MAIN ▇▇▇▇▇▇▇ HOUSING L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of June 25, 1996
TABLE OF CONTENTS
Preliminary Statement...........................................1
ARTICLE I.......................................................1
Defined Terms...................................................1
ARTICLE II.....................................................19
Name and Business..............................................19
2.1 Name; Continuation...................................19
2.2 Office and Resident Agent............................19
2.3 Purpose..............................................19
2.4 Term and Dissolution.................................20
ARTICLE III....................................................20
Mortgage, Refinancing and Disposition of Property..............20
3.1 Personal Liability...................................20
3.2 Refinancings.........................................21
3.3 Sale of Assets.......................................21
3.4 Real Estate Commissions..............................21
ARTICLE IV.....................................................21
Partners; Capital..............................................21
4.1 Capital and Capital Accounts.........................21
4.2 General Partner......................................23
4.3 Investment Limited Partner, Special Limited Partner and Original
Limited
Partner........................................................23
4.4 Liability of the Limited Partners....................23
4.5 Special Rights of the Special Limited Partner........23
4.6 Meetings.............................................26
ARTICLE V......................................................27
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner................................27
5.1 Payments.............................................27
5.2 Return of Capital Contributions......................31
ARTICLE VI.....................................................34
Rights, Powers and Duties of General Partner...................34
6.1 Authorized Acts......................................34
6.2 Restrictions on Authority............................35
6.3 Personal Services; Other Business Ventures...........37
6.4 Business Management and Control......................37
6.5 Duties and Obligations...............................38
6.6 Representations and Warranties.......................41
6.7 Liability on Mortgages...............................44
6.8 Indemnification of the General Partner...............44
6.9 Indemnification of the Partnership and the Limited Partners45
6.10 Operating Deficits...................................46
6.11 Obligation to Complete the Construction of the Apartment Complex47
6.12 Certain Payments to the General Partner and Others...47
6.13 Delegation of General Partner Authority..............48
6.14 Assignment to Partnership............................49
6.15 Contracts with Affiliates............................49
6.16 Tax Matters Partner..................................49
ARTICLE VII....................................................51
Withdrawal of a General Partner; New General Partners..........51
7.1 Voluntary Withdrawal.................................51
7.2 Reconstitution.......................................51
7.3 Successor General Partner............................52
7.4 Interest of Predecessor General Partner..............53
7.5 Event of Bankruptcy as to a General Partner; Removal of a General
Partner and Transfer of Its Interest...........................54
7.6 Designation of New General Partners..................55
7.7 Amendment of Certificate; Approval of Certain Events.55
7.8 Valuation and Sale of Interest of Former General Partner56
ARTICLE VIII...................................................57
Transferability of Limited Partner Interests...................57
8.1 Assignments..........................................57
8.2 Substituted Limited Partner..........................57
8.3 Restrictions.........................................58
ARTICLE IX.....................................................58
Borrowings.....................................................58
ARTICLE X......................................................59
Profits, Losses, Tax Credits, Distributions and Capital Accounts59
10.1 Profits, Losses and Tax Credits......................59
10.2 Cash Distributions Prior to Dissolution..............60
10.3 Distributions Upon Dissolution.......................61
10.4 Special Provisions...................................62
10.5 Authority of the General Partner to Vary Allocations to Preserve
and Protect the Partners' Intent...................................66
ARTICLE XI.....................................................67
Management Agent...............................................67
11.1 General..............................................67
11.2 Fees.................................................68
11.3 Removal and Replacement..............................68
11.4 Lack of Management Agent.............................69
ARTICLE XII....................................................69
Books and Records, Accounting, Tax Elections, Etc..............69
12.1 Books and Records....................................69
12.2 Bank Accounts........................................69
12.3 Auditors.............................................69
12.4 Cost Recovery and Elections..........................70
12.5 Special Basis Adjustments............................70
12.6 Fiscal Year..........................................71
12.7 Information to Partners..............................71
12.8 Expenses of the Partnership..........................73
ARTICLE XIII...................................................74
General Provisions.............................................74
13.1 Restrictions by Reason of Section 708 of the Code....74
13.2 Amendments to Certificates...........................75
13.3 Notices..............................................75
13.4 Word Meanings........................................76
13.5 Binding Effect.......................................76
13.6 Applicable Law.......................................76
13.7 Counterparts.........................................76
13.8 Financing Regulations................................76
13.9 Separability of Provisions...........................77
13.10 Paragraph Titles.....................................77
13.11 Amendment Procedure..................................77
13.12 Extraordinary Limited Partner Expenses...............77
13.13 Time of Admission....................................78
EXHIBIT A Legal Description
EXHIBIT B Projected Rents
EXHIBIT C Due Diligence Recommendations
EXHIBIT D Specimen Title Policy
MAIN ▇▇▇▇▇▇▇ HOUSING L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Main ▇▇▇▇▇▇▇ Housing L.P. (the "Partnership") was formed as a New York
limited partnership pursuant to an Agreement of Limited Partnership dated as
of November 1, 1995 (the "Original Agreement") by and between ▇▇▇▇▇▇▇
Development Corporation, a New York corporation ("EDC" or the "Original
General Partner"), as general partner and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as the limited
partner (the "Original Limited Partner"), and a Certificate of Limited
Partnership (the "Certificate") filed in the Filing Office on November 10,
1995 as amended by the Certificate of Amendment to Certificate of Limited
Partnership filed in the Filing Office on or before June 28, 1996 pursuant to
which EDC withdrew as general partner and was replaced by ▇▇▇▇▇▇▇ Development,
LLC, a New York limited liability company ("ELLC") (the "General Partner").
The parties desire to amend and restate the Original Agreement to (i)
provide for the withdrawal from the Partnership of the Original General
Partner, (ii) provide for the admission of ELLC as the General Partner, (iii)
provide for the withdrawal from the Partnership of the Original Limited
Partner, (iv) provide for the admission of BOSTON CAPITAL TAX CREDIT FUND IV
L.P., a Delaware limited partnership ("BCTCF"), as the Investment Limited
Partner, (v) provide for the admission of BCTC 94, INC., a Delaware
corporation ("BCTC 94") as the Special Limited Partner, and (vi) more fully
set forth the rights and obligations of the Partners.
In consideration of the mutual agreements set forth herein, it is agreed
and certified, and the Original Agreement is hereby amended and restated in
its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the meanings
specified below:
"Act" means the Revised Uniform Limited Partnership Act as in effect in
the State.
"Actual Credit" means, with respect to a particular Fiscal Year, the
total amount of Tax Credit properly allocable by the Partnership to the
Investment Limited Partner for such Fiscal Year. The Actual Credit shall be
retroactively revised if the amount of Tax Credit properly allocable to the
Investment Limited Partner is revised as the result of an audit or is
recaptured.
"Additional Limited Partner" means any holder of an Interest designated
as an Additional Limited Partner pursuant to the provisions of Section 4.5(b)
or Section 7.4.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end
of a Partnership Fiscal Year, after giving effect to the following
adjustments:
(i) Such Capital Account shall be increased by the amount of any
Deficit Restoration Obligation of such Partner.
(ii) Such Capital Account shall be decreased by the Qualified Income
Offset Items.
The foregoing definition of Adjusted Capital Account Deficit and the
application of such term in the manner provided in this Agreement is intended
to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Allocation Regulations and shall be interpreted consistently therewith.
"Admission Date" means the first date on which all parties hereto shall
have executed this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" means as to a specified Person, (i) such Person; (ii) each
member of the Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred to in the
preceding clauses (i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii); or (v) any other
Person (a) who directly or indirectly controls, is controlled by, or is under
common control with such Person, (b) who is an officer of, director of,
partner in or trustee of, or serves in a similar capacity with respect to,
such Person or of which such Person is an officer, director, partner or
trustee, or with respect to which such Person serves in a similar capacity,
(c) who, directly or indirectly, is the beneficial owner of ten percent (10%)
or more of any class of equity securities of such Person or of which such
Person is directly or indirectly the owner of ten percent (10%) or more of
any class of equity securities, (d) who is an officer, director, general
partner, trustee or holder of ten percent (10%) or more of the voting
securities or beneficial interests of any Person referred to in the foregoing
clauses (v) (b) or (v) (c), or (e) who, whatever such Person's title, performs
functions for such Person or any Affiliate of such Person similar to a
Chairman or member of the Board of Directors, or executive officer such as the
President, Executive Vice President or Senior Vice President, Corporate
Secretary, or Treasurer, or any Person holding a five percent (5%) or more
equity interest in such Person, or any Person having the power to direct or
cause the direction of such Person whether through the ownership of voting
securities, by contract or otherwise. An Affiliate of any Investment Limited
Partner or of any Investment General Partner does not include a Person who is
a partner in a Partnership or joint venture with any Investment Limited
Partner or any other Affiliate of any Investment Limited Partner if such
Person is not otherwise an Affiliate of any Investment Limited Partner or any
Investment General Partner. For purposes of this definition, the term
Affiliate shall not be deemed to include any law firm (or member or associate
thereof) providing legal services to any Investment Limited Partner, any
Investment General Partner, the General Partner or any Affiliate of any of
them.
"AFR" means the "applicable federal rate" as defined and determined in
the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency or any other Governmental Authority
with jurisdiction over the Apartment Complex, or the business and operations
of the Partnership.
"Agreement" means this First Amended and Restated Agreement of Limited
Partnership, including Schedule A, as amended from time to time.
"Allocation Regulations" means the Treasury Regulations issued under
Sections 704(b) and 752 of the Code, as the same may be modified or amended
from time to time. In the event that the Allocation Regulations are revised
or amended subsequent to the date of this Agreement, references herein to
sections or paragraphs of the Allocation Regulations shall be deemed to be
references to the applicable sections or paragraphs of the Allocation
Regulations as then in effect.
"Apartment Complex" means the real property located in New ▇▇▇▇▇▇▇▇,
Westchester County, New York, as more fully described in Exhibit A attached
hereto, together with (i) all buildings and other improvements constructed or
to be constructed thereon and (ii) all furnishings, equipment and personal
property owned by the Partnership and located thereon or otherwise covered by
the Mortgages.
"Applicable Percentage" has the meaning set forth in Section 42(b) of
the Code.
"Applied Amounts" shall have the meaning set forth in Section 6.10.
"Asset Management Fee" means the fee payable to BCTCF or an Affiliate
thereof pursuant to the provisions of Section 6.12(b).
"Assignee" shall have the meaning set forth in Section 4.1(c).
"Auditors" means ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of Bethesda, Maryland, or
such other firm of independent certified public accountants as may be engaged
by the General Partner with the Consent of the Special Limited Partner for the
purposes of preparing the Partnership's income tax returns, auditing the books
and records of the Partnership and certifying financial reports of the
Partnership.
"BCTC 94" means BCTC 94, Inc., a Delaware corporation, and its
successors.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a Delaware limited
partnership, and its successors.
"Best Knowledge" shall mean and include, in the case of a specified
Person, (i) actual current knowledge and (ii) that knowledge which a prudent
businessperson (including, in the case of an Entity, the general or managing
partners, officers and directors of such Entity) should have obtained in the
management of his or her business affairs after making due inquiry and
exercising due diligence with respect thereto. In connection therewith, the
knowledge (both actual and constructive) of any general or managing partner,
director or officer of an Entity shall be deemed to be the knowledge of the
Entity.
"Capital Account" has the meaning set forth in Section 4.1(b).
"Capital Contribution" means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each Partner,
as set forth in Schedule A. Any reference in this Agreement to the Capital
Contribution of a then Partner shall include a Capital Contribution previously
made by any prior Partner for the Interest of such then Partner.
"Capital Proceeds" means the proceeds of a Capital Transaction.
"Capital Transaction" means a refinancing of any Partnership
indebtedness or a sale, exchange, eminent domain taking, damage or destruction
(whether insured or uninsured), insured title defect or other disposition of
all or any portion of the Apartment Complex (other than an event generating
proceeds of any business or rental interruption insurance), but excluding the
payment of Capital Contributions.
"Carryover Certification" means the date on which the Investment Limited
Partner shall have received, in a form and in substance satisfactory to the
Investment Limited Partner, the certification of the Auditors that, with
respect to the carryover allocation of 1995 Tax Credits, as of a date no
later than December 31, 1995, the Partnership had incurred capitalizable costs
with respect to the Apartment Complex of at least ten per cent (10%) of the
Partnership's reasonably expected basis in the Apartment Complex as of
December 31, 1995, so that each building in the Apartment Complex constitutes
a "qualified building" for the purposes of Section 42(h)(1)(E)(ii) of the
Code.
"Cash Available for Debt Service Requirements" for any period, means the
excess of (i) all cash actually received by the Partnership on a cash basis
from normal operations during such period, but specifically excluding the
proceeds of insurance (other than business or rental interruption insurance),
loans, Capital Transactions or Capital Contributions over (ii) all cash
requirements of the Partnership properly allocable to such period of time on
an accrual basis (not including distributions to Partners out of Cash Flow of
the Partnership or fees payable from Cash Flow) and, on an annualized basis,
all projected expenditures, including those of a seasonal nature, which might
reasonably be expected to be incurred on an unequal basis during a full annual
period of operation as determined by the Auditors but specifically excluding
Debt Service Requirements. For purposes of this definition, (i) cash
requirements of the Partnership shall include to the extent not otherwise
covered above, full funding of reserves (including, without limitation,
funding of the Replacement Reserve), normal repairs, real estate taxes at
fully assessed levels assuming a fully improved property and necessary capital
improvements and (ii) if free rent or other rental concessions shall have been
granted to tenants, the calculation of rental revenues under clause (i) of the
preceding sentence shall be adjusted so that the effect of such concessions is
amortized equally over the term of all leases (excluding renewal periods) to
which it applies.
"Cash Expenditures" means all disbursements of cash during a specified
Fiscal Year (other than distributions to Partners), including, without
limitation, payment of operating expenses, payment of principal and interest
on the Partnership's indebtedness (other than payments of principal and
interest on any Subordinated Loans or Voluntary Loans), the cost of repairs to
the Apartment Complex, amounts allocated to reserves by the General Partner
and the payment of any fees other than the Asset Management Fee, the
Partnership Management Fee and the Development Fee. In addition, the net
increase during such Fiscal Year in any escrow account or reserve maintained
by or for the Partnership shall be considered a Cash Expenditure during such
Fiscal Year. The term Cash Expenditures shall not include Development Costs.
Cash Expenditures payable to Partners or Affiliates of Partners shall be paid
after Cash Expenditures payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash Expenditures.
Cash Flow shall be determined separately for each Fiscal Year or portion
thereof.
"Cash Receipts" means all cash receipts of the Partnership from whatever
source derived other than from a Capital Transaction, including, without
limitation, rental revenues, government subsidy payments, any amounts
attributable to construction savings and Capital Contributions (except to the
extent construction savings and/or Capital Contributions are used to pay
Development Costs), proceeds of (i) loans, (ii) business interruption
insurance and (iii) rental insurance. In addition, the net reduction in any
Fiscal Year in the amounts of any escrow account or reserve maintained by or
for the Partnership (including, without limitation, the Operating Reserve and
the Replacement Reserve) shall be considered a cash receipt of the Partnership
for such Fiscal Year. Notwithstanding the foregoing, at the election of the
General Partner, Cash Receipts received near the end of a Fiscal Year and
intended for use in meeting the Partnership's obligations (including the cost
of acquiring assets or paying debts or expenses) in the subsequent Fiscal Year
shall not be deemed to be received until such following Fiscal Year.
"Certificate" shall have the meaning set forth in the Preliminary
Statement.
"Class Contribution" means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partner, the
Investment Limited Partner, the Special Limited Partner or any Additional
Limited Partner).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations (permanent and temporary) issued thereunder, as
amended from time to time. References herein to any Code section shall
include any successor provisions.
"Commencement Date" means the first day of the month in which the
Admission Date occurs.
"Competitive Real Estate Commission" means that real estate or brokerage
commission paid for the purchase or sale of the Apartment Complex or other
Partnership property which is reasonable, customary and competitive in light
of the size, type and location of the Apartment Complex or other property.
"Completion Date" means the later of: (i) the date the Investment
Limited Partner shall have received copies of all requisite certificates or
permits permitting occupancy of 100% of the apartments units in the Apartment
Complex as issued by each Agency having jurisdiction; provided, however, that
if such certificates or permits are of a temporary nature, the Completion Date
shall not be deemed to have occurred unless the General Partner certifies to
the Investment Limited Partner that any work remaining to be completed is for
so-called "punch list items" and the General Partner knows of no reason why
permanent certificates of occupancy will not be issued upon completion of such
"punch list items"; or (ii) the date as of which the Inspecting Consultant
certifies that the work to be performed by the Contractor under the
Construction Contract is substantially complete. Any representation by the
General Partner under this Agreement that the Completion Date has occurred
shall be subject to confirmation by the Special Limited Partner pursuant to a
physical inspection of the Apartment Complex; provided, however, that in the
event that the Special Limited Partner does not make such physical inspection
of the Apartment Complex within 10 business days after having received a
written representation of the General Partner that the Completion Date has
occurred, then the Special Limited Partner will be deemed to have waived the
physical inspection requirement; provided, however, that such 10-day period
shall not be included in any calculation as to when the Completion Date shall
have occurred.
"Compliance Period" means the fifteen (15)-year period commencing with
the first year of the Credit Period.
"Consent of the Investment Limited Partner" means the prior written
consent or approval of the Investment Limited Partner which, unless otherwise
specifically provided herein, may be given or withheld in its sole discretion.
The Consent of the Investment Limited Partner shall be exercised by and
through the Investment General Partner, acting in the name and on behalf of
the Investment Limited Partner. If at any time, the Investment Limited
Partner interest is held by more than one Person, such Consent shall require
majority approval of such Persons.
"Consent of the Special Limited Partner" means the prior written consent
or approval of the Special Limited Partner which, unless otherwise
specifically provided herein, may be given or withheld in its sole discretion.
"Construction Contract" means the fixed price construction contract
dated as of June __, 1996, by and between the Contractor and the Partnership,
as amended.
"Construction Lender" means Chase Community Development Corporation or
any other Lender providing construction financing for the Apartment Complex.
"Construction Loan" means the construction loan, in the amount of
$835,930 to be provided by the Construction Lender to the Partnership pursuant
to the terms of the Construction Loan Documents.
"Construction Loan Agreement" means the Loan Agreement dated
June __, 1996 by and between the Construction Lender and the Partnership, as
amended.
"Construction Loan Documents" means the Construction Note, the
Construction Mortgage, the Construction Loan Agreement and all other documents
executed and/or delivered in connection with the Construction Loan.
"Construction Mortgage" means collectively, the Mortgages securing the
Partnership's obligations under the Construction Note.
"Construction Note" means collectively, the promissory notes executed by
the Partnership to evidence its obligations with respect to the Construction
Loan, which note is or shall be secured by the Construction Mortgage.
"Construction Permitting Date" means the first date upon which the
Partnership shall have received the Requisite Approvals for the commencement
of the rehabilitation and operation of the Apartment Complex in accordance
with the Plans and Specifications therefor.
"Contractor" means Castle Rock Construction Co., Inc., a New York
corporation, and its successors.
"Contractor Payoff Letter" means a letter to be issued by the
Contractor to the Partnership at the time of Completion Date stating that all
amounts payable to the Contractor in connection with the Project have been
paid in full and that there are no pending or, to the Contractor's Best
Knowledge, threatened, defaults under the Construction Contract.
"Controlling Person" has the meaning set forth in Section 15 of the
Securities Act of 1933, as amended.
"Cost Certification" means the date upon which each Limited Partner
shall have received the written certification of the Auditors, in a form and
in substance reasonably satisfactory to the Special Limited Partner, as to the
itemized amounts of the construction and development costs of the Apartment
Complex and the Actual Credit pertaining to each building in the Apartment
Complex.
"Credit Agency" means the State of New York Division of Housing and
Community Renewal and its successors.
"Credit Period" has the meaning set forth in Section 42(f)(1) of the
Code.
"Credit Recovery Loan" means a constructive interest-bearing advance of
the Investment Limited Partner, as more fully described in Section 5.1(g).
"Credit Shortfall" shall have the meaning set forth in Section 5.1(g).
"Debt Service Coverage Ratio" means, for any period with each month
considered individually, a fraction, the numerator of which is the Cash
Available for Debt Service Requirements with respect to such period and the
denominator of which is the Debt Service Requirements for such period. The
achievement by the Partnership of a specified Debt Service Coverage Ratio
shall be confirmed by the Auditors and shall be subject to the approval of the
Special Limited Partner, which shall not be unreasonably withheld, provided,
however, that no objection by the Special Limited Partner to the determination
of the Auditors shall be valid unless the General Partner is notified of such
objection, and the specific reasons therefor, within seven (7) business days
following the receipt by the Special Limited Partner of the Auditor's
determination letter and in the event that the Special Limited Partner does
not so notify the General Partner within such seven business day period, the
Special Limited Partner will be deemed to have waived its right to object to
such determination.
"Debt Service Requirements" means for any period, all debt service,
reserve, mortgage insurance premium, tax and insurance escrows and/or other
cash requirements imposed with respect to the Mortgage or any other
indebtedness (except for the Subordinated Loans and Voluntary Loans) properly
allocable to such period of time on an annualized accrual basis as determined
by the Auditors. To the extent the relevant period includes any period prior
to Permanent Mortgage Commencement, Debt Service Requirements for such period
shall be computed by adding to the foregoing amounts the amount (if any) by
which the debt service on such Permanent Loan for such period beginning after
principal amortization has commenced exceeds the actual debt service on such
Permanent Loan (and any previous Mortgage Loan which may have then been in
place) for the relevant period.
"Deficit Restoration Obligation" means, for each Partner, the sum of (i)
any amounts which such Partner is obligated to restore to the Partnership in
accordance with the provisions of Sections 1.704-1(b)(2)(ii)(c), 1.704-
1(b)(2)(ii)(h) or any other applicable provisions of the Allocation
Regulations, (ii) such Partner's Share of Partnership Minimum Gain if any, and
(iii) such Partner's Share of Partner Nonrecourse Debt Minimum Gain, if any.
"Designated Net Worth Requirements" means as of the date of
determination, such standards or criteria (relating to net worth or other
characteristics) as may be (i) set forth in Revenue Procedure 89-12 or any
other regulations, memoranda, published ruling or revenue procedure of the
Service for classification of the Partnership for federal income tax purposes
as a partnership rather than an association taxable as a corporation, or (ii)
sufficient to support the issuance by tax counsel approved by each Investment
Limited Partner of an opinion to the same effect.
"Developer" means R&D Young Developers, LLC, a New York limited
liability company, and its successors.
"Development Agreement" means the Development Agreement, dated as of
June 25, 1996, by and between the Developer and the Partnership.
"Development Costs" means any and all costs and expenses necessary to
(i) cause the construction of the Apartment Complex to be completed, in a good
and workmanlike manner, free and clear of all mechanics', materialmen's or
similar liens, in accordance with the Plans and Specifications, (ii) equip the
Apartment Complex with all fixtures as shown on the Plans and Specifications,
equipment and articles of personal property (including, without limitation,
refrigerators and ranges), (iii) obtain all required certificates of occupancy
for the apartment units and other space in the Apartment Complex, (iv) pay the
Development Fee, (v) finance the construction of the Apartment Complex and
achieve Permanent Mortgage Commencement in accordance with the provisions of
the Project Documents, (vi) discharge all Partnership liabilities and
obligations arising out of any casualty generating insurance proceeds for the
Partnership, (vii) fund any Partnership reserves required (a) hereunder or (b)
under any of the Project Documents which must be funded prior to the
Completion Date, (viii) repay and discharge the Construction Loan, and (ix)
pay any other costs or expenses necessary to achieve the Completion Date and
Permanent Mortgage Commencement.
"Development Fee" means the fees payable by the Partnership to the
Developer pursuant to the terms of the Development Agreement for its services
in connection with the acquisition, development and rehabilitation of the
Apartment Complex.
"Disposition" (including the forms Dispose and Disposing) means, as to a
specified Partner, the assignment, sale, transfer, exchange or other
disposition of all or any part of its Interest.
"Disposition Agreement" means the Disposition and Development Agreement
by and between the Credit Agency and the Partnership, and as may be amended
from time to time.
"Due Diligence Recommendations" means Exhibit C attached hereto and made
a part hereof.
"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section 42(d) of the Code.
"Entity" means any Person, general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of his
property, or ordering the winding-up or liquidation of his affairs
and the continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days;
(ii) the commencement by such Person of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or the consent by him to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or similar official) of such Person or
for any substantial part of his property, or the making by him of
any assignment for the benefit of creditors, or the taking of
corporate action by the Person in furtherance of any of the
foregoing; or
(iii) the commencement against such Person of an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, which has not been vacated, discharged or bonded within
sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in Section 5.1(h).
"Extended Use Agreement" means the extended use housing commitment to be
executed by the Partnership in accordance with the requirements of the Credit
Agency and the provisions of Section 42(h)(6)(A) of the Code.
"Filing Office" means the Office of the Secretary of State of the State
of New York.
"Fiscal Year" means the twelve-month period which begins on the first
day of January and ends on the thirty-first day of December of each calendar
year (or ends on the date of final dissolution for the year in which the
Partnership is wound up or dissolved) including, without limitation, such
partial year as may be applicable.
"General Partner" means ELLC and any Person who becomes a General
Partner as provided herein, in its capacity as a general partner of the
Partnership. At any and all times where there is more than one General
Partner, the term General Partner shall mean such General Partners.
"Governmental Authority" means the Credit Agency or any other federal,
state or local governmental authority having jurisdiction over the particular
matter to which reference is being made.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of
such asset, as determined by the contributing Partner and the
Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined
by the General Partner, as of the following times: (a) 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; (b) 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 (c) the
liquidation of the Partnership within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Allocation Regulations; provided,
however, that the adjustments pursuant to clauses (a) and (b)
above shall be made 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;
(iii) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the
date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken
into account in determining Capital Accounts pursuant to Section
1.704-1(b)(2)(iv)(m) of the Allocation Regulations and Section 4.1
hereof; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this clause (iv) to the extent that the
General Partner determines that an adjustment pursuant to clause
(ii) hereof is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant
to this clause (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section (i), (ii) or (iv) hereof, such Gross Asset Value shall
thereafter be adjusted by the depreciation taken into account with respect to
such asset for purposes of computing Profits or Losses.
"Guarantors" means each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, and each
of their respective successors as guarantors under the Guaranty.
"Guaranty" means the Guaranty, dated as of June 25, 1996, of the
Guarantors of all of the obligations of the General Partner hereunder and of
the Developer as set forth in the Development Agreement, as amended.
"Hazardous Material" has the collective meanings given to the terms
"hazardous material", "hazardous substances" and "hazardous wastes" in the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the term "radioactive
materials" in the context of the Atomic Energy Act, 28 U.S.C. Sec. 2344, and
also includes any meanings given to such terms in any similar state or local
statutes, ordinances, regulations or by-laws.
"Immediate Family" means with respect to any Person, such Person's
spouse, parents, parents-in-law, descendants, nephews, nieces, brothers,
sisters, brothers-in-law, sisters-in-law, children-in-law and grandchildren-
in-law.
"Includable Items" shall have the meaning set forth in Section 6.11.
"Initial Adjustment Date" shall have the meaning set forth in Section
5.1(e).
"Initial 100% Occupancy Date" means the first date on which not less
than 100% of the 11 apartment units in the Apartment Complex shall have been
leased to, and not less than 100% of such apartments units shall be physically
occupied by tenants on such date meeting the terms of the Minimum Set-Aside
Test under executed leases at rentals meeting the requirements of the Rent
Restriction Test.
"Initial Operating Period" means the period commencing on the Completion
Date and ending on the last day of the sixtieth (60) month following such
date.
"Inspecting Consultant" means the consultant retained by any Lender
(including, without limitation, the Construction Lender) to monitor the
progress of the rehabilitation of the Apartment Complex and to certify as to
the completion of such construction.
"Installment" means an installment of the Investment Limited Partner's
Capital Contribution paid or payable to the Partnership pursuant to
Section 5.1.
"Interest" means the entire 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.
"Invested Amount" means (i) as to the Investment Limited Partner, an
amount equal to the paid-in Capital Contribution of the Investment Limited
Partner divided by .73 and (ii) as to any other Partner, an amount equal to
its paid-in Capital Contribution.
"Investment General Partner" means Boston Capital Associates IV L.P., a
Delaware limited partnership, in its capacity as the general partners of the
Investment Limited Partner, and any other Person who may become a successor or
additional general partner of the Investment Limited Partner.
"Investment Limited Partner" means BCTCF and any Person or Persons who
replace it as Substituted Limited Partner, but shall not include any
Additional Limited Partner.
"Investment Partnership Agreement" means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from time to time.
"Lender" means any Person (other than the General Partner or its
Affiliates) who makes a loan to the Partnership, whether or not such loan is
secured by a Mortgage, or the successors and assigns of such Person in such
capacity.
"Lender Estoppel Letter" means a letter to be issued to the Partnership
by each Lender to the Project at the time of payment of the Second Installment
stating that all amounts currently due and owing to such Lender by the
Partnership have been paid in full and that there are no existing defaults in
connection with such debt obligations which have been noticed.
"Limited Partners" means the Investment Limited Partner, the Special
Limited Partner and any Additional Limited Partner.
"Liquidating Event" shall have the meaning set forth in Section 2.4.
"Managing General Partner" means any Person designated as such pursuant
to the provisions of Section 6.4.
"Management Agent" means R&D Young Realty Management, LLC, a New York
limited liability company in its capacity as the initial management and rental
agent for the Apartment Complex, and any successor management and rental agent
designated or appointed at any time.
"Management Agreement" means the agreement between the Partnership and
the Management Agent providing for the management of the Apartment Complex.
"Management Fee" means the Management Fee to which reference is made in
Section 11.1.
"Material Agreement" means any agreement to which the Partnership is a
party or to which the Apartment Complex is subject, the termination of which
would have a material adverse impact on the Apartment Complex or the business
and operations of the Partnership.
"Minimum Set-Aside Test" means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40% of the
units in the Apartment Complex must be occupied by individuals with incomes
equal to 60% or less of area median income, as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the Partnership evidenced
by any Note and secured by any mortgage on the Apartment Complex from the
Partnership to any Lender; and, where the context admits, the term "Mortgage"
shall mean and include any of the mortgages securing said indebtedness and any
other documents pertaining to said indebtedness which were required by the
Lender as a condition to making such Mortgage Loan. In case any Mortgage is
replaced by any subsequent mortgage or mortgages, such term shall refer to any
such subsequent mortgage or mortgages. The term "mortgage" means any
mortgage, mortgage deed, deed of trust, deed to secure debt or any similar
security instrument, and "foreclose" and words of like import include the
exercise of a power of sale under a mortgage or comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by any Lender and
secured by a Mortgage.
"Mortgage Loan Documents" means the Construction Loan Documents and/or
the Permanent Loan Documents, as the context may require.
"Nonrecourse Debt" or "Nonrecourse Liability" means any indebtedness for
which none of the Partners has any Economic Risk of Loss other than through
his or its interest in the Partnership Property securing such indebtedness, as
defined in Section 1.752-1(a)(2) of the Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section 1.704-
2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to a Lender
evidencing a Mortgage Loan, and shall also mean and include any Note
supplemental to said original Note issued to a Lender or any Note issued to a
Lender in substitution for any such original Note.
"Operating Deficit" means, for any specified period of time, the amount
by which the Cash Receipts of the Partnership are less than the amount
necessary to pay all Cash Expenditures of the Partnership.
"Operating Profits or Losses" means, with respect to any Fiscal Year,
the Profits or Losses of the Partnership for such Fiscal Year other than
Profits or Losses from a Capital Transaction.
"Operating Reserve" shall have the meaning set forth in Section
6.5(e)(ii).
"Original Agreement" has the meaning set forth in the Preliminary
Statement.
"Original Limited Partner" has the meaning set forth in the Preliminary
Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section 1.704-
2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Sections 1.704-2(i)(2) and (3) of the Allocation Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued pursuant to this
Agreement.
"Partnership Management Fee" shall have the meaning set forth in
Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in Section 1.704-
2(d) of the Allocation Regulations.
"Percentage Interests" means the interests of the Partners in Profits
and Losses, tax-exempt income, non-deductible, non-capitalizable expenditures
and Tax Credits, as set forth in Schedule A.
"Permanent Lender" means Chase Community Development Corporation which
intends to sell its interest immediately after Permanent Loan closing to The
New York State Common Retirement Fund (with insurance from the State of New
York Mortgage Agency) or any other Lender providing permanent financing for
the Apartment Complex who has been approved by the Special Limited Partner and
the General Partner, except as otherwise provided in Section 3.2.
"Permanent Loan" means any permanent loan provided by the Permanent
Lender to the Partnership pursuant to the terms of the Permanent Loan
Documents.
"Permanent Loan Commitment Date" means the commitment for permanent
financing from the Permanent Lender dated as of February 29, 1996 or such
other commitment as may be issued in form and substance satisfactory to the
Special Limited Partner.
"Permanent Loan Conditions" means, with respect to a proposed Permanent
Loan, that (a) such Permanent Loan (i) has a term of not less than 30 years,
(ii) has an amortization schedule not longer than 30 years, (iii) is in a
principal amount of not more than $640,000 and (b) when such Permanent Loan is
in place, the Debt Service Coverage Ratio of the Partnership is projected to
be not less than 1.15 to 1.00.
"Permanent Loan Documents" means the Permanent Note, the Permanent
Mortgage and all other documents executed and/or delivered in connection with
the Permanent Loan.
"Permanent Mortgage" means the Mortgage securing the Partnership's
obligations under the Permanent Note.
"Permanent Mortgage Commencement" means the payment and discharge of the
Construction Loan and the execution and delivery of the Permanent Loan
Documents.
"Permanent Note" means the Promissory Note to be executed by the
Partnership to evidence its obligations with respect to the Permanent Loan,
which Note shall be secured by the Permanent Mortgage.
"Person" means any individual or Entity.
"Plans and Specifications" means the plans and specifications for the
rehabilitation of the Apartment Complex, including, without limitation,
specifications for materials, and all amendments and modifications thereof
which are approved in accordance with the Project Documents.
"Prime Rate" means the rate of interest announced from time to time by
the Wall Street Journal as the prime rate.
"Profits or Losses" shall have the meaning set forth in Section
10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan Documents, this
Agreement, the Development Agreement, the Extended Use Agreement, the
Guaranty, the Disposition Agreement, the Management Agreement, all other
instruments executed by the Partnership, the General Partner or an Affiliate
of the General Partner and delivered to (or required by) any Lender and all
other documents relating to the Apartment Complex and by which the Partnership
is bound, as amended or supplemented from time to time.
"Projected Credit" means $131,940 per annum for each of the Fiscal Years
1997 through 2006 (inclusive), provided that upon the occurrence of any of the
events described in Section 5.1(e), the Projected Credit shall thereafter be
the Revised Projected Credit.
"Projected Rents" means the rents described in Exhibit B attached hereto
and made a part hereof.
"Qualified Basis" has the meaning set forth in Section 42(c) of the
Code.
"Qualified Income Offset Item" means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to be made
(a) pursuant to Section 704(e)(2) of the Code to a donee of an interest in the
Partnership, (b) pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (c) pursuant to Treasury Regulation
Section 1.751-1(b)(2)(ii) as the result of a distribution by the Partnership
of unrealized receivables or inventory items and (2) a distribution that, as
of the end of such year, reasonably is expected to be made to a Partner to the
extent it exceeds offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the Partnership taxable
year in which such distribution reasonably is expected to occur.
"Reconstitution Period" shall have the meaning set forth in Section
7.2(b).
"Reduction Amount" shall have the meaning set forth in Section 5.1(f).
"Reduction Year" shall have the meaning set forth in Section 5.1(f).
"Regulations" means the rules and regulations applicable to the
Apartment Complex or the Partnership of the Credit Agency, the City of New
▇▇▇▇▇▇▇▇ and any other Governmental Authority having jurisdiction over the
Partnership and/or the Apartment Complex.
"Related Person" means a Person related to a Partner within the meaning
of Treasury Regulation Section 1.752-4(b).
"Rent Restriction Test" means the test pursuant to Section 42 of the
Code whereby the gross rent charged to tenants of the low-income units in the
Apartment Complex may not exceed thirty percent (30%) of the qualifying income
levels.
"Rental Achievement" means the first time following three (3)
consecutive full calendar months of operations after the Completion Date (with
each month considered individually) that the Apartment Complex generates a
1.15 to 1.00 Debt Service Coverage Ratio.
"Replacement Reserve" shall have the meaning set forth in
Section 6.5(e).
"Repurchase Amount" shall have the meaning set forth in Section 5.2(a).
"Requisite Approvals" means any required approvals of each Lender and
Agency to an action proposed to be taken by the Partnership.
"Revised Projected Credit" has the meaning set forth in Section 5.1(e).
"Schedule A" means Schedule A to this Agreement, as amended from time to
time.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means, for each Partner
an amount equal to his or its "share of partner nonrecourse debt minimum gain"
as determined in accordance with Section 1.704-2(i)(5) of the Allocation
Regulations.
"Share of Partnership Minimum Gain" means for each Partner, an amount
equal to his or its "share of partnership minimum gain" as determined in
accordance with Section 1.704-2(g) of the Allocation Regulations.
"Site" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and shall also include any meaning given to it in
any similar state or local statutes, ordinances, regulations or by-laws.
"Special Limited Partner" means BCTC '94, and any Person who becomes a
Special Limited Partner as provided herein, in its capacity as a special
limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage Loans, (ii)
the net rental income, if any, generated by the Apartment Complex prior to
Permanent Mortgage Commencement which is permitted by the Lenders to be
applied to the payment of Development Costs, (iii) the Capital Contributions
of the Investment Limited Partner, (iv) the Capital Contributions of the
General Partner in the amounts set forth in Schedule A as of the Admission
Date, and (v) any insurance proceeds arising out of casualties occurring prior
to Permanent Mortgage Commencement.
"State" means the State of New York.
"State Designation" means the date on which the Partnership receives an
allocation in proper form pursuant to Section 42 of the Code from the Credit
Agency of 1995 Tax Credits, as evidenced by the execution by or on behalf of
the Credit Agency of one or more Form(s) 8609. For the purposes of
determining State Designation, each building in the Apartment Complex shall be
treated as having received an allocation of Tax Credit in an amount equal to
the lesser of (i) the amount of Tax Credit carryover allocation received from
the Credit Agency as to such building or (ii) the amount of Tax Credits set
forth on the Form 8609 as to such building.
"Subordinated Loan" means any loan made by the General Partner to the
Partnership pursuant to Section 6.5(e) or Section 6.10.
"Subordinated Loan Period" shall have the meaning set forth in
Section 6.5(e).
"Substituted Limited Partner" means any Person who is admitted to the
Partnership as Limited Partner under Section 8.2 or acquires the Interest of a
Limited Partner pursuant to Section 5.2.
"Syndication Expenses" means all expenditures classified as syndication
expenses pursuant to Treasury Regulation Section 1.709-2(b). Syndication
Expenses shall be taken into account under this Agreement at the time they
would be taken into account under the Partnership's method of accounting if
they were deductible expenses.
"Tax Accountants" means ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of Bethesda,
Maryland or such other firms of independent certified public accountants as
may be engaged by the Special Limited Partner to review the Partnership income
tax returns.
"Tax Credit" means the low-income housing tax credit described in
Section 42 of the Code.
"Tax Credit Set-Aside" means the date on which the Partnership receives
an allocation of 1995 Tax Credits from the Credit Agency in an annual dollar
amount of not less than $131,940.
"Tax Liability" means cash sufficient to enable a Partner to pay, on an
after-tax basis after any taxes imposed or any distribution in connection
therewith, the taxes projected by such Partner to be imposed on it as a result
of any relevant Capital Transaction.
"Title Policy" means the owner's title insurance policy, or at the
option of the Special Limited Partner an endorsement to a pre-existing owner's
policy in favor of the Partnership thereto, with an effective date on or after
the Admission Date, in the amount of not less than the Invested Amount plus
the outstanding Partnership indebtedness, issued by First American Title
Insurance Company to the Partnership, evidencing the Partnership's ownership
of the Apartment Complex subject only to such exclusions, exceptions,
conditions and stipulations as may be approved by the Special Limited Partner
in its sole discretion and with a Fairway endorsement and a non-imputation
endorsement.
"Vessel" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and shall also include any meaning given to it in
any similar state or local statutes, ordinances, regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in Article IX.
"Withdrawal" (including the forms Withdraw, Withdrawing and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of
insanity or incompetence, Event of Bankruptcy, dissolution, liquidation, or
voluntary or involuntary withdrawal or retirement from the Partnership for any
reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement. Withdrawal
also shall mean the sale, assignment, transfer or encumbrance by a General
Partner of its interest as a General Partner other than a pledge of assignment
by a General Partner of its Interest required pursuant to the terms of the
Construction Loan Documents and as approved in writing by the Special Limited
Partner. A General Partner which is a corporation, limited liability company
or partnership shall be deemed to have sold, assigned, transferred or
encumbered its interest as a General Partner in the event (as a result of one
or more transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to the laws of descent
and distribution) or encumbrance of a controlling interest in a corporate or
limited liability company General Partner or of a general partner interest in
a General Partner which is a partnership to a Person who is not an Affiliate
of the General Partner. For purposes of this definition of Withdrawal, the
term "controlling interest" shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Main ▇▇▇▇▇▇▇ Housing L.P. The Partners
agree to continue the Partnership which was formed pursuant to the provisions
of the Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is c/▇ ▇▇▇▇▇▇▇
Development, LLC, 1-B ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at which office there shall be maintained those records required by the
Act to be kept by the Partnership. The Partnership may have such other or
additional offices as the General Partner shall deem desirable. The General
Partner may at any time change the location of the principal office and shall
give due notice thereof to the Limited Partners.
(b) The resident agent for the Partnership in the State for service of
process is as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
1-B Quaker Ridge Road
Suite 122
New Rochelle, New York 10804
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in, secure
financing for, construct, rehabilitate, develop, improve, maintain, operate,
lease and otherwise deal with the Apartment Complex. The Partnership shall
operate the Apartment Complex in accordance with any applicable Regulations.
The Partnership shall not engage in any other business or activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and effect until
December 31, 2046, except that the Partnership shall be dissolved and its
assets liquidated prior to such date upon the first to occur of the following
events ("Liquidating Events"):
(i) The sale or other disposition of all or substantially all of
the assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless the Partnership
is continued as provided in Section 7.2(a);
(iii) The election to dissolve the Partnership made in writing by
the General Partner with the Consent of the Investment Limited Partner
and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not reconstituted
pursuant to the provisions of Section 7.2 or Section 7.3.
(b) Upon the dissolution of the Partnership, the General Partner (or
for purposes of this paragraph, its trustees, receivers or successors) shall
cause the cancellation of the Certificate and shall liquidate the Partnership
assets and apply and distribute the proceeds thereof in accordance with the
provisions of Section 10.3, unless the Investment Limited Partner elects to
reconstitute the Partnership and continue its business as provided in Section
7.2(b), in which case the Partnership assets shall be transferred to the new
Partnership as provided in such Section. Notwithstanding the foregoing, if,
during liquidation, the General Partner shall determine that an immediate sale
of part or all of the Partnership's assets would be impermissible, impractical
or cause undue loss to the Partners, the General Partner may defer liquidation
of, and withhold from distribution for a reasonable time, any assets of the
Partnership except those necessary to satisfy Partnership debts and
obligations (other than Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The General Partner and its Affiliates, jointly and severally, are
hereby authorized to incur personal liability for the repayment of funds
advanced by the Construction Lender (and interest thereon) pursuant to the
Construction Loan Documents. However, from and after the date of Permanent
Mortgage Commencement, neither the General Partner nor any Related Person
shall at any time bear, nor shall the General Partner permit any other Partner
or any Related Person to bear, the Economic Risk of Loss for the payment of
any portion of any Mortgage Loan unless, prior to the effectiveness of the
transaction in which such Economic Risk of Loss is created or assumed, the
General Partner shall have obtained, at the expense of the Partnership, an
opinion from reputable tax counsel, in form and substance reasonably
satisfactory to the Special Limited Partner, to the effect that such Economic
Risk of Loss will not result in the reallocation of Tax Credits or Losses from
the Investment Limited Partner and the Special Limited Partner to the General
Partner. The General Partner shall cause the Partnership to elect promptly,
to the extent permitted and in the manner prescribed by any Agency or Lender
having jurisdiction, that all debt service payments made by the Partnership to
the holder of the Permanent Mortgage shall be applied first to interest
determined at the stated rate set forth in the Permanent Note, and then to
principal due with respect to the Permanent Note.
3.2 Refinancings
The Partnership may decrease, increase or refinance any Mortgage Loan
and may make any required transfer or conveyance of Partnership assets for
security or mortgage purposes, provided, however, any such decrease, increase
or refinancing of any Mortgage (except for the discharge of the Construction
Loan in accordance with the Construction Loan Documents and the borrowing of
the original principal amount of the Permanent Loan) may be made by the
General Partner only with the Consent of the Special Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise transfer or
convey all or substantially all the assets of the Partnership only with the
Consent of the Special Limited Partner. Notwithstanding the foregoing and
except as set forth in Section 6.2(a)(vi), no Consent of the Special Limited
Partner shall be required for the execution and delivery of the Construction
Loan Documents, the leasing of apartments to tenants in the normal course of
operations or the leasing of all or substantially all the apartments to a
public housing authority at rents satisfactory to any Agency or Lender as
expressed in writing, provided (subject to the Rent Restriction Test) that
such rents are not less than the Projected Rents.
3.4 Real Estate Commissions
The total compensation to all Persons for the sale of the Apartment
Complex shall be limited to a Competitive Real Estate Commission, which in no
event shall exceed six percent (6%) of the contract price for the sale of the
Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the aggregate amount of
the cash and the Gross Asset Value of property contributed by the General
Partner and by the Limited Partners as set forth in Schedule A. No interest
shall be paid by the Partnership on any Capital Contribution to the
Partnership. Schedule A shall be amended from time to time to reflect the
withdrawal or admission of Partners, any changes in the Partnership Interests
held by a Partner arising from the transfer of an Interest to or by such
Partner and any change in the amounts to be contributed or agreed to be
contributed by any Partner. No Partner shall have the right to withdraw or
receive a return of any of its Capital Contributions except as set forth in
this Agreement. Further, no Partner shall have any right of partition.
(b) An individual Capital Account shall be established and maintained
for each Partner, including any additional or substituted Partner who shall
hereafter receive an interest in the Partnership. The Capital Account of each
Partner shall be maintained in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited
such Partner's Capital Contributions, such Partner's distributive share
of Profits, and any items in the nature of income or gain that are
specially allocated pursuant to Section 10.4 hereof, and the amount of
any Partnership liabilities that are assumed by such Partner or that are
secured by any Partnership Property distributed to such Partner;
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Partnership Property
distributed to such Partner pursuant to any provision of this Agreement,
such Partner's distributive share of Losses, and any items in the nature
of expenses or losses that are specially allocated pursuant to Section
10.4 hereof, and the amount of any liabilities of such Partner that are
assumed by the Partnership or that are secured by any property
contributed by such Partner to the Partnership.
In the event that the Gross Asset Values of Partnership assets are
adjusted pursuant to this Agreement, the Capital Accounts of all Partners
shall be adjusted simultaneously to reflect the aggregate net adjustment as if
the Partnership recognized gain or loss equal to the amount of such aggregate
net adjustment.
(c) The original Capital Account established for any Assignee (as
hereinafter defined) shall be in the same amount as, and shall replace, the
adjusted Capital Account of the Partner which such Assignee succeeds, and, for
the purpose of the Agreement, such Assignee shall be deemed to have made the
Capital Contribution, to the extent actually paid in, of the Partner which
such Assignee succeeds. The term "Assignee," as used in this paragraph, shall
mean a Person who shall become entitled to receive a share of the Profits,
Losses, Tax Credits and distributions of the Partnership by reason of such
Person succeeding to the Interest of a Partner by assignment of all or any
part of an Interest. To the extent an Assignee receives less than 100% of the
Interest of a Partner, such Assignee's Capital Account and Capital
Contribution shall be in proportion to the Partnership Interest such Assignee
receives, and the Capital Account and Capital Contribution of the Partner who
retains a partial interest in the Partnership shall continue, and not be
replaced, in proportion to the Partnership Interest such Partner retains.
(d) The foregoing provisions and other provisions of this Agreement
relating to the maintenance of the Capital Accounts are intended to comply
with the Allocation Regulations, and shall be interpreted and applied in a
manner consistent with such Allocation Regulations.
4.2 General Partner
(a) The name, address and Capital Contribution of the General Partner
are as set forth on Schedule A.
(b) The Original General Partner hereby withdraws as a general partner
of the Partnership and acknowledges that it no longer has any Interest in, or
rights or claims against, the Partnership as a Partner as of the Admission
Date.
(c) The General Partner has contributed or will contribute
contemporaneously with the execution hereof $100 to the capital of the
Partnership.
4.3 Investment Limited Partner, Special Limited Partner and Original
Limited Partner
(a) The Original Limited Partner hereby withdraws as a limited partner
of the Partnership and acknowledges that it no longer has any Interest in, or
rights or claims against, the Partnership as a Partner as of the Admission
Date.
(b) Each of the Special Limited Partner and the Investment Limited
Partner is hereby admitted to the Partnership as a Limited Partner in
substitution for the Original Limited Partner as of the Admission Date and
agrees to be bound by the terms and provisions of the Project Documents and
this Agreement. The name and address of the Investment Limited Partner and
the Special Limited Partner are as set forth on Schedule A.
(c) Except as otherwise specifically set forth in Sections 4.5 or 7.4,
the General Partner shall have no authority to admit additional Limited
Partners without the Consent of the Investment Limited Partner.
4.4 Liability of the Limited Partners
Except as provided under the Act, neither the Investment Limited
Partner, the Special Limited Partner nor any Person who becomes an Additional
Limited Partner shall be liable for any debts, liabilities, contracts or
obligations of the Partnership; such Persons shall be liable only to pay their
respective Capital Contributions as and when the same are due hereunder and
under the Act.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other than
Section 13.8), to the extent the law of the State is not inconsistent, the
Special Limited Partner shall have the right, subject to any Requisite
Approvals, to:
(i) amend this Agreement provided, however, that no such
amendment affect the rights (including, without limitation, the right to
receive any fees, allocable share of Cash Flow or other distributions,
or Profits or Losses and Tax Credits hereunder) or increase any of the
liabilities or obligations of any General Partner without its prior
written consent; including, without limitation, the Special Limited
Partner shall not have the right to amend this Agreement so as to
decrease the amount of any Installment or the aggregate Capital
Contribution without the prior written consent of the Construction
Lender or Permanent Lender, as applicable;
(ii) dissolve the Partnership provided, however, that such
dissolution shall not be caused by the Special Limited Partner unless
the General Partner has violated a material provision of any Project
Document, which violation has not been cured within any applicable cure
period specified or within 30 days if no cure period is specified, to be
extended up to no more than 120 days if such cure is being diligently
pursued and cannot be effected within such applicable (or 30-day) cure
period;
(iii) remove any General Partner and elect a new General Partner
(A) on the basis of the performance and discharge of such General
Partner's obligations constituting fraud, bad faith, gross negligence,
wilful misconduct or intentional breach of fiduciary duty, or (B) upon
the occurrence of any of the following:
(1) such General Partner shall have violated any material
provisions of any Project Document or other document required in
connection with any Mortgage which has resulted in notice of a
default thereunder, or shall have violated any material provisions
of any Regulations applicable to the Apartment Complex, in each
case which results in any Adverse Consequences to the Partnership
and has not been cured within any applicable cure period provided
therefor or within 30 days if no cure period is specified, to be
extended up to no more than 120 days if such cure is being
diligently pursued and cannot be effected within such applicable
(or 30-day) period;
(2) such General Partner shall have violated
any material provision of this Agreement, including, but not
limited to, any obligation to fund any Partnership expenses under
Section 6.10 and such default has not been cured within 30 days
after written notice from the Special Limited Partner to the
General Partner, or such General Partner shall have violated any
provisions of applicable law which shall have not been cured
within 30 days, which cure period may be extended up to no more
than 120 days if such cure is being diligently pursued and cannot
be effected within such 30-day period;
(3) any Mortgage shall be in default and such
default shall not be cured within any applicable cure period set
forth in the Mortgage Loan Documents, or
(4) such General Partner shall have conducted
its own affairs or the affairs of the Partnership in such a manner
as would (A) cause the termination of the Partnership for federal
income tax purpose or (B) cause the Partnership to be treated for
federal income tax purposes as an association taxable as a
corporation;
(iv) continue the business of the Partnership with a substitute
General Partner, provided that the General Partner has been removed
pursuant to Section 4.5(a)(iii) above; and
(v) approve or disapprove the sale of all or substantially all
of the assets of the Partnership.
(b) Upon the removal of a General Partner,
(i) without any further action by any Partner, the Special
Limited Partner or its designee shall automatically become a General
Partner and acquire in consideration of a cash payment of $100 such
portion of the Interest of the removed General Partner as counsel to the
Investment Limited Partnership shall determine is the minimum
appropriate interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the Act,
(ii) the remaining portion of the economic Interest of the
removed General Partner shall automatically be converted to an equal
economic Interest as an Additional Limited Partner,
(iii) the economic Interest of the Special Limited Partner as the
Special Limited Partner shall not be affected by the new status of the
Special Limited Partner or its designee as a General Partner, and
(iv) the new General Partner shall automatically be irrevocably
delegated all of the powers and duties of the General Partners pursuant
to Section 6.13. The Special Limited Partner or any successor General
Partner proposed by the Special Limited Partner shall have the option,
exercisable in its sole discretion, to acquire the Additional Limited
Partner Interest, or any portion thereof, of any removed General Partner
upon payment of the agreed or then present fair market value of such
Interest or portion thereof. If such value is not agreed to, the fair
market value of the Interest shall be as determined by a qualified, MAI-
designated state-licensed real estate appraiser selected by the removed
General Partner. If the Special Limited Partner does not accept such
value, it may select a second similarly-qualified appraiser. If the
values determined by both such appraisers differ by no more than 10%,
then the purchase price shall be the arithmetic mean of the two. If the
values differ by more than 10%, then the purchase price shall be
determined by a third appraiser in accordance with the Arbitration
procedure set forth in Section 5.1. The method of payment to the
removed General Partner shall be fair; and must protect the solvency and
liquidity of the Partnership. The method of payment will be deemed
presumptively fair where it provides for a promissory note bearing
interest at the applicable Federal Rate, known as AFR, payable from the
proceeds of a Capital Transaction as set forth in Section 10.2(b)
hereof. In addition, upon removal, the Partnership must promptly pay to
the removed General Partner all amounts then accrued and owing to the
removed General Partner, including the amount of any authorized loans
made by the General Partner to the Partnership; provided, however, that
notwithstanding the language of Section 6.12, Article X, Article XI and
any other provision hereof, no removed General Partner or any Affiliate
thereof shall be entitled to receive any fee, compensation or other
remuneration from the Partnership, other than any such fee, compensation
or other remuneration to the extent earned in full prior to the date of
such removal. The Partnership is not authorized to enter into any
arrangement whereby any fee, compensation or other remuneration could be
payable directly or indirectly to any General Partner or Affiliate
thereof in a manner inconsistent with the immediately preceding sentence
unless the prior written consent of the Special Limited Partner shall
have been obtained to such particular arrangement. The Partnership may
offset against any payments to a General Partner removed under this
Section 4.5 any damages suffered by the Partnership as a result of any
breach of the obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a general partner for any
obligations of the Partnership incurred after the effective date of its
removal. Each General Partner hereby grants to the Special Limited
Partner an irrevocable (to the extent permitted by applicable law) power
of attorney coupled with an interest to execute and deliver any and all
documents and instruments on behalf of such General Partner and the
Partnership as the Special Limited Partner may deem to be necessary or
appropriate in order to effect the provisions of this Section 4.5 and to
enable the new General Partner to manage the business of the
Partnership; provided, however the Special Limited Partner agrees that
it will give ten (10) days prior Notice to the General Partner the
opportunity during such ten (10) day period to execute and deliver to
the Special Limited Partner any document or other instrument so
requiring the General Partner's signature, after which period the
Special Limited Partner may exercise its rights under such Power of
Attorney.
(c) In order to implement the provisions of Section 4.5(a)(v), the
General Partner is hereby required, within ten (10) days after its receipt of
any offer to purchase the Apartment Complex or all of the Interests in the
Partnership, to send a copy of such offer (or a written description of any
such oral offer) to each of the Limited Partners. In connection with any
proposed sale of the Apartment Complex, the Special Limited Partner (or its
designee) shall have the right to (i) receive and review copies of all
documents relating to the proposed sale, (ii) participate in the negotiations
of the terms and conditions of the proposed sale, (iii) meet with the proposed
purchaser, (iv) solicit proposals for alternative offers for the Apartment
Complex, and (v) provide such other services in connection with the proposed
sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten percent
(10%) of the then outstanding Limited Partner Interests may call meetings of
the Partnership for any matters for which the Limited Partners may vote as set
forth in this Agreement. A list of the names and addresses of all Limited
Partners shall be maintained as part of the books and records of the
Partnership and shall be made available upon request to any Limited Partner or
his representative at his cost. Upon receipt of a written request either in
person or by certified mail stating the purpose(s) of the meeting, the General
Partner shall provide all Limited Partners within ten (10) days after receipt
of said request, written notice of a meeting and the purpose of such meeting
to be held on a date not less than fifteen (15) nor more than sixty (60) days
after receipt of said request, at a time convenient to the Limited Partners.
All meetings shall be held at the principal office of the Partnership or such
other location as is reasonably designated by the General Partner.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10 shall be
paid in full in cash on the Admission Date. The Investment Limited Partner's
Capital Contribution shall be paid in cash installments (the "Installments"),
as follows:
(i) $431,046 (the "First Installment") on the latest of (A) the
Admission Date, (B) the closing of the Construction Loan, (C) the
Permanent Loan Commitment Date, (D) Tax Credit Set-Aside or (E) the
Construction Permitting Date;
(ii) $195,930 (the "Second Installment"), on the latest of (A)
the Completion Date, (B) Cost Certification, (C) receipt of an updated
Title Policy or title endorsement with dollar amount coverage satisfying
the Title Policy definition and in form and substance substantially the
same as that attached hereto as Exhibit D with no material changes,
(D) receipt of the Contractor Payoff Letter; or (E) receipt of all
Lender Estoppel Letters;
(iii) $117,559 (the "Third Installment") on the latest of (A) the
Initial 100% Occupancy Date, (B) Permanent Mortgage Commencement, (C)
Rental Achievement, (D) State Designation, (E) receipt by the
Partnership of a Permanent Certificate of Occupancy for the Project,
(F) compliance with Due Diligence Recommendations, or (G) satisfaction
of all conditions to the payment of the First Installment and Second
Installment; and
(iv) $39,186 (the "Fourth Installment") on the latest to occur of
(A) receipt of a tax return and audited financial statement for the year
in which Rental Achievement occurred, or (B) satisfaction of all
conditions to the payment of the First, Second and Third Installment.
provided, however, that (x) the General Partner shall give the Investment
Limited Partner not less than twenty-one (21) days' written notice prior to
the due date of each Installment subsequent to the First Installment, and (y)
no Installment shall be due unless and until all conditions to the payment of
all prior Installments have been satisfied.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the General Partner to the
Investment Limited Partner of a written certificate (the "Payment
Certificate") stating that as of the date of such certificate (i) all the
conditions to the payment of such Installment have been satisfied and (ii) all
representations and warranties of the General Partner contained in this
Agreement are true and correct. Except as provided in the final sentence of
this Section 5.1(b), acceptance by the Partnership of any Installment shall
constitute a confirmation that, as of the date of payment, all such conditions
are satisfied and all such representations and warranties are true and
correct. The obligation of the Investment Limited Partner to pay the First
Installment is also conditioned upon delivery by the General Partner to the
Investment Limited Partner of (x) a legal opinion of independent counsel to
the Partnership, the General Partner, the Developer and the Guarantors, which
opinion(s) must be satisfactory to the Investment Limited Partner as to form,
content and identity of counsel and (y) a photocopy of a binding commitment,
in form and substance satisfactory to the Special Limited Partner, to issue
the Title Policy and endorsements thereto in form and substance satisfactory
to the Special Limited Partner insuring against all zoning defects of the
Apartment Complex, a Fairway endorsement and a non-imputation endorsement. In
no event shall any Installment become due until all of the conditions for all
of the Installments listed prior to the Installment in question in
Section 5.1(a) shall have been satisfied and all of such prior Installments
shall have become due. Notwithstanding the foregoing, however, if at any time
prior to the date when an Installment becomes due and payable, the Partnership
has an Operating Deficit which the General Partner would be required to fund
pursuant to Section 6.10, then the Investment Limited Partner may, at its
option, waive the requirement of the delivery of the Payment Certificate or
any other condition with respect to part or all of such Installment and pay
such part or all of such Installment, provided that the proceeds of the amount
so paid are used by the Partnership to fully fund such Operating Deficit;
provided, however, that if the proceeds of such amount so paid are designated
in Section 6.12 to be used to pay fee(s), then such proceeds shall be utilized
to pay such fee(s) and the recipient(s) thereof shall be required to, and
hereby agree to, utilize the proceeds of such fee(s) to fund such Operating
Deficit, in which case the Investment Limited Partner is hereby authorized to
directly fund such Operating Deficit, with the funds so applied being deemed
to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be dated and
delivered not less than ten (10) nor more than thirty (30) days prior to the
due date for such Installment.
(d) If, as of the date when an Installment would otherwise be due, any
statement required to be made in the Payment Certificate for such Installment
cannot be truthfully made, the General Partner shall notify the Investment
Limited Partner of the reason why such statement would be untrue if made, and
the Investment Limited Partner shall not be required to pay such Installment;
provided, however, that if (i) any such statement can subsequently be
truthfully made and (ii) the Investment Limited Partner shall not have
irrevocably lost, in the good faith judgment of the Investment General
Partner, any material tax or other benefits hereunder (other than tax benefits
for which the Investment Limited Partner has been fully compensated pursuant
to the provisions of paragraphs (e), (f) and (g) of this Section 5.1), then
the Investment Limited Partner shall pay such Installment to the Partnership
thirty (30) days after delivery by the General Partner to the Investment
Limited Partner of the Payment Certificate together with an explanation of the
manner in which each such statement had become true.
(e)
1. In the event that on or at any time prior to the Completion
Date (the "Initial Adjustment Date"), the Investment Limited Partner shall
receive a written certification of the Auditors indicating that the aggregate
Actual Credit during the Credit Period will be less than the aggregate
Projected Credit during the Credit Period, then (i) the next succeeding
Installments of the Capital Contributions of the Investment Limited Partner
shall be reduced by an amount equal to the product of (X) the difference
between (1) the aggregate Projected Credit during the Credit period and
(2) the aggregate Actual Credit during the Credit Period and (Y) .687, and
(ii) the Projected Credit for each Fiscal Year shall thereafter be redefined
to mean the Actual Credit, as so determined (the "Revised Projected Credit").
Any such reduction pursuant to this Section 5.1(e) shall be made first to the
Installment, if any, next due to be paid by the Investment Limited Partner,
and any balance of such amount payable by the General Partner in excess of the
amount of such Installment shall be applied to succeeding Installments, if
any, provided that if the amount of any such reductions exceeds the sum of the
remaining Installments, if any, then an amount equal to the amount of such
excess shall be paid by the General Partner to the Investment Limited Partner
promptly after demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such event (unless
such reduction was caused by an act or omission of the Investment Limited
Partner or its Affiliates, in which event no such reduction or payment shall
be required). No reduction of any Installment or any payment by the General
Partner pursuant to this Section 5.1(e) shall be deemed to be a Capital
Contribution by the General Partner to the Partnership, nor shall any such
payment constitute a return of capital to the Investment Limited Partner.
2. In the event that on or at any time prior to the Completion
Date (the "Initial Adjustment Date"), the Investment Limited Partner shall
receive a written certification of the Auditors indicating that the aggregate
Actual Credit during the Credit Period will be mores than the aggregate
Projected Credit during the Credit Period, then (i) the next succeeding
Installments of the Capital Contributions of the Investment Limited Partner
shall be increased by an amount equal to the lesser of (X) $39,186 or (Y) the
product of (a) the difference between the aggregate Projected Credit during
the Credit period and the aggregate Actual Credit during the Credit Period and
(b) .594, and (ii) the Projected Credit for each Fiscal Year shall thereafter
be redefined to mean the Actual Credit, as so determined (the "Revised
Projected Credit"). Any such increase pursuant to this Section 5.1(e)(2)
shall be paid 50% with the Third Installment and 50% with the Fourth
Installment to be paid by the Investment Limited Partner.
(f) If with respect to any Fiscal Year all or a portion of which
occurs during the Initial Operating Period, the Actual Credit is or was less
than the Projected Credit (or the Revised Projected Credit, if applicable) for
such Fiscal Year (a "Reduction Year"), then the General Partner shall pay to
the Investment Limited Partner the Reduction Amount. The Reduction Amount
shall be equal to the sum of (A) the excess of the Projected Credit (or the
Revised Projected Credit, if applicable) for such Fiscal Year over the Actual
Credit for such Fiscal Year multiplied by .814 plus (B) the amount of any
recapture, interest or penalty payable by the limited partners and/or holders
of beneficial assignee certificates of the Investment Limited Partner as a
result of such shortfall. The Auditors shall make their determination of the
amount of the Actual Credit with respect to each Reduction Year within thirty
(30) days following the end of such Fiscal Year. The Investment Limited
Partner shall be eligible to be paid a Reduction Amount as hereinabove
described with respect to each Reduction Year. Any Reduction Amount shall
first be applied to the Installment next due to be paid by the Investment
Limited Partner, with any portion of such Reduction Amount in excess of the
amount of such Installment then being applied to succeeding Installments,
provided that if no further Installments remain to be paid or if the Reduction
Amount shall exceed the sum of the amounts of the remaining Installments, then
the entire Reduction Amount or the balance of the Reduction Amount, as the
case may be, shall be paid by the General Partner to the Investment Limited
Partner promptly after demand is made therefor, as a payment of damages for
breach of warranty, regardless of the reason for the occurrence of such event
(unless such reduction was caused by an act or omission of the Investment
Limited Partner or its Affiliates, in which event no Reduction Amount shall be
payable). No payment by the General Partner pursuant to this Section 5.1(f)
shall be deemed to be a Capital Contribution to the Partnership nor shall any
such payment constitute a return of capital to the Investment Limited Partner.
(g) In the event that, for any reason, at any time after the end of
the Initial Operating Period, the amount of the Actual Credit shall be less
than the Projected Credit (or the Revised Projected Credit, if applicable)
with respect to any Fiscal Year of the Partnership (such difference being
hereinafter referred to as a "Credit Shortfall"), the Investment Limited
Partner shall be treated as having made a constructive advance to the
Partnership with respect to such Fiscal Year (a "Credit Recovery Loan"), which
shall be deemed to have been made on January 1 of such Fiscal Year in an
amount equal to the sum of (A) the Credit Shortfall for such Fiscal Year plus
(B) the amount of any recapture, interest or penalty payable by the limited
partners and/or the holders of beneficial assignee certificates of the
Investment Limited Partner as a result of the Credit Shortfall for such Fiscal
Year, assuming that each limited partner and/or holder of a beneficial
assignee certificate in the Investment Partnership used all of the Tax Credits
allocated to him in the Fiscal Year of allocation and that each such Person
was subject to interest at the rate set forth in Section 6621(a)(2) of the
Code and to the penalty for understatement of tax set forth in Section 6662(d)
of the Code. Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such principal
advances shall have been deemed to have been made under this Section 5.1(g) at
a rate of nine percent (9%) per annum. Credit Recovery Loans shall be payable
by the Partnership as provided in Section 10.2(b), Clause Fourth. Credit
Recovery Loans and interest thereon shall not be treated as loans or interest,
respectively, for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(i). For the purposes of Article X, the term Credit Recovery
Loan shall not include any portion of such a deemed advance which shall have
theretofore been paid to the Investment Limited Partner.
(h) The Investment Limited Partner shall grant to the Partnership a
security interest in the Investment Limited Partner's Interest as collateral
security for the payment, when due in accordance with the terms of this
Agreement, of the Capital Contributions of the Investment Limited Partner.
Except as hereinafter provided in Section 5.1(i), upon any default by the
Investment Limited Partner in the payment of its Capital Contributions as and
when they are due and payable (an "Event of Default"), which Event of Default
has not been cured within ten (10) business days following notice thereof by
the Partnership to the Investment Limited Partner, the Partnership or its
assignee shall have all the rights and remedies, with respect to the security
interest hereby granted by such Investment Limited Partner, of a secured party
under Article 9 of the Uniform Commercial Code as in effect in the State. The
Investment Limited Partner will execute a UCC-1 financing statement evidencing
the security interest granted hereby and will deliver such statement to the
Partnership.
(i) Notwithstanding the provisions of Section 5.1(h) above, in the
event of a dispute regarding the existence of an Event of Default, such
dispute shall be resolved by binding arbitration and until the issuance of a
final arbitration award confirming the existence of an Event of Default, the
Partnership shall not be entitled to exercise any of its rights or remedies
under Section 5.1(h) above. The Partnership, the General Partner or the
Investment Limited Partner may submit such dispute to arbitration in the City
of Boston, Massachusetts before one (1) arbitrator by giving a demand for
arbitration to the Partnership, the General Partner and the Investment Limited
Partner. The Partnership and the Investment Limited Partner shall be the
parties to such arbitration. Notwithstanding the provisions of Section 13.3,
any notices, consents, approvals, demands and requests given with respect to
any such arbitration shall be given in accordance with this Agreement. The
parties shall request that the arbitrator appointed pursuant to this Section
and, if applicable, the AAA (hereinafter defined) observe the provisions of
the preceding sentence. Within three (3) business days after the giving of
any such demand for arbitration, the parties shall in good faith seek to find
a mutually acceptable arbitrator who shall be authorized solely to issue a
determination that an Event of Default did or did not occur. If agreement as
to a mutually acceptable arbitrator is not reached within such three (3)
business day period, then either party may, within three (3) business days
thereafter submit such dispute for arbitration before one (1) arbitrator under
the Expedited Procedures provisions of the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") (presently Rules 53 through 57 and,
to the extent applicable, Section 19); provided, however, that with respect to
any such arbitration: (i) the list of arbitrators referred to in Rule 54 shall
be returned within three (3) business days from the date of receipt; (ii) the
parties shall notify the AAA by telephone, within two (2) business days after
receipt of notice of the arbitrator designated by the AAA of any objections to
the arbitrator appointed; (iii) the Notice of Hearing referred to in Rule 55
shall be given at least four (4) business days in advance of the hearing; (iv)
the hearing shall be held within two (2) business days after the initial
hearing; and (v) the decision and award of the arbitrator shall be made within
two (2) business days of completion of the arbitration and shall be final and
conclusive on the parties. The arbitrator shall only determine whether or not
such Event of Default occurred. The arbitrator shall not have the right to
amend or vary from the provisions of this Agreement. Any arbitration award
hereunder shall be binding and may be enforced by any court with appropriate
jurisdiction.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit Benchmarks and
Standards. If (i) all 11 apartment units in the Apartment Complex shall not
have been placed in service by March 31, 1997, or (ii) by December 31, 1997,
fewer than 5 of the apartment units in the Apartment Complex shall have been
occupied by tenants meeting the terms of the Minimum Set-Aside Test under
executed leases which shall have received any Requisite Approvals at rental
levels meeting the requirements of the Rent Restriction Test, or (iii)
Permanent Mortgage Commencement shall not have occurred prior to December 31,
1997 (or any later date fixed by the General Partner with the Consent of the
Special Limited Partner), or (iv) State Designation shall not have occurred by
June 30, 1997 (or any later date fixed by the General Partner with the Consent
of the Special Limited Partner) and by said date the General Partner shall not
have made any payment as described in the next to last sentence of Section
5.1(e) or, if the Investment Limited Partner shall have elected to have all or
a portion of any payment under Section 5.1(e) applied toward future
Installment obligations of the Investment Limited Partner, amendments to this
Agreement shall not have been adopted and filed in the Filing Office,
reflecting such event, or (v) the Partnership shall fail to meet the Minimum
Set-Aside Test or the Rent Restriction Test by the close of the first year of
the Credit Period and/or fails to continue to meet either of such tests at any
time during the sixty (60)-month period commencing on such date, or (vi) prior
to Permanent Mortgage Commencement, (A) foreclosure proceedings shall have
commenced under any Mortgage and such proceedings shall not have been
dismissed within thirty (30) days, (B) any of the commitments of a Lender to
provide a Mortgage Loan and/or any subsidy financing shall be terminated or
withdrawn and not reinstated or replaced within sixty (60) days with terms at
least as favorable to the Partnership or terms for which the Consent of the
Special Limited Partner and any Requisite Approvals shall have been obtained,
or (C) the Construction Lender, acting in good faith and in accordance with
the provisions of the Construction Loan Documents, shall have irrevocably
refused to make any further advances under the Construction Loan Documents and
such decision shall not have been reversed or the Construction Lender replaced
within sixty (60) days or (vii) if by December 31, 1995 (or any later date
fixed by the General Partner with the Consent of the Special Limited Partner),
the Special Limited Partner shall not have received, in form and substance
satisfactory to the Special Limited Partner, a Carryover Certification, or
(viii) if at any time it shall be determined by the Service or by the Tax
Accountants that a Carryover Certification could not be issued or was issued
in error, or (ix) if by the date which is twelve (12) months following the
Completion Date, Rental Achievement shall not have been achieved, or (x) at
any time the General Partner fails to make a Subordinated Loan and such
failure continues for ten (10) days, then within five (5) days of the
occurrence thereof, the General Partner shall send to the Investment Limited
Partner and the Special Limited Partner notice of such event and of the
General Partner's obligation to repurchase the Interests of the Investment
Limited Partner and the Special Limited Partner by paying to the Investment
Limited Partner and the Special Limited Partner an amount (the "Repurchase
Amount") equal to each such Partner's Invested Amount minus the portion, if
any, of such Partner's Capital Contribution which shall not yet have been paid
(or deemed to have been paid) to the Partnership plus the amount of any third-
party costs, including, without limitation, attorney's fees incurred by or on
behalf of such Partner in implementing this Section 5.2(a) in the event the
Investment Limited Partner and/or the Special Limited Partner require(s) such
a repurchase. If either the Special Limited Partner or the Investment Limited
Partner elects to require a repurchase of its Interest and the payment to it
of an amount equal to its Repurchase Amount, it shall send notice thereof to
the Partnership within thirty (30) days after the mailing date of the General
Partner's notice, or at any time after the occurrence of any of the foregoing
if the General Partner shall not have sent a notice thereof, and the General
Partner shall within ten (10) days after the Partnership receives any such
notice from a Partner requesting the purchase of its Interest repurchase the
Interest of such Partner by paying to such Partner an amount equal to its
Repurchase Amount. If, following receipt of the General Partner's notice,
either the Special Limited Partner or the Investment Limited Partner fails to
send notice to the General Partner by the end of such 30-day period requesting
the General Partner to purchase its Interest, the Special Limited Partner
and/or the Investment Limited Partner, as the case may be, shall be deemed to
have waived its right to cause the General Partner to purchase its Interest as
a result of the event described in the General Partner's notice. No such
waiver, however, shall affect the right of the Special Limited Partner and/or
the Investment Limited Partner to cause the General Partner to purchase its
Interest upon the occurrence of any other event described in this
Section 5.2(a), or upon any subsequent occurrence of the event described in
the General Partner's notice.
(b) Lender Disapproval. If any Agency or Lender shall disapprove,
or fail to give any required approval of, the Investment Limited Partner
and/or the Special Limited Partner as a Limited Partner hereunder within one
hundred eighty (180) days of the Admission Date, then the Partner being
disapproved or not approved shall, effective as of such time or such later
time as may be elected by the Partner being disapproved or not approved as may
be specified by such Agency or Lender in its disapproval, at the option of the
Partner being disapproved or not approved (if not directed by such Agency or
Lender to withdraw), cease to be a Limited Partner. The General Partner
shall, within thirty (30) days of the effective date of such cessation, pay to
the Partner being disapproved or not approved an amount equal to its Invested
Amount minus the amount, if any, of such Partner's Capital Contribution which
shall not yet have been paid (or deemed to have been paid) to the Partnership
plus the amount of any third party costs, including, but not limited to
attorney's fees, incurred by or on behalf of such Partner in implementing this
Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner of the amount
due to it pursuant to either Section 5.2(a) or Section 5.2(b), the Interest of
such Partner shall terminate, and the General Partner shall indemnify and hold
harmless such Partner from and against any Adverse Consequences to which such
Partner (as a result of its participation hereunder) may be subject, provided
that such Adverse Consequences do not result from such Partner's acts or
omissions.
(d) Waiver of Repurchase Right. Each of the Investment Limited
Partner and the Special Limited Partner shall have the right to irrevocably
waive its right to have its Interest repurchased pursuant to any clause or
clauses of Section 5.2(a), or any portion thereof, at any time during which
any of such rights shall be in effect. Such a waiver shall be exercised by
delivery to the General Partner of a written notice stating that the rights
being waived pursuant to any specified clause or clauses of Section 5.2(a), or
any specified portion thereof, are thereby waived for a specified period of
time.
(e) Additional General Partner. If the General Partner shall fail to
make on the due date therefor any payment required under Section 5.2(a) or
Section 5.2(b), time being of the essence, at any time thereafter the Special
Limited Partner shall have the option, exercisable in its sole discretion, to
cause itself or its designee to be admitted as an additional General Partner,
receiving from the existing General Partner, in consideration of the payment
of ten dollars ($10.00), a one per cent (1%) interest in the Profits, Losses,
Tax Credits and distributions of the Partnership, with the Special Limited
Partner retaining its status as such and its economic interest in the
Partnership as the Special Limited Partner (or its designee as an additional
General Partner). If the Special Limited Partner exercises the option
described in this Section 5.2(e), each of the other General Partner hereby
agrees that all of its rights and powers hereunder as a General Partner shall
automatically be irrevocably delegated to the Special Limited Partner pursuant
to Section 6.13 without the necessity of any further action by any Partner.
Each Partner hereby grants to the Special Limited Partner an irrevocable (to
the extent permitted by applicable law) power of attorney coupled with an
interest to take any action and to execute, deliver and file or record any and
all documents and instruments on behalf of such Partner and the Partnership as
the Special Limited Partner may deem necessary or appropriate in order to
effectuate the provisions of this Section 5.2(e) and to allow the additional
General Partner to manage the business of the Partnership. The admission of
the Special Limited Partner or its designee as an additional General Partner
shall not relieve any other General Partner of any of its economic obligations
hereunder, and each other General Partner shall fully indemnify and hold
harmless the additional General Partner from and against any and all Adverse
Consequences sustained by such additional General Partner in connection with
its status as a General Partner (other than Adverse Consequences arising
solely from the gross negligence or willful misconduct of such additional
General Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3, Section 6.15 and
all other provisions of this Agreement, the General Partner for, in the name
and on behalf of the Partnership, is hereby authorized, in furtherance of the
purposes of the Partnership:
(i) to acquire by purchase, lease, exchange or otherwise any
real or personal property;
(ii) to construct, rehabilitate, operate, maintain, finance and
improve, and to own, sell, convey, assign, mortgage or lease any real
estate and any personal property;
(iii) to borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment
Complex or any other assets of the Partnership;
(iv) to execute the Mortgage Loan Documents and the other Project
Documents and all such other documents as the General Partner deems to
be necessary or appropriate in connection with the acquisition,
development, construction and financing of the Apartment Complex;
(v) to prepay in whole or in part, refinance or modify any
Mortgage Loan or other financing affecting the Apartment Complex;
(vi) to employ the Management Agent (which may be an Affiliate of
the General Partner) and, subject to the provisions of Article XI, to
pay reasonable compensation for its services;
(vii) to employ its Affiliates to perform services for, or sell
goods to, the Partnership;
(viii) to execute contracts with any Agency, the State or
any subdivision or agency thereof or any other Governmental Authority to
make apartments or tenants in the Apartment Complex eligible for any
public-subsidy program;
(ix) to execute leases of some or all of the apartment units of
the Apartment Complex to individuals and/or to a public housing
authority and/or to a non-profit corporation, cooperative or other non-
profit Entity;
(x) to employ or engage such engineers, architects, technicians,
accountants, attorneys and other Persons, as may be necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership; and
(xi) to enter into any kind of activity and to perform and carry
out contracts of any kind which may be lawfully carried on or performed
by a partnership and to file all certificates and document which may be
required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the General
Partner shall have no authority to perform any act in violation of any
applicable law, Agency or other government regulations, the requirements of
any Lender, or the Project Documents. In the event of any conflict between
the terms of this Agreement and any applicable Regulations or requirements of
any Lender, the terms of such Regulations or the requirements of such Lender,
as the case may be, shall govern. Subject to the provisions of Section
6.2(b), the General Partner, acting in its capacity as General Partner, shall
not have the authority, without the Consent of the Special Limited Partner:
(i) to have unsecured borrowings in excess of ten thousand
dollars ($10,000.00) in the aggregate at any one time outstanding,
except borrowings constituting Subordinated Loans, Voluntary Loans or
Credit Recovery Loans;
(ii) to borrow from the Partnership or commingle Partnership
funds with the funds of any other Person;
(iii) following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the character or use of the Apartment Complex or
which cost in excess of ten thousand dollars ($10,000.00) in a single
Fiscal Year, except (x) replacements and remodeling in the ordinary
course of business or under emergency conditions or (y) construction
paid for from insurance proceeds;
(iv) to acquire any real property in addition to the Apartment
Complex;
(v) following Permanent Mortgage Commencement, and except as
otherwise specifically provided in Section 3.2, to increase, decrease or
modify the terms of or refinance any Mortgage Loan;
(vi) to rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Minimum Set-
Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a proceeding seeking
any decree, relief, order or appointment in respect to the Partnership
under the federal bankruptcy laws, as now or hereafter constituted, or
under any other federal or state bankruptcy, insolvency or similar law,
or the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the Partnership or for
any other substantial part of the Partnership's business or property, or
to cause the Partnership to consent to any such decree, relief, order or
appointment initiated by any Person other than the Partnership;
(x) to execute contracts with any Agency, the State or any
subdivision or agency thereof or any other Governmental Authority to
make apartments or tenants in the Apartment Complex eligible for any
public-subsidy program;
(xi) to amend any construction or rehabilitation contract;
(xii) to pledge or assign any of the Capital Contributions of the
Investment Limited Partner or the proceeds thereof (except to the extent
required by the terms of the Construction Loan Documents and agreed to
in writing by the Special Limited Partner); or
(xiii) to do any act required to be approved or ratified by
all limited partners under the Act.
(b) In the event that any General Partner violates any provision of
Section 6.2(a), the Special Limited Partner in its sole discretion, may cause
itself or its designee to be admitted as an additional General Partner without
any further action by any other Partner. Upon any such admission of an
additional General Partner, each existing General Partner shall be deemed to
have assigned proportionally to the additional General Partner, automatically
and without further action, such portion of its General Partnership Interest
so that the additional General Partner shall receive not less than a one
percent (1%) interest in the Profits, Losses, Tax Credits and distributions of
the Partnership in consideration of one dollar ($1.00) and any other
consideration which may be agreed upon. An additional General Partner so
admitted shall automatically become the Managing General Partner and shall be
irrevocably delegated all of the power and authority of all of the General
Partner pursuant to Section 6.13. Any such additional General Partner shall
have the right to withdraw as a General Partner at any time, leaving the prior
General Partner once again as the only General Partner, the provisions of
Article VII notwithstanding. Each Partner hereby grants to the Special
Limited Partner a special power of attorney, irrevocable to the extent
permitted by law and coupled with an interest, to amend this Agreement and to
do anything else which, in view of the Special Limited Partner, may be
necessary or appropriate to accomplish the purposes of this Section 6.2(b) or
to enable any additional General Partner admitted pursuant to this Section
6.2(b) to manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General Partner of any
of its economic obligations hereunder, and each other General Partner shall
fully indemnify and hold harmless the additional General Partner from and
against any and all Adverse Consequences sustained by the additional General
Partner in connection with its status as a General Partner (other than Adverse
Consequences arising solely from the gross negligence or wilful misconduct of
such additional General Partner).
(c) Neither the Investment General Partner nor any Affiliate thereof
shall be given an exclusive right to sell, or exclusive employment to sell,
the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive any salary or
other direct or indirect compensation for any services or goods provided in
connection with the Partnership or the Apartment Complex, except as may be
specifically provided in Section 6.12, Section 6.15 and Article XI or as to
which the Consent of the Special Limited Partner shall have been obtained to
the precise terms thereof prior to the commencement of such services or the
provision of such goods. Any Partner may engage independently or with others
in other business ventures of every nature and description, including the
ownership, operation, management, syndication and development of real estate;
neither the Partnership nor any other Partner shall have any rights in and to
such independent ventures or the income or profits derived therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the General Partner
shall have the exclusive right to control the business of the Partnership. If
at any time there is more than one General Partner, the powers and duties of
the General Partners hereunder shall be exercised in the first instance by a
Managing General Partner who, subject to the terms and provisions of this
Agreement, shall manage the business and affairs of the Partnership. The
Managing General Partner may bind the Partnership by executing and delivering,
in the name and on behalf of the Partnership, any documents which this
Agreement authorizes the General Partners to execute hereunder without the
requirement that any other General Partner execute such documents. The
initial Managing General Partner shall be ELLC; if it is unwilling or unable
to serve in such capacity or shall cease to be a General Partner, the
remaining General Partners may from time to time designate a new Managing
General Partner. If for any reason no designation is in effect, the powers of
the Managing General Partner shall be exercised by a majority in interest of
the General Partners. Any action required or permitted to be taken by a
corporate General Partner hereunder may be taken by such of its proper
officers or agents as it shall validly designate for such purpose.
(b) The Managing General Partner shall have control over the business
of the Partnership and shall have all rights, powers and authority conferred
by law as necessary, advisable or consistent in connection therewith. Without
limiting the generality of the foregoing, the Managing General Partner shall
have the right, power and authority to execute any documents relating to the
acquisition, financing, rehabilitation, operation and sale of all or any
portion of the Apartment Complex with the prior approval of the other General
Partners, if any. The Managing General Partner shall be responsible for
administering any construction loan draw requests for the development of the
Apartment Complex.
(c) Neither the Investment Limited Partner nor the Special Limited
Partner shall have any right to take part in the management or control of the
business of the Partnership or to transact any business in the name of the
partnership. No provision of this Agreement which makes the Consent of the
Investment Limited Partner or the Consent of the Special Limited Partner a
condition for the effectiveness of an action taken by the General Partner is
intended, and no such provisions shall be construed, to give the Investment
Limited Partner or the Special Limited Partner, as the case may be, any
participation in the control of the Partnership business. Each of the Special
Limited Partner and the Investment Limited Partner hereby consents to the
exercise by the General Partner of the powers conferred on it by law and this
Agreement, and the General Partner agrees to exercise control of the business
of the Partnership only in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the provisions of this Section
6.4 be invoked by any General Partner or by any other Person as a defense
against or as an impediment to the ability of either the Investment Limited
Partner or the Special Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of the Partnership
using commercially reasonable efforts to carry out the purpose of the
Partnership, and shall devote to the Partnership such time as may be
reasonably necessary for the proper performance of its duties and the business
of the Partnership. The General Partner shall promptly take all action which
may be necessary or appropriate for the proper development, construction,
maintenance and operation of the Apartment Complex in accordance with the
provisions of this Agreement, the Project Documents and any applicable laws
and Regulations. The General Partner is responsible for the management and
operation of the Partnership, including the oversight of the rent-up and
operational stages of the Apartment Complex.
(b) Subject to the provisions of Section 6.5(g), the General Partner
shall use its diligent good faith efforts to cause the Partnership to generate
Cash Flow for distribution to the Partners at the maximum realizable level in
view of (i) any applicable Regulations, (ii) the Minimum Set-Aside Test, (iii)
the Rent Restriction Test and (iv) the Projected Rents, and, if necessary, the
General Partner also shall use its best efforts to obtain approvals and
implementation of appropriate adjustments in the rental schedule of the
Apartment Complex.
(c) The General Partner shall cause the Partnership to obtain and keep
in force, during the term of the Partnership, comprehensive casualty
insurance, including, but not limited to, fire, earthquakes and other risks
generally included under "extended coverage" policies, workers compensation
and public liability insurance in favor of the Partnership (i) with such
companies and in such amounts as shall be satisfactory to the Lenders, or, if
the Lenders impose no specific requirements, as shall be customary for
apartment complexes similar to the Apartment Complex, and (ii) in amounts
equal to the full replacement cost of the Apartment Complex which replacement
cost amount shall be calculated in a manner (A) similar to those amounts which
are customary in the area for apartment complexes such as the Apartment
Complex and (B) as may be reasonably requested by the Special Limited Partner
from time to time, and (C) in any event, sufficient to prevent the
Partnership from becoming a co-insurer under any such policies. No
deductibles on such policies may exceed $2,500. The public liability
insurance in favor of the Partnership shall be in an amount not less than
$3,000,000 (up to $2,000,000 of which may be covered by an umbrella policy).
Through the Completion Date, or such later date as may be required by any
Agency or any Lender, the General Partner also shall cause the Partnership to
obtain and keep in force a builder's risk policy in favor of the Partnership
in an amount not less than the greater of (i) the full replacement value of
the Apartment Complex (excluding the value of the underlying land, the site
utilities and the foundations) or (ii) such other amount as shall be required
by any Agency or Lender. Throughout the term of the Partnership, the General
Partner shall provide copies of all such policies (or binders) to the Special
Limited Partner promptly after their receipt thereof. The General Partner
shall cause the applicable insurer to name each of the Investment Limited
Partner and the Special Limited Partner as an "additional insured" on each
Partnership insurance policy.
(d) If at any time there is more than one General Partner, the
obligations of the General Partners hereunder shall be the joint and several
obligations of each General Partner. Except as otherwise provided in Sections
4.5(b) and 7.1, such obligations shall survive any Withdrawal of a General
Partner from the Partnership.
(e) (i) The General Partner shall establish and maintain reasonable
reserves (the "Replacement Reserve") to provide for working capital needs,
improvements, replacements and any other contingencies of the Partnership. At
a minimum, the General Partner shall cause the Partnership to annually deposit
$2,386 from Cash Flow into the Replacement Reserve; to the extent that Cash
Flow (as determined before deduction of such reserve deposit) for any Fiscal
Year shall be insufficient to make such deposit in full, the General Partner
shall fund such shortfall from its own funds as a Subordinated Loan; and
(ii) In addition to the requirements of Section 6.5(e)(i), in
order to fund Cash Expenditures of the Partnership which exceed Cash Receipts
available for the payment thereof, on or prior to the payment of the Third
Installment, the General Partner (or its designee), shall deposit $21,000 into
a segregated reserve account (the "Operating Reserve") to secure the General
Partner's obligation to fund operating expenses as set forth in Section 6.10.
Funds held in the Operating Reserve may be released to pay operating expenses
with the approval of the Special Limited Partner. The funds, if any,
remaining in the Operating Reserve shall be returned to the General Partner
(or its designee) in accordance with the provisions of Section 10.2. Any
funds utilized from the Operating Reserve to pay Partnership operating
expenses shall constitute Subordinated Loans. Upon the utilization of such
funds from the Operating Reserve, the General Partner shall use its best good
faith efforts to redeposit Partnership funds in the Operating Reserve in an
amount sufficient to maintain the minimum balances required herein.
(f) Each General Partner shall be bound by the provisions of the
Project Documents, and no additional General Partner shall be admitted if he,
she or it has not first agreed to be bound by this Agreement (and assume the
obligations of a General Partner hereunder) and by the Project Documents to
the same extent and under the same terms as each of the other General
Partners.
(g) The General Partner shall take all actions appropriate to ensure
that the Investment Limited Partner receives the full amount of the Projected
Credit, including, without limitation, the rental of apartments to appropriate
tenants and the filing of annual certifications as may be required. In this
regard, the General Partner shall, inter alia, cause (i) the Partnership to
satisfy the Minimum Set-Aside Test, the Rent Restriction Test and all other
requirements imposed from time to time under the Code with respect to rental
levels and occupancy by qualified tenants by the close of the first year of
the Credit Period and throughout the Compliance Period so as to permit the
Partnership to be entitled to the maximum available Tax Credit (ii) the
Partnership to comply with all State Tax Credit monitoring procedures, (iii)
all dwelling units in the Apartment Complex to be leased for initial periods
of not less than six months to individuals satisfying the Rent Restriction
Test, (iv) the Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex to be of
equal quality with comparable amenities available to low-income tenants on a
comparable basis without separate fees.
(h) On or before the Admission Date, the General Partner shall provide
to the Special Limited Partner either (i) an appraisal of the Apartment
Complex prepared by a competent independent appraiser or (ii) completed FmHA
Forms 1924-13 (estimate and certificate of actual cost) and 1930-7 (statement
of budget, income and expense) or HUD project cost and budget analysis on Form
2264, or any successor FmHA or HUD form, any comparable form of a state or
other Governmental Authority, including any applicable Credit Agency, setting
forth estimates with respect to construction, rehabilitation and mortgage
financing costs and initial rental income and operating expense figures for
the Apartment Complex.
(i) The General Partner shall (i) not store or dispose of (except in
compliance with all laws, ordinances, and regulations pertaining thereto) any
Hazardous Material at the Apartment Complex, or at or on any other Site or
Vessel owned, occupied, or operated either by any General Partner, any
Affiliate of a General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor indirectly transport
or arrange for the transport of any Hazardous Material (except in compliance
with all laws, ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any General
Partner's obtaining knowledge of any potential or known release, or threat of
release, of any Hazardous Material at or from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General Partner, any
Affiliate of a General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a lien on the
Apartment Complex; (y) upon any General Partner's receipt of any notice to
such effect from any federal, state, or other Governmental Authority; and (z)
upon any General Partner's obtaining knowledge of any incurrence of any
expense or loss by any such government authority in connection with the
assessment, containment, or removal of any Hazardous Material for which
expense or loss any General Partner may be liable or for which expense or loss
a lien may be imposed on the Apartment Complex.
(j) The General Partner shall promptly request in writing of the
Permanent Lender that the Permanent Lender cause the Special Limited Partner
to be named as an "interested party" in the Permanent Mortgage Loan Documents,
so that the Permanent Lender will notify the Special Limited Partner of any
default under the Permanent Mortgage or the General Partner shall itself
notify the Special Limited Partner of any such default.
(k) The General Partner shall provide the Special Limited Partner with
a true and accurate copy of each Construction Loan requisition and any
supporting documents and information which has been submitted for approval by
the Construction Lender (whether submitted before or after the Admission
Date).
(l) The General Partner shall 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. The General Partner shall not employ,
or permit another to employ, such funds or assets in any manner except for the
exclusive benefit of the Partnership. No General Partner shall contract away
the fiduciary duty owed at common law to the Limited Partners.
6.6 Representations and Warranties
A. The General Partner represents and warrants to the Investment
Limited Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State and has
complied with all filing requirements necessary for its existence and to
preserve the limited liability of the Investment Limited Partner and the
Special Limited Partner.
(2) No event or proceeding has occurred or is pending or, is to
the Best Knowledge of the General Partner, has been threatened within the last
90 days which would (i) materially adversely affect the Partnership or its
properties, or (ii) materially adversely affect the ability of the General
Partner or any of its Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the Apartment Complex,
other than legal proceedings which have been bonded against without recourse
to Partnership assets in such manner as to stay the effect of the proceedings
or otherwise have been adequately provided for. This subparagraph shall be
deemed to include, without limitation, the following: (x) legal actions or
proceedings before any court, commission, administrative body or other
Governmental Authority having jurisdiction over the zoning applicable to the
Apartment Complex; (y) labor disputes; and (z) acts of any Governmental
Authority.
(3) To the best knowledge of the General Partner, no default (or
event which, with the giving of notice or the passage of time or both, would
constitute a default) has occurred and is continuing under this Agreement or
under any material provision of the Project Documents, and the Project
Documents are in full force and effect.
(4) Except as specifically permitted under Section 3.1, no
Partner or Related Person bears (or will bear) the Economic Risk of Loss with
respect to the Permanent Mortgage Loan. No General Partner has, either on its
own behalf or on behalf of the Partnership, incurred any financial obligation
with respect to the Partnership prior to the Admission Date, other than as
disclosed in writing to the Special Limited Partner prior to the Admission
Date.
(5) The Apartment Complex will be, is being or has been
constructed in a timely manner in conformity with the Project Documents.
There is no violation by the Partnership or the General Partner of any zoning,
environmental or similar regulation applicable to the Apartment Complex which
could have a material adverse effect thereon, and the Partnership has complied
and will comply with all applicable municipal and other laws, ordinances and
regulations relating to such construction and use of the Apartment Complex.
All appropriate public utilities, including, but not limited to, water,
electricity, gas (if called for in the Plans and Specifications), and sanitary
and storm sewers, are or will be available and operating properly for each
unit in the Apartment Complex at the time of the initial occupancy of such
unit.
(6) To the best knowledge of the General Partner, the
Partnership owns good and marketable fee simple title to the Apartment
Complex, subject to no material liens, charges or encumbrances other than
those which (i) are both permitted by the Project Documents and are noted or
excepted in the Title Policy, (ii) do not materially interfere with use of the
Apartment Complex (or any part thereof) for its intended purpose or, other
than the permitted Mortgages, have a material adverse effect on the value of
the Apartment Complex, or (iii) have been bonded or insured against in such a
manner as to preclude the holder of such lien or such surety or insurer from
having any recourse to the Property or the Partnership for payment of any debt
secured thereby, which bond(s) or insurance have been approved by the Lenders.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken pertaining to
the Partnership or the Apartment Complex by each Affiliate of a General
Partner which is a corporation or limited liability company have been or will
be duly authorized by all necessary corporate or other actions, and the
consummation of any such transactions with or on behalf of the Partnership
will not constitute a breach or violation of, or a default under, the charter
or by-laws of such Affiliate or any agreement by which such Affiliate or any
of its properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner (or partner or member of a General
Partner) which is a corporation or limited liability company (a
"Corporation/LLC") has been duly organized, is validly existing and in good
standing under the laws of its state of organization and has all requisite
corporate and other power to be a General Partner and to perform its duties
and obligations as contemplated by this Agreement and the Project Documents.
Neither the execution and delivery by any Corporation/LLC of this Agreement
nor the performance of any of the actions of any Corporation/LLC contemplated
hereby has constituted or will constitute a violation of (a) the articles of
incorporation, operating agreement, by-laws and any other organizational
documents of such Corporation/LLC, (b) any agreement by which such
Corporation/LLC is bound or to which any of its property or assets is subject,
or (c) any law, administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner.
(10) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not necessarily
limited to, any account for replacement reserves, are currently funded to the
levels currently required by any Agency or Lender.
(11) If the only General Partner(s) are one or more
corporation(s) or limited liability company(ies), then the General Partner(s)
have a combined net worth which satisfies the Designated Net Worth
Requirements.
(12) All anticipated payments and expenses required to be made or
incurred in order to complete the construction of the Apartment Complex in
conformity with the Project Documents, to fund any reserves hereunder or under
any other Project Document required to be funded at or prior to the later of
the Admission Date or Permanent Mortgage Commencement, to satisfy all
requirements under the Project Documents and to pay the Development Fee and
all other fees, have been or will be paid or provided for utilizing only (i)
the funds available from the Construction Loan, (ii) the Capital Contributions
of the Investment Limited Partner, (iii) the Capital Contributions of the
General Partner in the amounts set forth on Schedule A as of the Admission
Date, (iv) the available net rental income, if any, earned by the Partnership
prior to Permanent Mortgage Commencement (to the extent that it is permitted
to be used for such purposes by any Agency or Lender), (v) any Cash Flow
generated subsequent to Permanent Mortgage Commencement (to the extent
provided in Section 10.2(a)), (vi) any insurance proceeds, and (vii) any funds
furnished by the General Partner pursuant to Sections 6.5(e) and 6.11(a).
(13) The aggregate amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is $130,621 per
annum for each of the years 1997 through 2006 (inclusive), provided, however,
that the General Partner shall have no liability to the Investment Limited
Partner or the Special Limited Partner for any breach of the representation
contained in this paragraph (m) if (but only to the extent that) the adjuster
provisions set forth in Sections 5.1(e), (f) and (g) have become operative and
all required payments or adjustments have been made thereunder in accordance
with the terms thereof.
(14) The Apartment Complex will be, is being or has been
constructed and operated in a manner which satisfies Section 42 of the Code
and shall continue to satisfy all existing and anticipated restrictions
applicable to projects generating Tax Credits.
(15) No General Partner, Affiliate of a General Partner or Person
for whose conduct any General Partner is or was responsible has ever: (i)
owned, occupied, or operated a Site or Vessel on which any Hazardous Material
was or is stored, transported, or disposed of, except if such storage,
transport or disposition was and is at all times in compliance with all laws,
ordinances, and regulations pertaining thereto; (ii) directly or indirectly
transported, or arranged for transport, of any Hazardous Material (except if
such transport was and is at all times in compliance with all laws, ordinances
and regulations pertaining thereto); (iii) caused or was legally responsible
for any release or threat of release of any Hazardous Material; (iv) received
notification from any federal, state or other Governmental Authority of (x)
any potential, known, or threat of release of any Hazardous Material from the
Apartment Complex or any other Site or Vessel owned, occupied, or operated by
any General Partner, by any Affiliate of a General Partner, or by any Person
for whose conduct any General Partner is or was responsible or whose liability
may result in a lien on the Apartment Complex; or (y) the incurrence of any
expense or loss by any such Governmental Authority or by any other Person in
connection with the assessment, containment, or removal of any release or
threat of release of any Hazardous Material from the Apartment Complex or any
such Site or Vessel.
(16) To the Best Knowledge of the General Partner, no Hazardous
Material was ever or is now stored on, transported, or disposed of on the land
comprising the Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance with all laws,
ordinances, and regulations pertaining thereto.
(17) The General Partner has fulfilled and will continue to
fulfill all of its duties and obligations under Section 6.5 as and when
required.
B. Each of the Investment Limited Partner and Special Limited Partner
represents and warrants to the General Partner as follows:
(1) Each of the Investment Limited Partner and Special Limited
Partner is a duly organized limited partnership or corporation, as the case
may be, validly existing and in good standing under the laws of the State of
Delaware, has complied with all filing requirements necessary for its
existence and has all requisite corporate and other power to be a Partner and
to perform its duties and obligations as contemplated by this Agreement. The
execution and delivery by any of the Investment Limited Partner and/or Special
Limited Partner of this Agreement nor the performance of any of the actions of
the Investment Limited Partner and/or Special Limited Partner contemplated
hereby has been or will be duly authorized by all necessary corporate,
partnership or other actions, as the case may be, and does not constitute a
violation of (a) the certificate of incorporation, operating agreement, by-
laws, partnership agreement and any other organizational documents of such
Investment Limited Partner or Special Limited Partner, (b) any agreement by
which such Investment Limited Partner or Special Limited Partner is bound or
to which any of its respective property or assets is subject, or (c) any law,
administrative regulation or court decree.
(2) To the best knowledge of the Investment Limited Partner and
Special Limited Partner, respectively, no default (or event which, with the
giving of notice or the passage of time or both, would constitute a default)
has occurred and is continuing under this Agreement or under any material
provision of the Project Documents, and the Project Documents are in full
force and effect.
(3) No Event of Bankruptcy has occurred with respect to the
Investment Limited Partner.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall at any time
bear the Economic Risk of Loss for the payment of any portion of any Mortgage
Loan, and the General Partner shall not permit any other Partner or any
Related Person to bear the Economic Risk of Loss for the payment of any
portion of any Mortgage Loan, except as may be expressly permitted pursuant to
the provisions of Article III with the Consent of the Special Limited Partner.
6.8 Indemnification of the General Partner
(a) No General Partner or any Affiliate thereof shall have liability
to the Partnership or to any Limited Partner for any loss suffered by the
Partnership which arises out of any action or inaction of any General Partner
or Affiliate thereof if such General Partner or Affiliate thereof in good
faith determined that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute gross negligence or
willful misconduct of such General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof shall be indemnified by
the Partnership from and against any Adverse Consequences sustained in
connection with the business and operations of the Partnership, provided that
all of the following conditions are met: (i) such General Partner has
determined, in good faith, that the course of conduct which caused the loss,
judgment, liability, expense or amount paid in settlement was in the best
interests of the Partnership; and (ii) such Adverse Consequences were not the
result of gross negligence or willful misconduct on the part of such General
Partner or Affiliate thereof; and (iii) such indemnification or agreement to
hold harmless is recoverable only out of the assets of the Partnership, and
not from the Limited Partners.
(c) Notwithstanding the above, no Partner or any Affiliate thereof
performing services for the Partnership or any broker-dealer shall be
indemnified for any Adverse Consequences arising from or out of an alleged
violation of federal or state securities laws unless there has been a
successful adjudication on the merits of each count involving securities laws
violations as to the particular indemnitee and the court finds that
indemnification of the settlement and related costs should be made; provided,
however, that the Partnership is authorized to advance in the form of a loan
to such Partner reasonably necessary funds for defense of any such claim
pending final adjudication which may have been brought against a Partner or
Affiliate thereof performing services for the Partnership. In any claim for
indemnification for federal or state securities law violations, the party
seeking indemnification shall, prior to seeking court approval for such
indemnification, place before the court the positions of the Securities and
Exchange Commission, the Massachusetts Securities Division and any other
applicable state securities administrator with respect to the issue of
indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance or course of construction
insurance, which insures any party against any liability as to which such
party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General Partner
under this Section 6.8 only if the loss involves an activity in which such
Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term "Affiliate" shall
mean any Person performing services on behalf of the Partnership who (i)
directly or indirectly controls, is controlled by or is under common control
with a General Partner; (ii) owns or controls ten percent (10%) or more of the
outstanding voting securities of a General Partner; (iii) is an officer,
director, partner or trustee of a General Partner; or (iv) if a General
Partner is an officer, director, partner or trustee, in any company for which
such General Partner acts in any such capacity. For purposes of this Section
6.8 only, the term "controls" and any form of such term shall mean the power
to direct the management and policies of a Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partner will indemnify and hold the Partnership and
the Limited Partners harmless from and against any and all Adverse
Consequences which the Partnership or any Limited Partner may incur by reason
of (i) the past, present or future actions or omissions of the General Partner
or any of its Affiliates constituting gross negligence or willful misconduct,
or (ii) any liabilities to which either the Partnership or the Apartment
Complex is subject other than (x) any Mortgage or (y) any payables or
necessary contractual obligations incurred pursuant to the requirements of any
Agency or Lender in connection with the operation of the Apartment Complex in
the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be liable
to a Limited Partner or the Partnership for any act or omission for which the
Partnership is required to indemnify such General Partner under Section 6.8.
(c) The General Partner shall indemnify, defend, and hold the Limited
Partners harmless from and against any Adverse Consequences related to or
arising out of the presence of any Hazardous Material at the Apartment Complex
(other than any Adverse Consequences resulting from the acts or omissions of
the Limited Partners). Any claim or loss described in the immediately
preceding sentence may be defended, compromised, settled, or pursued by the
Limited Partners with counsel of the Limited Partners' selection, but at the
expense of General Partner. Notwithstanding anything else set forth herein,
this indemnification shall survive the withdrawal of any General Partner
and/or the termination of this Agreement as to liabilities incurred prior to
such withdrawal or termination.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner shall be
obligated during the Initial Operating Period, to promptly advance funds to
eliminate any Operating Deficit, provided however, that the General Partner
shall not be obligated to advance in excess of an aggregate $220,000 in any
one Fiscal Year. In any case in which the General Partner otherwise would be
required to advance funds under this Section 6.10, any amounts then held in
the Operating Reserve may be released and disbursed for the purpose of
eliminating the Operating Deficit before the General Partner shall be required
to advance their own funds. In the event that the General Partner shall fail
to make any such advance as aforesaid, (a) the Partnership shall utilize
amounts (the "Applied Amounts") otherwise payable to the General Partner or
its Affiliates under Section 6.12 and/or Article X to meet the obligations of
the General Partner pursuant to this Section 6.10, with such utilization of
Applied Amounts constituting payment and satisfaction of the corresponding
amounts payable to the General Partner or its Affiliates under Section 6.12
and/or Article X, with the proceeds thereof being applied to such obligations,
and with the obligation of the Partnership to make such payments to the
General Partner or its Affiliates pursuant to Section 6.12 and/or Article X
being deemed to have been satisfied to the extent thereof and (b) the Special
Limited Partner shall have the option, exercisable in its sole discretion, to
cause it or one or more of its designees to be admitted to the Partnership as
additional General Partner(s). An additional General Partner so admitted
shall automatically, without the need for any further action by any Partner,
become the Managing General Partner and shall be delegated all of the powers
and authority of all of the General Partners pursuant to Section 6.13, and
each Partner hereby grants to any such additional General Partner a power of
attorney, coupled with an interest and irrevocable to the extent permitted by
law, to execute and deliver any and all instruments and documents which it
believes to be necessary or appropriate in order to accomplish the purposes of
this Section 6.10 and to manage the business of the Partnership. The
admission of an additional General Partner shall not relieve any other General
Partner of any of its economic obligations hereunder, and each other General
Partner shall indemnify and hold harmless the additional General Partner from
and against any and all Adverse Consequences sustained in connection with the
additional General Partner's status as a General Partner (other than Adverse
Consequences arising solely out of the negligence or misconduct of such
additional General Partner). For the purpose of this Section 6.10, all
expenses shall be paid on a sixty (60)-day current basis. Moreover, the
General Partner may in its sole discretion at any time advance funds to the
Partnership to pay operating expenses and/or debt service of the Partnership
in order to facilitate the Partnership's compliance with the Rent Restriction
Test. All advances pursuant to Section 6.5(e) and this Section 6.10
(including any Applied Amounts), except advances from the Operating Reserve,
shall constitute non-interest-bearing Subordinated Loans. Subordinated Loans
shall be repaid in accordance with the provisions of Article X. The form and
provisions of all Subordinated Loans shall conform to any applicable
Regulations.
6.11 Obligation to Complete the Construction of the Apartment Complex
(a) The Developer, in its capacity as the Developer and not as a
General Partner, shall be obligated to complete the construction of the
Apartment Complex and achieve Permanent Mortgage Commencement in the manner
set forth in this Agreement and the Development Agreement.
(b) If and to the extent required by the Construction Lender, the
completion of the Apartment Complex shall be secured by a completion bond in
an amount at least equal to the full amount of the Construction Contract for
the Apartment Complex or by other security satisfactory to the Construction
Lender, which other security may included, but shall not be limited to, the
following:
(i) a written guaranty of completion by a Person, supported by
financial statements demonstrating sufficient net worth or adequately
collateralized by other real or personal properties or other Persons'
guarantees; and/or
(ii) a retention of a reasonable portion of the Capital
Contribution of the Investment Limited Partner and/or fees to the
General Partner as a potential offset in the event the General Partner
does not perform in accordance with this Agreement.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as compensation for the
Developer's services in connection with the acquisition, development and
rehabilitation of the Apartment Complex, the Partnership shall pay to the
Developer a development fee (the "Development Fee") in the amount and at the
times set forth in the Development Agreement. If the Development Fee has not
been fully paid by the tenth (10th) anniversary of the Completion Date, the
General Partner shall make a Capital Contribution to the Partnership in an
amount sufficient to enable the Partnership to pay any unpaid portion of the
Development Fee.
(b) The Partnership shall pay to the Special Limited Partner or an
Affiliate thereof a fee (the "Asset Management Fee") commencing in 1997 for
its services in connection with the Partnership's accounting matters relating
to the Investment Limited Partner and assisting with the preparation of tax
returns and the reports required by Section 12.7 in the annual amount of
$1,500. The Asset Management Fee shall be payable from Cash Flow in the
manner and priority set forth in Section 10.2(a); provided however, that if in
any Fiscal Year, Cash Flow is insufficient to pay the full amount of the Asset
Management Fee, the General Partner shall advance the amount of such
deficiency to the Partnership as a Subordinated Loan. If after the Initial
Operating Period for any reason the Asset Management Fee is not paid in any
Fiscal Year, the General Partner shall not be obligated to make a Subordinated
Loan but the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first Fiscal Year in which there is sufficient Cash
Flow or Capital Proceeds as provided in Article X.
(c) In consideration of the services of the General Partner in
managing the day-to-day business and affairs of the Partnership, the
Partnership shall pay to the General Partner an annual fee (the "Partnership
Management Fee") commencing in 1996 in the amount of up to $1,500, payable
from Cash Flow in the manner set forth in Section 10.2(a). The Partnership
Management Fee shall be noncumulative so that if there is not sufficient Cash
Flow in any Fiscal Year to pay the amount of the Partnership Management Fee
specified in Section 10.2(a), clause Fifth, the Partnership shall have no
obligation to pay such shortfall in any future Fiscal Year.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner serving hereunder,
each General Partner may from time to time, by an instrument in writing,
delegate all or any of his powers or duties hereunder to another General
Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other instrument executed
by any General Partner shall be conclusive evidence in favor of every Person
relying thereon or claiming thereunder that at the time of the delivery
thereof (i) the Partnership was in existence, (ii) this Agreement had not been
amended in any manner so as to restrict the delegation of authority among
General Partners (except as shown in certificates or other instruments duly
filed in the Filing Office) and (iii) the execution and delivery of such
instrument was duly authorized by the General Partners. Any Person may always
rely on a certificate addressed to him and signed by any General Partner
hereunder:
(1) as to who are the General Partners or Limited Partners
hereunder;
(2) as to the existence or nonexistence of any fact which
constitutes a condition precedent to acts by the General Partners or in
any other manner germane to the affairs of the Partnership;
(3) as to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) as to the authenticity of any copy of this Agreement and any
amendments thereto; or
(5) as to any act or failure to act by the Partnership or as to
any other matter whatsoever involving the Partnership or any Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and assign to the
Partnership all of their right, title and interest in and to the Apartment
Complex and in and to all of the Project Documents, including, but not limited
to, the following: (i) all contracts with architects, supervising architects,
engineers and contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings heretofore
prepared or obtained in connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and applications therefore,
including, but not limited to those relating to planning, zoning, building
permits and Tax Credits; (iv) any and all commitments with respect to any
Mortgage(s); and (v) any and all contracts or rights with respect to any
agreements with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may act as Management
Agent upon the terms and conditions set forth in Article XI.
(b) The General Partner or any Affiliates thereof shall have the right
to contract or otherwise deal with the Partnership for the sale of goods or
services to the Partnership in addition to those set forth herein, if (i)
compensation paid or promised for such goods or services is reasonable (i.e.,
at fair market value) and is paid only for goods or services actually
furnished to the Partnership, (ii) the goods or services to be furnished shall
be reasonable for and necessary to the Partnership, (iii) the fees, terms and
conditions of such transaction are at least as favorable to the Partnership in
all material respects as would be obtainable in an arm's-length transaction,
and (iv) no agent, attorney, accountant or other independent consultant or
contractor who also is employed on a full-time basis by the General Partner or
any Affiliate shall be compensated by the Partnership for his services. Any
contract covering such transactions shall be in writing and shall be
terminable without penalty on sixty (60) days written notice. Any payment
made to the General Partner or any Affiliate for such goods or services shall
be fully disclosed to all Limited Partners in the reports required under
Article XII. Neither the General Partner nor any Affiliate shall, by the
making of lump-sum payments to any other Person for disbursement by such other
Person, circumvent the provisions of this Section 6.15(b).
6.16 Tax Matters Partner
(a) The General Partner hereby is designated as Tax Matters Partner of
the Partnership, and shall engage in such undertakings as are required of the
Tax Matters Partner of the Partnership as provided in treasury regulations
pursuant to Section 6231 of the Code. Each Partner, by the execution of this
Agreement, consents to such designation of the Tax Matters Partner and agrees
to execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate
to evidence such consent.
(b) The Tax Matters Partner hereby is authorized, but not required:
(i) to enter into any settlement agreement with the Service with
respect to any tax audit or judicial review, in which agreement the Tax
Matters Partner may expressly state that such agreement shall bind the
other Partners, except that such settlement agreement shall not bind any
Partner who (within the time prescribed pursuant to the Code and
treasury regulations thereunder) files a statement with the Service
providing that the Tax Matters Partner shall not have the authority to
enter into a settlement agreement on the behalf of such Partner;
(ii) in the event that a notice of final administrative
adjustment at the Partnership level of any item required to be taken
into account by a Partner for tax purposes (a "Final Adjustment") is
mailed to the Tax Matters Partner, to seek judicial review of such Final
Adjustment, including the filing of a petition for readjustment with the
Tax Court, the District Court of the United States for the district in
which the Partnership's principal place of business is located, or the
United States Claims Court;
(iii) to intervene in any action brought by any other Partner for
judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment with the
Service at any time and, if any part of such request is not allowed by
the Service, to file an appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(v) to enter into an agreement with the Service to extend the
period for assessing any tax which is attributable to any item required
to be taken into account by a Partner for tax purposes, or an item
effected by such item; and
(vi) to take any other action on behalf of the Partners or the
Partnership in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or Regulations.
(c) The Partnership shall indemnify and reimburse the Tax Matters
Partner for all expenses, including legal and accounting fees, claims,
liabilities, losses and damages incurred in connection with any administrative
or judicial proceeding with respect to the tax liability of the Partners. The
payment of all such expenses shall be made before any distributions are made
from Cash Flow or any discretionary reserves are set aside by the General
Partner. The General Partner shall have the obligation to provide Partnership
funds for such purpose, but only to the extent of available Partnership
resources. The taking of any action and the incurring of any expense by the
Tax Matters Partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole discretion of the Tax Matters
Partner and the provisions on limitations of liability of the General Partner
and indemnification set forth in Section 6.8 of this Agreement shall be fully
applicable to the Tax Matters Partner in its capacity as such.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Voluntary Withdrawal
(a) Except as set forth in Section 7.1(b) below, no General Partner
shall have the right to Withdraw voluntarily from the Partnership or to sell,
assign or encumber its Interest without the Consent of the Investment Limited
Partner and each of the other General Partners (if any) and, if required, any
Requisite Approvals.
(b) Notwithstanding the foregoing:
(i) A General Partner may at any time propose to the Investment
Limited Partner a Person to serve as such General Partner's successor or
if at such time there be more than one General Partner, to serve as a
successor to one or more of the General Partners desiring to withdraw.
If the Investment Limited Partner has consented thereto or if, pursuant
to Section 7.5, such a consent is not required, and any Requisite
Approvals are obtained to such withdrawal and the admission of such
successor, all Partners hereby agree, subject to the provisions of
Section 7.5, that this Agreement and the Certificate shall be
appropriately amended to effect such withdrawal and admission.
(ii) If the Special Limited Partner or its designee becomes a
General Partner pursuant to the provisions of Section 4.5(b), Section
5.2(e), Section 6.2(b) or Section 6.10, it shall not require the consent
of any other General Partner to transfer all or any portion of its
Interest as a General Partner, other than as may be required under the
Act.
(iii) The General Partner may pledge or assign its Interest to the
Construction Lender as security for the Partnership's obligations under
the Construction Loan Documents, provided that the form and substance of
such pledge or assignment has been approved by the Special Limited
Partner.
7.2 Reconstitution
(a) In the event of the Withdrawal of a General Partner, the
Partnership shall not be dissolved or required to be wound up if (i) at the
time of such Withdrawal there is at least one remaining General Partner and
that General Partner carries on the business of the Partnership (any such
remaining General Partner being hereby authorized to carry on the business of
the Partnership), or (ii) within ninety (90) days after such Withdrawal all
remaining Partners (or if authorized by the Act, a majority of the Percentage
Interests in the Partnership) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of such
Withdrawal, of one or more additional General Partners.
(b) If it is determined, by a court of competent jurisdiction, that
the Partnership has dissolved prior to the occurrence of a Liquidating Event,
or if upon the Withdrawal of a General Partner, the Partners fail to appoint a
substitute General Partner effective as of such event and to agree to continue
the business of the Partnership as provided in this Section 7.2, then within
an additional ninety (90) days after such determination or the last day of
such ninety (90) day period, as the case may be (the "Reconstitution Period"),
a majority of those Persons constituting the Investment Limited Partner may
elect to reconstitute the Partnership and continue its business on the same
terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as a General Partner a Person designated by a majority of those Persons
constituting the Investment Limited Partners. Upon any such election by the
Investment Limited Partner, all Partners shall be bound thereby and shall be
deemed to have consented thereto. Unless such an election is made within the
Reconstitution Period, the Partnership shall wind up its affairs in accordance
with the provisions of Section 10.3 hereof. If such an election is made
within the Reconstitution Period, then:
(i) The reconstituted limited partnership shall continue
until the occurrence of a Liquidating Event as provided in Section
2.4;
(ii) If the successor General Partner is not a former
General Partner, then the provisions of Section 7.4(d) shall
apply; and
(iii) All necessary steps shall be taken to cancel this
Agreement and the Certificate and to enter into a new partnership
agreement and certificate of limited partnership, and the
successor General Partner shall be obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the remaining General
Partners may designate a Person to become a successor General Partner to the
Withdrawing General Partner. Except as provided in Section 7.5 and subject to
the provisions of Section 7.5, any Person so designated, subject to any
Requisite Approvals, the Consent of the Investment Limited Partner and, if
required by the Act or any other applicable law, the consent of any other
Partner so required, shall become a successor General Partner upon his written
agreement to be bound by the Project Documents and by the provisions of this
Agreement.
(b) If any Withdrawal shall occur at a time when there is no remaining
General Partner and the Partners do not unanimously elect to continue the
business of the Partnership in accordance with the provisions of clause (ii)
of Section 7.2(a) above, then a majority of those Persons constituting the
Investment Limited Partner shall have the right, subject to any Requisite
Approvals and the provisions of Section 7.5, to designate a Person to become a
successor General Partner upon his written agreement to be bound by the
Project Documents and by the provisions of this Agreement.
(c) If a majority of those Persons constituting the Investment Limited
Partner elects to reconstitute the Partnership and admit a successor General
Partner pursuant to this Section 7.3, the relationship of the Partners in the
reconstituted Partnership shall be governed by this Agreement.
7.4 Interest of Predecessor General Partner
(a) Except as provided in Section 7.3(a), no assignee or transferee of
all or any part of the Interest as a General Partner of a General Partner
shall have any automatic right to become a General Partner. Until the
acquisition of the Interest of a Withdrawing General Partner pursuant to
Section 7.4(d) or 7.8, such Interest shall be deemed to be that of an assignee
and the holder thereof shall be entitled only to such rights as an assignee
may have as such under the laws of the State.
(b) Anything herein contained to the contrary notwithstanding, any
General Partner who Withdraws voluntarily in violation of Section 7.1 shall
remain liable for all of its obligations under this Agreement, for all its
other obligations and liabilities hereunder incurred or accrued prior to the
date of its Withdrawal and for any loss or damage which the Partnership or any
of its Partners may incur as a result of such Withdrawal (except as provided
in Section 6.7), except for any loss or damage attributable to the default,
negligence or misconduct of a successor General Partner admitted in its place
under this Agreement.
(c) The estate (which term, for purposes of this Section 7.4(c), shall
include the heirs, distributees, estate, executors, administrators, guardian,
committee, trustee or other personal representative) of a Withdrawn General
Partner shall be liable for all his liabilities and obligations hereunder,
except as provided in this Section 7.4(c). In the event of the death,
insanity or incompetency of a General Partner, his estate shall remain liable
for all of his obligations and liabilities hereunder incurred or accrued prior
to the date of such event, and for any damages arising out of any breach of
this Agreement by him, but his estate shall not have any obligation or
liability on account of the business of the Partnership or the activities of
the other General Partners after his death, insanity or incompetency unless it
becomes a General Partner pursuant to Section 7.3(a).
(d) The Disposition of the General Partner Interest of a General
Partner who or which Withdraws voluntarily in compliance with this Agreement
shall be accomplished in such manner as shall be reasonably acceptable to the
remaining General Partners and shall be reasonably approved by Consent of the
Investment Limited Partner. Except as provided in the preceding sentence,
upon the Withdrawal of a General Partner (other than a General Partner who or
which is removed as such pursuant to Section 4.5), such Withdrawn General
Partner shall be deemed to have automatically transferred to the remaining
General Partners, in proportion to their respective General Partner Interests,
or, if there shall be no remaining General Partner, then to the Partnership
for the benefit of the remaining Partners, all or such portion of the General
Partner Interest of such Withdrawn General Partner which, when aggregated with
the existing General Partner Interests of all such remaining General Partners,
will be sufficient to assure such remaining General Partners a 1% interest in
all Profits, Losses, Tax Credits and distributions of the Partnership under
Article X. No documentation shall be necessary to effectuate such transfer,
which shall be automatic, and no consideration shall be payable therefor. For
the purposes of Article X, the effective date of the transfer pursuant to the
provisions of this Section 7.4(d) of the General Partner Interest of a
Withdrawn General Partner shall be deemed to be the date on which such
Withdrawal occurs. That portion of the General Partner Interest (the
"Remaining Interest") of the Withdrawing General Partner which shall not have
been transferred pursuant to this Section 7.4(d) shall be (i) purchased by the
Partnership in accordance with the provisions of Section 7.8 in the case of a
General Partner who or which Withdraws in violation of Section 7.1 hereof and
(ii) in all other cases (except a removed General Partner), shall be retained
by such Withdrawing General Partner (or pass to legal representatives thereof)
who or which shall have the status of a Special Limited Partner, but with the
right to receive only that share of the Profits, Losses, Tax Credits and
distributions of the Partnership to which the Withdrawing General Partner, as
such, would have been entitled had he or it remained, reduced to the extent of
the General Partner Interest transferred hereunder, but such Withdrawing
Partner (or his or its legal representatives, as the case may be) shall not be
considered to be a Special Limited Partner for the purpose of exercising any
rights reserved to the Special Limited Partner under this Agreement or sharing
the benefits allocated to the Special Limited Partner under Article X hereof
and shall not participate in the votes or consents of the Limited Partners
hereunder; provided, however, that in the case of a General Partner who or
which Withdraws involuntarily without violation of this Agreement, the
Partnership shall have the option (but not the obligation), exercisable by
notice to the holder of such Interest within six months following the date of
such Withdrawal, to acquire the Remaining Interest of such Withdrawing General
Partner (or the Special Limited Partner Interest deriving therefrom) in
accordance with the valuation and payment provisions of Section 7.8.
7.5 Event of Bankruptcy as to a General Partner; Removal of a General
Partner and Transfer of Its Interest
(a) If an Event of Bankruptcy shall have occurred as to a General
Partner, the Special Limited Partner may (i) replace such General Partner with
a successor general partner (the "Successor") willing to serve as a General
Partner and reallocate to the Successor (and the bankrupt General Partner
hereby assigns to the Successor in such event) the interest of the bankrupt
General Partner in Profits, Losses, Tax Credits, Cash Flow and Capital
Proceeds (provided, however, that in no event shall any fees which are earned
be so reallocated), or (ii) add an additional General Partner willing to serve
as such with such of the powers of the bankrupt General Partner hereunder as
the Special Limited Partner may designate and make a similar reallocation to
that contemplated by the foregoing clause (i), which the bankrupt General
Partner hereby ratifies in such event. Upon the selection of the Successor as
aforesaid and his admission as a General Partner, the bankrupt General Partner
shall not have any further rights, powers, liabilities or obligations under
this Agreement and/or in respect of the Apartment Complex, provided, however,
that the bankrupt General Partner shall continue to be responsible for (1) any
loss caused by the nonperformance of its obligations under this Agreement
and/or in respect of the Apartment Complex to be performed prior to the
Completion Date and (2) the furnishing of any funds required to be furnished
by it under Sections 6.10 and 6.11 (any such sums advanced by the bankrupt
General Partner pursuant to this clause (2) shall be deemed to be Capital
Contributions except to the extent treated as Subordinated Loans pursuant to
Section 6.10). If all or any part of the General Partner Interest of a
General Partner is reallocated pursuant to this Section 7.5, such General
Partner shall be entitled to receive the fair market value of the Interest (or
portion thereof) so reallocated; such fair market value shall be determined
and paid in accordance with Section 7.8. No exercise of rights pursuant to
this Section 7.5 need be delayed pending determination of such value.
(b) From and after the date of the occurrence of an Event of
Bankruptcy as to any General Partner, the obligation of the Investment Limited
Partner to pay the Installments shall be suspended, and such obligation shall
be reinstated only when such Event of Bankruptcy shall have been cured in a
manner approved in writing by the Special Limited Partner. Notwithstanding
the foregoing, if an Event of Bankruptcy occurs as to a General Partner when
another viable General Partner remains who is not in default with respect to
its obligations hereunder, the payment obligation of the Investment Limited
Partners shall be suspended only if such Event of Bankruptcy has a material
adverse impact on the Investment Limited Partner's tax benefits hereunder for
which the Investment Limited Partner has not been fully compensated under the
adjuster provisions set forth in Section 5.1.
(c) Each Partner (including any General Partner removed as aforesaid)
hereby irrevocably nominates and appoints the Special Limited Partner and each
of its officers, with full power of substitution, as the attorney-in-fact of
such Partner, in his name, place and ▇▇▇▇▇, to make, execute and deliver any
and all amendments to this Agreement, the Certificate, business certificates
and instruments of like tenor which may be necessary or appropriate to give
effect to the provisions of this Section 7.5.
(d) Inasmuch as the interests of the Partners under this Agreement
depend on the continuing existence of viable General Partners willing and able
to perform the functions of the General Partners under this Agreement, the
rights of, and payments to, the General Partners have been agreed on in con-
sideration, among other things, of the agreement and ability of the General
Partners to perform such functions, and the inclusion of this Section 7.5 in
this Agreement has been a material inducement to each of the Investment
Limited Partner and the Special Limited Partner to enter into this Agreement.
Each Partner hereby ratifies and confirms any action authorized by the
provisions of this Section 7.5.
7.6 Designation of New General Partners
(a) The General Partners may, with the written consent of all
Partners, at any time designate new General Partners, each with such Interest
as a General Partner in the Partnership as the General Partners may specify,
subject to any Requisite Approvals.
(b) Any new General Partner shall, as a condition of receiving any
interest in the Partnership property, agree to be bound by the Project
Documents and any other documents required in connection therewith and by the
provisions of this Agreement, to the same extent and on the same terms as any
other General Partner.
7.7 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant to the
preceding provisions of this Article VII, Schedule A shall be amended to
reflect such admission and an amendment to the Certificate, also reflecting
such admission, shall be filed as required by the Act.
(b) Each Partner hereby consents to and authorizes any admission or
substitution of a General Partner or any other transaction, including, without
limitation, the continuation of the Partnership business, which has been
authorized under the provisions of this Agreement, and hereby ratifies and
confirms each amendment of this Agreement necessary or appropriate to give
effect to any such transaction.
7.8 Valuation and Sale of Interest of Former General Partner
(a) Subject to the provisions of Section 7.4(d), if the business of
the Partnership is continued after the Withdrawal of a General Partner, or if,
following such event, the Partnership is reconstituted, in each case as
contemplated by this Agreement, the Partnership shall purchase such General
Partner's Interest (which term, and words of like import, as used in this
Section 7.8 shall refer only to the "Remaining Interest" of such Withdrawing
General Partner as defined in Section 7.4(d) in all cases where applicable)
for a price equal to the fair market value thereof. The fair market value
shall be based upon either the agreed value of such Interest or, if such value
is not agreed to, the fair market value of such Interest as determined by a
qualified, MAI-designated state-licensed real estate appraiser selected by the
Withdrawing General Partner. If the Partnership does not accept such value,
it may select a second similarly-qualified appraiser. If the values
determined by both such appraisers are within 10%, then the purchase price
shall be the arithmetic mean of the two. If the values differ by more than
10%, then the two appraisers shall appoint a third similarly-qualified
appraiser, who shall follow the procedure with respect to Arbitration outlined
in Section 5.1 hereinabove. Notwithstanding the foregoing, if a General
Partner is removed for cause, or if a General Partner has voluntarily
Withdrawn from the Partnership in contravention of the terms of this
Agreement, the purchase price paid to such General Partner for its Interest
shall be reduced by an amount determined by an arbitrator mutually agreeable
to the Partnership and the General Partner to adequately compensate the
Partnership for the action of such General Partner leading to its removal, or
for the fact of its violation of the terms of this Agreement.
(b) Promptly after the determination of the purchase price of a former
General Partner's Interest pursuant to Section 7.8(a), the Partnership shall
deliver to such former General Partner a promissory note of the Partnership
for such purchase price, payable in five equal consecutive annual installments
commencing on the first anniversary of the date of such note. Such promissory
note shall bear simple interest at the rate per annum which is at all times
equal to the AFR then in effect for obligations of like term, payable on the
last day of each calendar quarter during which such note is outstanding;
provided, however, that if such note is delivered following a Withdrawal of a
General Partner which is voluntary on its part in violation of this Agreement
or a removal for cause, then (i) such note shall neither be secured nor bear
interest, and (ii) the principal payable to the withdrawing General Partner
shall be limited in amount and date of payment to distributions available from
the proceeds of a Capital Transaction as set forth in Section 10.2(b). Within
120 days after the determination of the purchase price of the former General
Partner's Interest, the Partnership may, with the consent of all remaining
General Partners and the Consent of the Investment Limited Partner, sell such
Interest to one or more Persons, who may be Affiliates of the remaining
General Partner or General Partners, and admit such Person or Persons to the
Partnership as substitute General Partners; provided, however, that the
purchase price to be paid to the Partnership for the Interest of the former
General Partner shall not be less than its purchase price as determined by the
appraisal and, if applicable, arbitration described above. Such substitute
General Partner or Partners may pay said purchase price in installments in the
manner set forth above in this Section 7.8(b).
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and
distribution) or pursuant to the provisions of Section 8.1(b), no Limited
Partner may assign all or any part of its Interest without the written consent
of the General Partner, the giving or withholding of which is exclusively
within its discretion.
(b) A Limited Partner, without the consent of any Partner, may assign
to any Person all or any portion of the economic benefits of the ownership of
such Limited Partner's Interest; provided, however, that such assignment shall
not be binding on the Partnership until there shall have been filed with the
Partnership by registered mail certified copies of an executed and
acknowledged assignment and the written acceptance by the assignee of all the
terms and provisions of this Agreement; if such assignment and acceptance are
not so filed, the Partnership need not recognize such assignment for any
purpose. An assignee of a Limited Partner who does not become a Substituted
Limited Partner shall have the right to receive the allocable share of any
Profits, Losses, Tax Credits or distributions of the Partnership to which the
assigning Limited Partner would have been entitled with respect to the
Interest (or portion thereof) so assigned if no such assignment had been made
by such Limited Partner. Any assigning Limited Partner whose permitted
assignee becomes a Substituted Limited Partner shall thereupon cease to be a
Limited Partner and shall no longer have any of the rights or privileges of a
Limited Partner. Where the assignee does not become a Substituted Limited
Partner, the Partnership shall recognize such assignment not later than the
last day of the calendar month following receipt of notice of assignment and
all documentation required in connection therewith.
(c) Each assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further assignment of its Interest shall be
subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to substitute an assignee
as Limited Partner in its place. Subject to the provisions of Section 8.3,
the General Partner may, in its sole discretion, permit an assignee to become
a Substituted Limited Partner. The consent of the General Partner to an
assignment of a Limited Partner's Interest under Section 8.1 shall not, in and
of itself, constitute its consent to the admission of the assignee as a
Substituted Limited Partner under this Section 8.2.
(b) Any Substituted Limited Partner shall execute such instrument or
instruments as shall be required by the General Partner to signify the
agreement of such Substituted Limited Partner to be bound by all the
provisions of this Agreement and shall pay the Partnership's reasonable legal
fees and filing costs in connection with its substitution as a Limited
Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be made if such
Disposition would violate the provisions of Sections 8.1, 8.2 or 13.1.
(b) In no event shall all or any part of a Limited Partner Interest be
Disposed of to a minor (other than to a descendant by reason of death) or to
an incompetent.
(c) The General Partner may, in addition to any other requirement it
may impose, require as a condition of any Disposition of a Limited Partner
Interest that the transferor (i) assume all costs incurred by the Partnership
in connection therewith and (ii) furnish the Partnership and the other
Partners with an opinion of counsel satisfactory to counsel to the Partnership
that such Disposition complies with applicable federal and state securities
laws.
(d) Any sale, exchange, transfer or other Disposition of a Limited
Partner Interest in contravention of any of the provisions of this Section 8.3
shall be void and ineffectual and shall not bind or be recognized by the
Partnership.
(e) Notwithstanding any other provision contained in this Article
VIII, if at any time there is more than one Investment Limited Partner, each
Investment Limited Partner shall have a right of first refusal to purchase the
Interest of any other Investment Limited Partner who wishes to sell or
otherwise transfer its Interest at a price equal to and on terms identical to
those of the prospective purchaser thereof, to the extent reasonably
practical, and shall have at least fifteen (15) business days in which to
exercise such right after receiving notice thereof. If there shall be more
than two non-selling or transferring Investment Limited Partners, each of
which desires to exercise such a right of first refusal, they may do so pro
rata or, to the extent one does not so desire to exercise such right, to the
extent of the entire Interest being so sold or transferred.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement and may be made from any source, including Partners and their
Affiliates. Any Partnership borrowings from any Partner shall be subject to
any Requisite Approvals. If any Partner shall lend any monies to the
Partnership, the amount of any such loan shall not increase such Partner's
Capital Contribution. If any Partner shall so lend monies, each such loan (a
"Voluntary Loan") shall be an obligation of the Partnership and (except for
Subordinated Loans) shall be repayable to such Partner on the same basis and
with the same rate of interest as would be applicable to a comparable loan to
the Partnership from a third party. Funds advanced by the General Partner to
the Partnership pursuant to the provisions of Section 6.11 shall not
constitute borrowings for the purposes of this Article IX or for any other
purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and Section 10.4, for
each Partnership Fiscal Year or portion thereof, all Operating Profits and
Losses, tax-exempt income, losses, non-deductible non-capitalizable
expenditures and Tax Credits incurred or accrued on or after the Commencement
Date shall be allocated ninety-nine percent (99%) to the Investment Limited
Partner and one percent (1%) to the General Partner, provided, however, that
in any Fiscal Year in which Operating Profits are generated, such Operating
Profits shall be allocated to and among the Partners in the same percentages
as distributions of Cash Flow are made pursuant to Clause Sixth of
Section 10.2(a).
(b) Except as otherwise specifically provided in this Article, all
Profits and Losses arising from a Capital Transaction shall be allocated to
the Partners as follows:
As to Profits:
First, that portion of Profits (including any
Profits treated as ordinary income for federal income tax
purposes) shall be allocated to the Partners who have negative
Capital Account balances in proportion to the amounts of such
balances, provided that no Profits shall be allocated to a Partner
under this Clause First to increase any such Partner's Capital
Account above zero; and
Second, Profits in excess of the amounts
allocated under Clause First above shall be allocated to and among
the Partners in the same percentages as cash is distributed under
Clauses Seventh, Eighth and Ninth of Section 10.2(b);
As to Losses:
First, an amount of Losses shall be allocated to
the Partners to the extent and in such proportions as shall be
necessary such that, after giving effect thereto, the respective
balances in all Partners' Capital Accounts shall be in the ratio
of 99% for the Investment Limited Partner and 1% for the General
Partner;
Second, an amount of Losses shall be allocated
to the Partners until the balance in each Partner Capital Account
equals the amount of such Partner's Capital Contribution (after
the allocation under Clause First above);
Third, an amount of Losses shall be allocated to
the Partners to the extent of and in proportion to such Partners'
Capital Account balances (after the allocations under Clauses
First and Second above); and
Fourth, any remaining amount of Losses after the
allocation under Clauses First, Second and Third above shall be
allocated to the Partners in accordance with the manner in which
they bear the Economic Risk of Loss associated with such Loss;
provided, however, that in the event that no Partner bears an
Economic Risk of Loss then any remaining Losses shall be allocated
99% to the Investment Limited Partner and 1% to the General
Partner.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals, Cash Flow for each Fiscal Year
or portion thereof shall be applied as follows:
First, to the payment of the Asset Management
Fee for such Fiscal Year and for any previous Fiscal Year(s) as to
which the Asset Management Fee shall not yet have been paid in
full;
Second, to the payment of any unpaid portion of
the Development Fee;
Third, to the repayment of any Subordinated
Loans, with any such payments to be applied first to accrued but
unpaid interest and then to principal;
Fourth, to the distribution to the General
Partner (or its designee) of any portion of the Operating Reserve
which may be released and disbursed in accordance with the
provisions of Section 6.5(e)(ii);
Fifth, to the payment of the Partnership
Management Fee in an amount not to exceed the difference between
$1,500 and the amount of Cash Flow distributed pursuant to Clause
Second of this Section 10.2(a) for such Fiscal Year; and
Sixth, the balance thereof, if any, shall be
distributed annually, seventy-five (75) days after the end of the
Fiscal Year, 25% to the Investment Limited Partner and 75% to the
General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution and subject to the provisions of
Section 4.2(c), if Capital Proceeds are available for distribution from a
Capital Transaction, such Capital Proceeds shall be applied or distributed as
follows:
First, to the payment of all matured debts and
liabilities of the Partnership excluding (i) debts and
liabilities of the Partnership to Partners or their Affiliates,
(ii) all unpaid fees owing to the General Partner or its
Affiliates and (iii) notes delivered and payable pursuant to
Section 7.8(b)(i) and (ii); and to the establishment of any
reserves which the General Partner and the Auditors shall deem
reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, to the General Partner an amount equal
to 5% of the proceeds of any Capital Transaction which
(A) constitutes a refinancing of the Permanent Loan or (B) occurs
while the Permanent Loan remains outstanding and not in default,
such 5% amount calculated after deduction for amounts distributed
under Clause First above;
Third, to the payment of any accrued and unpaid
Asset Management Fees;
Fourth, to the payment to the Investment Limited
Partner of the full amount (including interest) of any Credit
Recovery Loans;
Fifth, to the repayment of any Subordinated Loans, with any
such payments to be applied first to accrued but unpaid interest
and then to principal;
Sixth, to the repayment of any remaining unpaid
debts and liabilities owed to Partners or Affiliates thereof by
the Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them, including,
but not limited to, accrued and unpaid amounts due in respect of
any and all fees (including but not limited to the Development
Fee) due and payable to the General Partner or its Affiliates as
set forth in Section 6.12; provided, however, that any debts or
obligations to be repaid to any Limited Partner or Affiliate
thereof pursuant to this Clause Sixth shall be repaid prior to the
repayment of any such debts or obligations to any General Partner
or Affiliate thereof;
Seventh, to the payment to each Limited Partner
of an amount equal to its Tax Liability, in each case minus any
prior distributions made to such Partner under this Clause
Seventh, but never an amount less than zero;
Eighth, to the payment to each General Partner
of an amount equal to its Invested Amount in each case minus any
prior distributions made to such Partner under this Clause Eighth,
but never an amount less than zero; and
Ninth, subject to the provisions of Section
10.3(a), any balance 49.999% to the Investment Limited Partner,
.001% to the Special Limited Partner and 50% to the General
Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership, 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 Capital Account adjustments for the Partnership Fiscal Year, including
adjustments to Capital Accounts pursuant to Sections 10.1(b) and 10.3(b). In
the event that a General Partner or Additional Limited Partner has a negative
balance in its Capital Account following the liquidation of the Partnership or
such Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership Fiscal Year in which such liquidation occurs,
such Partner shall pay to the Partnership in cash an amount equal to the
negative balance in such Partner's Capital Account. Such payment shall be
made by the end of such Fiscal Year (or, if later, within ninety (90) days
after the date of such liquidation) and shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or distributed
to other Partners in accordance with the positive balances in their Capital
Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be Profits and
Losses realized by the Partnership immediately prior to the liquidation or
other distribution event; and (ii) such Profits and Losses shall be allocated
to the Partners in accordance with the provisions of Section 10.1(b), 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. For the purposes of this Section 10.3(b), the terms "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 the provisions of Section
7701(g) of the Code), and the Partnership's adjusted basis for such assets as
determined under the applicable provisions of the Allocation Regulations.
This Section 10.3(b) is merely intended to provide a rule for allocating
unrealized gains and losses upon liquidation or other distribution event, and
nothing contained in this Section 10.3(b) or elsewhere herein 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 appraiser to be selected
by the General Partner with the Consent of the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all Profits, tax-
exempt income, Losses, non-deductible non-capitalizable expenditures, Tax
Credits and cash distributions shared by a class of Partners shall be shared
by each Partner in such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of Partners of
which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Nonrecourse Debt (including, without limitation, Voluntary Loans
or Subordinated Loans) or (b) the Partnership incurs Losses from
extraordinary events which are not recovered from insurance or otherwise
(collectively "Recourse Obligations") in respect of any Partnership
Fiscal Year, then the calculation and allocation of Profits and Losses
shall be adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations shall be allocated to the
General Partner; and second, the balance of such deductions shall be
allocated as provided in Section 10.1(a).
(ii) If any Profits arise from the sale or other disposition of
any Partnership asset which shall be treated as ordinary income under
the depreciation recapture provisions of the Code, then the full amount
of such ordinary income shall be allocated among the Partners in the
proportions that the Partnership deductions from the depreciation giving
rise to such recapture were actually allocated. In the event that
subsequently-enacted provisions of the Code result in other recapture
income, no allocation of such recapture income shall be made to any
Partner who has not received the benefit of those items giving rise to
such other recapture income.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the Apartment
Complex and such indebtedness is distributed to the Partners pursuant to
the provisions of Section 10.2(b) or Section 10.3, the distributions of
the cash portion of such purchase price and the principal amount of such
purchase money indebtedness hereunder shall be allocated among the
Partners in the following manner: On the basis of the sum of the
principal amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be calculated the
percentage of the total net proceeds distributable to each class of
Partners based on Section 10.2(b) or Section 10.3, as applicable,
treating cash payments and purchase money indebtedness principal
interchangeably for this purpose, and the respective classes shall
receive such respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money indebtedness
retained by the Partnership shall be distributed in accordance with the
respective portions of principal allocated to the respective classes of
Partners in accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds shall be
allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance with the
applicable provisions of the Allocation Regulations and its basis
computed for federal income tax purposes shall be shared among the
Partners so as to take account of such variation in a manner consistent
with the principles of Section 704(c) of the Code and Section 1.704-
1(b)(2)(iv)(g) of the Allocation Regulations.
(v) The terms "Profits" and "Losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as determined
in accordance with the accounting methods followed by the Partnership
and computed in accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv). Profits and Losses for federal income tax purposes shall
be allocated in the same manner as set forth in this Article X, except
as provided in Section 10.4(b)(iv).
(vi) Nonrecourse Deductions shall be allocated 1% to the General
Partner and 99% to the Investment Limited Partner.
(vii) Partner Nonrecourse Deductions shall be allocated to and
among the Partners in the manner provided in the Allocation Regulations.
(viii) Subject to the provisions of Section 10.4(b)(xix), if
there is a net decrease in Partnership Minimum Gain for a Partnership
Fiscal Year, the Partners shall be allocated items of Partnership income
and gain in accordance with the provisions of Section 1.704-(2)(f) of
the Allocation Regulations.
(ix) Subject to the provisions of Section 10.4(b)(xix), if there
is a net decrease in Partner Nonrecourse Debt Minimum Gain for a
Partnership Fiscal Year then any Partner with a Share of such Partner
Nonrecourse Debt Minimum Gain shall be allocated items of Partnership
income and gain in accordance with the provisions of Section 1.704-
2(i)(4) of the Allocation Regulations.
(x) Subject to the provisions of 10.4(b)(vi) through 10.4(b)(ix)
above, in the event that any Limited Partner unexpectedly receives any
adjustments, allocations or distributions described in Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6) of the Allocation Regulations, 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 Allocation Regulations, the Adjusted Capital Account
Deficit of such Limited Partner as quickly as possible. This Section
10.4(b)(x) is intended to constitute a "qualified income offset"
provision within the meaning of the Allocation Regulations and shall be
interpreted consistently therewith.
(xi) Subject to the provisions of Sections 10.4(b)(vi) through
10.4(b)(x) above, in no event shall any Limited Partner be allocated
Losses which would cause it to have an Adjusted Capital Account Deficit
as of the end of any Partnership Fiscal Year. Any Losses which are not
allocated to a Limited Partner by reason of the application of the
provisions of this Section 10.4(b)(xi) shall be allocated to the General
Partner.
(xii) Subject to the provisions of Sections 10.4(b)(vi) through
10.4(b)(xi) above, in the event that any Limited Partner has an Adjusted
Capital Account Deficit at the end of any Partnership Fiscal Year, items
of Partnership income and gain shall be specially allocated to each such
Limited Partner in the amount of such Adjusted Capital Account Deficit
as quickly as possible.
(xiii) Syndication Expenses for any Fiscal Year or other
period shall be specially allocated to the Investment Limited Partner.
(xiv) For purposes of determining the Profits, Losses, Tax Credits
or any other items allocable to any period, Profits, Losses, Tax Credits
and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the General Partner using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.
(xv) To the extent that interest on loans (or other advances
which are deemed to be loans) made by a General Partner to the
Partnership is determined to be deductible by the Partnership in excess
of the amount of interest actually paid by the Partnership, such
additional interest deduction(s) shall be allocated solely to such
General Partner.
(xvi) Notwithstanding anything to the contrary contained herein,
the General Partner (or, if there is more than one General Partner, all
of the General Partners as a group) shall be allocated not less than 1%
of each material item of Partnership income, gain, loss, deduction and
credit ("Partnership Items") at all times during the existence of the
Partnership, provided, however, that temporary nonconformance with the
provisions of this Section 10.4(b)(xvi) shall be permitted to the extent
permitted by Revenue Procedure 89-12 or any successor provisions.
Subject to the foregoing, in the event that there is no allocation of a
material Partnership Item to the General Partner(s) hereunder or if the
amount of any material Partnership Item allocable to the General
Partner(s) hereunder shall not equal 1% of the aggregate amount
allocable to all the Partners without giving effect to this provision,
then the amount of such Partnership Item(s) otherwise allocable to the
Limited Partners hereunder shall be correspondingly reduced in order to
assure the General Partner(s) of its or their 1% share. Any such
reduction shall be applied to reduce the share of all classes of Limited
Partners in proportion to their respective Interests.
(xvii) For purposes of determining each Partner's
proportionate share of the excess Nonrecourse Liabilities of the
Partnership pursuant to Section 1.752-3(a)(3) of the Allocation
Regulations, the Investment Limited Partner shall be deemed to have a
99% interest in Profits and the General Partner shall be deemed to have
a 1% interest in Profits.
(xviii) Any recapture of any Tax Credit shall be allocated to
and among the Partners in the same manner in which the Partners share
the expenditures giving rise to such Tax Credit.
(xix) If for any Fiscal Year the application of the minimum gain
chargeback provisions of Section 10.4(b)(viii) or Section 10.4(b)(ix) of
this Agreement would cause distortion in the economic arrangement among
the Partners and it is not expected that the Partnership will have
sufficient other income to correct that distortion, the General Partner
may request a waiver from the Commissioner of the Service of the
application in whole or in part of Section 10.4(b)(viii) or Section
10.4(b)(ix) in accordance with Section 1.704-2(f)(4) of the Allocation
Regulations. Furthermore, if additional exceptions to the minimum gain
chargeback requirements of the Allocation Regulations have been provided
through revenue rulings or other Service pronouncements, the General
Partner is authorized to cause the Partnership to take advantage of such
exceptions if to do so would be in the best interest of a majority in
interest of the Partners.
(xx) In the event that any fee payable to any General Partner or
any Affiliate thereof shall instead be determined to be a non-
deductible, non-capitalizable distribution from the Partnership to a
Partner for federal income tax purposes, then there shall be allocated
to such General Partner an amount of gross income equal to the amount of
such distribution.
(xxi) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of priorities
shall apply:
(1) Capital Accounts shall be deemed to be
reduced by Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Clause Sixth of Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions of
Capital Proceeds under Clauses Eighth, or Ninth of
Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum
gain chargeback under Section 10.4(b)(viii) or Section
10.4(b)(ix).
(5) Capital Accounts shall be increased by any qualified
income offset required under Section 10.4(b)(x).
(6) Capital Accounts shall be increased by allocations of
Operating Profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of
Operating Losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of
Losses under Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of
Profits under Section 10.1(b).
(xxii) To the maximum extent permitted under the Code,
allocations of Profits and Losses shall be modified so that the
Partners' Capital Accounts reflect the amount they would have reflected
if adjustments required by Sections 10.4(b)(x), 10.4(b)(xi) and
10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations to Preserve
and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's distributive
share of Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and Tax Credits (and items thereof) shall be determined and
allocated in accordance with this Agreement to the fullest extent permitted by
Section 704(b) of the Code and the Allocation Regulations. In order to
preserve and protect the determinations and allocations provided for in this
Agreement, the General Partner is hereby authorized and directed to allocate
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any Fiscal Year
differently than otherwise provided for in this Agreement to the extent that
allocating Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures or credits (or any item thereof) in the manner
provided for herein would cause the determinations and allocations of each
Partner's distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures or credits (or any item thereof) not
to be permitted by Section 704(b) of the Code. Any allocation made pursuant
to this Section 10.5 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Agreement, and no amendment of this
Agreement or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under Section
10.5(a), the General Partner is authorized to act only after having been
advised in writing by the Tax Accountants that, under Section 704(b) of the
Code and/or the Allocation Regulations, (i) the New Allocation is necessary,
and (ii) the New Allocation is the minimum modification of the allocations
otherwise provided for in this Agreement necessary in order to assure that,
either in the then-current Fiscal Year or in any preceding Fiscal Year, each
Partner's distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (or any item
thereof) is determined and allocated in accordance with this Agreement to the
fullest extent permitted by Section 704(b) of the Code and the Allocation
Regulations.
(c) If the General Partner is required by Section 10.5(a) to make any
New Allocation in a manner less favorable to the Limited Partners than is
otherwise provided for herein, then the General Partner is authorized and
directed, only after having been advised in writing by the Tax Accountants
that such an allocation is permitted by Section 704(b) of the Code and the
Allocation Regulations, to allocate Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and credits (and any item thereof)
arising in later years in such manner so as to bring the allocations of
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and each item thereof) to the Limited Partners as
nearly as possible to the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partner under Section 10.5(a)
and Section 10.5(c) in reliance upon the advice of the Tax Accountants shall
be deemed to be made pursuant to the fiduciary obligation of the General
Partner to the Partnership and the Limited Partners, and no such allocation
shall give rise to any claim or cause of action by any Limited Partner.
ARTICLE XI
Management Agent
11.1 General
The General Partner shall engage the Management Agent to manage the
Apartment Complex pursuant to the Management Agreement. The Management Agent
shall receive a Management Fee of those amounts payable from time to time by
the Partnership to the Management Agent for management services in accordance
with a management contract approved by any Agency or Lender with the right to
approve the same, or, when any such management contract is not subject to the
approval of any Agency or Lender, in accordance with a reasonable and
competitive fee arrangement. The initial Management Agent shall be R&D Young
Realty Management Corp. From and after the Admission Date, the Partnership
shall not enter into any Management Agreement or modify or extend any
Management Agreement unless (i) the General Partner shall have obtained the
prior Consent of the Special Limited Partner which Consent shall not be
unreasonably withheld to the identity of the Management Agent and the terms of
the Management Agreement or the modification or extension thereof and (ii)
such new Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30) days' notice
by the Partnership in the event of any change in the identity of the General
Partner.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however, should the
Investment General Partner or an Affiliate thereof perform property management
services for the Partnership, property management, rent-up or leasing fees
shall be paid to the Investment General Partner or such Affiliate only for
services actually rendered and shall be in an amount equal to the lesser of
(i) fees competitive in price and terms with those of non-affiliated Persons
rendering comparable services in the locality where the Apartment Complex is
located and which could reasonably be available to the Partnership, or (ii)
five percent (5%) of the gross revenues of the Apartment Complex. No
duplicate property manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a substantial building
code violation which shall not have been cured within six months after notice
from a Governmental Authority (or for any building code violation which is not
likely to have Adverse Consequences such cure is being diligently pursued if
it cannot be effected within such 6-month period) or (ii) the Partnership
shall not have achieved a 1.15 to 1.00 Debt Service Coverage Ratio during any
Fiscal Year commencing on January 1, 1997, or (iii) an Event of Bankruptcy
shall occur with respect to the Management Agent, or (iv) the Management Agent
shall commit willful misconduct or gross negligence in its conduct of its
duties and obligations under the Management Agreement or (v) there is any
change in the Persons acting as General Partners (to which the Special Limited
Partner has not consented), or (vi) the Management Agent is cited by the
Credit Agency or any other Tax Credit monitoring or compliance agency of the
State or any other Governmental Authority for a violation or alleged violation
of any applicable rules, regulations or requirements, including, without
limitation, non-compliance with the Minimum Set-Aside Test, the Rent
Restriction Test or any other Tax Credit-related provision, then, upon request
by the Special Limited Partner and subject to Agency and Lender approval, if
required, the General Partner shall cause the Partnership to promptly
terminate the Management Agreement with the Management Agent and appoint a new
Management Agent selected by the Special Limited Partner, which new Management
Agent shall not be an Affiliate of a General Partner. Each General Partner
hereby grants to the Special Limited Partner an irrevocable (to the extent
permitted by applicable law) power of attorney coupled with an interest to
take any action and to execute and deliver any and all documents and
instruments on behalf of such General Partner and the Partnership as the
Special Limited Partner may deem to be necessary or appropriate in order to
effectuate the provisions of this Article XI. Subject to any Requisite
Approvals, the Partnership shall not enter into any future management
arrangement or renew or extend any existing management arrangement unless such
arrangement is terminable without penalty upon the occurrence of the events
described in this Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the Apartment Complex
during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are required
under the Act or by any Governmental Authority and may maintain such other
books and records as the General Partner in its discretion deems advisable.
Each Limited Partner, or its duly authorized representatives, shall have
access to the records of the Partnership at the principal office of the
Partnership at any and all reasonable times, and may inspect and copy any of
such records. A list of the name and addresses of all of the Limited Partners
shall be maintained as part of the books and records of the Partnership and
shall be mailed to any Limited Partner upon request. The Partnership may
require reimbursement for any out of pocket expenses which it incurs as a
result of the exercise by any Limited Partner of its rights under this Section
12.1, including, without limitation, photocopying expenses.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General Partner
shall determine. Withdrawals shall be made only in the regular course of
Partnership business on such signature or signatures as the General Partner
may determine. All deposits (including security deposits and other funds
required to be escrowed by any Lender or Agency) and other funds not needed in
the operation of the business shall be deposited, if required by applicable
law and to the extent permitted by applicable Agency or Lender requirements,
in interest bearing accounts or invested in United States Government
obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General Partner,
all tax returns of the Partnership. Prior to the filing of the Partnership
tax returns, and in no event later than February 1 of each Fiscal Year, the
Auditors shall deliver the tax returns for the prior Fiscal Year to the Tax
Accountants for their review and comment. If a dispute arises between the
Auditors and the Tax Accountants over the proper preparation of the tax
returns and such dispute cannot be resolved by the Auditors and the Tax
Accountants by March 1 of such Fiscal Year, then the Tax Accountants shall
make the final decision with respect to whether any changes are necessary.
The Partnership shall reimburse the Investment Limited Partner and its
Affiliates for all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports to the
Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations under
Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time periods set
forth therein, at any time thereafter upon written notice from the Special
Limited Partner, the General Partner shall appoint replacement Auditors. If
no such notice from the Special Limited Partner is delivered, the Consent of
the Special Limited Partner must be received to the appointment of replacement
Auditors. If the General Partner fails to appoint replacement Auditors within
thirty (30) days of the notice from the Special Limited Partner to replace the
Auditors, then the Special Limited Partner shall appoint replacement Auditors
of its own choosing, the cost of which shall be borne by the Partnership as a
Partnership expense. All of the Partners hereby grant to the Special Limited
Partner a special power of attorney, irrevocable to the extent permitted by
law, coupled with an interest, to so appoint replacement Auditors and to
anything else which in the judgment of the Special Limited Partner may be
necessary or appropriate to accomplish the purposes of this Section 12.3(c).
(d) On or prior to the date which is thirty (30) days after the
Admission Date, the General Partner shall cause the Partnership (i) in
writing, to engage the Auditors to perform the services required herein and
(ii) to deliver to the Investment Limited Partner copies of all such
engagement letters and agreements.
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost recovery
deductions are permitted, the Partnership shall elect to use, so far as
permitted by the provisions of the Code, accelerated cost recovery methods.
However, the Partnership may change to another method of cost recovery if such
other method is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner (and the limited partners and/or holders of
beneficial assignee certificates thereof).
(b) Subject to the provisions of Section 12.5, all other elections
required or permitted to be made by the Partnership under the Code shall be
made by the General Partner in such manner as will, in the opinion of the
Auditors, be most advantageous to the Investment Limited Partner and the
limited partners and/or holders of beneficial assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of the
Investment Limited Partner or a transfer of all or any part of an interest of
a partner and/or a holder of a beneficial assignee certificate of the
Investment Limited Partner, the Partnership shall elect, upon the request of
the Investment Limited Partner, pursuant to Section 754 of the Code, to adjust
the basis of the Partnership property. Any adjustments made pursuant to said
Section 754 shall affect only the successor in interest to the transferring
Partner or partner or holder of a beneficial assignee certificate thereof.
Each Partner will furnish the Partnership all information necessary to give
effect to any such election.
12.6 Fiscal Year
Unless otherwise required by law, the Fiscal Year and tax year of the
Partnership shall be the calendar year. The books of the Partnership shall be
maintained on an accrual basis.
12.7 Information to Partners
(a) The General Partner shall cause to be prepared and distributed to
all Persons who were Partners at any time during a Fiscal Year of the
Partnership:
(i) By February 28th of each succeeding calendar year after the
end of each Fiscal Year of the Partnership, (A) a balance sheet as of
the end of such Fiscal Year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for the Fiscal
Year then ended, all of which, except the statement of cash flows, shall
be prepared in accordance with generally accepted accounting principles
and accompanied by a report of the Auditors containing an opinion of the
Auditors, and (B) a report of the activities of the Partnership during
the period covered by the report. With respect to any distribution to
the Investment Limited Partner, the report called for shall separately
identify distributions from (1) Cash Flow from operations during the
period, (2) Cash Flow from operations during a prior period which had
been held as reserves, (3) proceeds from disposition of property and
investments, (4) lease payments on net leases with builders and sellers,
(5) reserves from the gross proceeds of the Capital Contributions of the
Investment Limited Partner, (6) borrowed monies, and (7) transactions
outside of the ordinary course of business with a description thereof
with respect to any Fiscal Year prior to the Completion Date, only an
audited balance sheet shall be required.
(ii) By February 7th of each succeeding calendar year, after the
end of each Fiscal Year of the Partnership, all information relating to
the Partnership and/or the Apartment Complex which is necessary, in the
view of the Tax Accountants, for the preparation of the Limited
Partners' federal income tax returns for the prior Fiscal Year.
(iii) Within thirty (30) days after the end of each quarter of a
Fiscal Year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then
ended, which may be unaudited;
(C) a statement of cash flows for the quarter
then ended, which may be unaudited;
(D) a Tax Credit monitoring form, a copy of
the rent roll for the Apartment Complex for each month during such
quarter, a statement of income and expenses, an operating
statement and an Occupancy/Rental Report, all in a form specified
by the Special Limited Partner;
(E) all other information which would be
pertinent to a reasonable investor regarding the Partnership and
its activities during the quarter covered by the report; and
(iv) a certification of the General Partner that the Apartment
Complex and its tenants are in compliance with all applicable federal,
state and local requirements and regulations;
(b) Within sixty (60) days after the end of each Fiscal Year of the
Partnership a copy of the annual report to be filed with the United States
Treasury concerning the status of the Apartment Complex as low-income housing
and, if required, a certificate to the appropriate state agency concerning the
same.
(c) upon the written request of the Investment Limited Partner for
further information with respect to any matter covered in item (a) or item (b)
above, the General Partner shall furnish such information within thirty (30)
days of receipt of such request.
(d) Prior to October 15 of each Fiscal Year, the Partnership shall
send to the Investment Limited Partner an estimate of the Investment Limited
Partner's share of the Tax Credits, Profits and Losses of the Partnership for
federal income tax purposes for the current Fiscal Year. Such estimate shall
be prepared by the General Partner and the Auditors and shall be in the form
specified by the Special Limited Partner.
(e) Within fifteen (15) days after the end of any calendar quarter
during which:
(i) there is a material default by the Partnership under any
Project Document or in the payment of any mortgage, taxes, interest or
other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by application of
funds therein for purposes materially different from those for which
such reserve was established,
(iii) any General Partner has received any notice of a material
fact which may substantially affect further distributions or Tax Credit
allocations to any Limited Partner, or
(iv) any Partner has pledged or collateralized its Interest in
the Partnership, the General Partner shall send the Investment Limited
Partner a detailed report of such event.
(f) After the Admission Date, the Partnership shall send to the
Investment Limited Partner copies of all applicable periodic reports covering
the status of project operations and any matters relating to the Tax Credit as
are required by any Lender or Agency.
(g) On or before May 1 of each Fiscal Year, the Partnership shall send
to the Investment Limited Partner a report on operations, in the form supplied
by the Special Limited Partner.
(h) The General Partner hereby consents to each Lender or Agency
providing the Special Limited Partner with copies of all material
communications between any such Lender or Agency and the General Partner
and/or the Partnership, including, but not limited to, any notices of default.
(i) [Intentionally Omitted.]
(j) Within thirty (30) days following the Completion Date, the General
Partner shall prepare, or cause the Auditors to prepare, and deliver to each
Limited Partner a Tax Credit basis worksheet for each building in the
Apartment Complex, all in a form specified by the Special Limited Partner.
(k) Promptly after Permanent Mortgage Commencement, the General
Partner shall send to the Special Limited Partner a closing binder containing
photocopies of the fully executed versions of all documents signed in
connection with the Permanent Mortgage. From and after any date upon which
the General Partner receives notice from the Special Limited Partner that the
Special Limited Partner would like copies of the monthly rent rolls for the
Apartment Complex to be sent to the Special Limited Partner, the General
Partner shall send copies of the rent rolls to the Special Limited Partner no
later than ten (10) days after the expiration of each month.
(l) If the General Partner does not cause the Partnership to fulfill
its obligations under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the
time periods set forth therein, the General Partner shall pay as damages the
sum of $500 per day (plus interest at a rate equal to the Prime Rate plus
three percent (3%)) to the Investment Limited Partner until such obligations
shall have been fulfilled. Such damages shall be paid forthwith by the
General Partner, and the failure to pay any such damages shall constitute a
material default by the General Partner hereunder. In addition, if the
General Partner shall fail to pay any such damages, the General Partner and
its Affiliates shall forthwith cease to be entitled to the distribution of any
Cash Flow or Capital Proceeds to which they may otherwise be entitled
hereunder. Such distributions of Cash Flow and Capital Proceeds shall be
restored only upon the payment of such damages in full, and any amount of such
damages not so paid shall be deducted against distributions of Cash Flow and
Capital Proceeds otherwise due to the General Partner or its Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly to and
paid by the Partnership.
(b) Except in extraordinary circumstances, neither the Investment
General Partner nor any Affiliate thereof shall be permitted to contract or
otherwise deal with the Partnership for the sale of goods or services or the
lending of money to the Partnership or the General Partners, except for (i)
management services, subject to the restrictions set forth in Article XI, (ii)
loans made by, or guaranteed by, the Investment General Partner or any of its
Affiliates and (iii) those dealings, contracts or provision of services
described in the Investment Partnership Agreement. Extraordinary
circumstances shall only be presumed to exist where there is an emergency
situation requiring immediate action and the services required are not
immediately available from unaffiliated parties. All services rendered under
such circumstances must be rendered pursuant to a written contract which must
contain a clause allowing termination without penalty on sixty (60) days'
notice. Goods and services provided under such circumstances must be provided
at the lesser of actual cost or the price charged for such goods or services
by independent parties.
(c) In the event that extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide construction
services in connection with the Apartment Complex. Neither the Investment
General Partner nor any of its Affiliates shall provide such services unless
it believes it has an adequate staff to do so and unless such provision of
goods and construction services is part of its ordinary and ongoing business
in which it has previously engaged, independent of the activities of the
Investment Limited Partner. Any such services must be reasonable for and
necessary to the Partnership, actually furnished to the Partnership, and
provided at the lower of one hundred percent (100%) of the construction
contract rate with respect to the Apartment Complex or ninety percent (90%) of
the competitive price charged for such services by independent parties for
comparable goods and services in the same geographic location (except that in
the case of transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the lesser of costs
or the compensation, price or fee of any other Person rendering comparable
services as aforesaid). Cost of services as used herein means the pro rata
cost of personnel, including an allocation of overhead directly attributable
to such personnel, based on the amount of time such personnel spend on such
services or other method of allocation acceptable to the accountants for the
Investment Limited Partner.
(d) All services provided by the Investment General Partner or any
Affiliate thereof pursuant to Section 12.8(c) must be rendered pursuant to the
Investment Partnership Agreement or a written contract which precisely
describes the services to be rendered and all compensation to be paid and
shall contain a clause allowing termination without penalty upon sixty (60)
days' notice to the Investment General Partner by a vote of a majority in
interest of the limited partners and assignees of beneficial interests in the
Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership to the
Investment General Partner or its Affiliates except as described in the
Investment Partnership Agreement.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition of an Interest may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests Disposed of within
the period of twelve consecutive months prior to the proposed date of the
Disposition, would, in the opinion of the Tax Accountants or tax counsel to
the Partnership, result in the termination of the Partnership under Section
708 of the Code. This Section 13.1 shall have no application to any required
repurchase of the Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1 shall be void ab
initio and ineffectual and shall not bind or be recognized by the Partnership.
Notwithstanding the foregoing provisions of this Section 13.1, however, the
Investment Limited Partner may waive the provisions of this Section 13.1 at
any time as to a Disposition or series of Dispositions, and in the event of
such a waiver, this Section 13.1 shall have no force or effect upon such
Disposition or series of Dispositions.
13.2 Amendments to Certificates
Within one hundred twenty (120) days after the end of the Partnership
Fiscal Year in which the Investment Limited Partner shall have received any
distributions under Article X, the General Partner shall file an amendment to
the Certificate reducing the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment Limited
Partner as stated in the last previous amendment to the Certificate. However,
Schedule A shall not be amended on account of any such distribution.
The Partnership shall amend the Certificate at least once each calendar
quarter to effect the substitution of Substitute Limited Partners, although
the General Partner may elect to do so more frequently. In the case of
assignments, where the assignee does not become a Substitute Limited Partner,
the Partnership shall recognize the assignment not later than the last day of
the calendar month following receipt of notice of assignment and all
documentation required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2, no such
amendments to the Certificate need be filed by the General Partner if the
Certificate is not required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Except as otherwise specifically provided herein, all notices, demands
or other communications hereunder shall be in writing and shall be deemed to
have been given when the same are (i) deposited in the United States mail and
sent by certified or registered mail, postage prepaid, (ii) delivered to a
nationally recognized overnight delivery service, (iii) sent by telecopier or
other facsimile transmission, answerback requested, or (iv) delivered
personally, in each case, to the parties at the addresses set forth below or
at such other addresses as such parties may designate by notice to the
Partnership:
(a) If to the Partnership, at the office of the Partnership set forth
in Section 2.2.
(b) If to an Investor Limited Partner or Special Limited Partner, at
its address set forth in the Schedule, with copies to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇▇▇, Powers & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇ and
(c) If to a General Partner, at its address set forth in the Schedule,
with copies to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at Lowenthal, Landau, ▇▇▇▇▇▇▇ & Bring,
P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires. The singular shall
include the plural, and vice versa, and each gender (masculine, feminine and
neuter) shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers to the
corresponding Section or Article of this Agreement, unless specified
otherwise. References to Treasury Regulations (permanent or temporary) or
Revenue Procedures shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance with the
laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the same
counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in effect, (i) each of
the provisions of this Agreement shall be subject to, and the General Partner
covenants to act in accordance with, the Project Documents; (ii) the Project
Documents shall govern the rights and obligations of the Partners, their
heirs, executors, administrators, successors and assigns to the extent
expressly provided therein; (iii) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the possession and
control of the Apartment Complex and no right to collect the rent therefrom
shall pass to any Person who is not, or does not become, bound by the Project
Documents in a manner satisfactory to the Lenders and any Agency (to the
extent that its approval is required); (iv) no amendment to any provision of
the Project Documents shall become effective without the prior written consent
of any Lender and/or Agency (to the extent that its approval is required); and
(v) the affairs of the Partnership shall be subject to the Regulations, and no
action shall be taken which would require the consent or approval of any
Lender and/or Agency unless the prior consent or approval of such Lender
and/or Agency, as the case may be, shall have been obtained. No new Partner
shall be admitted to the Partnership, and no Partner shall withdraw from the
Partnership or be substituted for without the consent of any Lender and/or
Agency (if such consent is then required). No amendment to this Agreement
relating to matters governed by the Regulations or requirements shall become
effective until any Requisite Approvals to such amendment shall have been
obtained.
(b) Any conveyance or transfer of title to all or any portion of the
Apartment Complex required or permitted under this Agreement shall in all
respects be subject to all conditions, approvals and other requirements of any
Regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable and (a)
if for any reason any provision is determined to be invalid, such invalidity
shall not impair the operation of or affect those portions of this Agreement
which are valid, and (b) if for any reason any provision would cause the
Investment Limited Partner or the Special Limited Partner (in its capacity as
a Limited Partner) to be bound by the obligations of the Partnership (other
than the Regulations and the other requirements of any Agency or Lender),
such provision or provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any article
or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partner only with the
Consent of the Investment Limited Partner and the Consent of the Special
Limited Partner.
13.12 Extraordinary Limited Partner Expenses
(a) Any and all costs and expenses incurred by the Investment Limited
Partner and/or the Special Limited Partner in connection with exercising
rights and remedies against the General Partner with respect to this
Agreement, including, without limitation, reasonable attorneys' fees, shall be
paid by the General Partner on demand. All amounts due to the Investment
Limited Partner and/or the Special Limited Partner pursuant to this provision
shall bear interest from demand at a rate of nine percent (9%) per annum.
(b) If any General Partner breaches any provision of this Agreement,
the Investment Limited Partner and/or the Special Limited Partner may employ
an attorney or attorneys to protect its rights hereunder, and the General
Partner shall pay on demand the reasonable attorneys' fees and expenses
incurred by the Investment Limited Partner and/or the Special Limited Partner,
whether or not a legal action is actually commenced against any General
Partner by reason of such breach. All amounts due to the Investment Limited
Partner and/or the Special Limited Partner pursuant to this provision shall
bear interest from demand at a rate equal to nine percent (9%) per annum.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been admitted to
the Partnership as of the Commencement Date for all purposes of this
Agreement, including Article X, provided, however, that if treasury
regulations are issued under the Code or an amendment to the Code is adopted
which would require, in the opinion of the Auditors, that the Investment
Limited Partner be deemed admitted on a date other than as of the Commencement
Date, then the General Partner shall select a permitted admission date which
is most favorable to the Investment Limited Partner.
WITNESS the execution hereof under seal as of the __ day of June, 1996.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER:
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
WITHDRAWING GENERAL PARTNER:
▇▇▇▇▇▇▇ DEVELOPMENT CORP.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Sec.
GENERAL PARTNER:
▇▇▇▇▇▇▇ DEVELOPMENT, LLC
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Member
SPECIAL LIMITED PARTNER:
BCTC 94, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, as Attorney-in-Fact
for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND IV
L.P., a Delaware limited partnership,
by its general partner, Boston
Capital Associates IV L.P., a
Delaware limited partnership, by its
general partner, C&M Associates d/b/a
Boston Capital Associates, a
Massachusetts general partnership
By: /s/▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, as Attorney-in-Fact
for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a Partner
CONSENTS AND AGREEMENTS
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Article XI of the foregoing First Amended and
Restated Agreement of Limited Partnership notwithstanding any provision of the
Management Agreement to the contrary.
R&D YOUNG REALTY MANAGEMENT, LLC
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇, Member
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Sections 6.11 and 6.12(a) of the foregoing First
Amended and Restated Agreement of Limited Partnership.
R&D YOUNG DEVELOPERS, LLC
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇, Member
MAIN ▇▇▇▇▇▇▇ HOUSING L.P.
SCHEDULE A
As of June __, 1996
General Partner Capital Contribution Percentage Interests of
Operating Profits and Losses
and Tax Credits
▇▇▇▇▇▇▇ Development, LLC $100.00 1%
▇-▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Special Limited Capital Contribution Percentage Interests of
Partner Operating Profits and Losses
and Tax Credits
BCTC 94, INC. $10 0%
c/o Boston Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Investment Total Agreed-to Paid-In Capital Percentage
Limited Partner Capital Contribution Contribution Interests of
Operating
Profits and
Losses and
Tax Credits
BOSTON CAPITAL TAX $783,721 $431,046 99%
CREDIT FUND IV L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
*Paid-in Capital Contribution as of the date of this Schedule A. Future
Installments of Capital Contribution are subject to adjustment and are due at
the times and subject to the conditions set forth in the Agreement to which
this Schedule is attached.
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PROJECTED RENTS
One Bedroom
Units (1)
$721.63/month
Two Bedroom
Units (7)
$868.00/month
Three Bedroom
Units (1)
$1,000.64/month
Four Bedroom
Units (2)
$1,118.25/month
EXHIBIT C
DUE DILIGENCE RECOMMENDATIONS
EXHIBIT D
SPECIMEN TITLE POLICY