREE AND ACCEPTED MASONS OF OKLAHOMA or a successor
thereto.
Section 1.41 "Minimum Set-Aside Test" shall mean the 40-60 set-aside
test pursuant to Section 42(g), as amended and any successor thereto, of the
Code with respect to the percentage of apartment units in the Project to be
occupied by tenants whose incomes are equal to or less than the required
percentage of the area median gross income. Notwithstanding, the Partners
acknowledge that only 80% of the apartment units (12 units, of which there will
be six 2 bedroom units and six 3 bedroom units) are required to be rented to
Qualified Tenants and the remainder may be rented to non-Qualified Tenants.
Section 1.42 "Mortgage" or "Mortgage Loan" shall mean any source of
permanent financing of the Project by a qualified commercial lender (as defined
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in Section 42 of the Code) evidencing the indebtedness of the Partnership and
encumbering the Project. Where the context admits, the term "Mortgage" or
"Mortgage Loan" shall include any mortgage, deed, deed of trust, note,
regulatory agreement, security agreement, assumption agreement or other
instrument executed in connection with the Mortgage Note which is binding on the
Partnership; and in case any Mortgage is replaced or supplemented by any
subsequent mortgage or mortgages, the Mortgage shall refer to any such
subsequent mortgage or mortgages.
Section 1.43 "Mortgage Note" shall mean the partial nonrecourse
promissory note whereby the Partnership promises to pay First National Bank of
Omaha, or its successor or assignee, the principal sum of $400,000, plus
interest on the principal at 9% per annum over a term of 15 years and amortized
over 25 years. When the Mortgage Loan becomes effective, Douglas E. Hiner will
guarantee 25% of the outstanding principal of the Mortgage Loan.
Section 1.44 "Nonrecourse Deductions" shall have the meaning given it
in Treasury Regulations Section 1.704-2(b)(1).
Section 1.45 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).
Section 1.46 "Operating Deficit" shall mean for any fiscal year the
total amount by which the sum of the Partnership's operating expenses (defined
solely as the expenses incurred in connection with the operation and maintenance
of the Project), debt service on the Mortgage Loan and other Partnership debt
and required additions to Partnership reserves in accordance with Article VIII
of this Agreement, exceeds the cash revenues received in respect of the
operation of the Project for such fiscal year (not including any subsidy for
rental income from the General Partner or an Affiliate thereof, prepayments of
rent, security deposits and interest thereon, Capital Contributions, Sale or
Refinancing Proceeds or proceeds of Partnership borrowings).
Section 1.47 "Operating Deficit Guarantee Period" shall mean the period
commencing with the date of this Agreement and ending on the expiration of the
Compliance Period.
Section 1.48 "Operating Loans" shall mean loans made by the General
Partner to the Partnership pursuant to Article VI of this Agreement, which loans
do not bear interest and are repayable only as provided in Article XI of this
Agreement.
Section 1.49 "Original Limited Partner" shall mean DOUGLAS E. HINER.
Section 1.50 "Partner" shall mean the Managing General Partner, the
General Partner, the Limited Partner and the Special Limited Partner.
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Section 1.51 "Partner Nonrecourse Debt" shall have the meaning set
forth in Section 1.704-2(b)(4) of the Treasury Regulations.
Section 1.52 "Partner Nonrecourse Debt Minimum Gain" shall mean an
amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership
Minimum Gain that would result if such Partner Nonrecourse Debt were treated as
a Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Treasury Regulations.
Section 1.53 "Partner Nonrecourse Deductions" shall have the meaning
set forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury
Regulations.
Section 1.54 "Partnership" shall mean the limited partnership continued
under this Agreement.
Section 1.55 "Partnership Minimum Gain" shall mean the amount
determined in accordance with the principles of Treasury Regulation Sections
1.704-2(b)(2) and 1.704-2(d).
Section 1.56 "Permanent Mortgage Commencement" shall mean the first
date on which all of the following have occurred: (a) the Construction Loan
shall have been repaid in full; and (b) the closing of the Mortgage shall have
occurred and amortization of the Mortgage shall have commenced.
Section 1.57 "Person" shall mean an individual, proprietorship, trust,
estate, partnership, joint venture, association, company, corporation or other
entity.
Section 1.58 "Project" shall mean the approximately 1.929 acres of land
in Ogallalla, Keith County, Nebraska, as more fully described in Exhibit "A"
attached hereto and incorporated herein by this reference, and the Improvements.
Section 1.59 "Project Documents" shall mean and include all documents
delivered to or required by the Construction Loan and Mortgage Loan and/or any
governmental agency having jurisdiction over the Project in connection with the
development, construction and financing of the Project, including but not
limited to, the approved plans and specifications for the development and
construction of the Project.
Section 1.60 "Projected Annual Tax Credits" shall mean LIHTC in the
amount of $35,793 for 1997, $71,587 per year for each of the years 1998 through
2006, and $35,794 for 2007, which the General Partner has projected to be the
total amount of LIHTC which will be allocated to the Limited Partner by the
Partnership, constituting 98.99% of the aggregate amount of LIHTC of $723,170 to
be available to the Partnership; provided, however, that if the Actual Tax
Credit for 1997 is greater (or less than) $35,793, the Projected Tax Credit for
the year 2007 shall be reduced (or increased) by an amount equal to the amount
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by which the Actual Tax Credit for 1997 exceeds (or is less than) $35,793. The
Partners recognize and acknowledge that only 80% of the apartment units in the
Project qualify for Tax Credits and that the Projected Tax Credits reflect that
only 80% of the apartment units in the Project qualify for Tax Credits.
Section 1.61 "Projected Tax Credits" shall mean LIHTC in the aggregate
amount of $723,170.
Section 1.62 "Qualified Tenants" shall mean any tenants who have
incomes of 60% or less of the area median gross income, as adjusted for family
size, so as to make the Project eligible for LIHTC.
Section 1.63 "Rent Restriction Test" shall mean the test pursuant to
Section 42 of the Code whereby the gross rent charged to tenants of the
low-income apartment units in the Project must not exceed 30% of the applicable
income standards.
Section 1.64 "Reporting Fee" shall have the meaning set forth in
Section 9.2(d) hereof.
Section 1.65 "Revised Projected Tax Credits" shall have the meaning set
forth in Section 7.4(a) hereof.
Section 1.66 "Sale or Refinancing" shall mean any of the following
items or transactions: a sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Partnership, a condemnation of or
casualty at the Project or any part thereof, a claim against a title insurance
company, the refinancing or any Mortgage Note or other indebtedness of the
Partnership and any similar item or transaction; provided, however, that the
payment of Capital Contributions by the Partners shall not be included within
the meaning of the term "Sale or Refinancing."
Section 1.67 "Sale or Refinancing Proceeds" shall mean all cash
receipts of the Partnership arising from a Sale or Refinancing (including
principal and interest received on a debt obligation received as consideration
in whole or in part, on a Sale or Refinancing) less the amount paid or to be
paid in connection with or as an expense of such Sale or Refinancing, and with
regard to damage recoveries or insurance or condemnation proceeds, the amount
paid or to be paid for repairs, replacements or renewals resulting from damage
to or partial condemnation of the Project.
Section 1.68 "Special Limited Partner" shall mean WNC Housing, L.P., a
California limited partnership, and such other Persons as are admitted to the
Partnership as additional or substitute Special Limited Partners pursuant to
this Agreement.
Section 1.69 "State" shall mean the State of Nebraska.
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Section 1.70 "State Tax Credit Agency" shall mean the state agency of
Nebraska which has the responsibility and authorization to administer the LIHTC
program in Nebraska.
Section 1.71 "Substitute Limited Partner" shall mean any Person who is
admitted to the Partnership as a Limited Partner pursuant to Section 12.5 or
acquires the Interest of the Limited Partner pursuant to Section 7.3 of this
Agreement.
Section 1.72 "Tax Credit" shall mean any credit permitted under the
Code or the law of any state against the federal or a state income tax liability
of any Partner as a result of activities or expenditures of the Partnership
including, without limitation, LIHTC.
Section 1.73 "Tax Credit Conditions" shall mean, for the duration of
the Compliance Period, any and all restrictions including, but not limited to,
applicable federal, state and local laws, rules and regulations, which must be
complied with in order to qualify for the Tax Credits or to avoid an event of
recapture in respect of the Tax Credits.
Section 1.74 "TRA 1986" shall mean the Tax Reform Act of 1986.
Section 1.75 "Treasury Regulations" shall mean the Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
Section 1.76 "Withdrawing" or "Withdrawal" (including the verb form
"Withdraw" and the adjectival forms "Withdrawing" and "Withdrawn") shall mean,
as to a General Partner, the occurrence of the death, adjudication of insanity
or incompetence, or Bankruptcy of such Partner, or the withdrawal, removal or
retirement from the Partnership of such Partner for any reason, including any
sale, pledge, encumbering, assignment or other transfer of all or any part of
its General Partner Interest and those situations when a General Partner may no
longer continue as a General Partner by reason of any law or pursuant to any
terms of this Agreement.
ARTICLE II
NAME
The name of the Partnership shall be "OGALLALLA APARTMENTS I LIMITED
PARTNERSHIP."
ARTICLE III
PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE
Section 3.1 Principal Executive Office. The principal executive office
of the Partnership is located at 1007 Park Avenue, Omaha, Nebraska 68105, or at
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such other place or places within the State as the General Partner may hereafter
designate.
Section 3.2 Agent for Service of Process. The name of the agent for
service of process on the Partnership is Douglas E. Hiner, whose address is 1007
Park Avenue, Omaha, Nebraska 68105.
ARTICLE IV
PURPOSE
The purpose of the Partnership is to acquire, construct, own and
operate the Project in order to provide, in part, Tax Credits to the Partners in
accordance with the provisions of the Code and the Treasury Regulations
applicable to LIHTC and to sell the Project. The Partnership shall not engage in
any business or activity which is not incident to the attainment of such
purpose.
ARTICLE V
TERM
The Partnership term commenced upon the filing of the Certificate of
Limited Partnership in the office of, and on the form prescribed by, the
Secretary of State of the State, and shall continue until December 31, 2050
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.
ARTICLE VI
GENERAL PARTNER'S CONTRIBUTIONS AND LOANS
Section 6.1 Capital Contribution of General Partner. The General
Partner and Managing General Partner shall make a Capital Contribution in the
amount of $43,574.
Section 6.2 Construction and Operating Obligations; General Partner Loans.
(a) The General Partner shall cause Completion of Construction in
accordance with the Project Documents, and shall equip the Project or cause the
same to be equipped with all necessary and appropriate fixtures, equipment and
articles of personal property, including refrigerators and ranges. If costs and
expenses necessary to effect Completion of Construction exceed the sum of the
Capital Contributions and the proceeds of the Mortgage Note, the General Partner
shall be responsible for and shall be obligated to pay such deficiencies. Any
such advances shall not be reimbursable or otherwise change the Interest of any
Partner in the Partnership but shall be considered a cost overrun and not be
repayable. In addition, if (1) the Improvements are not completed on or before
July 1, 1997 ("Completion Date") (which date may be extended in the events of
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force majeure, but in no event longer than three months from the Completion
Date. For purposes of this Agreement force majeure shall mean any act of God,
strike, lockout, or other industrial disturbance, act of the public enemy, war,
blockage, public riot, fire, flood, explosion, governmental action, governmental
delay, restraint or inaction and any other cause or event, whether of the kind
enumerated specifically herein, or otherwise, which is not reasonably within the
control of a Partner to this Agreement claiming such suspension); (2) prior to
completing the Improvements, there is an uncured default under or termination of
the Construction Loan, Mortgage Loan commitment, or other material documents; or
(3) a foreclosure action is commenced against the Partnership, then at the
Special Limited Partner's election, either the General Partner will be removed
from the Partnership and the Special Limited Partner will be admitted as
successor General Partner, all in accordance with Article XIII hereof, or the
General Partner will repurchase the Interests of the Limited Partner and the
Special Limited Partner for an amount equal to the amounts theretofore paid by
the Limited Partner and the Special Limited Partner, and the Limited Partner and
the Special Limited Partner shall have no further Interest in the Partnership.
If the Limited Partner elects to have the General Partner repurchase the
Interest of the Limited Partner then the repurchase shall occur within 60 days
after the General Partner receives written demand from the Limited Partner.
(b) During the Operating Deficit Guarantee Period, the General Partner,
as required from time to time, shall provide Operating Loans in amounts
necessary to cover any Operating Deficits. Each Operating Loan shall be
nonrecourse to the Partners, and shall be repayable out of 50% of the available
Cash Flow From Operations or Sale or Refinancing Proceeds in accordance with
Article XI of this Agreement. In the event the General Partner shall fail to
make any Operating Loans required by this Section 6.2(b), the Partnership shall
withhold those funds otherwise payable to the General Partner or its Affiliates
pursuant to Section 9.2 ("General Partner Funds") and utilize the withheld funds
to meet the obligations of the General Partner pursuant to this Section 6.2(b);
any such use of General Partner Funds will be deemed an Operating Loan of the
General Partner repayable to the General Partner as aforesaid. Such use of
General Partner Funds shall also constitute payment and satisfaction of amounts
payable to the General Partner or Affiliates thereof pursuant to Section 9.2,
and the obligation of the Partnership to make such payments to the General
Partner or its Affiliates pursuant to Section 9.2 shall therefore be deemed
satisfied.
Section 6.3 Other General Partner Loans. After expiration of the
Operating Deficit Guarantee Period, with the Consent of the Special Limited
Partner, the General Partner may loan to the Partnership any sums required by
the Partnership and not otherwise reasonably available to it. Any such loan
shall bear simple interest (not compounded) at the rate of 2% per annum above
the then prevailing prime or reference rate charged by Bank of America N.T. &
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S.A., Main Office, San Francisco, California, or, if lesser, the maximum legal
rate. The maturity date and repayment schedule of any such loan shall be as
agreed to by the General Partner and the Special Limited Partner. The terms of
any such loan shall be evidenced by a written instrument. The General Partner
shall not charge a prepayment penalty on any such loan. Any loan in
contravention of this Section shall be deemed an invalid action taken by the
General Partner and such advance will be classified as a General Partner Capital
Contribution.
ARTICLE VII
CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
AND SPECIAL LIMITED PARTNER
Section 7.1 Original Limited Partner. The Original Limited Partner made
a Capital Contribution of $100. Effective as of the date of this Agreement, the
Original Limited Partner's Interest has been liquidated and the Partnership has
reacquired the Original Limited Partner's Interest in the Partnership. The
Original Limited Partner acknowledges that it has no further interest in the
Partnership as a limited partner as of the date of this Agreement, and has
released all claims, if any, against the Partnership arising out of its
participation as a limited partner.
Section 7.2 Capital Contribution of Limited Partner. The Limited
Partner shall make a Capital Contribution in the amount of $400,885, as may be
adjusted in accordance with Section 7.4 of this Agreement, in cash on the dates
and subject to the conditions hereinafter set forth:
(a) The obligation of the Limited Partner to pay the aforesaid Capital
Contribution shall be subject to the satisfaction of the following conditions:
(1) prior to the initial payment of the Capital Contribution
only, the issuance to the Limited Partner of an opinion of the Partnership's
legal counsel, in a form substantially similar to the form of opinion attached
hereto as Exhibit "B" and incorporated herein by this reference;
(2) prior to the initial payment of the Capital Contribution
only, the General Partner shall deliver to the Limited Partner a fully executed
Certification and Agreement in the form attached hereto as Exhibit "C" and
incorporated herein by this reference;
(3) prior to the due date of each installment of such Capital
Contribution except the first payment, the General Partner shall deliver to the
Limited Partner a fully executed General Partner Certification in the form
attached hereto as Exhibit "D" and incorporated herein by this reference, to the
effect that all of the representations and warranties set forth in Article IX
are accurate;
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(4) prior to the Capital Contribution payment referenced in
Section 7.2(b)(2) the General Partner shall deliver to the Limited Partner a
certificate of occupancy on all the apartment units in the Project and a copy of
the recorded grant deed (warranty deed);
(5) prior to the Capital Contribution payment referenced in
Section 7.2(b)(3), the General Partner shall deliver to the Limited Partner a
copy of an ALTA Owner's Title Insurance Policy and any endorsements required by
the Limited Partner, copies of all Mortgage Notes and Mortgage Loan documents
required by First National Bank of Omaha to close the Mortgage and disperse
Mortgage proceeds to the Partnership;
(6) prior to the Capital Contribution payment referenced in
Section 7.2(b)(4) the General Partner shall deliver to the Limited Partner the
current rent roll, copies of all initial tenant files including completed
applications, completed questionnaires or checklist of income and assets,
documentation of third party verification of income and assets, income
certification forms (LIHTC specific) and executed lease agreements collected by
the Management Agent, or General Partner, verifying each tenant's eligibility as
a Qualified Tenant;
(7) prior to each Capital Contribution payment through and
including 7.2(b)(2) the General Partner shall deliver to the Limited Partner
copies of all inspecting architect's application and certificate of payment (AIA
Document G702, or similar form acceptable to the Limited Partner), all
Construction Loan draw requests and a copy of the construction schedule and any
updates to the construction schedule;
(8) prior to the Capital Contribution payment referenced in
Section 7.2(b)(4) the General Partner shall deliver to the Limited Partner a
copy of the Declaration of Restrictive Covenants/Extended Use Agreement entered
into between the Partnership and the State Tax Credit Agency, an audited
construction cost certification with an itemized cost breakdown, Internal
Revenue Code Form 8609, or any successor form and any documents previous not
provided to the Limited Partner but required pursuant to this Section 7.2(a) and
Sections 14.3(a), (b) and (c).
(b) Provided the conditions of Section 7.2(a) of this Partnership
Agreement have been met, the Limited Partner shall make the following Capital
Contributions:
(1)$100,207 will be payable upon admittance of the Limited Partner into the
Partnership, provided the conditions of Section 7.2(a) of this Agreement have
been met;
(2) $200,452 will be payable upon Completion of Construction as evidenced
by the inspecting architect's certification (in a form substantially similar to
the form attached hereto as Exhibit "E" and incorporated herein by this
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reference), the issuance of a permanent certificate of occupancy (or equivalent
evidence of local occupancy approval) for all units, receipt of a letter from
the Contractor stating that all amounts payable to the Contractor have been paid
in full and that the Partnership is not in violation of the Construction
Contract, and verification of the Partnership's casualty insurance and general
liability insurance, provided the conditions of Section 7.2(a) of this Agreement
have been met;
(3) $50,113 will be payable the date the Project maintains a debt coverage
ratio of 1.15 for 120 consecutive days, the Limited Partnership's receipt of,
and review of, tenant income verification data to determine that 80% of the
apartment units in the Project qualify under Section 42 of the Code, delivery of
the Accountant's final Tax Credit cost certification and Tax Credit
Certification (in a form substantially similar to the form attached hereto as
Exhibit "F" and incorporated herein by this reference) setting forth the
Project's eligible basis and the amount of the Tax Credits to which the
Partnership is entitled, and delivery to the Limited Partner of a fully executed
set of Mortgage documents, provided the conditions of Section 7.2(a) of this
Agreement have been met; and
(4) $50,113 will be payable after all the conditions above have been met,
and delivery to the Limited Partner of the IRS Form 8609 and the first year tax
return in which Tax Credits are taken, provided the conditions of Section 7.2(a)
of this Agreement have been met.
Section 7.3 Repurchase of Limited Partner's Interest. Within 60 days
after the General Partner receives written demand from the Limited Partner
and/or the Special Limited Partner, the Partnership shall repurchase the Limited
Partner's Interest and/or the Special Limited Partner's Interest in the
Partnership by refunding to it in cash the full amount of the Capital
Contribution which the Limited Partner and/or the Special Limited Partner has
theretofore made in the event that, for any reason, the Partnership shall fail
to:
(a) receive an allocation of LIHTC no later than the close of the calendar
year during which the Project is placed in service;
(b) cause the Project to be placed in service by July 1, 1997;
(c) achieve 90% occupancy of the Project by Qualified Tenants by August 1,
1997;
(d) obtain Permanent Mortgage Commencement by August 1, 1997;
(e) meet both the Minimum Set-Aside Test and the Rent Restriction Test not
later than December 31 of the first year the Partnership elects the LIHTC to
commence in accordance with the Code; and
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(f) obtain a carryover allocation, within the meaning of Section 42 of the
Code, from the State Tax Credit Agency on or before December 31, 1996.
Section 7.4 Reduction of Limited Partner's Capital Contribution.
(a) If the anticipated amount of Projected Tax Credits to be allocated
to the Limited Partner and Special Limited Partner as evidenced by IRS Form
8609, Schedule A thereto, and the audited construction cost certification
provided to the Limited Partner is less than $715,938 (the "Revised Projected
Tax Credits") then the Limited Partner's and Special Limited Partner's Capital
Contribution provided for in Sections 7.2 and 7.5 shall be reduced by the amount
which will make the total Capital Contribution to be paid by the Limited Partner
and Special Limited Partner to the Partnership equal to 56% of the Revised
Projected Tax Credits so anticipated to be allocated to the Limited Partner and
Special Limited Partner.
(b) The General Partner is required to use its best efforts to rent 80%
of the Project's apartment units to Qualified Tenants throughout the Compliance
Period. If at any time during the first five calendar years following the year
in which the Project is placed in service, the Actual Tax Credit for any fiscal
year or portion thereof is or will be less than the Projected Annual Tax Credit,
or the Revised Projected Tax Credit calculated on an annual basis ("Revised
Projected Annual Tax Credit"), if applicable, then, unless the shortfall shall
have previously been addressed under Section 7.4(a), then the amount of the
reduction shall be applied to the next Capital Contribution owed by the Limited
Partner or the Special Limited Partner, if any, and any portion of such
reduction in excess of such Capital Contribution shall be applied to reduce
succeeding Capital Contributions of the Limited Partner or the Special Limited
Partner, if any. If, at the time of determination thereof, the Capital
Contribution reduction referenced in Section 7.4(a) and/or this section 7.4(b)
is greater than the balance of the Limited Partner's or Special Limited
Partner's Capital Contribution payments which is then due, if any ("Reduction
Shortfall"), then the amount of the Reduction Shortfall shall be paid by the
General Partner to the Limited Partner or the Special Limited Partner within
ninety days of the General Partner receiving notice of the Reduction Shortfall
from the Limited Partner and/or the Special Limited Partner.
(c) In the event that, for any reason, at any time after the first five
calendar years following the year in which the Project is placed in service, the
amount of the Actual Tax Credit is less than the Projected Annual Tax Credit, or
the Revised Projected Annual Tax Credit, if applicable, (the "Annual Credit
Shortfall"), then, unless the Annual Credit Shortfall shall have previously been
addressed under Section 7.4(a) or Section 7.4(b), there shall be a reduction in
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the General Partner's share of Cash Flow From Operations in an amount equal to
the Annual Credit Shortfall and said amount instead shall be paid to the Limited
Partner. In the event there are not sufficient funds to pay the full Annual
Credit Shortfall to the Limited Partner at the time of the next Distribution of
Cash Flow From Operations, then the Limited Partner shall be treated as having
made a constructive advance to the Partnership in an amount equal to the Annual
Credit Shortfall (a "Credit Shortfall Loan"), which shall be deemed to have been
made on January 1 of the year in which the Annual Credit Shortfall arises. Each
Credit Shortfall Loan shall bear simple interest (not compounded) from the date
on which such loan is deemed to have been made under this Section 7.4(d) at the
rate equal to the 5-year Treasury money rate at the time of the Credit Shortfall
Loan, or, if lesser, the maximum legal rate. Credit Shortfall Loans or any
portion thereof shall be repaid in the next year in which sufficient moneys are
available from the General Partner's Cash Flow From Operations, with interest
payable prior to principal. In the event a Sale or Refinancing of the Project
occurs prior to repayment in full of the Credit Shortfall Loan then the excess
will be paid in accordance with Section 11.2(b).
(d) In the event there is a reduction in the qualified basis of the
Project for income tax purposes following an audit by the Internal Revenue
Service (IRS) resulting in a recapture of Tax Credits previously claimed, then,
in addition to any other payments to which the Limited Partner and Special
Limited Partner is entitled under the terms of this Section 7.4 the General
Partner shall pay to the Limited Partner and the Special Limited Partner the sum
of (1) the deficiency assessed against the Limited Partner or Special Limited
Partner as a result of the Tax Credit recapture, (2) any interest and penalties
imposed on the Limited Partner or Special Limited Partner with respect to such
deficiency, and (3) an amount sufficient to pay any tax liability owed by the
Limited Partner or Special Limited Partner resulting from the receipt of the
amounts specified in (1) and (2).
Section 7.5 Capital Contribution of Special Limited Partner. The
Special Limited Partner shall make a Capital Contribution of $40 at the time of
the Limited Partner's Capital Contribution payment referenced in Section
7.2(b)(1). The Special Limited Partner shall be in a different class from the
Limited Partner and, except as otherwise expressly stated in this Agreement,
shall not participate in any rights allocable to or exercisable by the Limited
Partner under this Agreement.
Section 7.6 Return of Capital Contribution. From time to time the
Partnership may have cash in excess of the amount required for the conduct of
the affairs of the Partnership, and the General Partner may, with the Consent of
the Special Limited Partner, determine that such cash should, in whole or in
part, be returned to the Limited Partner in reduction of its Capital
Contribution. No such return shall be made unless all liabilities of the
Partnership (except those to Partners on account of amounts credited to them
pursuant to this Agreement) have been paid or there remain assets of the
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Partnership sufficient, in the sole discretion of the General Partner, to pay
such liabilities.
Section 7.7 Liability of Limited Partner and Special Limited Partner.
The Limited Partner and Special Limited Partner shall not be liable for any of
the debts, liabilities, contracts or other obligations of the Partnership. The
Limited Partner and Special Limited Partner shall be liable only to make Capital
Contributions in the amounts and on the dates specified in this Agreement and,
except as otherwise expressly required hereunder, shall not be required to lend
any funds to the Partnership or, after their respective Capital Contributions
have been paid, to make any further Capital Contribution to the Partnership.
ARTICLE VIII
WORKING CAPITAL AND RESERVES
Section 8.1 Operating and Maintenance Reserve and Replacement Reserve
Account. The Partnership shall establish an operating and maintenance reserve
account and a replacement reserve account and shall deposit thereinto an annual
amount equal to $100 per residential unit per year for the first twelve months
and $200 per residential unit per year thereafter for the purpose of repairs,
maintenance and capital repairs. Said deposit shall be made monthly in equal
installments. Withdrawals from such account shall be made only with the Consent
of the Special Limited Partner. Any balance remaining in these accounts at the
time of a sale of the Project shall be allocated and distributed equally between
the General Partner and the Limited Partner.
Section 8.2 Other Reserves. The General Partner shall establish out of
funds available to the Partnership a reserve account sufficient in its sole
discretion to pay any unforeseen contingencies which might arise in connection
with the furtherance of the Partnership business including, but not limited to,
(a) any rent subsidy required to maintain rent levels in compliance with the Tax
Credit Conditions; and (b) any real estate taxes, insurance, debt service or
other payments for which other funds are not provided for hereunder or otherwise
expected to be available to the Partnership. The General Partner shall not be
liable for any good-faith estimate which it shall make in connection with
establishing or maintaining any such reserves nor shall the General Partner be
required to establish or maintain any such reserves if, in its sole discretion,
such reserves do not appear to be necessary.
ARTICLE IX
MANAGEMENT AND CONTROL
Section 9.1 Power and Authority of General Partner. Subject to the
receipt of Consent of the Special Limited Partner or the consent of the Limited
Partner where required by this Agreement, and subject to the other limitations
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and restrictions included in this Agreement, the Managing General Partner shall
have complete and exclusive control over the management of the Partnership
business and affairs, and shall have the right, power and authority, on behalf
of the Partnership, and in its name, to exercise all of the rights, powers and
authority of a partner of a partnership without limited partners. No Limited
Partner or Special Limited Partner (except one who may also be a General
Partner, and then only in its capacity as General Partner within the scope of
its authority hereunder) shall have any right to be active in the management of
the Partnership's business or investments or to exercise any control thereover,
nor have the right to bind the Partnership in any contract, agreement, promise
or undertaking, or to act in any way whatsoever with respect to the control or
conduct of the business of the Partnership, except as otherwise specifically
provided in this Agreement.
Section 9.2 Payments to the General Partners and Others.
(a) The Partnership shall pay to the Developer a Development Fee in the
amount of $125,550 in accordance with the Development Fee Agreement between the
Partnership and the Developer. Such fee shall be deemed paid by the Partnership
and deemed received by the Developer (and includable in the taxable income of
the Developer in accordance with the Development Fee Agreement) when the Project
is placed in service.
(b) The Partnership shall retain the sum of $275,375 from the Capital
Contributions paid pursuant to Section 7.2(b) of this Agreement to be used for
supplemental development costs including, but not limited to, land costs,
architectural fees, survey and engineering costs, financing costs, loan fees,
building materials and labor, but the amount retained shall in no event be
greater than the difference between the Construction Loan and the Mortgage Loan.
If any such funds are remaining after Completion of Construction and all
construction costs are paid in full and the Construction Loan retired, then the
remainder shall first be paid to the General Partner in an amount equal to any
unpaid Development Fee and the balance, if any, shall be paid to the General
Partner as a reduction of the General Partner's Capital Contribution and/or an
incentive rent-up fee.
(c) The Partnership shall pay to the Management Agent a property
management fee for the leasing and management of the Project in an amount in
accordance with the Management Agreement. The term of the Management Agreement
shall not exceed one year. If the Management Agent is an Affiliate of the
General Partner then the Management Agreement shall provide that, commencing
with the termination of the Operating Deficit Guarantee Period referenced in
Section 6.2(b) in any year in which the Project has an Operating Deficit, 40% of
the management fee will be deferred ("Deferred Management Fee"). Deferred
Management Fees, if any, shall be paid to the Management Agent solely in
accordance with and to the extent permitted by Section 11.1 of this Agreement.
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(1) The General Partner shall, upon receiving any request of
the Mortgage lender requesting such action, dismiss the Management Agent as the
entity responsible for management of the Project under the terms of the
Management Agreement; or, the General Partner shall dismiss the Management Agent
at the request of the Special Limited Partner.
(2) The appointment of any successor Management Agent is
subject to the Consent of the Special Limited Partner which may only be sought
after the General Partner has provided the Special Limited Partner accurate and
complete disclosure respecting the proposed Management Agent.
(d) The Partnership shall pay to the Limited Partner a fee (the
"Reporting Fee") commencing in 1997 equal to 15% of the Cash Flow From
Operations but in no event less than $500 for the Limited Partner's services in
monitoring the operations of the Partnership and for services in connection with
the Partnership's accounting matters and assisting with the preparation of tax
returns and the reports required in Sections 14.2 and 14.3 of this Agreement.
The Reporting Fee shall be payable within seventy-five (75) days following each
calendar year and shall be payable from Cash Flow From Operations in the manner
and priority set forth in Section 11.1 of this Agreement; provided, however,
that if in any year Cash Flow From Operations is insufficient to pay the full
$500, the unpaid portion thereof shall accrue and be payable on a cumulative
basis in the first year in which there is sufficient Cash Flow From Operations,
as provided in Section 11.1, or sufficient Sale or Refinancing Proceeds, as
provided in Section 11.2.
(e) The Partnership shall pay to the General Partner an Incentive
Management Fee equal to 40% of the available Cash Flow From Operations in
accordance with Section 11.1 of this Agreement for each fiscal year of the
Partnership commencing in 1997 for services incident to the administration of
the business and affairs of the Partnership, which services shall include, but
not limited to, maintaining the books and records of the Partnership, selecting
and supervising the Partnership's Accountants, bookkeepers and other Persons
required to prepare and audit the Partnership's financial statements and tax
returns, and preparing and disseminating reports on the status of the Project
and the Partnership, all as required by Article XIV of this Agreement. The
Incentive Management Fee shall be payable within seventy-five (75) days
following each calendar year and shall be payable from Cash Flow From Operations
in the manner and priority set forth in Section 11.1. If the Incentive
Management Fee is not paid in any year it shall not accrue for payment in
subsequent years.
Section 9.3 Specific Powers of the Managing General Partner.
Subject to the other provisions of this Agreement, the Managing General
Partner shall have the following powers:
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(a) In the Partnership's name and on its behalf, the Managing General
Partner may hold, sell, transfer, lease or otherwise deal with any real,
personal or mixed property, interest therein or appurtenance thereto in
accordance with the purpose of this Agreement as indicated in Article IV hereto;
(b) In the Partnership's name and on its behalf, the Managing General
Partner may employ, contract and otherwise deal with, from time to time, Persons
whose services are necessary or appropriate in connection with management and
operation of the Partnership business, including, without limitation,
contractors, agents, brokers, Accountants and Management Agents (provided that
the selection of any Accountant or Management Agent has received the Consent of
the Special Limited Partner) and attorneys, on such terms as the Managing
General Partner shall determine;
(c) In the Partnership's name and on its behalf, the Managing General
Partner may bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the
Partnership;
(d) In the Partnership's name and on its behalf, the Managing General
Partner may pay as a Partnership expense any and all costs and expenses
associated with the formation, development, organization and operation of the
Partnership, including the expense of annual audits, tax returns and LIHTC
compliance;
(e) In the Partnership's name and on its behalf, the Managing General
Partner may deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(f) In the Partnership's name and on its behalf, the Managing General
Partner is authorized to execute the Construction Loan and the Mortgage;
(g) The Managing General Partner may require in any or all Partnership
contracts that the Managing General Partner shall not have any personal
liability thereunder but that the Person contracting with the Partnership shall
look solely to the Partnership and its assets for satisfaction;
(h) In the Partnership's name and on its behalf, the Managing General
Partner may execute, acknowledge and deliver any and all instruments to
effectuate any of the foregoing; and
(i) The Managing General Partner shall operate the Project and shall cause
the Management Agent to manage the Project in such a manner that the Project
will be eligible to receive a Tax Credit with respect to 80% of the apartment
units in the Project. To that end, the General Partner agrees, without
limitation, to make all elections requested by the Special Limited Partner under
Section 42 of the Code to allow the Partnership or its Partners to claim the Tax
Credit, to file Form 8609 with respect to the Project as required, for at least
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the duration of the Compliance Period to operate the Project and cause the
Management Agent to manage the Project so as to comply with the requirements of
Section 42 of the Code, as amended, or any successor thereto, including, but not
limited to, Section 42(g) and Section 42(i)(3) of the Code, as amended, or any
successors thereto, to make all certifications required by Section 42(l) of the
Code, as amended, or any successor thereto, and to operate the Project and cause
the Management Agent to manage the Project so as to comply with all other Tax
Credit Conditions.
Section 9.4 Authority Requirements. During the Compliance Period, the
following provisions shall apply:
(a) Each of the provisions of this Agreement shall be subject to, and
the General Partner covenants to act in accordance with, the Tax Credit
Conditions and all applicable federal, state and local laws and regulations;
(b) The Tax Credit Conditions and all such laws and regulations, as
amended or supplemented, shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successor and assigns, and
they shall control as to any terms in this Agreement which are inconsistent
therewith, and any such inconsistent terms of this Agreement shall be
unenforceable by or against any of the Partners;
(c) Upon any dissolution of the Partnership or any transfer of the
Project, no title or right to the possession and control of the Project and no
right to collect rent therefrom shall pass to any Person who is not, or does not
become, bound by the Tax Credit Conditions in a manner that, in the opinion of
counsel to the Partnership, would not avoid a recapture thereof on the part of
the former owners; and
(d) Any conveyance or transfer of title to all or any portion of the
Project required or permitted under this Agreement shall in all respects be
subject to the Tax Credit Conditions and all conditions, approvals or other
requirements of the rules and regulations of any authority applicable thereto.
Section 9.5 Limitations on General Partner's Power and Authority.
Notwithstanding the provisions of this Article IX, the General Partner shall
not:
(a) Except as required by Section 9.4, act in contravention of this
Agreement;
(b) Act in any manner which would make it impossible to carry on the
ordinary business of the Partnership;
(c) Confess a judgment against the Partnership;
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(d) Possess Partnership property, or assign the Partner's right in specific
Partnership property, for other than the exclusive benefit of the Partnership;
(e) Admit a Person as a General Partner except as provided in this
Agreement;
(f) Admit a Person as a Limited Partner except as provided in this
Agreement;
(g) Violate any provision of the Mortgage Loan or Mortgage Note;
(h) Cause the Project apartment units to be rented to anyone other than
Qualified Tenants;
(i) Violate the Minimum Set-Aside Test or the Rent Restriction Test for the
Project;
(j) Cause any recapture of the Tax Credits;
(k) Permit any creditor who makes a nonrecourse loan to the Partnership to
have, or to acquire at any time as a result of making such loan, any direct or
indirect interest in the profits, income, capital or other property of the
Partnership, other than as a secured creditor;
(l) Commingle funds of the Partnership with the funds of another Person; or
(m) Take any action which requires the Consent of the Special Limited
Partner or the consent of the Limited Partner unless the General Partner has
received the Consent of the Special Limited Partner.
Section 9.6 Restrictions on Authority of General Partner. Without
consent of the Special Limited Partner the General Partner shall not:
(a) Sell, exchange, lease or otherwise dispose of the Project;
(b) Incur indebtedness other than the Construction Loan and Mortgage Loan
in the name of the Partnership, other than in the ordinary course of the
Partnership's business;
(c) Engage in any transaction not expressly contemplated by this Agreement
in which the General Partner has an actual or potential conflict of interest
with the Limited Partner or the Special Limited Partner;
(d) Contract away the fiduciary duty owed to the Limited Partner and the
Special Limited Partner at common law;
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(e) Take any action which would cause the Project to fail to qualify, or
which would cause a termination or discontinuance of the qualification of the
Project, as a "qualified low income housing project" under Section 42(g)(1) of
the Code, as amended, or any successor thereto, or which would cause the Limited
Partner to fail to obtain the Projected Tax Credits or which would cause the
recapture of any LIHTC;
(f) Make any expenditure of funds, or commit to make any such expenditure,
other than in response to an emergency, except as provided for in the annual
budget approved by the Special Limited Partner, as provided in Section 14.3(i)
hereof;
(g) Cause the merger or other reorganization of the Partnership; or
(h) Dissolve the Partnership.
Section 9.7 Duties of Managing General Partner. The Managing General
Partner agrees that it shall at all times:
(a) Diligently and faithfully devote such of its time to the business of
the Partnership as may be necessary to properly conduct the affairs of the
Partnership;
(b) File and publish all certificates, statements or other instruments
required by law for the formation and operation of the Partnership as a limited
partnership in all appropriate jurisdictions;
(c) Cause the Partnership to carry Insurance from an Insurance Company;
(d) Have a fiduciary responsibility for the safekeeping and use of all
funds and assets of the Partnership, whether or not in its immediate possession
or control and not employ or permit another to employ such funds or assets in
any manner except for the benefit of the Partnership;
(e) Comply with all Code and State rules and regulations for rural rental
housing and LIHTC;
(f) Use its best efforts to keep the Project and Project dwelling units, in
decent, safe, sanitary and good condition, repair and working order, ordinary
use and obsolescence excepted, and make or cause to be made from time to time
all necessary repairs thereto (including external and structural repairs) and
renewals and replacements thereof;
(g) Pay, before the same shall become delinquent and before penalties
accrue thereon all Partnership taxes, assessments and other governmental charges
against the Partnership or its properties, and all of its other liabilities,
except to the extent and so long as the same are being contested in good faith
by appropriate proceedings in such manners as not to cause any material adverse
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effect on the Partnership's property, financial condition or business
operations, with adequate reserves provided for such payments;
(h) Permit, and cause the Management Agent to permit, the Special Limited
Partner and its representatives to have access to the Project and personnel
employed by the Partnership and by the Management Agent who are concerned with
management of the Project at all reasonable times during normal business hours
and to examine all agreements, Tax Credit compliance data and plans and
specifications and deliver copies thereof and such reports as may reasonably be
required by the Special Limited Partner. The General Partner shall provide the
Special Limited Partner with copies of all correspondence, notices and reports
sent pursuant to or received under the Project Documents or any authority with
respect to the Project at the time such correspondence, notices or reports are
sent or received, copies of all other correspondence of substantial importance
which a prudent investor would wish to examine in connection with the
transaction at the time such correspondence is sent or received, and all reports
required by Article XIV within the required time periods set forth therein.
(i) Make any Capital Contributions, advances or loans required to be made
by the General Partner under the terms of this Agreement;
(j) Establish and maintain all reserves required to be established and
maintained under the terms of this Agreement;
(k) Comply with each and every covenant, representation and warranty set
forth in Section 9.11; and
(l) Perform such other acts as may be expressly required of it under the
terms of this Agreement.
Section 9.8 Partnership Expenses.
(a) All of the Partnership's expenses shall be billed directly to and
paid by the Partnership to the extent practicable. Reimbursements to the General
Partner or any of its Affiliates by the Partnership shall be allowed only for
the Partnership's operating cash expenses and only subject to the limitations on
the reimbursement of such expenses set forth herein. As used in this Section 9.8
the term "operating cash expenses" shall mean, with respect to any fiscal
period, the amount of cash disbursed by the Partnership for Partnership business
in that period in the ordinary course of business for the payment of its
operating expenses, such as expenses for advertising and promotion, management,
utilities, repair and maintenance, Insurance, Partner communications, legal,
accounting, statistical and bookkeeping services, use of computing or accounting
equipment, travel and telephone expenses, salaries and direct expenses of
Partnership employees while engaged in Partnership business, and any other
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operational and administrative expenses necessary for the prudent operation of
the Partnership. Without limiting the generality of the foregoing, "operating
cash expenses" shall include fees paid by the Partnership to the General Partner
or any Affiliate of the General Partner permitted by this Agreement and the
actual cost of goods, materials and administrative services used for or by the
Partnership, whether incurred by the General Partner, an Affiliate of the
General Partner or a nonaffiliated Person in performing the foregoing functions.
As used in the preceding sentence, "actual cost of goods and materials" means
the actual cost of goods and materials used for or by the Partnership and
obtained from entities which are not Affiliates of the General Partner, and
actual cost of administrative services means the pro rata cost of personnel (as
if such persons were employees of the Partnership) associated therewith, but in
no event to exceed the amount which would be charged by nonaffiliated Persons
for comparable goods and services.
(b) Reimbursement to the General Partner or any of its Affiliates of
operating cash expenses pursuant to Subsection (a) hereof shall be subject to
the following:
(1) No such reimbursement shall be permitted for services for which the
General Partner or any of its Affiliates is entitled to compensation by way of a
separate fee; and
(2) No such reimbursement shall be made for (A) rent or depreciation,
utilities, capital equipment or other such administrative items, and (B)
salaries, fringe benefits, travel expenses and other administrative items
incurred or allocated to any "controlling person" of the General Partner or any
Affiliate of the General Partner. For the purposes of this Section 9.8(b)(2),
"controlling person" includes, but is not limited to, any Person, however
titled, who performs functions for the General Partner or any Affiliate of the
General Partner similar to those of: (i) chairman or member of the board of
directors; (ii) executive management, such as president, vice president or
senior vice president, corporate secretary or treasurer; (iii) senior
management, such as the vice president of an operating division who reports
directly to executive management; or (iv) those holding 5% or more equity
interest in such General Partner or any such Affiliate of the General Partner or
a person having the power to direct or cause the direction of such General
Partner or any such Affiliate of the General Partner, whether through the
ownership of voting securities, by contract or otherwise.
Section 9.9 General Partner Expenses. The General Partner or Affiliates
of the General Partner shall pay all Partnership expenses which are not
permitted to be reimbursed pursuant to Section 9.8 and all expenses which are
unrelated to the business of the Partnership.
Section 9.10 Other Business of Partners. Any Partner may engage
independently or with others in other business ventures wholly unrelated to the
Partnership business of every nature and description, including, without
limitation, the acquisition, development, construction, operation and management
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of real estate projects and developments of every type on their own behalf or on
behalf of other partnerships, joint ventures, corporations or other business
ventures formed by them or in which they may have an interest, including,
without limitation, business ventures similar to, related to or in direct or
indirect competition with the Project except if prohibited under a
non-competition agreement. Neither the Partnership nor any Partner shall have
any right by virtue of this Agreement or the partnership relationship created
hereby in or to such other ventures or activities or to the income or proceeds
derived therefrom. Conversely, no Person shall have any rights to Partnership
assets, incomes or proceeds by virtue of such other ventures or activities of
any Partner.
Section 9.11 Covenants, Representations and Warranties. The General
Partner covenants, represents and warrants that the following are presently true
and will be true during the term of this Agreement, to the extent then
applicable:
(a) The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner and the Special Limited Partner.
(b) The Partnership Agreement and the Project Documents are in full
force and effect and neither the Partnership nor the General Partner is in
breach or violation of any provisions thereof.
(c) Improvements will be completed in a timely and workmanlike manner
in accordance with all applicable requirements of the Mortgage Loan, all
applicable requirements of all appropriate governmental entities and the plans
and specifications of the Project that have been or shall be hereafter approved
by First National Bank of Omaha, if required, and all applicable governmental
entities, as such plans and specifications may be changed from time to time with
the approval of First National Bank of Omaha and any applicable governmental
entities, if such approval shall be required.
(d) The Project is being operated in accordance with standards and
procedures which are prudent and customary for the operation of properties
similar to the Project.
(e) Additional Improvements on the Project, if any, shall be completed
substantially in conformity with the Project Documents and any other
requirements necessary to obtain Completion of Construction.
(f) Except as otherwise provided, no Partner has or will have any
personal liability with respect to or has or will have personally guaranteed the
payment of the Mortgage.
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(g) The Partnership is in compliance with all construction and use
codes applicable to the Project and is not in violation of any zoning,
environmental or similar regulations applicable to the Project.
(h) All appropriate public utilities, including sanitary and storm
sewers, water, gas and electricity, are currently available and will be
operating properly for all units in the Project at the time of first occupancy
and throughout the term of the Partnership.
(i) The Project has obtained, or will obtain before Permanent Mortgage
Commencement, and will maintain throughout the term of this Partnership
Insurance written by an Insurance Company.
(j) The Partnership owns the fee simple interest in the Project.
(k) The Construction Contract has been entered into between the
Partnership and the Contractor; no other consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.
(l) A builder's risk insurance policy in favor of the Partnership is in
full force and effect and will remain in full force and effect until Completion
of Construction.
(m) Except as otherwise disclosed to the Limited Partner and the
Special Limited Partner in writing prior to the execution of this Agreement, to
the best of the General Partner's knowledge: (1) no Hazardous Substance has been
disposed of, or released to or from, or otherwise now exists in, on, under or
around, the Project and (2) no aboveground or underground storage tanks are now
or have ever been located on or under the Project. The General Partner will not
install or allow to be installed any aboveground or underground storage tanks on
the Project. The General Partner covenants that the Project shall be kept free
of Hazardous Materials and shall not be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce or process
Hazardous Materials, except in connection with the normal maintenance and
operation of any portion of the Project. The General Partner shall comply, or
cause there to be compliance, with all applicable Federal, state and local laws,
ordinances, rules and regulations with respect to Hazardous Materials and shall
keep, or cause to be kept, the Project free and clear of any liens imposed
pursuant to such laws, ordinances, rules and regulations. The General Partner
must promptly notify the Limited Partner and the Special Limited Partner in
writing (3) if it knows, or suspects or believes there may be any Hazardous
Substance in or around any part of the Project, any Improvements constructed on
the Project, or the soil, groundwater or soil vapor, (4) if the General Partner
or the Partnership may be subject to any threatened or pending investigation by
any governmental agency under any law, regulation or ordinance pertaining to any
Hazardous Substance, and (5) of any claim made or threatened by any Person,
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other than a governmental agency, against the Partnership or General Partner
arising out of or resulting from any Hazardous Substance being present or
released in, on or around any part of the Project.
(n) The General Partner has not executed and will not execute any
agreements with provisions contradictory to, or in opposition to, the provisions
of this Agreement.
(o) The Partnership shall maintain the Projected Annual Tax Credits.
(p) No charges, liens or encumbrances exist with respect to the Project
other than those which are created or permitted by the Project Documents or
Mortgage or are noted or excepted in the title policy for the Project.
(q) The buildings on the Project site constitute or shall constitute a
"qualified low-income housing project" as defined in Section 42(g) of the Code,
and as amplified by the Treasury Regulations thereunder. In this connection, not
later than December 31 of the first year in which the Partners elect the LIHTC
to commence in accordance the Code, the Project will satisfy the Minimum
Set-Aside Test.
(r) All accounts of the Partnership required to be maintained under the
terms of the Project Documents, including, without limitation, any reserves in
accordance with Article VIII hereof, are currently funded to required levels,
including levels required by any authority.
(s) The General Partner has not lent or otherwise advanced any funds to
the Partnership other than its Capital Contribution and the Partnership has no
unsatisfied obligation to make any payments of any kind to the General Partner
or any Affiliate thereof.
(t) No event has occurred which constitutes a default under any of the
Project Documents.
(u) No event or proceeding, including, but not limited to, any legal
actions or proceedings before any court, commission, administrative body or
other governmental authority, and acts of any governmental authority having
jurisdiction over the zoning or land use laws applicable to the Project, has
occurred the continuing effect of which has: (1) materially or adversely
affected the operation of the Partnership or the Project; (2) materially or
adversely affected the ability of the General Partner to perform its obligations
hereunder or under any other agreement with respect to the Project; or (3)
prevented the completion of construction of the Improvements in substantial
conformity with the Project Documents, other than legal proceedings which have
been bonded against (or as to which other adequate financial security has been
issued) in a manner as to indemnify the Partnership against loss; provided that
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the foregoing does not apply to matters of general applicability which would
adversely affect the Partnership, the General Partner, Affiliates of the General
Partner or the Project only insofar as they or any of them are part of the
general public.
(v) Neither the Partnership nor the General Partner has any
liabilities, contingent or otherwise, which have not been disclosed in writing
to the Limited Partner and the Special Limited Partner and which in the
aggregate affect the ability of the Limited Partner to obtain the anticipated
benefits of its investment in the Partnership.
(w) The General Partner has and shall maintain a net worth equal to at
least $500,000 computed in accordance with generally accepted accounting
principles.
The General Partner shall be liable to the Limited Partner for any
costs, damages, loss of profits, diminution in the value of its investment in
the Partnership, or other losses, of every nature and kind whatsoever, direct or
indirect, realized or incurred by the Limited Partner as a result of any
material breach of the representations and warranties set forth in this Section
9.11.
Section 9.12 Right of First Refusal. The Right of First Refusal
provided for in this Agreement shall conform to the requirements of Code Section
42(i)(7), as amended from time to time. If the Limited Partner is desirous of
selling its Interest in the Partnership then it must first offer its Interest to
the General Partner. For these purposes, the term "sell" shall include any
transfer, conveyance, assignment or pledge of all or any portion of such
Interests. Before the Limited Partner sells or unconditionally agrees to sell
its Interest, it shall offer to sell its Interest to the General Partner (the
"Offer") for an amount equal to the principal amount of outstanding indebtedness
secured by the Project (other than indebtedness incurred within the 5-year
period ending on the date of the sale) and all Federal, State and local taxes
attributable to such sale. The General Partner shall have 30 days from receipt
of the Offer (the "Offer Period") in which to accept or reject the Offer. If the
General Partner gives timely notice of acceptance of the Offer, the Limited
Partner shall be obligated to sell its Interest and the General Partner shall be
obligated to purchase the Interest. If the General Partner does not give timely
notice of acceptance of the Offer, then the Limited Partner may sell its
Interest to a third party.
ARTICLE X
ALLOCATIONS OF INCOME, LOSSES AND CREDITS
Section 10.1 General. All items includable in the calculation of Income
or Loss not arising from a Sale or Refinancing, and all Tax Credits, shall be
allocated 98.99% to the Limited Partner, .01% to the Special Limited Partner and
1% to the General Partner.
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Section 10.2 Allocations From Sale or Refinancing. All Income and
Losses arising from a Sale or Refinancing shall be allocated between the
Partners as follows:
(a) As to Income:
(1) First, an amount of Income equal to the aggregate negative balances (if
any) in the Capital Accounts of all Partners having negative Capital Accounts
(prior to taking into account the Sale or Refinancing and the Distribution of
the related Sale or Refinancing Proceeds, but after giving effect to
Distributions of Cash Flow From Operations and allocations of other Income and
Losses pursuant to this Article X up to the date of the Sale or Refinancing)
shall be allocated to such Partners in proportion to their negative Capital
Account balances until all such Capital Accounts shall have zero balances; and
(2) Second, an amount of Income sufficient to increase the Limited
Partner's positive Capital Account balance to its Capital Contribution and to
increase the Special Limited Partner's positive Capital Account balance to an
amount equal to its Capital Contribution, shall be allocated to the Limited
Partner and the Special Limited Partner, respectively;
(3) Third, an amount of Income sufficient to increase the General Partner's
positive Capital Account balance to an amount equal to its Capital Contribution;
and
(4) The balance, if any, of such Income shall be allocated 50% to the
Limited Partner and 50% to the General Partner.
(b) As to Losses:
(1) an amount of Losses equal to the aggregate positive balances (if any)
in the Capital Accounts of all Partners having positive Capital Accounts (prior
to taking into account the Sale or Refinancing and the Distribution of the
related Sale or Refinancing Proceeds, but after giving effect to Distributions
of Cash Flow From Operations and allocations of Income and Losses pursuant to
Section 10.1 up to the date of the Sale or Refinancing) shall be allocated to
such Partners in proportion to their positive Capital Account balances until all
such Capital Accounts shall have zero balances; and
(2) the balance of any such Losses shall be allocated 98.99% to the Limited
Partner, .01% to the Special Limited Partner and 1% to the General Partner.
(c) Notwithstanding the foregoing provisions of Section 10.2(a) and
(b), in no event shall any Losses be allocated to the Limited Partner or the
Special Limited Partner if and to the extent that such allocation would create
or increase an Adjusted Capital Account Deficit for the Limited Partner or the
Special Limited Partner. In the event an allocation of 98.99% or .01% of each
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item includable in the calculation of Income or Loss not arising from a Sale or
Refinancing, would create or increase an Adjusted Capital Account Deficit for
the Limited Partner or the Special Limited Partner, respectively, then so much
of the items of deduction other than projected depreciation shall be allocated
to the General Partner instead of the Limited Partner or the Special Limited
Partner as is necessary to allow the Limited Partner or the Special Limited
Partner to be allocated 98.99% and .01%, respectively, of the items of Income
and Project depreciation without creating or increasing an Adjusted Capital
Account Deficit for the Limited Partner or the Special Limited Partner, it being
the intent of the parties that the Limited Partner and the Special Limited
Partner always shall be allocated 98.99% and .01%, respectively, of the items of
Income not arising from a Sale or Refinancing and 98.99% and .01%, respectively,
of the Project depreciation.
Section 10.3 Special Allocations. The following special allocations shall
be made in the following order:
(a) Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership Minimum Gain during any Partnership fiscal year,
each Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, notwithstanding any other provision of this Article X, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership fiscal year, each Person who
has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items of Partnership
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Person's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
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The items to be so allocated shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(b) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.
(c) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible, provided that an allocation
pursuant to this Section 10.3(c) shall be made if and only to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 10.3 have been tentatively made as if
this Section 10.3(c) were not in the Agreement.
(d) In the event any Partner has a deficit Capital Account at the end
of any Partnership fiscal year which is in excess of the sum of (i) the amount
such Partner is obligated to restore, and (ii) the amount such Partner is deemed
to be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 10.3(d) shall be made if and only to the extent that such Partner would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 10.3 have been tentatively made as if this Section
10.3(d) and Section 10.3(c) hereof were not in the Agreement.
(e) Nonrecourse Deductions for any fiscal year shall be specially
allocated 98.99% to the Limited Partner, .01% to the Special Limited Partner and
1% to the General Partner.
(f) Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).
(g) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
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gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event that Treasury Regulations
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event that Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) To the extent the Partnership has taxable interest income with
respect to any promissory note pursuant to Section 483 or Section 1271 through
1288 of the Code:
(1) Such interest income shall be specially allocated to the
Limited Partner to whom such promissory note relates; and
(2) The amount of such interest income shall be excluded from
the Capital Contributions credited to such Partner's Capital Account in
connection with payments of principal with respect to such promissory note.
(i) In the event the adjusted tax basis of any investment tax credit
property that has been placed in service by the Partnership is increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the Partners (as an item in the nature of income or gain) in the same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.
(j) Any reduction in the adjusted tax basis (or cost) of Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same proportions as the basis (or cost) of such property is allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).
(k) Any income, gain, loss or deduction realized as a direct or
indirect result of the issuance of an interest in the Partnership by the
Partnership to a Partner (the "Issuance Items") shall be allocated among the
Partners so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Agreement to each Partner, shall
be equal to the net amount that would have been allocated to each such Partner
if the Issuance Items had not been realized.
(l) If any Partnership expenditure treated as a deduction on its
federal income tax return is disallowed as a deduction and treated as a
distribution pursuant to Section 731(a) of the Code, there shall be a special
allocation of gross income to the Partner deemed to have received such
distribution equal to the amount of such distribution.
(m) The allocation to the General Partner of each material item of
Partnership income, loss, deduction or credit will not be less than 1% of each
such item at all times during the existence of the Partnership.
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(n) Interest deduction on the Partnership indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.
Section 10.4 Curative Allocations. The allocations set forth in
Sections 10.2(c), 10.3(a), 10.3(b), 10.3(c), 10.3(d), 10.3(e), 10.3(f), and
10.3(g) hereof (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss, or deduction pursuant to this
Section 10.4. Therefore, notwithstanding any other provision of this Article X
(other than the Regulatory Allocations), with the Consent of the Special Limited
Partner, the General Partner shall make such offsetting special allocations of
Partnership income, gain, loss, or deduction in whatever manner the General
Partner, with the Consent of the Special Limited Partner, determines appropriate
so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Partner would have had if the Regulatory Allocations were not part of the
Agreement and all Partnership items were allocated pursuant to Sections 10.1,
10.2(a), 10.2(b), 10.3(h), 10.3(i), 10.3(j), 10.3(k), 10.3(l), 10.3(m), 10.3(n)
and 10.5. In exercising its authority under this Section 10.4, the General
Partner shall take into account future Regulatory Allocations under Section
10.3(a) and 10.3(b) that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 10.3(e) and 10.3(f).
Section 10.5 Other Allocation Rules.
(a) The basis (or cost) of any Partnership investment tax credit property
shall be allocated among the Partners in accordance with Treasury Regulations
Section 1.46-3(f)(2)(i). All Tax Credits (other than the investment tax credit)
shall be allocated among the Partners in accordance with applicable law.
Consistent with the foregoing, the Partners intend that LIHTC will be allocated
98.99% to the Limited Partner, .01% to the Special Limited Partner and 1% to the
General Partner.
(b) In the event Partnership investment tax credit property is disposed of
during any taxable year, profits for such taxable year (and, to the extent such
profits are insufficient, profits for subsequent taxable years) in an amount
equal to the excess, if any, of (1) the reduction in the adjusted tax basis (or
cost) of such property pursuant to Code Section 50(c), over (2) any increase in
the adjusted tax basis of such property pursuant to Code Section 50(c) caused by
the disposition of such property, shall be excluded from the profits allocated
pursuant to Section 10.1 and Section 10.2(a) hereof and shall instead be
allocated among the Partners in proportion to their respective shares of such
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excess, determined pursuant to Section 10.3(i) and 10.3(j) hereof. In the event
more than one item of such property is disposed of by the Partnership, the
foregoing sentence shall apply to such items in the order in which they are
disposed of by the Partnership, so the profits equal to the entire amount of
such excess with respect to the first such property disposed of shall be
allocated prior to any allocations with respect to the second such property
disposed of, and so forth.
(c) For purposes of determining the Income, Losses, or any other items
allocable to any period, Income, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partner with the Consent of the Special Limited Partner, using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.
(d) Solely for purposes of determining a Partner's proportionate share of
the "excess nonrecourse liabilities" of the Partnership within the meaning of
Treasury Regulations Section 1.752-3(a)(3), the Partners' interests in
Partnership profits are as follows: Limited Partner: 98.89%; Special Limited
Partner: .01%; General Partner: 1%.
(e) To the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the General Partner shall endeavor to treat Distributions as having
been made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse
Debt only to the extent that such Distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner who is not a General Partner.
Section 10.6 Tax Allocations: Code Section 704(c). In accordance with
Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 1.25(a) hereof).
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.25(b) hereof, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the General Partner with the Consent of the Special Limited Partner in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 10.6 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Person's Capital Account or share of Income, Losses, other
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items, or distributions pursuant to any provision of this Agreement.
Section 10.7 Allocation Among Limited Partners. In the event that the
Interest of the Limited Partner hereunder is at any time held by more than one
Limited Partner all items which are specifically allocated to the Limited
Partner for any month pursuant to this Article X shall be apportioned among such
Persons according to the ratio of their respective profit-sharing interests in
the Partnership at the last day of such month.
Section 10.8 Allocation Among General Partners. In the event that the
Interest of the General Partner hereunder is at any time held by more than one
General Partner all items which are specifically allocated to the General
Partner for any month pursuant to this Article X shall be apportioned among such
Persons in such percentages as may from time to time be determined by agreement
among them without amendment to this Agreement or consent of the Limited Partner
or Consent of the Special Limited Partner.
Section 10.9 Modification of Allocations. The provisions of Articles X
and XI and other provisions of this Agreement are intended to comply with
Treasury Regulations Section 1.704 and shall be interpreted and applied in a
manner consistent with such section of the Treasury Regulations. In the event
that the General Partner determines, in its sole discretion, that it is prudent
to modify the manner in which the Capital Accounts of the Partners, or any debit
or credit thereto, are computed in order to comply with such section of the
Treasury Regulations, the General Partner may make such modification, but only
with the Consent of the Special Limited Partner, to the minimum extent
necessary, to effect the plan of allocations and Distributions provided for
elsewhere in this Agreement. Further, the General Partner shall make any
appropriate modifications, but only with the Consent of the Special Limited
Partner, in the event it appears that unanticipated events (e.g., the existence
of a Partnership election pursuant to Code Section 754) might otherwise cause
this Agreement not to comply with Treasury Regulation Section 1.704.
ARTICLE XI
DISTRIBUTION
Section 11.1 Distribution of Cash Flow From Operations. Cash Flow From
Operations for each fiscal year shall be distributed within seventy-five (75)
days following each calendar year and shall be applied in the following order of
priority:
(a) To pay the Deferred Management Fee, if any but in no event shall this
payment exceed 50% of the Cash Flow From Operations;
(b) To pay the current Reporting Fee and then to pay any accrued Reporting
Fees which have not been paid in full from previous years;
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(c) To pay the Development Fee in accordance with the Development Fee
Agreement;
(d) To pay the Operating Loans, if any, as referenced in Section 6.2(b) of
this Agreement, limited to 50% of the Cash Flow From Operations remaining after
reduction for the payments made pursuant to subsections (a) through (c) of this
Section 11.1;
(e) To pay the Incentive Management Fee equal to 40% of the Cash Flow From
Operations remaining after reduction for the payments made pursuant to
subsections (a) through (d) of this Section 11.1; and
(f) To the Limited Partner in an amount equal to 50% of the remaining Cash
Flow From Operations and to the General Partner in an amount equal to 50% of the
remaining Cash Flow From Operations.
Section 11.2 Distribution of Sale or Refinancing Proceeds. Sale or
Refinancing Proceeds shall be distributed in the following order:
(a) To the payment of the Mortgage Note and other matured debts and
liabilities of the Partnership, other than accrued payments, debts or other
liabilities owing to Partners or former Partners;
(b) To any accrued payments, debts or other liabilities owing to the
Partners or former Partners, including, but not limited to, accrued Reporting
Fees and Operating Loans, to be paid prorata if necessary;
(c) To the establishment of any reserves which the General Partner,
with the Consent of the Special Limited Partner, shall deem reasonably necessary
for contingent, unmatured or unforeseen liabilities or obligations of the
Partnership;
(d) To the Limited Partner in an amount equal to its Capital Contribution;
(e) To the Special Limited Partner in an amount equal to its Capital
Contribution;
(f) To the General Partner in an amount equal to its Capital Contribution;
and
(g) Thereafter, 50% to the Limited Partner and 50% to the General Partner.
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ARTICLE XII
TRANSFERS OF LIMITED
PARTNER'S INTEREST IN THE PARTNERSHIP
Section 12.1 Assignment of Limited Partner's Interest. The Limited
Partner and Special Limited Partner shall not have the right to assign all or
any part of their respective Interests in the Partnership to any other Person,
whether or not a Partner, except upon satisfaction of each of the following:
(a) By a written instrument in form and substance satisfactory to the
General Partner and its counsel, setting forth the name and address of the
proposed transferee, the nature and extent of the Interest which is proposed to
be transferred and the terms and conditions upon which the transfer is proposed
to be made, stating that the Assignee accepts and agrees to be bound by all of
the terms and provisions of this Agreement, and providing for the payment of all
reasonable expenses incurred by the Partnership in connection with such
assignment, including but not limited to the cost of preparing any necessary
amendment to this Agreement;
(b) Upon consent of the General Partner to such assignment, which shall
not be unreasonably withheld; and
(c) Upon receipt by the General Partner of the Assignee's written
representation that the Partnership Interest is to be acquired by the Assignee
for the Assignee's own account for long-term investment and not with a view
toward resale, fractionalization, division or distribution thereof.
THE LIMITED PARTNERSHIP INTEREST AND THE SPECIAL LIMITED PARTNERSHIP
INTEREST DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AS AMENDED OR UNDER ANY STATE SECURITIES LAW. THESE INTERESTS MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Section 12.2 Effective Date of Transfer. Any assignment of a Limited
Partner's Interest or Special Limited Partner's Interest pursuant to Section
12.1 shall become effective as of the last day of the calendar month in which
the last of the conditions to such assignment are satisfied.
Section 12.3 Invalid Assignment. Any purported assignment of an
Interest of a Limited Partner or Special Limited Partner otherwise than in
accordance with Section 12.1 or Section 12.6 shall be of no effect as between
the Partnership and the purported assignee and shall be disregarded by the
General Partner in making allocations and Distributions hereunder.
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Section 12.4 Assignee's Rights to Allocations and Distributions. An
Assignee shall be entitled to receive allocations and Distributions from the
Partnership attributable to the Interest acquired by reason of any permitted
assignment from and after the first day of the calendar month following the
month which ends with the effective date of the transfer of such Interest as
provided in Section 12.2. The Partnership and the General Partner shall be
entitled to treat the assignor of such Partnership Interest as the absolute
owner thereof in all respects, and shall incur no liability for allocations and
Distributions made in good faith to such assignor, until such time as the
written instrument of assignment has been received by the Partnership.
Section 12.5 Substitution of Assignee as Limited Partner or Special Limited
Partner.
(a) An Assignee shall not have the right to become a Substitute Limited
Partner or substitute Special Limited Partner in place of his assignor unless
the written consent of the General Partner to such substitution shall have been
obtained, which consent, in the General Partner's absolute discretion, may be
withheld.
(b) A nonadmitted transferee of a Limited Partner's Interest or Special
Limited Partner's Interest in the Partnership shall only be entitled to receive
that share of allocations, Distributions and the return of Capital Contribution
to which its transferor would otherwise have been entitled with respect to the
Interest transferred, and shall have no right to obtain any information on
account of the Partnership's transactions, to inspect the Partnership's books
and records or have any other of the rights and privileges of a Limited Partner
or Special Limited Partner, provided, however, that the Partnership shall, if a
transferee and transferor jointly advise the General Partner in writing of a
transfer of an Interest in the Partnership, furnish the transferee with
pertinent tax information at the end of each fiscal year of the Partnership.
(c) The General Partner may elect to treat a transferee of a
Partnership Interest who has not become a Substitute Limited Partner or
substitute Special Limited Partner as a Substitute Limited Partner or substitute
Special Limited Partner, as the case may be, in the place of its transferor
should the General Partner determine in its absolute discretion that such
treatment is in the best interest of the Partnership.
Section 12.6 Death, Bankruptcy, Incompetency, etc. of a Limited
Partner. Upon the death, dissolution, adjudication of bankruptcy, or
adjudication of incompetency or insanity of a Limited Partner or Special Limited
Partner, such Partner's executors, administrators or legal representatives shall
have all the rights of a Limited Partner or Special Limited Partner, as the case
may be, for the purpose of settling or managing such Partner's estate, including
such power as such Partner possessed to constitute a successor as a transferee
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of its Interest in the Partnership and to join with such transferee in making
the application to substitute such transferee as a Partner. However, such
executors, administrators or legal representatives will not have the right to
become Substitute Limited Partners or substitute Special Limited Partners in the
place of their respective predecessors-in-interest unless the General Partner
shall so consent.
ARTICLE XIII
WITHDRAWAL, REMOVAL AND REPLACEMENT OF
GENERAL PARTNER
Section 13.1 Withdrawal of General Partner.
(a) The General Partner may not Withdraw (other than as a result of an
Involuntary Withdrawal) without the Consent of the Special Limited Partner, and,
to the extent required, of First National Bank of Omaha and the State Tax Credit
Agency. Withdrawal shall be conditioned upon the agreement of the Special
Limited Partner to be admitted as a successor General Partner, or if the Special
Limited Partner declines to be admitted as a successor General Partner then on
the agreement of one or more Persons who satisfy the requirements of Section
13.5 of this Agreement to be admitted as successor General Partner(s).
(b) Each General Partner shall indemnify and hold harmless the
Partnership and all Partners from its Withdrawal in violation of Section 13.1(a)
hereof. Each General Partner shall be liable for damages to the Partnership
resulting from its Withdrawal in violation of Section 13.1(a).
Section 13.2 Removal of General Partner.
(a) The Special Limited Partner or the Limited Partner, or both of
them, may remove either, or both, the Managing General Partner or the General
Partner:
(1) For cause if such General Partner or Managing General Partner has:
(A) Been subject to an event of Bankruptcy;
(B) Committed any fraud, willful misconduct, breach of fiduciary duty or
other negligent conduct in the performance of its duties under this Agreement;
(C) Been convicted of, or entered into a plea of guilty to, a felony;
(D) Made personal use of Partnership funds or properties;
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(E) Violated the terms of the Mortgage Note, and such violation prompts
First National Bank of Omaha to issue a default letter or acceleration notice to
the Partnership or General Partner;
(F) Failed to provide any loan, advance, Capital Contribution or any other
payment to the Partnership required under this Agreement;
(G) Failed to obtain the Consent of the Special Limited Partner prior to
any decision, act or omission under circumstances where this Agreement requires
that such consent be obtained;
(H) Breached any representation, warranty or covenant contained in this
Agreement, or failed to perform any other action which may be required by this
Agreement;
(I) Violated any federal or state tax law which causes a recapture of
LIHTC; or
(J) Failed during any six-month period during the Compliance Period to
cause at least 70% of the total apartment units in the Project to qualify for
LIHTC, unless such failure is the result of fire, flood, earthquake or other act
of God or unless such failure is cured within 120 days after the end of the
six-month period.
(2) As provided in Section 6.2(a) hereof.
(b) Written notice of the removal for cause of the General Partner
shall be served by the Special Limited Partner or the Limited Partner, or both
of them, upon the General Partner either by certified or by registered mail,
return receipt requested, or by personal service. Such notice shall set forth
the reasons for the removal, if any, and the date upon which the removal is to
become effective.
(c) Upon receipt of such notice of removal for cause, the General
Partner shall cause an accounting to be prepared covering the transactions of
the Partnership from the end of the previous fiscal year through the date of
receipt of such notice, and thereafter it shall not sell or dispose of
Partnership assets under any circumstances. The accounting shall be completed by
the effective date of the removal and shall be in sufficient detail to
accurately and fully reflect the earnings or losses for the period and the
financial condition of the Partnership. If the General Partner fails to cause
the accounting to be prepared within 30 days of receipt of the notice of removal
for cause then the Limited Partner may cause the accounting to be prepared. The
expenses of the accounting shall be borne by the General Partner.
Section 13.3 Effects of a Withdrawal. In the event of a Withdrawal, the
entire Interest of the Withdrawing General Partner shall immediately and
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automatically terminate on the effective date of such Withdrawal, and such
General Partner shall immediately cease to be a General Partner, shall have no
further right to participate in the management or operation of the Partnership
or the Project or to receive any allocations or Distributions from the
Partnership or any other funds or assets of the Partnership, except as
specifically set forth below. In the event of a Withdrawal, any or all executory
contracts, including but not limited to the Management Agreement, between the
Partnership and the Withdrawing General Partner or its Affiliates may be
terminated by the Partnership, with the Consent of the Special Limited Partner,
upon written notice to the party so terminated.
Furthermore, notwithstanding such Withdrawal, the Withdrawing General
Partner shall be and shall remain, liable as a General Partner for all
liabilities and obligations incurred by the Partnership or by the General
Partner prior to the effective date of the Withdrawal, or which may arise upon
such Withdrawal. Any remaining Partner shall have all other rights and remedies
against the Withdrawing General Partner as provided by law or under this
Agreement.
The General Partner agrees that in the event of its Withdrawal it will
indemnify and hold the Limited Partner and the Special Limited Partner harmless
from and against all losses, costs and expenses incurred in connection with the
Withdrawal, including, without limitation, all legal fees and other expenses of
the Limited Partner and the Special Limited Partner in connection with the
transaction.
The following additional provisions shall apply in the event of a
Withdrawal:
(a) In the event of a Withdrawal which is not an Involuntary
Withdrawal, the Withdrawing General Partner shall have no further right to
receive any future allocations or Distributions from the Partnership or any
other funds or assets of the Partnership, nor shall it be entitled to receive or
to be paid by the Partnership any further payments of fees (including fees which
have been earned but are unpaid) or to be repaid any outstanding advances or
loans made by it to the Partnership or to be paid any amount for its former
Interest. From and after the effective date of such Withdrawal, the former
rights of the Withdrawing General Partner to receive or to be paid such
allocations, Distributions, funds, assets, fees or repayments shall be assigned
to the other General Partner or General Partners (which may include the Special
Limited Partner), or if there is no other general partner of the Partnership at
that time, to the Special Limited Partner.
(b) In the event of an Involuntary Withdrawal, except as provided in
Section 13.3(b)(3) below, the Withdrawing General Partner shall have no further
right to receive any future allocations or Distributions from the Partnership or
any other funds or assets of the Partnership, provided that accrued and payable
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fees (i.e., fees earned but unpaid as of the date of Withdrawal) owed to the
Withdrawing General Partner, and any outstanding loans of the Withdrawing
General Partner to the Partnership, shall be paid to the Withdrawing General
Partner in the manner and at the times such fees and loans would have been paid
had the Withdrawing General Partner not Withdrawn. The Interest of the General
Partner shall be purchased as follows:
(1) If the Involuntary Withdrawal arises from removal for
cause as set forth in Section 13.2(a) hereof, the Withdrawn General Partner
shall be entitled to receive as its sole compensation for its Interest in the
Partnership an amount equal to its positive Capital Account balance determined
as of the effective date of the removal, if any, payable upon the dissolution
and termination of the Partnership after all of the Partners have been
distributed the positive balances in their Capital Accounts.
(2) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), the
Partnership, with the Consent of the Special Limited Partner, may, but is not
obligated to, purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital. The purchase price of such
Interest shall be its Fair Market Value as determined by agreement between the
Withdrawing General Partner and the Special Limited Partner, or, if they cannot
agree, by arbitration in accordance with the then current rules of the American
Arbitration Association. The cost of such arbitration shall be borne equally by
the Withdrawing General Partner and the Partnership. The purchase price shall be
paid by the Partnership by delivering to the General Partner or its
representative the Partnership's non-interest bearing unsecured promissory note
payable, if at all, upon liquidation of the Partnership in accordance with
Section 11.2(b). The note shall also provide that the Partnership may prepay all
or any part thereof without penalty.
(3) If the Involuntary Withdrawal does not arise from removal
for cause under Section 13.2(a) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), and if the
Partnership does not purchase the Interest of the Withdrawing General Partner in
Partnership allocations, Distributions and capital, then the Withdrawing General
Partner shall retain its Interest in such items, but such Interest shall be held
as a special limited partner.
Section 13.4 Successor General Partner. Upon the occurrence of an event
giving rise to a Withdrawal of a General Partner, any remaining General Partner,
or, if there be no remaining General Partner, the Withdrawing General Partner or
its legal representative, shall promptly notify the Special Limited Partner of
such Withdrawal (the "Withdrawal Notice"). Whether or not the Withdrawal Notice
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shall have been sent as provided herein, the Special Limited Partner shall have
the right to become a successor General Partner (and to become the successor
managing General Partner if the Withdrawing General Partner was previously the
managing General Partner). In order to effectuate the provisions of this Section
13.4 and the continuance of the Partnership, the Withdrawal of a General Partner
shall not be effective until the expiration of 120 days from the date on which
occurred the event giving rise to the Withdrawal, unless the Special Limited
Partner shall have elected to become a successor General Partner as provided
herein prior to expiration of such 120-day period, whereupon the Withdrawal of
the General Partner shall be deemed effective upon the notification of all the
other Partners by the Special Limited Partner of such election.
Section 13.5 Admission of Additional or Successor General Partner. No
Person shall be admitted as an additional or successor General Partner unless
(a) such Person shall have agreed to become a General Partner by a written
instrument which shall include the acceptance and adoption of this Agreement;
(b) the Consent of the Special Limited Partner to the admission of such Person
as a substitute General Partner, which consent may be withheld in the discretion
of the Special Limited Partner, shall have been given; and (c) such Person shall
have executed and acknowledged any other instruments which the Special Limited
Partner shall reasonably deem necessary or appropriate to affect the admission
of such Person as a substitute General Partner. If the foregoing conditions are
satisfied, this Agreement shall be amended in accordance with the provisions of
the Act, and all other steps shall be taken which are reasonably necessary to
effect the Withdrawal of the Withdrawing General Partner and the substitution of
the successor General Partner. Nothing contained herein shall reduce the Limited
Partner's Interest or the Special Limited Partner's Interest in the Partnership.
Section 13.6 Transfer of Interest. Except as otherwise provided herein,
the General Partner may not Withdraw from the Partnership, or enter into any
agreement as the result of which any Person shall become interested in the
Partnership, without the Consent of the Special Limited Partner.
Section 13.7 No Goodwill Value. At no time during continuation of the
Partnership shall any value ever be placed on the Partnership name, or the right
to its use, or to the goodwill appertaining to the Partnership or its business,
either as among the Partners or for the purpose of determining the value of any
Interest, nor shall the legal representatives of any Partner have any right to
claim any such value. In the event of a termination and dissolution of the
Partnership as provided in this Agreement, neither the Partnership name, nor the
right to its use, nor the same goodwill, if any, shall be considered as an asset
of the Partnership, and no valuation shall be put thereon for the purpose of
liquidation or distribution, or for any other purpose whatsoever.
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ARTICLE XIV
BOOKS AND ACCOUNTS, REPORTS,
TAX RETURNS, FISCAL YEAR AND BANKING
Section 14.1 Books and Accounts.
(a) The General Partner shall cause the Partnership to keep and maintain at
its principal executive office full and complete books and records which shall
include each of the following:
(1) a current list of the full name and last known business or residence
address of each Partner set forth in alphabetical order together with the
Capital Contribution and the share in Income and Losses of each Partner;
(2) a copy of the Certificate of Limited Partnership and all certificates
of amendment thereto, together with executed copies of any powers of attorney
pursuant to which any certificate has been executed;
(3) copies of the Partnership's federal, state and local income tax
information returns and reports, if any, for the six most recent taxable years;
(4) copies of the original of this Agreement and all amendments thereto;
(5) financial statements of the Partnership for the six most recent fiscal
years; and
(6) the Partnership's books and records for at least the current and past
three fiscal years.
(b) Upon the request of the Limited Partner, the General Partner shall
promptly deliver to the Limited Partner, at the expense of the Partnership, a
copy of the information set forth in Section 14.1(a) above. The Limited Partner
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shall have the right upon reasonable request and during normal business hours to
inspect and copy any of the foregoing, or any of the other books and records of
the Partnership or the Project at its own expense.
Section 14.2 Accounting Reports.
(a) By March 1 of each calendar year the General Partner shall provide
to the Limited Partner and the Special Limited Partner all tax information
necessary for the preparation of their federal and state income tax returns and
other tax returns with regard to the jurisdiction(s) in which the Partnership is
formed and in which the Project is located.
(b) By March 1 of each calendar year the General Partner shall send to
the Limited Partner and the Special Limited Partner: (1) a balance sheet as of
the end of such fiscal year and statements of income, Partners' equity and
changes in cash flow for such fiscal year prepared in accordance with generally
accepted accounting principles and accompanied by an auditor's report containing
an opinion of the Partnership's Accountants; (2) a report (which need not be
audited) of any Distributions made at any time during the fiscal year,
separately identifying Distributions from Cash Flow From Operations for the
fiscal year, Cash Flow From Operations for prior years, Sale or Refinancing
Proceeds, and reserves; (3) a report setting forth the amount of all fees and
other compensation and Distributions and reimbursed expenses paid by the
Partnership for the fiscal year to the General Partner or Affiliates of the
General Partner and the services performed in consideration therefor, which
report shall be verified by the Partnership's Accountants, with the method of
verification to include, at a minimum, a review of the time records of
individual employees, the costs of whose services were reimbursed, and a review
of the specific nature of the work performed by each such employee, all in
accordance with generally accepted auditing standards and, accordingly,
including such tests of the accounting records and such other auditing
procedures as the Accountants consider appropriate in the circumstances; (4) a
copy of the Project's rent roll for the most recent calendar quarter; (5) a
statement signed by the General Partner indicating the number of apartment units
which are occupied by Qualified Tenants; and (6) a report of the significant
activities of the Partnership during the year.
(c) Within 60 days after the end of each fiscal quarter in which a Sale
or Refinancing of the Project occurs, the General Partner shall send to the
Limited Partner and the Special Limited Partner a report as to the nature of the
Sale or Refinancing and as to the Income and Losses for tax purposes and
proceeds arising from the Sale or Refinancing.
Section 14.3 Other Reports. The General Partner shall also provide to the
Limited Partner and the Special Limited Partner:
(a) During the period of construction, by the tenth day of each month a
copy of the previous month's Construction Loan draw request and the inspecting
architect's application and certification of payment (AIA Document G702, or
similar form acceptable to the Limited Partner);
(b) During the rent-up phase, and continuing until the end of the first
six-month period during which the Project has a sustained occupancy of 95% or
better, by the tenth day of each month within such period a copy of the previous
month's rent roll (through the last day of the month) and a tenant LIHTC
compliance worksheet similar to the monthly initial tenant certification
worksheet included in Exhibit "G" attached hereto and incorporated herein by
this reference and copies of all initial tenant files including completed
applications, completed questionnaires or checklists of income and assets,
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documentation of third party verification of income and assets, income
certification forms (LIHTC specific) and executed lease agreements collected by
the Management Agent, or General Partner, verifying each tenant's eligibility as
a Qualified Tenant;
(c) A quarterly tax credit compliance report similar to the worksheet
included in Exhibit "G" due on or before April 30 of each year for the first
quarter, July 31 of each year for the second quarter, October 31 of each year
for the third quarter and January 31 of each year for the fourth quarter. In
order to verify the reliability of the information being provided on the
compliance report the Limited Partner may request a small sampling of tenant
files to be provided. The sampling will include, but not be limited to, copies
of tenant applications, certifications and third party verifications used to
qualify tenants. If any inaccuracies are found to exist on the tax credit
compliance report or any items of noncompliance are discovered then the sampling
will be expanded as determined by the Limited Partner.
(d) By September 15 of each year, an estimate of LIHTC for that year;
(e) If the Project receives a reservation of LIHTC in one year but will not
complete the construction and rent-up until a later year, the General Partner
will provide to the Limited Partner by December 31 of the year during which the
reservation is received an audited cost certification together with the
accountant's work papers verifying that the Partnership has expended the
requisite 10% of the reasonably expected cost basis to meet the carryover test
provisions of Section 42 of the Code;
(f) During the Compliance Period, no later than the day any such
certification is filed, copies of any certifications which the Partnership must
furnish to federal or state governmental authorities administering any Tax
Credit program including, but not limited to, copies of all annual tenant
recertifications required under Section 42 of the Code;
(g) A quarterly report on operations, in the form attached hereto as
Exhibit "G", due on or before April 30 of each year for the first quarter of
operations, July 31 of each year for the second quarter of operations, October
31 of each year for the third quarter of operations and January 31 of each year
for the fourth quarter of operations which shall include, but is not limited to,
an unaudited income statement showing all activity in the reserve accounts
required to be maintained pursuant to Section VIII of this Agreement, statement
of income and expenses, balance sheet, rent roll as of the end of each calendar
quarter of each year, and third party verification of current utility allowance;
(h) By the annual renewal date of each and every year, an executed original
or certified copy of each and every Insurance policy or certificate required by
the terms of this Agreement;
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(i) On or before March 15th of each calendar year, the General Partner's
updated financial statement as of December 31 of the previous year;
(j) On or before November 1 of each calendar year, a copy of the following
year's proposed operating budget. Each such budget shall contain an amount
required for reserves in accordance with Article VIII and for the payment of
real estate taxes, insurance, debt service and other payments; and
(k) Notice of the occurrence, or of the likelihood of occurrence, of any
event which has had or is likely to have a material adverse effect upon the
Project or the Partnership, including, but not limited to, any breach of any of
the representations and warranties set forth in Section 9.11 of this Agreement,
and any inability of the Partnership to meet its cash obligations as they become
payable, within ten days after the occurrence of such event.
Section 14.4 Late Reports. If the General Partner does not fulfill its
obligations under Sections 14.2 and 14.3 within the time periods set forth
therein, the General Partner, using its own funds, shall pay as damages the sum
of $100.00 per week (plus interest at the rate established by Section 6.3 of
this Agreement) to the Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General Partner, and
failure to so pay shall constitute a material default of the General Partner
hereunder and cause for removal under Section 13.2 hereof. In addition, if the
General Partner shall so fail to pay, the General Partner and its Affiliates
shall forthwith cease to be entitled to any fees hereunder (other than the
Development Fee) and/or to the payment of any Cash Flow From Operations or Sale
or Refinancing Proceeds to which the General Partner may otherwise be entitled
hereunder. Payments of fees and Distributions shall be restored only upon
payment of such damages in full.
Section 14.5 Annual Site Visits. On an annual basis a representative of
the Limited Partner, at the Limited Partner's expense, will conduct a site visit
which will include, in part, an inspection of the property, a review of the
office and tenant files and an interview with the property manager. The Limited
Partner may, in its sole discretion, cancel all or any part of the annual site
visit.
Section 14.6 Tax Returns. The General Partner shall cause income tax
returns for the Partnership to be prepared and timely filed with the appropriate
federal, state and local taxing authorities.
Section 14.7 Fiscal Year. The fiscal year of the Partnership shall be
the calendar year or such other period as may be approved by the Internal
Revenue Service for federal income tax purposes.
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Section 14.8 Banking. All funds of the Partnership shall be deposited
in a separate bank account or accounts as shall be determined by the General
Partner with the Consent of the Special Limited Partner. All withdrawals
therefrom shall be made upon checks signed by the General Partner or by any
person authorized to do so by the General Partner. The General Partner shall
provide to any Partner who requests same the name and address of the financial
institution, the account number and other relevant information regarding any
Partnership bank account.
Section 14.9 Certificates and Elections.
(a) The Managing General Partner shall file the First Year Certificate
within 90 days following the close of the taxable year during which Completion
of Construction occurs and thereafter shall timely file any certificates which
the Partnership must furnish to federal or state governmental authorities
administering the Tax Credit programs under Section 42 of the Code.
(b) The Managing General Partner may, but is not required to, cause the
Partnership to make or revoke the election referred to in Section 754 of the
Code, as amended, or any similar provisions enacted in lieu thereof.
ARTICLE XV
DISSOLUTION, WINDING UP, TERMINATION
AND LIQUIDATION OF THE PARTNERSHIP
Section 15.1 Dissolution of Partnership. The Partnership shall be
dissolved upon the expiration of its term or the earlier occurrence of any of
the following events:
(a) The effective date of the Withdrawal or removal of the General
Partner, unless (1) at the time there is at least one other General Partner
(which may be the Special Limited Partner if it elects to serve as successor
General Partner under Section 13.4 hereof) who will continue as General Partner,
or (2) within 120 days after the occurrence of any such event the Limited
Partner elects to continue the business of the Partnership;
(b) The sale of the Project and the receipt in cash of the full amount
of the proceeds of such sale; or
(c) The written election to do so of the Limited Partner.
Notwithstanding the foregoing, however, in no event shall the
Partnership terminate prior to the expiration of its term if such termination
would result in a violation of the Mortgage Note or any other agreement with or
rule or regulation of First National Bank of Omaha to which the Partnership is
subject.
Section 15.2 Return of Capital Contribution upon Dissolution. Except as
provided in Sections 7.3, 7.4 and 7.6 of this Agreement, which provide for a
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reduction or refund of the Limited Partner's Capital Contribution under certain
circumstances, and which shall represent the personal obligation of the General
Partner, as well as the obligation of the Partnership, each Partner shall look
solely to the assets of the Partnership for all Distributions with respect to
the Partnership (including the return of its Capital Contribution) and shall
have no recourse therefor (upon dissolution or otherwise) against any General
Partner. No Partner shall have any right to demand property other than money
upon dissolution and termination of the Partnership, and the Partnership is
prohibited from such a distribution of property absent the Consent of the
Special Limited Partner.
Section 15.3 Distributions of Assets. Upon a dissolution of the
Partnership, the General Partner (or, if there is no General Partner then
remaining, such other Person(s) designated as the liquidator of the Partnership
by the Special Limited Partner or by the court in a judicial dissolution) shall
take full account of the Partnership assets and liabilities and shall liquidate
the assets as promptly as is consistent with obtaining the fair value thereof.
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership pursuant to Section
11.2(a) through and including 11.2(c), the remaining assets of the Partnership
shall be distributed to the Partners in accordance with the positive balances in
their Capital Accounts, after taking into account all allocations under Article
X hereof.
(b) In the event that a General Partner has a deficit balance in its
Capital Account following the liquidation of the Partnership or its Interest, as
determined after taking into account all Capital Account adjustments for the
Partnership's taxable year in which such liquidation occurs, such General
Partner shall pay to the Partnership the lesser of:
(1) the amount necessary to restore such deficit balance to
zero in compliance with Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(3); or
(2) 1.01% of the Capital Contributions.
The deficit make-up shall be paid by the General Partner by the end of
such taxable year and shall, upon liquidation of the Partnership, be paid to
creditors of the Partnership or distributed to other Partners in accordance with
their positive Capital Account balances. Notwithstanding, if the Special Limited
Partner has become successor General Partner, it shall not be responsible for
any deficit balance in its Capital Account which arose during the time the
former General Partner served as General Partner.
(c) With respect to assets distributed in kind to the Partners in
liquidation or otherwise:
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(1) unrealized appreciation or unrealized depreciation in the
values of such assets shall be deemed to be Income and Losses realized by the
Partnership immediately prior to the liquidation or other Distribution event;
and
(2) such Income and Losses shall be allocated to the Partners
in accordance with Section 10.2 hereof, and any property so distributed shall be
treated as a Distribution of an amount in cash equal to the excess of such Fair
Market Value over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered.
(d) For the purposes of Section 15.3(c), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the Fair Market
Value of such assets, taking into account the Fair Market Value of the
associated financing but subject to Section 7701(g) of the Code, and the
Partnership's adjusted basis in such assets for book purposes. Section 15.3(c)
is merely intended to provide a rule for allocating unrealized Income and Losses
upon liquidation or other Distribution event, and nothing contained in Section
15.3(c) or elsewhere in this Agreement is intended to treat or cause such
Distributions to be treated as sales for value. The Fair Market Value of such
assets shall be determined by an independent appraiser to be selected by the
General Partner with the Consent of the Special Limited Partner.
Section 15.4 Deferral of Liquidation. If at the time of liquidation the
General Partner or other liquidator shall determine that an immediate sale of
part or all of the Partnership assets could cause undue loss to the Partners,
the liquidator may, in order to avoid loss, but only with the Consent of the
Special Limited Partner, either defer liquidation and retain all or a portion of
the assets or distribute all or a portion of the assets to the Partners in kind.
In the event that the liquidator elects to distribute such assets in kind, the
assets shall first be assigned a value (by appraisal by an independent
appraiser) and the unrealized appreciation or depreciation in value of the
assets shall be allocated to the Partners' Capital Accounts, as if such assets
had been sold, in the manner described in Section 10.2, and such assets shall
then be distributed to the Partners as provided herein. In applying the
preceding sentence, the Project shall not be assigned a value less than the
unamortized principal balance of any loan secured thereby.
Section 15.5 Liquidation Statement. Each of the Partners shall be furnished
with a statement prepared or caused to be prepared by the General Partner or
other liquidator, which shall set forth the assets and liabilities of the
Partnership as of the date of complete liquidation. Upon compliance with the
distribution plan as outlined in Sections 15.3 and 15.4, the Limited Partner and
Special Limited Partner shall cease to be such and the General Partner shall
execute, acknowledge and cause to be filed those certificates referenced in
Section 15.6.
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Section 15.6 Certificates of Dissolution; Certificate of Cancellation of
Certificate of Limited Partnership.
(a) Upon the dissolution of the Partnership, the General Partner shall
cause to be filed in the office of, and on a form prescribed by the Secretary of
State of the State, a certificate of dissolution. The certificate of dissolution
shall set forth the Partnership's name, the Secretary of State's file number for
the Partnership, the event causing the Partnership's dissolution and the date of
the dissolution.
(b) Upon the completion of the winding up of the Partnership's affairs,
the General Partner shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State of the State, a certificate of
cancellation of the Certificate of Limited Partnership. The certificate of
cancellation of the Certificate of Limited Partnership shall set forth the
Partnership's name, the Secretary of State's file number for the Partnership,
and any other information which the General Partner determines to include
therein.
ARTICLE XVI
AMENDMENTS
This Agreement may be amended at any time by the Limited Partner. This
Agreement may not be amended by the General Partner absent the Consent of the
Special Limited Partner. Notwithstanding the foregoing, no amendment shall
change the Partnership to a general partnership; extend the term of the
Partnership beyond the date provided for in this Agreement; modify the limited
liability of the Limited Partner and the Special Limited Partner; allow the
Limited Partner to take control of the Partnership's business within the meaning
of the Act; reduce or defer the realization of any Partner's interest in
allocations, Distributions, capital or compensation hereunder, or increase any
Partner's obligations hereunder, without the consent of the Partner so affected;
or change the provisions of this Article XVI.
ARTICLE XVII
MISCELLANEOUS
Section 17.1 Voting Rights.
(a) The Limited Partner shall have no right to vote upon any matters
affecting the Partnership, except as provided in this Agreement. Notwithstanding
the foregoing, the Limited Partner may, without the concurrence of the General
Partner:
(1) Approve or disapprove, but, except as otherwise expressly provided
herein, not initiate, the Sale or Refinancing of the Project;
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(2) Remove the General Partner and elect a substitute General Partner as
provided in this Agreement;
(3) Elect a successor General Partner upon the Withdrawal of the General
Partner;
(4) Approve or disapprove, but not initiate, the dissolution of the
Partnership; or
(5) Subject to the provisions of Article XVI hereof, amend this Agreement.
(b) On any matter where the Limited Partner has the right to vote,
votes may only be cast at a duly called meeting of the Partnership or through
written action without a meeting.
(c) The Special Limited Partner shall have the right to consent to
those actions or inactions of the Partnership and/or General Partner as
otherwise set forth in this Agreement, and the General Partner is prohibited
from any action or inaction requiring such consent unless such consent has been
obtained.
Section 17.2 Meeting of Partnership. Meetings of the Partnership may be
called either (a) at any time by the General Partner; or (b) upon the General
Partner's receipt of a written or facsimile request from the Limited Partner
setting forth the purpose of such meeting. Within ten days after receipt of the
Limited Partner's written or facsimile request for a meeting, the General
Partner shall provide all Partners with written notice of the meeting (which
shall be by telephone conference, or at the principal place of business of the
Partnership or such other location referenced in the notice) to be held not less
than 15 days nor more than 30 days after receipt of such written or facsimile
request from the Limited Partner, which notice shall specify the time and place
of such meeting and the purpose or purposes thereof. If the General Partner
fails to provide the written notice of the meeting within ten days after receipt
of the Limited Partner's request to hold a meeting, then the Limited Partner may
provide the written notice of the meeting to all the Partners, which notice
shall specify the time and place of such meeting and the purpose or purposes
thereof. All meetings and actions of the Limited Partner shall be governed in
all respects, including matters relating to notice, quorum, adjournment,
proxies, record dates and actions without a meeting, by the applicable
provisions of the Act, as it shall be amended from time to time.
Section 17.3 Notices. Any notice given pursuant to this Agreement may
be served personally on the Partner to be notified, or may be mailed, first
class postage prepaid, to the following address, or to such other address as a
party may from time to time designate in writing:
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To the Managing
General Partner: MOST WORSHIPFUL PRINCE HALL GRAND
LODGE, FREE AND ACCEPTED MASONS
OF OKLAHOMA
1304 W. Broadway
Muskogee, OK 74402
To the General Partner: RETRO DEVELOPMENT, INC.
1007 Park Avenue
Omaha, NE 68105
To the Limited Partner: WNC HOUSING TAX CREDIT FUND V, L.P.,
SERIES 4
c/o WNC Housing, L. P.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
To the Special
Limited Partner: WNC Housing, L. P.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
Section 17.4 Successors and Assigns. All the terms and conditions of
this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the Partners.
Section 17.5 Recording of Certificate of Limited Partnership. If the
General Partner should deem it advisable to do so, the Partnership shall record
in the office of the County Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited Partnership, or any amendment thereto, after such Certificate or
amendment has been filed with the Secretary of State of the State.
Section 17.6 Amendment of Certificate of Limited Partnership.
(a) The General Partner shall cause to be filed, within 30 days after
the happening of any of the following events, an amendment to the Certificate of
Limited Partnership reflecting the occurrence thereof:
(1) A change in the name of the Partnership.
(2) A change in the street address of the Partnership's principal executive
office.
(3) A change in the address, or the Withdrawal, of a General Partner, or a
change in the address of the agent for service of process, or appointment of a
new agent for service of process.
(4) The admission of a General Partner and that Partner's address.
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(5) The discovery by the General Partner of any false or erroneous material
statement contained in the Certificate of Limited Partnership or any amendment
thereto.
(b) The Certificate of Limited Partnership may also be amended in
conformity with this Agreement at any time in any other respect that the General
Partner determines.
(c) The General Partner shall cause the Certificate of Limited
Partnership to be amended, when required or permitted as aforesaid, by filing a
certificate of amendment thereto in the office of, and on a form prescribed by,
the Secretary of State of the State. The certificate of amendment shall set
forth the Partnership's name, the Secretary of State's file number for the
Partnership and the text of the amendment.
Section 17.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and said
counterparts shall constitute but one and the same instrument which may
sufficiently be evidenced by one counterpart.
Section 17.8 Captions. Captions to and headings of the Articles,
Sections and subsections of this Agreement are solely for the conveniences of
the parties, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.
Section 17.9 Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
Section 17.10 Tax Matters Partners. All the Partners hereby agree that
the Special Limited Partner shall be the "Tax Matters Partner" pursuant to the
Code and in connection with any audit of the federal income tax returns of the
Partnership; provided, however, that if the Special Limited Partner shall
withdraw from the Partnership or become Bankrupt, the General Partner shall
thereafter be the "Tax Matters Partner". If the Tax Matters Partner shall
determine to litigate any administrative determination relating to federal
income tax matters, it shall litigate such matter in such court as the Tax
Matters Partner shall decide in its sole discretion. In discharging its duties
and responsibilities, the Tax Matters Partner shall act as a fiduciary (i) to
the Limited Partner (to the exclusion of the other Partners) insofar as tax
matters related to the Tax Credits are concerned, and (ii) to all of the
Partners in other respects.
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Section 17.11 Expiration of Compliance Period.
(a) Notwithstanding any provision hereof to the contrary (other than
this Section 17.11), the Special Limited Partner shall have the right at any
time after the beginning of the last year of the Compliance Period to require,
by written notice to the General Partner, that the General Partner promptly
submit a written request to the applicable State Tax Credit Agency pursuant to
Section 42(h) of the Code (or any successor provision) that such agency endeavor
to locate within one year from the date of such written request a purchaser for
the Project who will continue to operate the Project as a qualified low income
property, at a purchase price that is not less than the minimum amount set forth
in Section 42(h)(6) of the Code (or any successor provision). In the event that
the State Tax Credit Agency obtains an offer satisfying the conditions of the
preceding sentence, the General Partner shall promptly notify the Special
Limited Partner in writing with respect to the terms and conditions of such
offer, and, if the Special Limited Partner notifies the General Partner that
such offer should be accepted, the General Partner shall cause the Partnership
promptly to accept such offer and to proceed to sell the Project pursuant to
such offer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Special Limited Partner shall have the right at any time after the
end of the Compliance Period to require, by written notice to the General
Partner (the "Required Sale Notice"), that the General Partner promptly use its
best efforts to obtain a buyer for the Project on the most favorable terms then
available. The General Partner shall submit the terms of any proposed sale to
the Special Limited Partner for its approval in the manner set forth in Section
17.11(a) hereof. If the General Partner shall fail to so obtain a buyer for the
Project within six months of receipt of the Required Sale Notice or if the
Consent of the Special Limited Partner in its sole discretion shall be withheld
to any proposed sale, then the Special Limited Partner shall have the right at
any time thereafter to obtain a buyer for the Project on terms acceptable to the
Special Limited Partner (but not less favorable to the Partnership than any
proposed sale previously rejected by the Special Limited Partner). In the event
that the Special Limited Partner so obtains a buyer, it shall notify the General
Partner in writing with respect to the terms and conditions of the proposed sale
and the General Partner shall cause the Partnership promptly to sell the Project
to such buyer.
(c) A sale of the Project prior to the end of the Compliance Period may
only take place if the conditions of Section 42(j)(6) of the Code (or any
successor provision) will be satisfied upon such sale by having the purchaser of
the Project post the required bond on behalf of the Partnership.
Section 17.12 Number and Gender. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
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identity of the Person or Persons may require.
Section 17.13 Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
all prior understandings and agreements between the parties, written or oral,
respecting this transaction are merged in this Agreement.
Section 17.14 Governing Law. This Agreement and its application shall be
governed by the laws of the State.
Section 17.15 Attorney's Fees. If a suit or action is instituted in
connection with an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to recover, in addition to costs, such sums
as the court may adjudge reasonable as attorney's fees, including fees on any
appeal.
Section 17.16 Receipt of Correspondence. The Partners agree that the
General Partner shall send to the Limited Partner and the Special Limited
Partner a copy of any correspondence relative to the Project's noncompliance
with the Mortgage Note, relative to the acceleration of the Mortgage Note and/or
relative to the disposition of the Project.
Section 17.17 Security Interest and Right of Set-Off. As security for
the performance of the respective obligations to which any Partner may be
subject under this Agreement, the Partnership shall have (and each Partner
hereby grants to the Partnership) a security interest in all funds distributable
to said Partner to the extent of the amount of such obligation.
IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership of OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska limited
partnership, is made and entered into as of the 15th day of October, 1996.
MANAGING GENERAL PARTNER
MOST WORSHIPFUL PRINCE HALL GRAND LODGE, FREE
AND ACCEPTED MASONS OF OKLAHOMA
By: ___________________________________
Deary Vaughn
SIGNATURES CONTINUED ON THE NEXT PAGE...
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GENERAL PARTNER
RETRO DEVELOPMENT, INC.
By: ___________________________________
Peter A. Spoto,
President
WITHDRAWING ORIGINAL LIMITED PARTNER
----------------------------------------
DOUGLAS E. HINER
LIMITED PARTNER
WNC HOUSING TAX CREDIT FUND V, L.P.,
SERIES 4
By: WNC & ASSOCIATES, INC.
General Partner
By: _________________________
John B. Lester, Jr.,
President
SPECIAL LIMITED PARTNER
WNC HOUSING, L. P.
By: WNC & Associates, Inc.,
General Partner
By: _______________________________
John B. Lester, Jr.,
President
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EXHIBIT A TO PARTNERSHIP AGREEMENT
LEGAL DESCRIPTION
Lots 1, 2, 3, 4, 5, 6, 7 and 8, Goodrich's Subdivision, Lot 9, Replat, in
Ogallalla, Keith County, Nebraska.
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EXHIBIT B TO PARTNERSHIP AGREEMENT
FORM OF LEGAL OPINION
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4 c/o WNC Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626
RE: OGALLALLA APARTMENTS I LIMITED PARTNERSHIP
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the investment by WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4,
a California limited partnership (the "Limited Partner") in OGALLALLA APARTMENTS
I LIMITED PARTNERSHIP (the "Partnership"), a Nebraska limited partnership formed
to own, develop, (construct/rehabilitate) finance and operate an apartment
complex for low-income persons (the "Apartment Complex") in Ogallalla, Keith
County, Nebraska. The general partner(s) of the Partnership (is/are) MOST
WORSHIPFUL PRINCE HALL GRAND LODGE, FREE AND ACCEPTED MASONS OF OKLAHOMA and
RETRO DEVELOPMENT, INC. (the "General Partner(s)").
In rendering the opinions stated below, we have examined and relied
upon the following:
(i) [Certificate of Limited Partnership];
(ii) [Agreement of Limited Partnership] (the "Partnership
Agreement");
(iii) A preliminary reservation letter from [State
Allocating Agency] (the "State Agency") dated
_________, 199___ conditionally awarding
$_______________ in Federal tax credits annually for
each of ten years and $_______________ in California
tax credits annually for each of four years for the
Apartment Complex; and
(iv) Such other documents, records and instruments as we
have deemed necessary in order to enable us to render
the opinions referred to in this letter.
For purposes of rendering the opinions stated below we have assumed
that, in those cases in which we have not been involved directly in the
preparation, execution or the filing of a document, that (a) the document
reviewed by us is an original document, or a true and accurate copy of the
original document, and has not been subsequently amended, (b) the signatures on
each original document are genuine, and (c) each party who executed the document
had proper authority and capacity.
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Based on the foregoing we are of the opinion that:
(a) ________________________, one of the General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of _____________________ and has full power and authority to enter into
and perform its obligations under the Partnership Agreement.
_____________________, one of the other General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of __________________ and has full power and authority to enter into and
perform its obligations under the Partnership Agreement.
(b) The Partnership is a limited partnership duly formed and
validly existing under the laws of the State of Nebraska.
(c) The Partnership is validly existing under and subject to the laws
of Nebraska with full power and authority to own, develop,
[construct/rehabilitate], finance and operate the Apartment Complex and to
otherwise conduct business under the Partnership Agreement.
(d) Execution of the Partnership Agreement by the General Partner(s)
has been duly and validly authorized by or on behalf of the General Partner(s)
and, having been executed and delivered in accordance with its terms, the
Partnership Agreement constitutes the valid and binding agreement of the General
Partner(s), enforceable in accordance with its terms.
(e) The execution and delivery of the Partnership Agreement by the
General Partner(s) does not conflict with and will not result in a breach of any
of the terms, provisions or conditions of any agreement or instrument known to
counsel to which any of the General Partner(s) or the Partnership is a party or
by which any of them may be bound, or any order, rule, or regulation to be
applicable to any of such parties of any court or governmental body or
administrative agency having jurisdiction over any of such parties or over the
property.
(f) To the best of counsel's knowledge, after due inquiry, there is no
litigation or governmental proceeding pending or threatened against, or
involving the Apartment Complex, the Partnership or any General Partner which
would materially adversely affect the condition (financial or otherwise) or
business of the Apartment Complex, the Partnership or any of the Partners of the
Partnership.
(g) The Limited Partner and the Special Limited Partner have been
admitted to the Partnership as limited partners of the Partnership under
__________ law and are entitled to all of the rights of limited partners under
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the Partnership Agreement. Except as described in the Partnership Agreement, no
person is a partner of or has any legal or equitable interest in the
Partnership, and all former partners of record or known to counsel have validly
withdrawn from the Partnership and have released any claims against the
Partnership arising out of their participation as partners therein.
(h) Liability of the Limited Partner for obligations of the Partnership
is limited to the amount of the Limited Partner's capital contributions required
by the Partnership Agreement.
(i) Neither the General Partner(s) of the Partnership nor the Limited
Partner nor the Special Limited Partner will have any liability for the Mortgage
Note or the Mortgage Loan represented thereby (as those terms are defined in the
Partnership Agreement, and the lender of the Mortgage Loan will look only to its
security in the Apartment Complex for repayment of the Mortgage Loan.
(j)The Partnership owns a fee simple interest in the Apartment Complex.
(k) To the best of our actual knowledge and belief, after due inquiry,
the Partnership has obtained all consents, permissions, licenses, approvals, or
orders required by all applicable governmental or regulatory agencies for the
development, [construction/rehabilitation] and operation of the Apartment
Complex, and the Apartment Complex conforms to all applicable Federal, state and
local land use, zoning, health, building and safety laws, ordinances, rules and
regulations.
(l) The Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") from the State Agency. The final allocation
of the LIHTC and ultimately eligibility of the Apartment Complex for such final
allocation are subject to a series of requirements which must be met, performed
or achieved at various times prior to and after such final allocation. Assuming
all such requirements are met, performed or achieved at the time or times
provided by applicable laws and regulations, the Apartment Complex will qualify
for LIHTC.
All of the opinions set forth above are qualified to the extent that
the validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the covenants, warranties or other provisions contained in any agreement. We
B-3
<PAGE>
have not examined, and we express no opinion with respect to, the applicability
of, or liability under, any Federal, state or local law, ordinance or regulation
governing or pertaining to environmental matters, hazardous wastes, toxic
substances or the like.
We express no opinion as to any matter except those set forth above.
These opinions are rendered for use by the Limited Partner and its legal counsel
which will rely on this opinion in connection with federal income tax opinions
to be rendered by that firm. This opinion may not be delivered to or relied upon
by any other person or entity without our express written consent.
Sincerely,
- --------------------
B-4
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EXHIBIT C TO PARTNERSHIP AGREEMENT
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of the date written below by
OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska limited partnership (the
"Partnership"); MOST WORSHIPFUL PRINCE HALL GRAND LODGE, FREE AND ACCEPTED
MASONS OF OKLAHOMA (the "Managing General Partner") and RETRO DEVELOPMENT, INC.
(the "General Partner"); and DOUGLAS E. HINER (collectively referred to as the
"Original Limited Partner") for the benefit of WNC HOUSING TAX CREDIT FUND V,
L.P., SERIES 4, a California limited partnership (the "Investment Partnership"),
and WNC & ASSOCIATES, INC. ("WNC").
WHEREAS, the Partnership proposes to admit the Investment Partnership
as a limited partner thereof pursuant to an Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), in
accordance with which the Investment Partnership will make substantial capital
contributions to the Partnership; and
WHEREAS, the Investment Partnership and WNC have relied upon certain
information and representations described herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Partnership Agreement and become a limited partner of the Partnership, and for
$1.00 and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Partnership, the General Partner and the
Original Limited Partner hereby agree as follows for the benefit of the
Investment Partnership and WNC.
1. Representations, Warranties and Covenants of the Partnership,
the General Partner and the Original Limited Partner
The Partnership, the General Partner and the Original Limited Partner
jointly and severally represent, warrant and certify to the Investment
Partnership and WNC that, with respect to the Partnership, as of the date
hereof:
1.1 The Partnership is duly organized and in good standing as
a limited partnership pursuant to the laws of the state of its formation with
full power and authority to own its apartment complex (the "Apartment Complex")
and conduct its business; the Partnership, the General Partner and the Original
Limited Partner have the power and authority to enter into and perform this
Certification and Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the General Partner and the Original Limited
Partner have been duly and validly authorized by all necessary action; the
execution and delivery of this Certification and Agreement, the fulfillment of
C-1
<PAGE>
its terms and consummation of the transactions contemplated hereunder do not and
will not conflict with or result in a violation, breach or termination of or
constitute a default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which the Partnership or
any General Partner or Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Partnership or any General Partner
or Original Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and binding agreement of the
Partnership, the General Partner and the Original Limited Partner, enforceable
against each of them in accordance with its terms.
1.2 The General Partner has delivered to the Investment
Partnership, WNC or their affiliates all documents and information which would
be material to a prudent investor in deciding whether to invest in the
Partnership. All factual information provided to the Investment Partnership, WNC
or their affiliates either in writing or orally, did not, at the time given, and
does not, on the date hereof, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they are made.
1.3 Each of the representations and warranties contained in
the Partnership Agreement is true and correct as of the date hereof.
1.4 Each of the covenants and agreements of the Partnership
and the General Partner contained in the Partnership Agreement has been duly
performed to the extent that performance of any covenant or agreement is
required on or prior to the date hereof.
1.5 All conditions to admission of the Investment Partnership
as the investment limited partner of the Partnership contained in the
Partnership Agreement have been satisfied.
1.6 No default has occurred and is continuing under the
Partnership Agreement or any of the Project Documents (as such term is defined
in the Partnership Agreement) for the Partnership.
1.7 The Partnership shall maintain the Projected Annual Tax
Credits.
1.8 The General Partner agrees to take all actions necessary
to claim the Projected Tax Credit, including, without limitation, the filing of
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Form(s) 8609 with the Internal Revenue Service.
1.9 No person or entity other than the Partnership holds any
equity interest in the Apartment Complex.
1.10 The Partnership has the sole responsibility to pay all
maintenance and operating costs, including all taxes levied and all insurance
costs, attributable to the Apartment Complex.
1.11 The Partnership, except to the extent it is protected by
insurance and excluding any risk borne by lenders, bears the sole risk of loss
if the Apartment Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.
1.12 No person or entity except the Partnership has the right
to any proceeds, after payment of all indebtedness, from the sale, refinancing,
or leasing of the Apartment Complex.
1.13 No General Partner is related in any manner to the
Investment Partnership, nor is any General Partner acting as an agent of the
Investment Partnership.
2. Miscellaneous
2.1 This Certification and Agreement is made solely for the
benefit of the Investment Partnership and WNC, and their respective successors
and assignees, and no other person shall acquire or have any right under or by
virtue of this Agreement.
2.2 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, all of
which together shall constitute one and the same instrument.
2.3 Capitalized terms used but not defined in this
Certification Agreement shall have the meanings given to them in the Partnership
Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Certificate and Agreement is made and entered
into as of the 15th day of October, 1996
PARTNERSHIP
OGALLALLA APARTMENTS I LIMITED PARTNERSHIP
By: RETRO DEVELOPMENT, INC.,
General Partner
By:
Peter A. Spoto
By: MOST WORSHIPFUL PRINCE HALL GRAND LODGE,
FREE AND ACCEPTED MASONS OF OKLAHOMA
By: ________________________
Deary Vaughn
MANAGING GENERAL PARTNER
By: MOST WORSHIPFUL PRINCE HALL GRAND LODGE,
FREE AND ACCEPTED MASONS OF OKLAHOMA
By: ________________________
Deary Vaughn
GENERAL PARTNER
By: RETRO DEVELOPMENT, INC.
By:
Peter A. Spoto
ORIGINAL LIMITED PARTNER
By:
DOUGLAS E. HINER
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EXHIBIT D TO THE PARTNERSHIP AGREEMENT
GENERAL PARTNER CERTIFICATION
This General Partner Certification is being issued to WNC HOUSING TAX
CREDIT FUND V, L.P., SERIES 4 ("Limited Partner") by MOST WORSHIPFUL PRINCE HALL
GRAND LODGE, FREE AND ACCEPTED MASONS OF OKLAHOMA and RETRO DEVELOPMENT, INC.,
General Partners of OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska
limited partnership ("Partnership") in accordance with Section 7.2 of the
Amended and Restated Agreement of Limited Partnership of the Partnership
("Partnership Agreement").
Capitalized terms used but not defined in this General Partner
Certification shall have the meanings given to them in the Partnership
Agreement.
WHEREAS, the Limited Partner is scheduled to make a Capital Contribution to
the Partnership;
WHEREAS, the Partnership Agreement requires the General Partner to issue
this Certification prior to the Limited Partner's payment; and
WHEREAS, the Limited Partner shall rely on this Certification in evaluating
the continued merits of its investment in the Partnership;
NOW, THEREFORE, to induce the Limited Partner to make its scheduled Capital
Contribution to the Partnership, the General Partner represents and warrants to
the Limited Partner that the following are true and correct as of the date
written below:
(a) The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner and the Special Limited Partner.
(b) The Partnership Agreement and the Project Documents are in full
force and effect and neither the Partnership nor the General Partner is in
breach or violation of any provisions thereof.
(c) Improvements will be completed in a timely and workmanlike manner
in accordance with all applicable requirements of the Mortgage Loan, all
applicable requirements of all appropriate governmental entities and the plans
and specifications of the Project that have been or shall be hereafter approved
by First National Bank of Omaha, if required, and all applicable governmental
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entities, as such plans and specifications may be changed from time to time with
the approval of First National Bank of Omaha and any applicable governmental
entities, if such approval shall be required.
(d) The Project is being operated in accordance with standards and
procedures which are prudent and customary for the operation of properties
similar to the Project.
(e) Additional Improvements on the Project, if any, shall be completed
substantially in conformity with the Project Documents and any other
requirements necessary to obtain Completion of Construction.
(f) Except as otherwise provided, no Partner has or will have any
personal liability with respect to, or has or will have personally guaranteed
the payment of, the Mortgage.
(g) The Partnership is in compliance with all construction and use
codes applicable to the Project and is not in violation of any zoning,
environmental or similar regulations applicable to the Project.
(h) All appropriate public utilities, including sanitary and storm
sewers, water, gas and electricity, are currently available and will be
operating properly for all units in the Project at the time of first occupancy
and throughout the term of the Partnership.
(i) The Project has obtained, or will obtain before Permanent Mortgage
Commencement, and will maintain throughout the term of this Partnership
Insurance written by an Insurance Company.
(j) The Partnership owns the fee simple interest in the Project.
(k) The Construction Contract has been entered into between the
Partnership and the Contractor; no other consideration or fee shall be paid to
the Contractor other than amounts set forth in the Construction Contract.
(l) A builder's risk insurance policy in favor of the Partnership will
be and is in full force and effect until Completion of Construction.
(m) Except as otherwise disclosed to the Limited Partner and the
Special Limited Partner in writing prior to the execution of the Partnership
Agreement, to the best of the General Partner's knowledge: (1) no Hazardous
Substance has been disposed of, or released to or from, or otherwise now exists
in, on, under or around, the Project and (2) no aboveground or underground
storage tanks are now or have ever been located on or under the Project. The
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General Partner will not install or allow to be installed any aboveground or
underground storage tanks on the Project. The General Partner covenants that the
Project shall be kept free of Hazardous Materials and shall not be used to
generate, manufacture, refine, transport, treat, store, handle, dispose of,
transfer, produce or process Hazardous Materials, except in connection with the
normal maintenance and operation of any portion of the project. The General
Partner shall comply, or cause there to be compliance, with all applicable
Federal, state and local laws, ordinances, rules and regulations with respect to
Hazardous Materials and shall keep, or cause to be kept, the Project free and
clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. The General Partner must promptly notify the Special Limited
Partner in writing (3) if it knows, or suspects or believes there may be any
Hazardous Substance in or around any part of the Project, any Improvements
constructed on the Project, or the soil, groundwater or soil vapor, (4) if the
General Partner or the Partnership may be subject to any threatened or pending
investigation by any governmental agency under any law, regulation or ordinance
pertaining to any Hazardous Substance, and (5) of any claim made or threatened
by any Person, other than a governmental agency, against the Partnership or
General Partner arising out of or resulting from any Hazardous Substance being
present or released in, on or around any part of the Project.
(n) The General Partner has not executed and will not execute any
agreements with provisions contradictory to, or in opposition to, the provisions
of the Partnership Agreement.
(o) The Partnership shall maintain the Projected Annual Tax Credits.
(p) No charges or encumbrances exist with respect to the Project other
than those which are created or permitted by the Project Documents or are noted
or excepted in the title policy for the Project.
(q) The buildings on the Project site constitute or shall constitute a
"qualified low-income housing project" as defined in Section 42(g) of the Code,
and as amplified by the Treasury Regulations thereunder. In this connection, not
later than December 31 of the first year in which the Partners elect the LIHTC
to commence in accordance the Code, the Project will satisfy the Minimum
Set-Aside Test.
(r) All accounts of the Partnership required to be maintained under the
terms of the Project Documents, including, without limitation, any reserves in
accordance with Article VIII hereof, are currently funded to required levels,
including levels required by any authority.
(s) The General Partner has not lent or otherwise advanced any funds to
the Partnership other than its Capital Contribution and the Partnership has no
D-3
<PAGE>
unsatisfied obligation to make any payments of any kind to the General Partner
or any Affiliate thereof.
(t) No event has occurred which constitutes a material default under
any of the Project Documents.
(u) No event or proceeding, including, but not limited to, any legal
actions or proceedings before any court, commission, administrative body or
other governmental authority, and acts of any governmental authority having
jurisdiction over the zoning or land use laws applicable to the Project, has
occurred the continuing effect of which has: (1) materially or adversely
affected the operation of the Partnership or the Project; (2) materially or
adversely affected the ability of the General Partner to perform its obligations
hereunder or under any other agreement with respect to the Project; or (3)
prevented the completion of construction of the Improvements in substantial
conformity with the Project Documents, other than legal proceedings which have
been bonded against (or as to which other adequate financial security has been
issued) in a manner as to indemnify the Partnership against loss; provided that
the foregoing does not apply to matters of general applicability which would
adversely affect the Partnership, the General Partner, Affiliates of the General
Partner or the Project only insofar as they or any of them are part of the
general public.
(v) Neither the Partnership nor the General Partner has any
liabilities, contingent or otherwise, which have not been disclosed in writing
to the Limited Partner and the Special Limited Partner and which in the
aggregate affect the ability of the Limited Partner to obtain the anticipated
benefits of its investment in the Partnership.
(w) The General Partner has and shall maintain a net worth equal to at
least $500,000 computed in accordance with generally accepted accounting
principles.
IN WITNESS WHEREOF, the undersigned have set their hands to this
General Partner Certification this day of 1996.
RETRO DEVELOPMENT, INC.
General Partner
By:
Peter A. Spoto
D-4
<PAGE>
EXHIBIT E TO PARTNERSHIP AGREEMENT
FORM OF COMPLETION CERTIFICATE
(to be used when construction [rehabilitation] completed)
COMPLETION CERTIFICATE
The undersigned, an architect duly licensed and registered in the State of
Ogallalla, Keith County, Nebraska, has prepared final working plans and detailed
specifications for OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska
limited partnership (the "Partnership"), between WNC HOUSING TAX CREDIT FUND V,
L.P., SERIES 4, a California limited partnership ("Limited Partner") and the
Partnership in connection with the construction [rehabilitation] of improvements
on certain real property located in Ogallalla, Keith County, Nebraska (the
"Improvements").
The undersigned hereby certifies (i) that the Improvements have been completed
in accordance with the aforesaid plans and specifications, (ii) that a permanent
certificate of occupancy and all other permits required for the continued use
and occupancy of the Improvements have been issued with respect thereto by the
governmental agencies having jurisdiction thereof, (iii) that the Improvements
are in compliance with all requirements and restrictions of all governmental
authorities having jurisdiction over the Improvements, including, without
limitation, all applicable zoning, building, environmental, fire, and health
ordinances, rules and regulations and (iv) that all contractors, subcontractors
and workmen who worked on the Improvements have been paid in full except for
normal retainages and amounts in dispute.
- -----------------------------------
Project Architect
Date: ____________________________
Confirmed by:
- -----------------------------------
General Partner
Date: ____________________________
E-1
<PAGE>
EXHIBIT F TO THE PARTNERSHIP
[ACCOUNTANT'S CERTIFICATE]
[Accountant's Letterhead]
_______________, 199____
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC Housing, L. P.
3158 Redhill Ave., Suite 120
Costa Mesa, California 92626
RE: Partnership
Certification as to Amount
of Eligible Tax Credit Base
Gentlemen:
In connection with the acquisition by WNC HOUSING TAX CREDIT FUND V, L.P.,
SERIES 4 (the "Limited Partner") of a limited partnership interest in OGALLALLA
APARTMENTS I LIMITED PARTNERSHIP, a Nebraska limited partnership (the
"Partnership") which owns a certain parcel of land located in Ogallalla, Keith
County, Nebraska and improvements thereon (the "Project"), the Limited Partner
has requested our certification as to the amount of low-income housing tax
credits ("Tax Credits") available with respect to the Project under Section 42
of the Internal Revenue Code of 1986, as amended (the "Code"). Based upon our
review of [the financial information provided by the Partnership] of the
Partnership, we are prepared to file the Federal information tax return of the
Partnership claiming annual Tax Credits in the amount of $_______________, which
amount is based on an eligible basis (as defined in Section 42(d) of the Code)
of the Project of $________________, a qualified basis (as defined in Section
42(c) of the Code) of the Project of $_________________ and an applicable
percentage (as defined in Section 42(b) of the Code) of _____%.
Sincerely,
- -------------------------
F-1
<PAGE>
REPORT OF OPERATIONS
QUARTER ENDED:____________________________,199X
- ------------------------------------- -----------------------------------
LOCAL PARTNERSHIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
GENERAL PARTNER:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
FIRM NAME:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PROPERTY NAME:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
-----------------------------------
- ------------------------------------- -----------------------------------
RESIDENT MANAGER:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ACCOUNTANT:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
FIRM:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------ -----------------------------------
MANAGEMENT COMPANY
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CONTACT:
- ------------------------------------- -----------------------------------
- -------------------------------------------------------------------------------
OCCUPANCY INFORMATION
A. Number of Units_____ Number of RA Units_____ Number of Section 8 Tenants ____
B. Occupancy for the Quarter has: Increased ____ Decreased_____
Remained the Same _____
C. Number of: Move-Ins ______ Move-Outs __________ % of Occupancy ______
D. Average length of tenant residency: 1-6 months ______ 6-12 months ______
1-3 years ______ Over 4 years_____
E. Number of Basic rent qualified applicants on waiting list: ________
F. If the apartments are less than 90% occupied, please explain why and
describe what efforts are being made to lease-up remaining units.
___________________________________________________________________________
G. On site manager: Full Time__________ Part Time____________.
If part-time, the number of hours per week_____________.
G-1
<PAGE>
OPERATIONAL INFORMATION
Rent Schedule and Increases from Previous Quarter
Number Monthly Rent Rent Increases Effective
of Units Basic / Market Amount Percent Date
1 Bedroom ________ ______________ _________________ ________
2 Bedroom ________ ______________ _________________ ________
3 Bedroom ________ ______________ _________________ ________
PROPOSED MAINTENANCE
Completed Funded by
Type Description or Operations or Amount
Planned Reserves
- ------------------------------------------------------------------------------
Interior Painting
- ------------------------------------------------------------------------------
Exterior Painting
- ------------------------------------------------------------------------------
Siding
- ------------------------------------------------------------------------------
Roofing
- ------------------------------------------------------------------------------
Drainage
- ------------------------------------------------------------------------------
Paving
- ------------------------------------------------------------------------------
Landscaping
- ------------------------------------------------------------------------------
Playground
- ------------------------------------------------------------------------------
Community Room
- ------------------------------------------------------------------------------
Laundry Room
- ------------------------------------------------------------------------------
Common Areas
- ------------------------------------------------------------------------------
Carpet
- ------------------------------------------------------------------------------
Appliances
- ------------------------------------------------------------------------------
Lighting
- ------------------------------------------------------------------------------
Other
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Please describe in detail any major repairs:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
G-2
<PAGE>
CONDITION OF PROPERTY
THE OVERALL APPEARANCE OF THE BUILDING(S) IS:
Excellent Good Fair Bad
THE OVERALL APPEARANCE OF THE GROUNDS IS:
Excellent Good Fair Bad
EXTERIOR CONDITION (Please Check Appropriate Box)
- ------------------------------------------------------------------------------
Type of Condition Excellent Good Fair Problems/Comments
- ------------------------------------------------------------------------------
Signage
- -------------------------------------------------------------------------------
Parking Lots
- -------------------------------------------------------------------------------
Office/Storage
- -------------------------------------------------------------------------------
Equipment
- -------------------------------------------------------------------------------
Community Building
- -------------------------------------------------------------------------------
Laundry Room
- -------------------------------------------------------------------------------
Benches/Playground
- -------------------------------------------------------------------------------
Lawns, Plantings
- -------------------------------------------------------------------------------
Drainage, Erosion
- -------------------------------------------------------------------------------
Carports
- -------------------------------------------------------------------------------
Fences
- -------------------------------------------------------------------------------
Walks/Steps/Guardrails
- -------------------------------------------------------------------------------
Lighting
- -------------------------------------------------------------------------------
Painting
- -------------------------------------------------------------------------------
Walls/Foundation
- -------------------------------------------------------------------------------
Roof/Flashing/Vents
- -------------------------------------------------------------------------------
Gutters/Splashblocks
- -------------------------------------------------------------------------------
Balconies/Patios
- -------------------------------------------------------------------------------
Doors Windows/Screens
- -------------------------------------------------------------------------------
Elevators
- -------------------------------------------------------------------------------
INTERIOR CONDITION
- -------------------------------------------------------------------------------
Stairs
- -------------------------------------------------------------------------------
Flooring
- -------------------------------------------------------------------------------
Doors/Cabinets/Hardware
- -------------------------------------------------------------------------------
Drapes/Blinds
- -------------------------------------------------------------------------------
Interior Painting
- -------------------------------------------------------------------------------
Refrig/Stoves/Sinks
- -------------------------------------------------------------------------------
Bathroom/Tubs/Showers
Toilets
- -------------------------------------------------------------------------------
G-3
<PAGE>
FINANCIAL STATUS
A. Replacement Reserve is: Fully-funded Under-funded Amount
(complete attached schedule)
Tax/Insurance Escrow is: Fully-funded Under-funded Amount
(complete attached schedule)
Property is operating at a: Surplus Deficit Amount
If deficit, General Partner funding? Yes No Amount
Mortgage Payments are: On Schedule Delinquent Amount
Are the taxes current? Yes No
(please provide copy of paid tax bill)
Is the insurance current? Yes No Renewal Date
(please provide copy of yearly renewal)
B. Please note and explain any significant changes in the following:
Administrative Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Repairs/Maintenance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Utility Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Taxes/Insurance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
C. Do you anticipate making a return to owner distribution? Yes No
Explanation:
------------------------------------------------------------------------
------------------------------------------------------------------------
D. Please explain in detail any change in the financial condition:
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Any insurance claims files? Yes______ No______
If yes, please explain:
------------------------------------------------------------------------
------------------------------------------------------------------------
G-4
<PAGE>
SCHEDULE OF RESERVES
Replacement Tax & Insurance Other Total
Beginning Balance:
Deposits:
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
Total Deposits
----------- ---------- ------- -------
Authorized Disbursements:
Description:
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
Total Disbursements: ----------- ---------- -------- ------
Ending Balance: (1) ----------- ---------- -------- ------
Required Balance: ----------- ---------- -------- ------
Over/under funding: ----------- ---------- -------- ------
(1) Must agree with amount shown on the balance sheet.
Prepared By: Date:
- -------------------------------------------------------------------------------
Firm: Telephone:
- -------------------------------------------------------------------------------
Reminder: Please include the following documents:
1. Completed Report of Operations
2. Balance Sheet
3. Statement of Income & Expenses
4. Rent roll for quarter ending
5. Tax Credit Compliance Report
G-5
<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
Fund: Tax Credit Set-Asides Information: Loan/Regulatory Set-Asides:
Property Name: [ ] 20/50 or [ ] 40/60 Election
Address: Does the 51% average apply? [ ] Y [ ] N
Deeper Set-Aside __% @ 50% AMI
County:
Management Company
[ ] Multi-Family Contact Person:
[ ] Elderly
24 Number of Units Phone #
Number of Exempt
Units
LIHTC Project#
- -----------------------------------------------------------------------------
Gross Move-In
Unit First Time Move-In No. of No. in Income Income
No. Tenant Name Date Bdrms Sq. Ft. Set-Aside Unit Move-In Limits
- -------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
- -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-6 (a)
<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Tenant
Income Income Asset Unit Rent Tenant Utility
Qualified Verification Verification Rent Subsidy Payment Allowance
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-6(b)
<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Tenant Overall
Gross Maximum Rent Tenant
Rent Rent Qualified Eligible
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
G-6(c)
<PAGE>
QUARTERLY TAX CREDIT COMPLIANCE REPORT
PROPERTY NAME
Quarter Ending: Tax Credit Set-Asides Information: Loan/Regulatory Set-Asides:
[ ] 20/50 or [ ] 40/60 Election
Does the 51% average apply? [ ] Y [ ] N
Deeper Set-Aside : ( List Details)
County: Allocation: Management Company:
Pre-1990 (Rent based on number of persons) Contact Person:
Elected to change No. Bedrm
Post-1989 (Based on number of Bedroom)
[ ] Multi-Family [ ] Elderly Phone No.
Number of Units
Number of Exempt Units Fax No.
Prepared by:
LIHTC Project#
- -----------------------------------------------------------------------------
Gross Annual
Unit Tenant Move-In No. Of Inc. Set- No. In Annual Income
No. Name Date Bdrms Pct. Aside Unit Income Limits
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-7 (a)
<PAGE>
QUARTERLY TAX CREDIT COMPLIANCE REPORT
PROPERTY NAME
(CONTINUED)
Annual Tenant Less
Recert. Income Income Assets Unit Rent Tenant
Date Qualified Verified Verified Rent Subsidy Payment
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Tenant Tenant Overall
Utility Gross Maximum Rent Tenat
Allow. Rent Rent Qualified Eligible
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-7(b)
<PAGE>
Tenant Tax Credit Compliance Audit
Document Transmittal Checklist
Unit Number Property Name Date
Tenant Name Completed By:
Initial _________ Annual________
Check Box for Type of Certification Management Company
This Section For WNC Use Only
Check Documents Being Sent
Received. Reviewed
___Internal Checklist or worksheet
___Initial - Rental Application/Rental Agreement
___Initial - Questionnaire of Income/Assets
___Recertification - Questionnaire of Income/Assets
___Recertification - Addendum to Lease
___Employment Verification
___Employment Termination Verification
___Military Verification
___Verification of Welfare Benefits
___Verification of Social Security Benefits
___Verification of Disability Benefits
___Unemployment Verification
___Verification of Unemployment Compensation
___Verification Worksmen Compensation
___Retirement/Annuities Verification
___Verification of Veterans Pension
___Verification of Child Support
___Verification of Alimony Support
___Disposed of Assets Last 2 yrs.
___Real Estate
___Investment
___Assets Verifications (savings, stocks etc.)
___Trusts/with Current Tax Return
___Lump Sum Settlements
___Notarized Affidavit of Support
___Certification of Handicap
___Notarized Self-Employed-Tax Return
___Notarized statement of no income
___Tenant Certification
- ------------------------------------------------------------------------------
This Section For WNC Use Only
YES NO
Are all required forms completed?
Are all required forms dated?
Did the Manager and Tenant sign all documents?
Third party verification of income completed?
Third party verification of assets completed?
Are verifications completed for all members 18 yrs. and
over?
Did all the members of the household 18 yrs. and
over sign all documents?
Is lease completed with a minimum of six months/ SRO
monthly?
Addendum completed?
Tenant Certification completed?
Are all members of the household full-time students?
Is utility allowance correct?
Is correct income limit being used?
Is correct rent limit being used?
For tenants with no income
Was notarized statement of no income obtained with tax
return?
or Were all sources verified (AFDC, Unemployment,
Soc. Sec., Disability)?
G-8
<PAGE>
TAX CREDIT COMPLIANCE MONITORING:
ANNUAL CERTIFICATION
As General Partner of OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, I
hereby certify as to the following:
1. OGALLALLA APARTMENTS I LIMITED PARTNERSHIP owns a sixteen (16) unit
project ("Project") in Ogallalla, Keith County, Nebraska.
2. An annual income certification (including supporting documentation) has
been received from each tenant. The income certification reflects that the
tenant's income meets the income limitation applicable to the Project pursuant
to Section 42(g)(1) of the Internal Revenue Code ("Code").
3. The Project satisfies the requirements of the applicable minimum set
aside test as defined in Section 42(g)(1) of the Code.
4. Each unit within the Project is rent restricted as defined in Section
42(g)(2)of the Code.
5. Each unit in the Project is available for use by the general public and
not for use on a transient basis.
6. Each building in the Project is suitable for occupancy in accordance
with local health, safety, and building codes.
7. During the preceding calendar year, there had been no change in the
eligible basis, as defined in Section 42(d)of the Code, of any building within
the Project.
8. All common area facilities included in the eligible basis of the
Apartment Complex are provided to the tenants on a comparable basis without a
separate fee to any tenant in the Project.
9. During the preceding calendar year when a unit in the Project became
vacant reasonable attempts were made to rent that unit to tenants whose incomes
met the income limitation applicable to the Project pursuant to Section 42(g)(1)
of the Code and while that unit was vacant no units of comparable or smaller
size were rented to tenants whose income did not meet the income limitation
applicable to the Project pursuant to Section 42(g)(1) of the Code.
10. If the income of a tenant in a unit increased above the limit allowed
in Section 42 (g)(2)(D)(ii), then the next available unit of comparable or
smaller size was rented to tenants whose incomes met the income limitation
applicable to the Project pursuant to Section 42(g)(1) of the Code.
IN VERIFICATION OF THE FOREGOING ENCLOSED HEREWITH IS A COPY OF THE ANNUAL
INCOME CERTIFICATION RECEIVED FROM EACH TENANT IN THE PROJECT. UPON REQUEST I
WILL PROVIDE COPIES OF ALL DOCUMENTATION RECEIVED FROM THE TENANT TO SUPPORT
THAT CERTIFICATION.
I declare under penalty of perjury under the law of the State of
Nebraska that the foregoing is true and correct.
Executed this _____ day of ________________ at ____________________,
_________________________.
- ------------------------------------
G-9
<PAGE>
Calculation of Debt Service Coverage
Month 1 Month 2 Month 3
------------ ------------ ------------
INCOME
Gross Potential Rent
Other Income
Vacancy Loss
------------ ------------ ------------
Adjusted Gross Income
------------ ------------ ------------
OPERATING EXPENSES
Utilities
Maintenance
Management Fee
Administration
Insurance
Real Estate Taxes
Other Expenses
------------ ------------ ------------
Total Operating Expenses
------------ ------------ ------------
Net Operating Income (1)
Accrual adjustments for:
R/E Taxes
Insurance
Tax/ Accounting
Other
Replacement Reserves
============ ============ ============
Income for DSC Calculation
============ ============ ============
------------ ------------ ------------
Stabilized Debt Service
------------ ------------ ------------
------------ ------------ ------------
Debt Service Coverage (2)
------------ ------------ ------------
(1) This number should reconcile easily with the monthly financial statements
(2) The ratio between the Income for DSC calculation and Stabilized
Debt Service. As example, a 1.15 DSC means that for every $1.00 of
Stabilized Debt Service required to be paid there must be $1.15 of
Net Operating Income available.
G-10
<PAGE>
DEVELOPMENT FEE AGREEMENT
This DEVELOPMENT FEE AGREEMENT ("Agreement"), is entered into as of the
date written below by and between Retro Development, Inc. ("Developer") and
OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska limited partnership
("Owner"). Developer and Owner collectively may be referred to as the "Parties"
or individually may be referred to as a "Party".
RECITALS
A. Owner has acquired the real property located in Ogallalla, Keith County,
Nebraska, as more particularly described in Exhibit A attached hereto and
incorporated herein (the "Real Property").
B. Owner intends to develop on the Real Property a sixteen (16) unit
low-income rental housing complex and other related improvements, which is
intended to qualify for federal low-income housing tax credits (the "Project").
C. Prior to the date of this Agreement Developer has performed substantial
development services with respect to the Project as specified in Section 2.3 of
this Agreement. Developer has also agreed to oversee the development of the
Project until all construction work is completed and to provide certain services
relating thereto. The Parties recognize and acknowledge that the Developer is,
and has been, an independent contractor in all services rendered to, and to be
rendered to, the Owner pursuant to this Development Fee Agreement.
D. Owner desires to commit its existing development agreement with
Developer into writing through this Development Fee Agreement for Developer's
services to manager, oversee, and complete development of the Project. Developer
desires to commit its existing development agreement with Owner into writing
through this Development Fee Agreement and Developer is willing to assign all
development rights to the Project to Owner, to undertake performance of such
development services, and to fulfill all obligations of the Developer set forth
in this Agreement, in consideration of Owner's restated promise to pay to
Developer the fee specified in this Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and the
mutual promises and undertakings in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Owner and Developer agree as follows.
1
<PAGE>
SECTION I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall, when capitalized,
have the following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Construction Documents" means the contract documents between the Owner
and the Construction Lender pertaining to construction of the Project.
"Construction Lender" means First National Bank of Omaha, which has
committed to make a loan to finance construction of the Project.
"Construction Loan" means the loan to finance construction of the
Project, made to Owner by the Construction Lender.
"Contractor" means Retro Development, Inc.
"Department" means the Nebraska agency responsible for the reservation
and allocation of Tax Credits.
"Development Fee" means the fee for development services described in
Section 2 of this Agreement.
"Permanent Loan Funding Date" means the date on which the loan between
Owner and First National Bank of Omaha is closed and funded; all construction
costs are paid in full and the Construction Loan repaid in full; and the
issuance of a certificate of occupancy by the governmental agency having
jurisdiction over the Project.
"Tax Credits" means the low-income housing tax credits found in
Section 42 of the Code, and all rules, regulations, rulings, notices and other
promulgations thereunder.
SECTION 2
ENGAGEMENT OF DEVELOPER; FEE; SERVICES
2.1 Engagement; Term. Owner hereby confirms the engagement of Developer
to act as developer of the Project, and to perform the various covenants and
obligations of the Developer under this Agreement. Developer hereby confirms and
accepts such engagement, and agrees to perform fully and timely each and every
one of its obligations under this Agreement. The term of such engagement shall
commence on the date hereof and subject to the pre-payment provisions of Section
3 shall expire on December 31, 2003.
2.2 Development Fee. In consideration of Developer's prior activities
and agreement to provide development services during the term of this Agreement
and the assignment of all development rights for the Project, Owner agrees to
2
<PAGE>
pay the Developer a Development Fee in the amount of $125,550. The Development
Fee shall be payable in accordance with Section 3 of this Agreement.
2.3 Development Services.
(a) Prior Services. Owner acknowledges that Developer has, prior to the
date hereof, performed substantial development services relating to the Project.
Such services (the "Prior Services") have included the following:
(1) Developer has located, negotiated and closed on the purchase of the
Real Property.
(2) Developer has made an application for Tax Credits to the Department.
(3) Developer has negotiated, conferred and worked with the Department to
obtain a reservation of Tax Credits for the Owner on the Project.
(4) Developer has negotiated, conferred and worked with the Department to
obtain an allocation of Tax Credits for the Owner on the Project.
(5) Developer has negotiated and conferred with the environmental engineer
to provide a full environmental evaluation of the Real Property.
(6) Developer has negotiated and conferred with a market analyst to provide
a full market feasibility study of the Project.
(7) Developer has negotiated, conferred and caused the Owner to execute an
architectural contract for the planning and design of the Project.
(8) Developer has created, refined and analyzed the financial projections
for the Project.
(9) Developer has negotiated, conferred, and worked with the Project
architects, engineers and Contractor with regard to preparation, refinement, and
finalization of the plans and specifications for the Project, and projected
construction schedules and costs.
(10) Developer has applied for zoning approvals, land use approvals and
development permits necessary for the Project, and has conferred and worked with
the City of Ogallalla planning and building agencies with regard to such
approvals and permits.
(11) Developer has negotiated and conferred with the Construction Lender to
obtain the Construction Loan.
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(12) Developer has negotiated and conferred with an insurance carrier to
provide a builder's risk policy during construction.
(b) Future Services. Developer hereby agrees to perform the following
development services for and as an agent of Owner:
(1) Construction and Development Matters. Developer shall oversee
construction of the Project on Owner's behalf, as provided in this Section
2.3(b)(1). Owner shall allow Developer full access to the Project during the
construction period. Developer and Developer's agents shall perform their work
in a manner that minimizes interference with the management and operation of the
Project.
(A) Developer shall exert its best efforts to ensure that the Contractor
performs its obligations under the Construction Documents in a diligent and
timely manner.
(B) Developer shall participate in and provide assistance with regard to
pre-construction conferences and pre-construction documents, including drawings,
specifications, contracts, and schedules.
(C) Developer shall review all Construction Documents, identify
construction issues and participate in the resolution of such issues.
(D) Developer shall attend construction progress meetings at the Project
site to monitor construction progress and advise Owner and the Contractor with
respect to the resolution of construction issues.
(E) Developer shall review the Contractor's monthly pay applications.
(F) Developer shall monitor the Contractor's progress with respect to the
approved Project schedule and keep the Owner informed of all pertinent Project
issues and construction progress.
(G) Developer shall advise Owner with respect to relations with engineers,
architects, and other construction professionals.
(H) Developer shall be available for immediate response in critical
situations arising during the construction of the Project.
(I) Developer shall coordinate relations with the City of Ogallalla and
other governmental authorities having jurisdiction over development of the
Project.
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(2) Tax Credit Matters. From the date hereof through the completion of
construction of the Project, the Developer shall provide the following services
to owner with regard to the Tax Credits which services do not constitute the
rendering of legal or tax advice:
(A) Developer shall consult with and advise Owner concerning construction
issues that could affect the amount of Tax Credits for which the Project is
eligible.
(B) Developer shall consult with and advise Owner with respect to the
requirements of the Department as they relate to the construction and
development of the Project.
(C) Developer shall monitor construction progress with respect to the
Project schedule agreed to with the Department, if any.
(D) Developer shall coordinate and participate in any conferences with the
Department relating to the Project and construction matters.
(c) Assignment of Development Rights. Developer hereby assigns to Owner all
rights to the development of the Project, including but not limited to, all
tangible and intangible rights arising with respect to the name OGALLALLA
APARTMENTS I LIMITED PARTNERSHIP, the design of the Project, the plans and
specifications for the Project and all rights arising under the agreements with
Project architects, engineers and other Project design and construction
professionals.
SECTION 3
DEVELOPMENT FEE PAYMENTS
To the extent not previously paid, for Development services performed
and to be performed under this Agreement, the Owner shall pay the Developer the
Development Fee on the Permanent Loan Funding Date. If the Development Fee is
not paid in full upon the Permanent Loan Funding Date then the Development Fee
shall be paid from available Cash Flow From Operations in accordance with the
terms of Section 11.1 of the Amended and Restated Agreement of Limited
Partnership for OGALLALLA APARTMENTS I LIMITED PARTNERSHIP, a Nebraska limited
partnership (said agreement is incorporated herein by this reference) but in no
event later than December 31, 2003.
SECTION 4
TERMINATION
Neither Party to this Agreement shall have the right to terminate this
Agreement prior to the expiration of the term without cause. Owner may terminate
this Agreement without further liability, for cause, which shall mean any one of
the following:
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(a) A material breach by Developer of its obligations under
this Agreement that is not cured within thirty (30) days after notice thereof
(or, as to any non-monetary obligations that is not reasonably capable of cure
within 30 days, and provided that cure is commenced within 10 days of notice and
diligently pursued thereafter to completion, within such time as may reasonably
be necessary to complete such cure);
(b) A fraudulent or intentionally incorrect report by
Developer to Owner with respect to the Project; or
(c) Any intentional misconduct or gross negligence by
Developer with respect to its duties under this Contract.
Upon proper termination of this Agreement by Owner pursuant to
this Section 4, all rights of Developer to receive unearned Development Fees
pursuant to this Agreement with respect to services not yet performed shall
terminate. Developer shall receive the full Development Fee for Prior Services
and shall receive a portion of the Development Fee for Future Services based on
the percentage of completion of construction of the Project at the time of
termination. Nothing in this Section 4 shall be deemed to prevent Owner from
bringing an action against Developer to recover fully all damages resulting from
any of the causes set forth in paragraphs (a), (b) or (c) above, or to prevent
Owner from contending in any action or proceeding that the Future Services were
not earned by Developer.
SECTION 5
GENERAL PROVISIONS
5.1 Notices. Notices required or permitted to be given under this
Agreement shall be in writing sent by registered or certified mail, postage
prepaid, return receipt requested, to the Parties at the following addresses, or
such other address as is designated in writing by the Party, the date of
registry thereof, or the date of certification receipt therefor being deemed the
date of such notice; provided, however, that any written communication
containing such information sent to a Party actually received by a Party shall
constitute notice for all purposes of this Agreement.
If to Developer: Retro Development, Inc.
1007 Park Avenue
Omaha, NE 68105
If to Owner: OGALLALLA APARTMENTS I
LIMITED PARTNERSHIP
1007 Park Avenue
Omaha, NE 68105
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5.2 Interpretation.
(a) Headings. The section headings in this Agreement are
included for convenience only; they do not give full notice of the terms of any
portion of this Agreement and are not relevant to the interpretation of any
provision of this Agreement.
(b) Relationship of the Parties. Neither Party hereto shall be
deemed an agent, partner, joint venturer, or related entity of the other by
reason of this Agreement and as such neither Party may enter into contracts or
agreements which bind the other Party.
(c) Governing Law. The Parties intend that this Agreement
shall be governed by and construed in accordance with the laws of the state of
Nebraska applicable to contracts made and wholly performed within Nebraska by
persons domiciled in Nebraska.
(d) Severability. Any provision of this Agreement that is
deemed invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability, without rendering invalid or unenforceable the
remaining provisions of this Agreement.
5.3 Integration; Amendment. This Agreement constitutes the entire
agreement of the Parties relating to the subject matter hereof. There are no
promises, terms, conditions, obligations, or warranties other than those
contained herein. This Agreement supersedes all prior communications,
representations, or agreements, verbal or written, among the Parties relating to
the subject matter hereof. This Agreement may not be amended except in writing.
5.4 Attorney' Fees. If any suit or action arising out of or related to
this Agreement is brought by any Party to any such document, the prevailing
Party shall be entitled to recover the costs and fees (including without
limitation reasonable attorneys' fees and costs of experts and consultants,
copying, courier and telecommunication costs, and deposition costs and all other
costs of discovery) incurred by such Party in such suit or action, including
without limitation to any post-trial or appellate proceeding.
5.5 Binding Effect. This Agreement shall bind and inure to the benefit
of, and be enforceable by, the Parties hereto and their respective successors,
heirs, and permitted assigns.
5.6 Assignment. Neither Party may assign this Agreement without the
consent of the other Party. No assignment shall relieve any Party of liability
under this Agreement unless agreed in writing to the contrary.
5.7 Third-Party Beneficiary Rights. No person not a Party to this
Agreement is an intended beneficiary of this Agreement, and no person not a
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Party to this Agreement shall have any right to enforce any term of this
Agreement.
5.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all the Parties, notwithstanding that all Parties are not signatories to the
same counterpart.
5.9 Further Assurances. Each Party agrees, at the request of the other
Party, at any time and from time to time after the date hereof, to execute and
deliver all such further documents, and to take and forbear from all such
action, as may be reasonably necessary or appropriate in order more effectively
to perfect the transfers or rights contemplated herein or otherwise to confirm
or carry out the provisions of this Agreement.
5.10 Mandatory Arbitration. Any person enforcing this Agreement may
require that all disputes, claims, counterclaims, and defenses ("Claims")
relating in any way to this Agreement or any transaction of which this Agreement
is a part (the "Transaction"), be settled by binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
and Title 9 of the U.S. Code. All claims will be subject to the statutes of
limitation applicable if they were litigated.
If arbitration occurs, one neutral arbitrator will decide all issues
unless either Party's Claim is $100,000.00 or more, in which case three neutral
arbitrators will decide all issues. All arbitrators will be active Nebraska
State Bar members in good standing. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award may be entered in any court
with jurisdiction.
If either Party institutes any judicial proceeding relating to the
Transaction, such action shall not be a waiver of the right to submit any Claim
to arbitration. In addition, both Parties have the right before, during, and
after any arbitration to exercise any of the following remedies, in any order or
concurrently: (i) setoff, (ii) self-help repossession, (iii) judicial or
non-judicial foreclosure against real or personal property collateral, (iv)
provisional remedies, including injunction, appointment of receiver, attachment,
claim and delivery, and replevin.
This arbitration clause cannot be modified or waived by either Party
except in a writing that refers to this arbitration clause and is signed by both
Parties.
IN WITNESS WHEREOF, the Parties have caused this Development Fee
Agreement to be executed as of ________________________, 1996.
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DEVELOPER: Retro Development, Inc.
By: _____________________________
Peter A. Spoto
OWNER: OGALLALLA APARTMENTS I
LIMITED PARTNERSHIP
By: Retro Development, Inc.
By: _____________________
Peter A. Spoto
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EXHIBIT A
Lots 1, 2, 3, 4, 5, 6, 7 and 8, Goodrich's Subdivision, Lot 9, Replat, in
Ogallalla, Keith County, Nebraska.
<PAGE>
GUARANTY AGREEMENT
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of the agreement of Retro Development, Inc.,
(the "Developer") to permit deferral of the $125,550 due from OGALLALLA
APARTMENTS I LIMITED PARTNERSHIP a Nebraska limited partnership ("Debtor") to
the Developer, the undersigned Guarantor(s), hereby unconditionally guaranty the
full and prompt payment when due, whether by acceleration or otherwise of that
certain Developer Fee from Debtor to the Developer, evidenced by the Development
Fee Agreement dated the even date herewith, and incorporated herein by this
reference. The foregoing described debt is referred to hereinafter as the
"Liabilities" or "Liability."
The undersigned further agree to pay all expenses paid or incurred by
the Developer in endeavoring to collect the Liabilities, or any part thereof,
and in enforcing the Liabilities or this Guaranty Agreement (including
reasonable attorneys' fees if collected or enforced by law or through an
attorney-at-law). The undersigned hereby represent and warrant that the
extension of credit or other financial accommodations by the Developer to Debtor
will be to the interest and advantage of the undersigned, and acknowledge that
this Guaranty Agreement is a substantial inducement to the Developer to extend
credit to Debtor and that the Developer would not otherwise extend credit to
Debtor.
The Developer may, from time to time, without notice to or consent of
the undersigned, (a) retain or obtain a security interest in any property to
secure any of the Liabilities or any obligation hereunder, (b) retain or obtain
the primary or secondary liability of any party or parties, in addition to the
undersigned, with respect to any of the Liabilities, (c) extend or renew for any
period (whether or not longer than the original period) or alter any of the
Liabilities, (d) release or compromise any Liability of the undersigned
hereunder or any Liability of any other party or parties primarily or
secondarily liable on any of the Liabilities, (e) release, compromise or
subordinate its title or security interest, or any part thereof, if any, in all
or any property now or hereafter securing any of the Liabilities or any
obligation hereunder, and permit any substitution or exchange for any such
property, and (f) resort to the undersigned for payment of any of the
Liabilities, whether or not the Developer shall have resorted to any property
securing any of the Liabilities or any obligation hereunder or shall have
preceded against any other party primarily or secondarily liable on any of the
Liabilities.
The undersigned hereby expressly waive: (a) notice of the existence or
creation of all or any of the Liabilities, (b) notice of any amendment or
modification of any of the instruments or documents evidencing or securing the
Liabilities, (c) presentment, demand, notice of dishonor and protest, (d) all
diligence in collection or protection of or realization upon the Liabilities or
any thereof, any obligation hereunder, or any security for any of the foregoing,
and (e) the right to require the Developer to proceed against Debtor on any of
the Liabilities.
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In the event any payment of Debtor to the Developer is held to
constitute a preference under the bankruptcy laws, or if for any other reason
the Developer is required to refund such payment or pay the amount thereof to
any other party, such payment by Debtor to the Developer shall not constitute a
release of Guarantor from any Liability hereunder, but Guarantor agrees to pay
such amount to the Developer upon demand and this Guaranty shall continue to be
effective or shall be reinstated, as the case may be, to the extent of any such
payment or payments.
No delay or failure on the part of the Developer in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Developer of any right or remedy shall preclude other or future
exercise thereof or the exercise of any other right or remedy. No action of the
Developer permitted hereunder shall in any way impair or affect this Guaranty
Agreement. For the purpose of this Guaranty Agreement, the Liabilities of Debtor
to the Developer are guaranteed notwithstanding any right or power of Debtor or
anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
impair or affect the obligations of the undersigned hereunder.
This Guaranty Agreement shall be binding upon the undersigned, and upon
the legal representatives, heirs, successors and assigns of the undersigned.
This Guaranty Agreement has been made and delivered in the state of
Nebraska and shall be construed and governed under Nebraska law.
Whenever possible, each provision of the Guaranty Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition of invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty Agreement.
Whenever the singular or plural number, masculine or feminine or neuter
is used herein, it shall equally include the other where applicable. In the
event this Guaranty Agreement is executed by more than one guarantor, this
Guaranty Agreement and the obligations hereunder are the joint and several
obligation of the undersigned.
Guarantor consents to the jurisdiction of the courts in the State of
Nebraska and/or to the jurisdiction and venue of any United States District
Court in the State of Nebraska having jurisdiction over any action or judicial
proceeding brought to enforce, construe or interpret this Guaranty. Guarantor
agrees to stipulate in any such proceeding that this Guaranty is to be
considered for all purposes to have been executed and delivered within the
geographical boundaries of the State of Nebraska, even if it was, in fact,
executed and delivered elsewhere.
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IN WITNESS WHEREOF, the undersigned have hereunto caused this Guaranty
Agreement to be executed as of _____________________, 1996.
Signed, sealed and delivered GUARANTOR:
in the presence of:
- ----------------------------
Witness
--------------------------
____________________________ Douglas E. Hiner
Notary Public
My Commission Expires:
Address for Guarantor:
- ----------------------------
1007 Park Avenue
(NOTARY SEAL) Omaha, NE 68105
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