▇▇▇▇▇▇ ASSOCIATES LIMITED PARTNERSHIP
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of August 1, 1996
TABLE OF CONTENTS
Preliminary Statement 1
ARTICLE I 2
Defined Terms 2
ARTICLE II 13
Name and Business 13
2.1 Name; Continuation 13
2.2 Office and Resident Agent 14
2.3 Purpose 14
2.4 Term and Dissolution 14
ARTICLE III 15
Mortgage, Refinancing and Disposition of Property 15
ARTICLE IV 16
Partners; Capital 16
4.1 Capital and Capital Accounts 16
4.2 General Partners 17
4.3 Investment Limited Partners and Special Limited Partner 17
4.4 Liability of the Limited Partners 17
4.5 Special Rights of the Investment Limited Partners;
Certain Consequences of General Partner Withdrawals 18
4.6 Meetings 20
ARTICLE V 20
Capital Contributions of the Investment Limited Partners and the Special
Limited Partner 20
5.1 Payments 20
5.2 Return of Capital Contributions 23
5.3 Limitation of Remedy 25
ARTICLE VI 25
Rights, Powers and Duties of General Partners 25
6.1 Authorized Acts 25
6.2 Restrictions on Authority 26
6.3 Personal Services 28
6.4 Business Management and Control; Tax Matters Partner 28
6.5 Duties and Obligations 29
6.6 Representations and Warranties 31
6.7 Liability on the Permanent Mortgage 34
6.8 Indemnification of the General Partners 35
6.9 Indemnification of the Partnership and the Limited Partners 36
6.10 Operating Deficits 36
6.11 Obligation to Complete the Construction of the Apartment
Complex 37
6.12 Certain Payments to the General Partners and Others 38
6.13 Delegation of General Partner Authority 40
6.14 Assignment to Partnership 41
ARTICLE VII 41
Withdrawal of a General Partner; New General Partners 41
7.1 Withdrawal 41
7.2 Obligation to Continue 41
ARTICLE VIII 42
Transferability of Limited Partner Interests 42
8.1 Assignments 42
8.2 Substituted Limited Partner 42
8.3 Restrictions 43
ARTICLE IX 43
Borrowings 43
ARTICLE X 44
Profits, Losses, Tax Credits, Distributions and Capital Accounts 44
10.1 Profits, Losses and Tax Credits 44
10.2 Cash Distributions Prior to Dissolution 45
10.3 Distributions Upon Dissolution 47
10.4 Special Provisions 48
10.5 Authority of the General Partners to Vary Allocations to
Preserve
and Protect the Partners' Intent 51
ARTICLE XI 53
Management Agent 53
ARTICLE XII 54
Books and Records, Accounting, Tax Elections, Etc. 54
12.1 Books and Records 54
12.2 Bank Accounts 54
12.3 Auditors 54
12.4 Cost Recovery and Elections 55
12.5 Special Basis Adjustments 55
12.6 Fiscal Year 55
12.7 Information to Partners 56
12.8 Expenses of the Partnership 59
ARTICLE XIII 60
General Provisions 60
13.1 Restrictions by Reason of Section 708 of the Code 60
13.2 Amendments to Certificate 60
13.3 Notices 60
13.4 Word Meanings 60
13.5 Binding Effect 61
13.6 Applicable Law 61
13.7 Counterparts 61
13.8 Separability of Provisions 61
13.9 Paragraph Titles 61
13.10 Amendment Procedure 61
13.11 Fees of Tax Accountants 61
13.12 Extraordinary Limited Partner Expenses 62
13.13 Time of Admission 62
13.14 Superseding of Prior Agreements 62
13.15 General Partner Division of Authority, Etc. 62
13.16 Purchase of Investment and Special Limited Partner Interests
63
SCHEDULE A
EXHIBIT A
EXHIBIT B
▇▇▇▇▇▇ ASSOCIATES LIMITED PARTNERSHIP
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
▇▇▇▇▇▇ Associates Limited Partnership (the "Partnership") was formed as a
Colorado limited partnership pursuant to a Limited Partnership Agreement
effective on June 15, 1993 (the "Original Agreement") by and among Surrey Wood
Associates Limited Liability Company, a Colorado limited liability company
("Surrey"), as the general partner and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as the limited partners (in such capacity,
the "Original Limited Partners"). A certificate of limited partnership with
respect thereto (the "Original Certificate") was filed in the Filing Office on
June 15, 1993. The Original Agreement was replaced by a Limited Partnership
Agreement (the "Replacement Agreement") dated as of May 16, 1995, pursuant to
which Surrey and the Original Limited Partners withdrew from the Partnership
and SMBR Associates Limited Partnership, a Texas limited partnership ("SMBR"),
was admitted as the sole general partner and Banc One Tax Credit Fund I, L.P.,
an Ohio limited partnership ("Fund"), was admitted as the sole limited partner
of the Partnership. An Amendment No. 1 to the Original Certificate, declaring
SMBR to be the general partner of the Partnership, was filed with the Colorado
Secretary of State on May 11, 1995. SMBR assigned its general partner interest
in the Partnership to ▇▇▇▇▇▇▇ Housing Limited Partnership, a Colorado limited
partnership ("SHLP"), and SHLP was admitted as substitute general partner,
pursuant to an Amendment and Assumption Agreement dated as of September 29,
1995. A Certificate of Amendment to Certificate of Limited Partnership,
declaring SHLP to be the general partner of the Partnership, was filed with the
Colorado Secretary of State on November 1, 1995. Fund withdrew as limited
partner of the Partnership, and Paloma LLC, a Colorado limited liability
company ("Paloma"), was admitted as the limited partner, pursuant to a
Termination and Release Agreement dated as of April 1, 1996. The Replacement
Agreement was amended and restated in its entirety by the Amended and Restated
Limited Partnership Agreement between SHLP and Paloma effective on January 1,
1996 (the "First Partnership Agreement").
The First Partnership Agreement was amended and restated in its entirety
by the Second Amended and Restated Agreement of Limited Partnership dated as of
June 28, 1996 (the "Second Partnership Agreement"), whereby Paloma withdrew as
limited partner of the Partnership and Boston Capital Tax Credit Fund III L.P.,
a Delaware limited partnership ("BCTC 3") and Boston Capital Tax Credit Fund IV
L.P., a Delaware limited partnership ("BCTC 4") were admitted as Limited
Partners of the Partnership.
The parties hereto now desire to enter into this Third Amended and
Restated Agreement of Limited Partnership in order to provide for the admission
of BCTC 94, Inc., a Delaware corporation ("BCTC 94") as the Special Limited
Partner and more fully set forth the rights and obligations of the Partners.
Certain capitalized terms used herein shall have the respective meanings
specified in Article I.
In consideration of the mutual agreements set forth herein, it is agreed
and certified, and the Second Partnership Agreement is hereby amended and
restated in its entirety, as follows:
ARTICLE I
Defined Terms
The following defined terms used in this Agreement shall have the
meanings specified below:
Actual Credit means, with respect to a particular year, the total amount
of Tax Credit properly allocable by the Partnership to the Investment Limited
Partners for such year. The Actual Credit shall be retroactively revised if
the amount of Tax Credit properly allocable to the Investment Limited Partners
is revised as a result of an audit or is recaptured.
Additional Limited Partner means any holder of an Interest designated as
an Additional Limited Partner pursuant to Section 4.5(b).
Admission Date means June 28, 1996.
Affiliate means as to any named Person (or as to every Partner if no
Person is specifically named): (i) such Person or any member of his Immediate
Family; (ii) the legal representative, successor or assignee of, or any trustee
of a trust for the benefit of, any such Person or member of his Immediate
Family; (iii) any Entity of which a majority of the voting interests is owned
by any one or more of the Persons referred to in the preceding clauses (i) and
(ii); (iv) any officer, director, trustee, employee, stockholder (10% or more)
or partner of any Person referred to in the preceding clauses (i), (ii) and
(iii); and (v) any Person directly or indirectly controlling, controlled by or
under direct or indirect common control with, any Person referred to in any of
the preceding clauses.
Agency means, as applicable, any government agency having jurisdiction
over the particular matter to which reference is being made.
Aggregate Cost means the sum of (i) the total Capital Contributions made
or anticipated to be made by the Investment Limited Partners plus (ii) the
proportionate amount of the mortgage loans on, and other debts related to, the
Apartment Complex, which proportionate amount is equal to the Investment
Limited Partners' initial pro rata interest in the profits, losses, and tax
credits of the Partnership. The amount of the Aggregate Cost determined upon
payment of the last of the Installments of the Capital Contribution of the
Investment Limited Partners shall not thereafter be reduced.
Agreement means this Third Amended and Restated Agreement of Limited
Partnership, including Schedule A, as amended from time to time.
Apartment Complex means the real property located in Irving, Dallas
County, Texas, as more fully described in the Mortgage, together with (i) all
buildings and other improvements constructed or to be constructed thereon and
(ii) all furnishings, equipment and personal property covered by the Mortgage.
Applicable Federal Rate means the "applicable federal rate" as defined
and determined in the manner set forth in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section 42(b) of the
Code.
Asset Management Fee means the fee payable to BCCLP or an Affiliate
thereof pursuant to Section 6.12(c).
Auditors means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, of Denver, Colorado, or such other
firm of independent certified public accountants as may be engaged by the
General Partner with the consent of Boston Capital for the purposes of
preparing the Partnership income tax returns, auditing the books and records of
the Partnership and certifying financial reports of the Partnership.
Authority means the Texas Department of Housing and Community Affairs,
and its successors.
Available Debt Service Funds means, for any period of two consecutive
calendar months, 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 Transaction proceeds and 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 or payments out of Cash Flow or the Asset Management
Fee) 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, all as set forth in an
audited financial statement of the Partnership, but specifically excluding any
required payments on any Permanent Mortgage.
BCCLP means Boston Capital Communications Limited Partnership, a
Massachusetts limited partnership, and its successors and assigns.
BCTC 3 means Boston Capital Tax Credit Fund III L.P., a Delaware limited
partnership, and its successors.
BCTC 4 means Boston Capital Tax Credit Fund IV L.P., a Delaware limited
partnership, and its successors.
Boston Capital means Boston Capital Partners, Inc., a Massachusetts
corporation, and its successors and assigns.
Capital Account has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or property contri-
buted and agreed to be contributed to the Partnership by each Partner, as shown
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 Transaction means any transaction the proceeds of which are not
includable in determining Cash Flow, including, without limitation, the sale or
other disposition of all or substantially all of the assets of the Partnership,
but excluding the payment of Capital Contribution and loans to the Partnership
(other than a refinancing of a Mortgage).
Cash Flow means the profits or losses of the Partnership from and after
the Commencement Date subject to any applicable Lender or Agency requirements
and to the following adjustments:
(a) Cost recovery deductions of buildings, improvements and personal
property and amortization deductions of any kind shall not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining profits and
losses but which is not currently payable in cash shall be deducted when
actually paid;
(d) Payments to reserves under Section 6.5(e) shall be deducted;
(e) Any amounts paid for capital expenditures (other than amounts paid
from the Construction or Permanent Mortgage or the Capital Contributions of the
Partners) shall be deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any Mortgage refinancing, any sale, exchange,
eminent domain taking, damage or destruction (whether insured or uninsured), or
other disposition, of all or any part of the Apartment Complex (other than the
proceeds of any business or rental interruption insurance) shall not be
included;
(g) Any rent or interest subsidy payments shall be included; and
(h) The fees set forth in Sections 6.12 and any fee payable in
connection with any transaction referred to in clause (f) above shall not be
deducted.
Certificate means the Original Certificate as amended from time to time
(including any amendment thereto effected by or in connection with this
Agreement).
Class Contribution means the aggregate Capital Contributions of all mem-
bers of a particular class of Partners (i.e., the General Partners, the
Investment Limited Partners, 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.
References herein to any Code section shall include any successor provisions.
Commencement Date means June 1, 1996.
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 December 31, 1995.
Compliance Period means the fifteen (15)-year period commencing with the
first year of the Credit Period.
Consent of the Investment Limited Partners means the prior written
consent or approval of each Investment Limited Partner, which shall not be
unreasonably withheld or delayed.
Construction Contract means the Construction Contract for the Apartment
Complex originally between the Partnership and Marks Construction Company, a
Colorado corporation, and later changed to be between the Partnership and SHLP,
as amended.
Construction Contract Note means the promissory note (if any) to be
issued under paragraph 3 of the Construction Contract.
Construction Lender means Bank One, Arizona, NA in its capacity as holder
of the Construction Mortgage; or SHLP in such capacity; or SHLP's successors or
assigns in such capacity.
Construction Mortgage means the financing for the construction of the
Apartment Complex provided by the Construction Lender in a principal amount of
up to $6,757,536.
Construction Mortgage Closing means the first date upon which the
Construction Mortgage was closed and the initial draw thereunder was disbursed.
Controlling Person has the meaning given to it in the context of 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 satisfactory to Boston Capital, as to the itemized amounts of the
construction and development costs of the Apartment Complex and the Eligible
Basis and Applicable Percentage pertaining to each building in the Apartment
Complex.
Credit Period has the meaning given to it in Section 42(f)(1) of the
Code.
Debt Service Coverage Ratio means for any period, a fraction, the
numerator of which is the Available Debt Service Funds 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
Auditors' determination letter and in the event that the Special Limited
Partner does not so notify the General Partner within such seven (7) 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) 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 the Permanent Mortgage loan if made pursuant to the Permanent
Mortgage Commitment would exceed for such period the actual debt service for
the relevant period on the current indebtedness of the Partnership which will
be paid in full upon Permanent Mortgage Commencement.
Development Services Agreement (1993) means the Development Services
Agreement (1993) dated December 6, 1993 by and among the Partnership and the
Managers named therein, and later changed to be between the Partnership and
SHLP, as amended.
Development Services Agreement (1993) Note means the promissory note in
the amount of $180,000 issued under the Development Services Agreement (1993).
Development Services Agreement (1995) means the Amended and Restated
Development Services Agreement (1995) by and between the Partnership and SHLP
relating to certain services, guarantees and liabilities in connection with the
development of the Apartment Complex, as amended.
Development Services Agreement (1995) Note means the promissory note in
the amount of $560,000 issued under the Development Services Agreement (1995).
Disposition (including the forms Dispose and Disposing) means, as to a
Limited Partner, the assignment, sale, transfer, exchange or other disposition
of all or any part of its Interest.
Due Diligence Requirements means those developmental requirements set
forth on Exhibit A hereto.
Economic Risk of Loss has the meaning set forth in Treasury Regulation
Section 1.752-2.
Effective Date means August 1, 1996.
89-12 Requirements means the requirements set forth in Internal Revenue
Procedure 89-12 which are prerequisites to the issuance, assuming that each
General Partner is a corporation, by the Service of an advance ruling that the
Partnership will be characterized for Federal income tax purposes as a
partnership and not as an association taxable as a corporation.
Eligible Basis has the meaning given to it in Section 42(d) of the Code.
Entity means any general partnership, limited partnership, corporation,
joint venture, trust, business trust, cooperative, real estate investment
trust, limited liability company or association.
Environmental Reports means that certain Phase I Environmental Site
Assessment conducted by Southwestern Laboratories in respect of the Apartment
Complex dated June 1992 and that certain letter report from Maxim Technologies,
Inc. to SHLP dated August 9, 1996.
Estoppel Letter means an estoppel letter in form and substance reasonably
satisfactory to the Special Limited Partner delivered to the Partnership from
each Lender which certifies as to each Mortgage loan (i) that there is no
default ongoing, (ii) the amounts of interest and principal paid on such
Mortgage loan to date and (iii) the outstanding principal balance of such
Mortgage loan.
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 or in respect of any Controlling
Person of such Person in a 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 the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or of any Controlling Person of such
Person or for any substantial part of such Person's property or of the
property of any Controlling Person of such Person, or the issuance of an
order for the winding-up or liquidation of such Person's affairs or the
affairs of any Controlling Person of such Person and the continuance of
any such decree or order unstayed and in effect for a period of sixty
(60) consecutive days, or
(ii) the commencement by such Person or by any Controlling Person
of such Person of a proceeding seeking any decree, order or appointment
referred to in clause (i), the consent by such Person or by any
Controlling Person of such Person to any such decree, order or the
appointment, or taking of any action by such Person or by any Controlling
Person of such Person in furtherance of any of the foregoing.
Filing Office means the Office of the Secretary of State of the State.
General Partners means SHLP and any Persons who become General Partners
as provided herein, in their capacities as general partners of the Partnership.
At any and all times where there is only one General Partner, the term General
Partners shall mean such sole General Partner.
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. In addition, the term Hazardous
Material also includes oil and any other substance known to be hazardous.
HUD means the United States Department of Housing and Urban Development.
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.
Initial 100% Occupancy Date means the first date upon which not less than
100% of the Low-Income Apartment Units in the Apartment Complex were leased to
and physically occupied by Qualified Tenants.
Installment means an installment of the Investment Limited Partners'
Capital Contributions paid or payable to the Partnership pursuant to Sec-
tion 5.1.
Insurance Requirements means those requirements set forth on Exhibit B
hereto.
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 in his capacity as such and the
obligation of such Partner to comply with the terms of this Agreement. A
Partner's right to fees which he has earned for services rendered, guarantees
made or personal liabilities incurred (as distinguished from his rights to
distributions with respect to his Interest as a Partner) is not included in his
Interest.
Invested Amount means (i) as to the Investment Limited Partners, an
amount equal to the paid-in Capital Contributions of such Investment Limited
Partners, divided by 0.73, and (ii) as to any other Partner, an amount equal to
its paid-in Capital Contribution.
Investment Capital Ratio means, as between the Investment Limited
Partners, the ratio in which they share certain obligations and rights pursuant
to this Agreement, which ration shall be : BCTC 3 - 71.65% and BCTC 4 - 28.35
%.
Investment General Partners means Boston Capital Associates III L.P., a
Delaware limited partnership, in its capacity as the general partner of BCTC 3,
Boston Capital Associates IV L.P., a Delaware limited partnership, in its
capacity as the general partner of BCTC 4, and any other Person who may become
a successor or additional general partner of either Investment Limited Partner.
Investment Limited Partners means Boston Capital Tax Credit Fund III
L.P., a Delaware limited partnership, Boston Capital Tax Credit Fund IV L.P., a
Delaware limited partnership, and any Person or Persons who replace either of
them as Substituted Limited Partner pursuant to this Agreement, but shall not
include any Special Limited Partner or Additional Limited Partner. At any and
all times where there is only one Investment Limited Partner, the term
Investment Limited Partners shall mean such sole Investment Limited Partner.
Investment Partnership Agreements mean the Agreements of Limited Partner-
ship of the Investment Limited Partners, as each may be amended from time to
time.
Lenders means the Construction Lender and the Permanent Lender, each in
its capacity as maker of a Mortgage loan, or its successors and assigns in such
capacity.
Limited Partners means the Investment Limited Partners, the Special
Limited Partner and any Additional Limited Partner.
Low-Income Apartment Units means the 93 units in the Project with respect
to which the Partnership has agreed to comply with the requirements for the Tax
Credit under Section 42 of the Code.
Management Agent means the management and rental agent for the Apartment
Complex.
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
Article XI.A.
Management Services Agreement means the Management Services Agreement
which was originally among the Partnership and the Managers named therein
concerning the performance of certain services for the Partnership by the
Managers, and was later changed to be between the Partnership and SHLP, as
amended.
Management Services Agreement Notes means the promissory note in the
amount of $189,400 issued under the Management Services Agreement, and the
additional promissory note or notes (if any) to be issued under the Management
Services Agreement.
Minimum Set-Aside Test means the set aside test selected by the Partner-
ship 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 the mortgage indebtedness of the Partnership to a Lender;
where the context admits, Mortgage shall mean and include the mortgage note
evidencing such indebtedness, the mortgage or deed of trust and security
agreement securing such indebtedness, the loan agreement and all other
documentation related thereto which evidence and secure such indebtedness,
including any Agency documentation related thereto.
Original Agreement has the meaning specified in the Preliminary
Statement.
Original Certificate has the meaning specified in the Preliminary
Statement.
Original Limited Partners has the meaning specified in the Preliminary
Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability (a) that is
considered non-recourse under Treasury Regulation Section 1.1001-2 or for which
the creditor's right to repayment is limited to one or more assets of the
Partnership and (b) for which any Partner or Related Person bears the Economic
Risk of Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of partner
nonrecourse debt minimum gain and the net increase or decrease in partner
nonrecourse debt minimum gain determined in a manner consistent with Treasury
Regulation Sections 1.704-2(d) and 1.704-2(g)(3).
Partnership means the limited partnership continued pursuant to this
Agreement.
Partnership Management Fee shall have the meaning set forth in Section
6.12(g).
Partnership Minimum Gain means the amount determined by computing, with
respect to each Partnership Non-Recourse Liability, the amount of gain, if any,
that would be realized by the Partnership if it disposed of (in a taxable
transaction) the property subject to such liability for no consideration other
than full satisfaction of such liability, and by then aggregating the amounts
so computed. Such computations shall be made in a manner consistent with
Treasury Regulation Section 1.704-2(d).
Partnership Non-Recourse Liability means any Partnership liability (or
portion thereof) for which no Partner or Related Person bears the Economic Risk
of Loss.
Percentage Interests means, as between the Investment Limited Partners,
the ratio in which they share in the benefits of the Partnership, which ratio
shall be: BCTC 3 - 66%; BCTC 4 - 34%.
Permanent Lender means Massachusetts Mutual Life Insurance Company, a
Massachusetts corporation, or any other provider of the Permanent Mortgage to
be obtained by the Partnership in accordance with Article III, in its capacity
as maker and holder of the Permanent Mortgage, together with its successors and
assigns in such capacity.
Permanent Mortgage means the permanent financing provided, or to be
provided, by the Permanent Lender for the Apartment Complex in accordance with
a Permanent Mortgage Commitment.
Permanent Mortgage Commencement means the later to occur of (a) closing
of the Permanent Mortgage, or (b) repayment of the Construction Mortgage in its
entirety.
Permanent Mortgage Commitment means the commitment of Massachusetts
Mutual Life Insurance Company, a Massachusetts corporation dated
__________ ___, 1996 to provide permanent financing for the Apartment Complex,
or any other commitment to provide permanent financing obtained by the General
Partner in accordance with Article III and which shall be in form and substance
satisfactory to the Investment Limited Partners.
Person means any individual or Entity.
Project Documents means and includes the Construction Mortgage and the
Permanent Mortgage, the Management Agreement, the Construction Contract, the
Management Services Agreement, the Development Services Agreement (1993), the
Development Services Agreement (1995), the Service Notes, all other instruments
delivered to (or required by) the Construction Lender and/or the Permanent
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 $258,913 for 1996, $455,034 per annum for each of
the years 1997 through 2005 and $147,601 for 2006; provided, however, that the
Projected Credit for 2006 shall be reduced by the amount, if any, by which the
Actual Credit for 1996 exceeds $258,913; and provided further that upon the
occurrence of any of the events described in Section 5.1(f), the Projected
Credit shall thereafter be the Revised Projected Credit.
Prospectus means each prospectus contained in the registration statement
filed with the Securities and Exchange Commission on behalf of the Investment
Limited Partners for the registration of beneficial assignee certificates
and/or limited partnership interests under the Securities Act of 1933, as
amended, in the final form in which said prospectus is filed with said
Commission and as thereafter amended and/or supplemented from time to time
pursuant to Rule 424 under said Act, or otherwise.
Qualified Basis has the meaning given to it in Section 42(c) of the Code.
Qualified Tenant means a tenant (i) with income not exceeding that
permitted by the Minimum Set-Aside Test who leases a Low-Income Apartment Unit
in the Project under a lease having an original term of not less than 6 months
at a rent not in excess of that specified in Section 42(g)(2) of the Code and
(ii) complying with any other requirements imposed by the Project Documents.
Related Person means a Person related to a Partner within the meaning of
Treasury Regulation Section 1.752-4(b).
Rental Achievement means the first time following four (4) consecutive
full calendar months of operations (with each month considered individually)
that the Apartment Complex generates a 1.15 to 1.00 Debt Service Coverage
Ratio.
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 per cent (30%) of the imputed income
levels determined under Section 42(g)(2)(C).
Required Debt Service Coverage Ratio means a Debt Service Coverage Ratio
of not less than 1.15.
Revised Projected Credit has the meaning given to it in Section 5.1(f).
Schedule A means Schedule A to this Agreement, as amended from time to
time.
Second Partnership Agreement has the meaning specified in the Preliminary
Statement.
Service means the Internal Revenue Service.
Service Notes means the Construction Contract Note, the Development
Services Agreement (1993) Note, the Development Services Agreement (1995) Note
and the Management Services Agreement Notes.
SHLP means ▇▇▇▇▇▇▇ Housing Limited Partnership, a Colorado limited
partnership.
SHLP Pay-Off Letter means a letter in form and substance reasonably
satisfactory to the Investment Limited Partners delivered by SHLP to the
Partnership which certifies that (i) all amounts due to SHLP from the
Partnership under the Construction Contract have been paid to the extent due on
or before the date of such letter, (ii) the Partnership is not in default under
the Construction Contract and (iii) each materialman and subcontractor who
performed work on the Apartment Complex pursuant to the Construction Contract
has been paid in full.
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, Inc., a Delaware corporation, and
any Person who becomes a Special Limited Partner as provided herein, in its
capacity as a special limited partner of the Partnership.
State means the State of Colorado.
State Designation means April 24, 1996.
Subordinated Loan means any loan made by the General Partners to the
Partnership pursuant to Section 6.5(e) or 6.10.
Substituted Limited Partner means any Person who is admitted to the Part-
nership as Limited Partner under Section 8.2 or acquires the Interest of a
Limited Partner pursuant to Section 5.2.
Tax Accountants means ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of Bethesda, Maryland
or such other firms of independent certified public accountants as may be
engaged by Boston Capital to review the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant to Section 42
of the Code.
Tax Credit Set-Aside means December 30, 1993, this being the date upon
which the Partnership received a carryover allocation of housing credit dollar
amount by the authorized agency of the State of Texas for the buildings
constituting the Apartment Complex in an annual dollar amount of $459,630.
Title Policy means the owner's title insurance policy, or at the option
of the Special Limited Partner an endorsement thereto, with an effective date
on or after the Admission Date, in the amount of not less than $7,870,000,
issued by Chicago Title Insurance Company to the Partnership, evidencing the
Partnership's ownership of the Apartment Complex subject only to the Permanent
Mortgage and such exclusions, exceptions, conditions and stipulations as may be
approved by the Special Limited Partner in its sole discretion and endorsed
with an endorsement insuring against all zoning defects relating to the
Apartment Complex, a Fairway endorsement and a non-imputation endorsement.
Uniform Act means the Uniform Limited Partnership Act as adopted by the
State.
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.
Withdrawal (including the forms Withdraw, Withdrawing and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of in-
sanity 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
shall also mean the sale, assignment, transfer or encumbrance by a General
Partner of its Interest as a General Partner. A General Partner which is a
corporation, partnership or limited liability company 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 General Partner, or of a general partner interest in a General
Partner which is a partnership, or of a member interest belonging to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ in a General Partner which is a limited liability company. For
purposes of this definition of Withdrawal, "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 ▇▇▇▇▇▇ Associates Limited Partnership.
The Partners agree to continue the Partnership which was formed pursuant to the
provisions of the Uniform Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at which office there shall be
maintained those records required by the Uniform Act to be kept by the
Partnership. The Partnership may have such other or additional offices as the
General Partners shall deem desirable. The General Partners 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 in the State for the Partnership for service of
process is ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General Partners may at any time change the resident agent
and shall give due notice thereof to the Limited Partners.
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in, construct,
develop, improve, maintain, operate, lease and otherwise deal with the
Apartment Complex. The Partnership shall operate the Apartment Complex in
accordance with any applicable Agency regulations and requirements. The
Partnership shall not engage in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect until Decem-
ber 31, 2046, except that the Partnership shall be dissolved and its assets
liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially all of the
assets of the Partnership;
(b) The Withdrawal of a General Partner if the remaining General
Partner(s), if any, shall fail to continue the business of the Partnership as
provided in Section 7.2;
(c) The election to dissolve the Partnership made in writing by the
General Partners with the Consent of the Investment Limited Partners and the
approval (if required) of any Agency;
(d) The entry of a final decree of dissolution of the Partnership by a
court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the Partnership
under the Uniform Act if the business of the Partnership is not continued
pursuant to Section 7.2.
Upon dissolution of the Partnership, the General Partners (or for pur-
poses of this paragraph, their trustees, receivers or successors) shall cause
the cancellation of the Certificate, liquidate the assets of the Partnership
and apply and distribute the proceeds thereof in accordance with Section 10.3.
Notwithstanding the foregoing, if, during liquidation, the General Partners
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 Partners 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
A. The Partnership shall be authorized to borrow from the Lenders
whatever amounts may be required, subject to the provisions hereof, in
connection with the acquisition, development and construction of and to meet
the expenses of operating the Apartment Complex (including without limitation
any items for which the Lenders may provide Mortgage funds) and shall secure
the same by the Mortgage; provided, however, that the Partnership shall not
borrow in excess of $6,757,536 from the Construction Lender or $3,750,000 from
the Permanent Lender without the Consent of the Investment Limited Partners.
However, from and after Permanent Mortgage Commencement, neither any General
Partner nor any Related Person shall at any time bear, nor shall the General
Partners permit any other Partner or any Related Person to bear, the Economic
Risk of Loss for the payment of any portion of any Mortgage, except as required
by the Permanent Mortgage Commitment or 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 note shall be applied first to interest
determined at the stated rate set forth in the Permanent Mortgage note, and
then to principal due with respect to the Permanent Mortgage note.
B. The Partnership may decrease, increase or refinance the Permanent
Mortgage and may make any required transfer or conveyance of Partnership assets
for security or mortgage purposes, provided, however, any such decrease (except
through the Permanent Mortgage amortization schedule anticipated at Permanent
Mortgage Commencement), increase or refinancing of the Permanent Mortgage may
be made by the General Partners only with the Consent of the Investment Limited
Partners.
C. The Partnership may sell, lease, exchange or otherwise transfer or
convey all or any substantial part of the assets of the Partnership only with
the Consent of the Investment Limited Partners. Notwithstanding the foregoing
and except as set forth in Section 6.2(a)(6), no Consent of the Investment
Limited Partners shall be required for 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 the Agency as
expressed in writing.
D. The total compensation to all Persons for the sale of the Apartment
Complex shall be limited to a Competitive Real Estate Commission, not to exceed
six per cent (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 Contribution of each Partner shall be as set forth on
Schedule A. 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, all to the extent specifically permitted by this
Agreement. No interest shall be paid on any Capital Contribution. No Partner
shall have the right to withdraw its Capital Contribution or to demand and
receive property of the Partnership in return for its Capital Contribution,
except as may be specifically provided in this Agreement or required by law.
(b) An individual Capital Account shall be established and maintained
on behalf of each Partner, including any additional or substituted Partner who
shall hereafter receive an Interest. In accordance with Treasury Regulation
Section 1.704-1(b), the Capital Account of each Partner shall consist of
(i) the amount of cash such Partner has contributed to the Partnership plus
(ii) the fair market value of any property such Partner has contributed to the
Partnership net of any liabilities assumed by the Partnership or to which such
property is subject plus (iii) the amount of profits or income (including tax-
exempt income) allocated to such Partner less (iv) the amount of losses and
deductions allocated to such Partner less (v) the amount of all cash
distributed to such Partner less (vi) the fair market value of any property
distributed to such Partner net of any liabilities assumed by such Partner or
to which such property is subject less (vii) such Partner's share of any other
expenditures which are not deductible by the Partnership for Federal income tax
purposes and which are not allowable as additions to the basis of Partnership
property. Each Capital Account shall also be subject to such other adjustments
as may be required under the Code. The Capital Account of a Partner shall not
be affected by any adjustments to basis made pursuant to Section 743 of the
Code but shall be adjusted with respect to adjustments to basis made pursuant
to Section 734 of the Code.
(c) The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as, and shall
replace, the Capital Account of the Partner which such Substituted Partner
succeeds, and, for the purposes of this Agreement, such Substituted Partner
shall be deemed to have made the Capital Contribution, to the extent actually
paid in, of the Partner which such Substituted Partner succeeds. The term
"Substituted Partner," as used in this paragraph, shall mean a Person who shall
become entitled to receive a share of the allocations and distributions of the
Partnership by reason of such Person succeeding to all or any part of the
Interest of a Partner by assignment of all or any part of a Partner's Interest.
To the extent a Substituted Partner receives less than 100% of the Interest of
a Partner he succeeds, the original Capital Account of such transferee
Substituted Partner and his Capital Contribution shall be in proportion to the
portion of the transferor Partner's Interest prior to the transfer which the
transferee receives, and the Capital Account of the transferor Partner who
retains a portion of his former Interest and his Capital Contribution shall
continue, and not be replaced, in proportion to the portion of the transferor
Partner's Interest prior to the transfer which the transferor Partner retains.
Nothing in this Section 4.1 shall affect the limitations on transferability of
Interests set forth in Article VII or Article VIII.
4.2 General Partners
(a) The name, address and Capital Contribution of each General Partner
are as set forth on Schedule A.
(b) The General Partners agree to make additional Capital Contributions
on the maturity dates of the Service Notes to enable the Partnership to make
all principal payments when due under such Notes; provided, however, that any
such maturity date may be extended by the Partnership and the holder of the
Note in question with the Consent of the Investment Limited Partners, or
without such consent if the Partnership and such holder provide a written
opinion from an attorney or accountant with more than ten years of full-time
experience in federal income taxation to the effect that no material federal
income tax risk is created by the extension.
4.3 Investment Limited Partners and Special Limited Partner
The Investment Limited Partners and the Special Limited Partner are the
sole Limited Partners as of the Admission Date and agree to be bound by the
terms and provisions of the Project Documents and this Agreement. The names
and addresses of the Investment Limited Partners and the Special Limited
Partner are as set forth on Schedule A. The General Partners shall have no
authority to admit additional Limited Partners without the Consent of the
Investment Limited Partners.
4.4 Liability of the Limited Partners
None of the Investment Limited Partners, the Special Limited Partner and
any Person who becomes an Additional Limited Partner shall be liable for any
debts, liabilities, contracts or obligations of the Partnership and shall only
be liable to pay their respective Capital Contributions as and when the same
are due hereunder and under the Uniform Act. Notwithstanding the preceding
sentence, an Additional Limited Partner whose Interest derives from the
Interest of a former General Partner (the "Transferred Interest") shall be
liable for the debts of the Partnership to the same extent as such General
Partner is liable with respect to the Transferred Interest as a result of his
having served as a General Partner, and shall also be liable for all
contributions (including without limitation the obligation to make Capital
Contributions under Section 4.2(b)), loans, advances, fundings or other
payments (including but not limited to the contribution provided for in
Section 10.3(a) in an amount equal to any negative balance in the Capital
Account associated with the Transferred Interest upon dissolution of the
Partnership) to the same extent as such General Partner with respect to the
transferred Interest.
4.5 Special Rights of the Investment Limited Partners;
Certain Consequences of General Partner Withdrawals
(a) Notwithstanding any other provision herein, to the extent the law
of the State is not inconsistent, each of the Investment Limited Partners and
the Special Limited Partner shall have the right, subject to the prior written
consent of any Agency (if such consent is required), to:
(i) amend this Agreement in any particular, provided that no such
amendment may affect the economic, tax or control rights or liabilities
of any Partner without such Partner's written consent;
(ii) dissolve the Partnership;
(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,
willful misconduct or material breach of fiduciary duty, which breach
shall not have been cured (or reasonable steps taken to begin its cure,
provided that such breach is susceptible of cure and such steps are taken
with diligence and continuity) within 60 days after written notice
specifying such breach shall have been delivered to the General Partners,
or (B) upon the occurrence of any of the following: (1) such General
Partner shall have materially violated any provisions of any Project
Document or other document required in connection with any Mortgage, or
any provisions of any Agency regulations applicable to the Apartment
Complex, and such violation shall not have been cured (or reasonable
steps taken to begin its cure, provided that such violation is
susceptible of cure and such steps are taken with diligence and
continuity) within 60 days after written notice specifying such violation
shall have been delivered to the General Partners; (2) such General
Partner shall have materially violated any provision of this Agreement,
including, but not limited to, any obligation to fund any Partnership
expense under Section 6.10, or such General Partner shall have violated
any provision of applicable law with respect to the Apartment Complex,
and the violation referred to in this clause (2) shall not have been
cured (or reasonable steps taken to begin its cure, provided that such
violation is susceptible of cure and such steps are taken with diligence
and continuity) within 60 days after written notice specifying such
violation shall have been delivered to the General Partners; (3) any
Mortgage shall have gone into default and such default is not cured or
waived in time to prevent the commencement of foreclosure proceedings
under such Mortgage; or (4) such General Partner shall have conducted its
own affairs or the affairs of the Partnership in such manner as would
(a) cause the termination of the Partnership for Federal income tax
purposes in a manner causing material tax harm to any Partner 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 for cause pursuant to Section
4.5(a)(iii) or the Withdrawal of SHLP as a General Partner, (i) without any
further action by any Partner, the Special Limited Partner or its designee may
in its discretion automatically become a General Partner and acquire in
consideration of a cash payment of $100 such portion of the Interests of the
former General Partner or Partners as counsel to the Investment Limited
Partners 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 Uniform Act, (ii) the Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new status of the
Special Limited Partner or its designee as a General Partner, and (iii) the new
General Partner shall automatically be irrevocably delegated all of the powers
and duties of the General Partners pursuant to Section 6.13. Upon the removal
of any General Partner under Section 4.5(a)(iii), or upon any Withdrawal of any
General Partner in violation of Section 7.1, (A) the Interest of such General
Partner shall automatically be converted to an equal Interest as an Additional
Limited Partner, but without any right or power to participate in the
management or control of the Partnership or its business or affairs, and
(B) the persons holding the Interests of the other original General Partners
shall have the option to acquire the Interest of the removed or Withdrawn
General Partner for no consideration other than the assumption of primary
liability for all obligations of the holder of such Interest to the Partnership
or its creditors (such option must be exercised, if at all, by written notice
from those optionholders wishing to exercise such option to the holder of the
Interest subject to such option within 60 days after the removal or
Withdrawal). Upon the Withdrawal of any General Partner other than in
violation of Section 7.1 or by removal under Section 4.5(a)(iii), clause (A)
but not clause (B) of the preceding sentence shall apply. 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 (if any) to manage the
business of the Partnership.
(c) In order to implement Section 4.5(a)(v), the General Partners are
hereby required, within five (5) days after their receipt of any written offer
to purchase the Apartment Complex or all of the Interests in the Partnership,
to send a copy of such offer to each of the Limited Partners. If, within
thirty (30) days of its receipt of any such copy of such an offer, the Special
Limited Partner shall send notice to the General Partners that the Special
Limited Partner desires that the Partnership accept such offer, then the
General Partners shall be required to accept such offer on behalf of the
Partnership and proceed promptly to close such transaction unless otherwise
instructed by the Special Limited Partner at any point prior to the closing of
such transaction. To the extent, if any, that the Special Limited Partner
shall determine, in its discretion, that the General Partners are not
proceeding in a manner satisfactory to it with respect to any such offer or
closing, each Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by law) power of attorney coupled with an
interest to execute and deliver any and all documents and instruments on behalf
of the Partnership and any Partner as the Special Limited Partner may deem to
be necessary or appropriate in order to effect the acceptance of and/or closing
pursuant to any such offer in such a manner as the Special Limited Partner
shall, in its discretion, determine to be satisfactory. Notwithstanding the
foregoing, the Partnership shall not be required to accept any offer or close
any transaction pursuant to this Section 4.5(c) within the "extended use
period" (as defined in Code Section 42(h)(6)(D)) for the Apartment Complex
without the written consent of the General Partners.
4.6 Meetings
The General Partners or Limited Partners holding more than ten per cent
(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
Partners shall provide all Limited Partners within ten (10) days after receipt
of said request, written notice (either in person or by certified mail) of a
meeting and the purpose of such meeting to be held on a date not less then
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 at such other office of the Partnership
as may be designated in the notice from the General Partners.
ARTICLE V
Capital Contributions of the Investment Limited Partners and the Special
Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution shall be $10,
payable in full in cash on the Effective Date. The Investment Limited
Partners' Capital Contribution shall be paid in cash installments (the
"Installments"), as follows:
(1) $1,716,000 by BCTC 3 and $678,966 by BCTC 4 (in the
aggregate, the "First Installment") on the latest to occur of (i) the
execution of this Agreement by all of the Partners, (ii) receipt by the
Investment Limited Partners of the Permanent Mortgage Commitment,
(iii) receipt by the Investment Limited Partners of the Title Policy,
(iv) satisfaction of the Due Diligence Requirements, (v) receipt by the
Investment Limited Partners of an Estoppel Letter from each Lender,
(vi) receipt by the Investment Limited Partner of the SHLP Pay-Off Letter
or (vii) the Initial 100% Occupancy Date; and
(2) $429,000 by BCTC 3 and $169,742 by BCTC 4 (in the aggregate,
the "Second Installment") on the later of (i) Permanent Mortgage
Commencement or (ii) Rental Achievement;
provided, however, that the General Partners shall give the Investment Limited
Partners not less than twenty-one (21) days' written notice prior to the
estimated due date and not less than seven (7) days' written notice prior to
the actual due date of each Installment subsequent to the First Installment.
(b) The obligation of the Investment Limited Partners to pay each In-
stallment is conditioned upon delivery by the General Partners to the Invest-
ment Limited Partners 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 Partners 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. In addition,
the obligation of the Investment Limited Partners to pay the First Installment
is also conditioned upon delivery by the General Partners to the Investment
Limited Partners of (i) a legal opinion of independent counsel to the
Partnership, which opinion must be satisfactory to the Investment Limited
Partners as to form, content and identity of counsel and (ii) a photocopy of
the Title Policy. 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" (expenses in excess of revenues which
the General Partners would be required to fund pursuant to Section 6.10), then
the Investment Limited Partners may, at their 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 and that any advance of funds by the General
Partners to pay items which would have been paid from such proceeds but for
this sentence shall be treated for all purposes of this Agreement as
Subordinated Loans payable, without interest, in accordance with Article X and
not as payments reimbursable only to the extent provided in Section 6.11.;
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 General Partners, on their behalf and on behalf of
any of their Affiliates to the extent any of the foregoing are recipient(s)
thereof shall be required to, and hereby agree to, utilize the proceeds of such
fee(s) or to fund such Operating Deficit pursuant to Section 6.10, in which
case the Investment Limited Partners are hereby authorized to directly fund
such Operating Deficit and the funds so applied shall be deemed to have been
paid and utilized as aforesaid.
(c) The Payment Certificate for the Second 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 (even after taking into account the application of
Sections 5.1(e) or (f)), the General Partners shall notify the Investment
Limited Partners of the reason why such statement would be untrue if made, and
the Investment Limited Partners 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 Partners shall not have
irrevocably lost, in the good faith judgment of the Investment General Partner,
any material tax or other benefits hereunder, then the Investment Limited
Partners shall pay such Installment to the Partnership thirty (30) days after
delivery by the General Partners to the Investment Limited Partners of the
Payment Certificate together with an explanation of the manner in which each
such statement had become true.
(e) If for any reason (including, without limitation, a final
determination which is not successfully appealed that the requirements of
Section 42(h)(i)(E) of the Code were not satisfied with respect to the
Apartment Complex or any portion thereof) with respect to any year (a
"Reduction Year") the Actual Credit is or was less than the Projected Credit,
then the General Partners shall credit against the next due Installments, if
any, and/or refund to the Investment Limited Partners (in accordance with the
Investment Capital Ratio) the Reduction Amount. The Reduction Amount shall be
equal to the sum of (A) the excess of the Projected Credit for such year over
the Actual Credit for such year multiplied by a fraction the numerator of which
is the Invested Amount of the Investment Limited Partners and the denominator
of which is the total aggregate amount of the Projected Credit for all years
plus (B) the amount of any (i) recapture (unless included in the Reduction
Amount under clause (A)) and interest payable by the limited partners of the
Investment Limited Partners as a result of such shortfall, assuming that each
limited partner in the Investment Limited Partners used all of the Tax Credits
allocated to it in the 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
(ii) penalty (if any) actually payable by each of the limited partners of the
Investment Limited Partners as a result of such shortfall for under- statement
of tax as set forth in Section 6662(d) of the Code. 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 year. The
Investment Limited Partners shall be eligible to be paid (in accordance with
the Investment Capital Ratio) a Reduction Amount as hereinabove described with
respect to each Reduction Year. Any Reduction Amount shall, at the option of
the Investment Limited Partners, (i) first be applied to the Installment next
due to be paid by the Investment Limited Partners, with any portion of such
Reduction Amount in excess of the amount of such Installment then being applied
to succeeding Installments, and/or (ii) be paid in its entirety by the General
Partners to the Investment Limited Partners (in accordance with the Investment
Capital Ratio) promptly after demand is made therefor. Any amounts paid or
refunded to the Investment Limited Partners shall constitute a return of its
Capital Contribution for all purposes of this Agreement.
(f) In the event that at any time after the Completion Date, either (x)
any lack of compliance with Section 42 of the Code or (y) the product of the
Apartment Complex's Eligible Basis and its Applicable Percentage, is determined
by the Auditors, the Tax Accountants or the Service (without successful
contest, administratively or judicially by the Partnership) to be such that the
Apartment Complex will not be eligible to receive Tax Credit in an annual
dollar amount of at least $459,630, then (a) the General Partners shall pay to
the Investment Limited Partners (in accordance with the Investment Capital
Ratio) an amount equal to 0.665 of the product of (A) the difference between
(i) $4,596,300 and (ii) the total amount of Tax Credit allocated and available
to the Partnership over the entire Credit Period and (B) 99% and (b) the
Projected Credit for each year shall thereafter be redefined to mean 99% of the
annual amount of Tax Credit actually so allocated and available to the
Partnership (the "Revised Projected Credit"). Any amount payable by the
General Partners to the Investment Limited Partners pursuant to this
Section 5.1(f) shall, at the option of the Investment Limited Partners, (i) be
applied first to the Installment, if any, next due to be paid by the Investment
Limited Partners, and any balance of such amount payable by the General
Partners in excess of the amount of such Installment shall be applied to
succeeding Installments, if any, and/or (ii) be paid in its entirety by the
General Partners to the Investment Limited Partners promptly after demand is
made therefor. Any amounts paid or refunded to the Investment Limited Partners
shall constitute a return of their Capital Contribution for all purposes of
this Agreement.
(g) The Investment Limited Partners and the Special Limited Partner (at
the expense of the Partnership or the General Partners) shall cooperate
reasonably with the Partnership and the General Partners from time to time in
connection with any administrative or judicial advancement or defense of the
legal position of the Partnership or the General Partners as to tax matters
with respect to any item in dispute. For purposes of Sections 5.1 (e) and (f),
the amount of any "recapture" means the amount of any Federal income tax
payable by any Person because an amount of Tax Credits allocated to such Person
on a Schedule K-1 (or any successor schedule) issued by the Partnership to such
Person is later finally determined not to be properly allowable to the
Partnership or allocable to such Person. All payments, credits or refunds by
the General Partners pursuant to Section 5.1(e) or (f) shall constitute
additional Capital Contributions of the General Partners.
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit Benchmarks and
Standards. If (i) a final determination is made by the Service, and not
successfully contested in court by the Partnership or the General Partner, that
the Apartment Complex was not placed in service for the purposes of Section 42
of the Code by December 31, 1995, or (ii) Permanent Mortgage Commencement shall
not have occurred prior to December 31, 1996 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partners), or
(iii) the Partnership shall fail to meet the Minimum Set-Aside Test or the Rent
Restriction Test by the close of the first year after the Completion Date
and/or fails to continue to meet either of those Tests at any time during the
sixty (60)-month period commencing on the date such tests are first met, or
(iv) prior to Permanent Mortgage Commencement, (x) foreclosure proceedings
shall have commenced under the Construction Mortgage and such proceedings shall
not have been dismissed within thirty (30) days, (y) the Construction Lender
shall have irrevocably refused to make any further advances under the
Construction Mortgage and such decision shall not have been reversed or the
Construction Lender replaced within one hundred (100) days, or (v) if at any
time it shall be determined by the Service or by the Auditors that as of
December 31, 1993 the Partnership had not incurred capitalizable costs with
respect to the Apartment Complex of at least ten percent (10%) of the
Partnership's reasonably expected basis in the Apartment Complex as of
December 31, 1995 and no contrary position is properly and successfully taken
by the Partnership on any original or amended tax return or other
administrative or judicial filing, or (vi) Rental Achievement has not occurred
within one year following the Completion Date, or (vii) at any time the General
Partner fails to make a Subordinated Loan as required by this Agreement, then
the General Partners shall, within five (5) days of the occurrence thereof,
send to the Investment Limited Partners and the Special Limited Partner notice
of such event and of the General Partners' obligation to repurchase the
Interests of the Investment Limited Partners and the Special Limited Partner by
paying to the Investment Limited Partners (in accordance with the Investment
Capital Ratio) and the Special Limited Partner an amount (the "Repurchase
Amount") equal to each such Partner's 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(a) in the event the Investment
Limited Partners and/or the Special Limited Partner require such a repurchase.
If either the Special Limited Partner or the Investment Limited Partners 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 Partners' notice,
or at any time after the occurrence of any of the foregoing if the General
Partners shall not have sent notice thereof, and the General Partners 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.
(b) Lender Disapproval. If any Lender or Agency shall disapprove, or
fail to give any required approval of, any 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
selected by the Partner being disapproved or not approved (or such other time
as may be specified by the Lender and/or Agency in its disapproval), at the
option of the Partner being disapproved or not approved (if not directed by the
Lender and/or Agency to withdraw), cease to be a Limited Partner. The General
Partners shall, within ten (10) 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 Partners 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 Partners shall indemnify and hold
harmless such Partner from any liabilities or losses or damages to creditors
of, or claimants against, the Partnership.
(d) Waiver of Repurchase Right. Any Investment Limited Partner shall
have the right to irrevocably waive their right to have their 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 Partners 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
from that date forward.
(e) Additional General Partner. If the General Partners 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,
whereupon such additional General Partner shall automatically be transferred
from the pre-existing General Partners, proportionally from their Interests, in
consideration of $10, a one per cent (1%) interest in all profits, losses, tax
credits and distributions of the Partnership if such transfer is reasonably
necessary to preserve the classification of the Partnership for Federal income
tax purposes, in the judgment of special tax counsel to the Investment Limited
Partners; such transfer notwithstanding, the Special Limited Partner shall
retain its status as such and its interest in the Partnership as the Special
Limited Partner shall not be affected. Upon any such admission of the Special
Limited Partner or its designee as an additional General Partner, each of the
other General Partners ▇▇▇▇▇▇ agrees that all of its rights and powers
hereunder as a General Partner with respect to the management and control of
the Partnership and its business and affairs 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 obligations hereunder, and each
other General Partner shall fully indemnify and hold harmless the additional
General Partner against any and all losses, judgments, liabilities, expenses
and amounts paid in settlement of any claims sustained in connection with its
capacity as a General Partner.
5.3 Limitation of Remedy
The application of Section 5.1(e) or (f) or 5.2 shall be the sole and
exclusive remedy or damages under this Agreement arising from or in connection
with any reduction, loss, shortfall or recapture of Tax Credits.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions of this
Agreement, the General Partners for, in the name and on behalf of the
Partnership, are hereby authorized to do the following in furtherance of the
purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any real
or personal property;
(2) To construct, operate, maintain, finance and improve, and to
own, sell, convey, assign, mortgage or lease any real estate and any
personal property;
(3) To borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment Com-
plex or any other assets of the Partnership;
(4) To execute any Permanent Mortgage Commitment, the
Construction and Permanent Mortgages, the other Project Documents and all
such other documents as the General Partners deem necessary or
appropriate in connection with the acquisition, development and financing
of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify the Con-
struction and Permanent Mortgages or any other financing affecting the
Apartment Complex;
(6) To employ the Management Agent (which may be an Affiliate of
the General Partners) and to pay reasonable compensation for its ser-
vices;
(7) To employ their respective Affiliates to perform services
for, or sell goods to, the Partnership;
(8) To execute contracts with the State of Texas or any
subdivision or agency thereof or any other government agency to make
apartments or tenants in the Apartment Complex eligible for any public-
subsidy program;
(9) To execute leases of some or all of the apartment units of
the Apartment Complex to a public housing authority and/or to a non-
profit corporation, cooperative or other non-profit Entity; and
(10) 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 documents 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
Partners shall have no authority to perform any act in violation of applicable
law, Agency or other government regulations, requirements of any Lender, or the
Project Documents. In the event of any conflict between the terms of this
Agreement and any applicable Agency or other government regulations or
requirements of the Lender, the terms of such regulations or requirements shall
govern. Neither shall the General Partners have any authority to do any of the
following acts without the Consent of the Investment Limited Partners and the
prior written consent of the Special Limited Partner:
(1) To have borrowings in excess of $10,000 in the aggregate at
any one time outstanding on the general credit of the Partnership, except
borrowings constituting Subordinated Loans;
(2) To borrow from the Partnership or commingle Partnership funds
with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the Apartment Complex or its use or which are at a
cost in excess of $10,000 in a single Partnership fiscal year, except
(a) replacements and remodeling in the ordinary course of business or
under emergency conditions or (b) construction paid for from insurance
proceeds;
(4) To acquire any real property in addition to the Apartment
Complex;
(5) Following Permanent Mortgage Commencement, to increase,
decrease (except through the amortization schedule provided for in the
Permanent Mortgage), modify the terms of or refinance the Permanent
Mortgage;
(6) 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;
(7) To sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the Partnership;
(8) To terminate any agreement with any Agency;
(9) 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
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;
(10) To amend the Construction Contract, except for change orders
approved by the Lender;
(11) To pledge or assign any of the Capital Contribution of the
Investment Limited Partners or the proceeds thereof, except as provided
in connection with the Construction Loan or the Permanent Loan; or
(12) To do any act required to be approved or ratified by all
limited partners under the Uniform Act.
(b) In the event that any General Partner materially violates any
provision of Section 6.2(a), and neither such General Partner nor any other
General Partner cures such violation (or commences to cure and proceeds with
diligence and continuity to cure such violation, if such cure can not be
accomplished immediately) within thirty (30) days after the Special Limited
Partner delivers written notice of the violation to such General Partner, and
to each other General Partner, 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 pre-existing General Partner
shall be deemed to have transferred (ratably in accordance with their
respective Interests) to the additional General Partner, automatically and
without further action, such portion of its General Partner interest so that
the additional General Partner shall receive not less than a one per cent (1%)
interest in the profits, losses, tax credits and distributions of the
Partnership in consideration of the payment of $10, if such transfer is
reasonably necessary to preserve the classification of the Partnership for
Federal income tax purposes, in the judgment of special tax counsel to the
Investment Limited Partners. An additional General Partner so admitted shall
automatically become the Managing General Partner and be irrevocably delegated
all of the power and authority of all of the General Partners 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 pre-existing General
Partners once again as the only General Partners, 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 the Certificate and this Agreement and to do
anything else which, in the 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 obligations hereunder, and each other General Partner shall fully
indemnify and hold harmless the additional General Partner from and against any
and all losses, judgments, liabilities, expenses and amounts paid in settlement
of any claims sustained in connection with its capacity as a General Partner.
6.3 Personal Services
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 and Article XI or as to which the prior
written 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 competing 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; Tax Matters Partner.
Subject to the provisions of this Agreement, the General Partners shall
have the exclusive right to control the business of the Partnership. The
Investment Limited Partners shall have no 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 Partners a condition for the effectiveness of
an action taken by the General Partners is intended, and no such provision
shall be construed, to give the Investment Limited Partners any participation
in the control of the Partnership business. Each of the Special Limited
Partner and the Investment Limited Partners hereby consent to the exercise by
the General Partners of the powers conferred on them by law and this Agreement,
and the General Partners agree 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 Partners or the Special Limited Partner to take any action hereunder.
All Partners hereby agree that SHLP shall serve as the "Tax Matters Partner."
In the case of litigation, the Tax Matters Partner is required to file suit in
the United States Tax Court unless the Consent of the Investment Limited
Partners is obtained to file suit in the United States Claims Court or the
United States District Court. Nothing herein shall be construed to restrict
the Partnership from engaging the Auditors to assist the Tax Matters Partner in
discharging its duties hereunder.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the Partnership to
the best of their ability, shall use their best efforts to carry out the
purpose of the Partnership, and shall devote to the Partnership such time as
may be necessary for the proper performance of their duties and the business of
the Partnership. The General Partners shall promptly take all action which may
be necessary or appropriate for the proper development, maintenance and
operation of the Apartment Complex in accordance with the provisions of this
Agreement, the Project Documents and applicable laws and regulations,
including, without limitation, funding the Service Notes pursuant to and if, as
and when required by Section 4.2(b) to the extent Cash Flow (to the extent
available for application thereto) is insufficient. The General Partners shall
be responsible for the management and operation of the Partnership, including
the oversight of the rent-up and operational stages of the Apartment Complex.
(b) The General Partners shall use their best 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 Agency and other
regulations, (ii) the Minimum Set-Aside Test and (iii) the Rent Restriction
Test, and, if necessary, the General Partners shall also use their 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, insurance policies in accordance
with the Insurance Requirements set forth on Exhibit B hereto. Throughout the
term of the Partnership, the General Partner shall provide copies of all such
policies (or binders) to the Investment Limited Partners within 30 days after
their receipt thereof. The General Partner shall cause the applicable insurer
to name the Investment Limited Partners as an "additional insured" on each
Partnership insurance policy. Each Partnership insurance policy shall include
a provision requiring the insurance company to notify the Investment Limited
Partners in writing no less than thirty (30) days prior to any cancellation,
non-renewal or material change in the terms and conditions of coverage. The
General Partner shall review regularly all of the Partnership and Apartment
Complex insurance coverage to insure that it is adequate and continuing. In
particular, the General Partner shall review at least annually the insurance
coverage required by this Section 6.5(c) to insure that it is in an amount at
least equal to the then current full replacement value of the Apartment
Complex.
Without limitation of the foregoing, the General Partner shall deliver to
the Investment Limited Partners on or before the Effective Date one or more
certificates or memoranda of insurance, in form reasonably acceptable to the
Investment Limited Partners, evidencing, (i) the existence of the insurance
policies and coverages specified on Exhibit B, (ii) that the Partnership and
its Partners (including the Investment Limited Partners) are named insured on
such policies, and (iii) that such insurance policies will not be cancelled by
the insurers except within thirty (30) days' written notice to the Investment
Limited Partners. From time to time following the Admission Date, the General
Partner shall deliver to the Investment Limited Partners such further
certificates or memoranda of insurance as the Investment Limited Partners may
reasonably require to confirm that such insurance and notice provisions with
respect to insurance under this Agreement have been complied with.
(d) 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) The General Partners shall establish and maintain reasonable
reserves to provide for working capital needs, improvements, replacements and
any other contingencies of the Partnership. At a minimum, the General Partners
shall cause the Partnership to annually deposit $13,950 from its Cash Flow into
replacement reserves; to the extent that Cash Flow (as determined before
deduction of this reserve deposit) for any year shall be insufficient to make
such deposit in full, the General Partners shall fund such shortfall from their
own funds as a Subordinated Loan.
(f) Each General Partner shall be bound by 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 the other General Partners.
(g) The General Partners shall take all actions necessary to ensure
that the Investment Limited Partners receive the full amount of the Projected
Credit, including, without limitation, the rental of apartments to Qualified
Tenants and the filing of annual certifications as may be required. In this
regard, the General Partners shall, inter alia, cause (i) the Partnership to
satisfy all requirements imposed from time to time under the Code with respect
to rental levels and occupancy only 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 of Texas Tax Credit monitoring
procedures, (iii) all Low-Income Apartment Units in the Apartment Complex to be
leased to Qualified Tenants, (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, except for garages,
carports, laundry facilities and other items designated by the General Partners
which shall not affect the availability or the amount of the Tax Credits.
(h) The General Partners shall (i) not store (except in compliance with
all laws, ordinances, and regulations pertaining thereto) or dispose of 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 Partners 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 governmental 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.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment Limited
Partners and the Special Limited Partner as follows:
(a) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State, is
duly authorized to carry on its business in the State of Texas and has
complied with all filing requirements necessary for its existence and to
preserve the limited liability of the Investment Limited Partners and the
Special Limited Partner.
(b) No event or proceeding has occurred or is pending or
threatened which would (i) materially adversely affect the Partnership or
its properties, or (ii) materially adversely affect the ability of the
General Partners or any of their 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) disputes with suppliers of labor and/or materials; and (z) acts of
any governmental authority.
(c) 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 provision of the Project
Documents, and the same are in full force and effect to the extent that
they have been executed to date.
(d) No Partner or Related Person bears the Economic Risk of Loss
with respect to the Permanent Mortgage, except as may be expressly
permitted by Article III. No General Partner has, either on its own
behalf or on behalf of the Partnership, incurred any financial
responsibility with respect to the Partnership prior to the Admission
Date, other than as disclosed in writing to the Investment Limited
Partners prior to the Admission Date.
(e) The Apartment Complex is being or has been completed in a
timely manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners 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 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 first occupancy of such unit.
(f) The Partnership owns good and marketable fee simple title to
the Apartment Complex, subject to no material liens, charges or encum-
brances other than those which (i) are both permitted by the Project
Documents and are noted or excepted in the Title Policy and (ii) do not
materially interfere with use of the Apartment Complex (or any part
thereof) for its intended purpose or have a material adverse effect on
the value of the Apartment Complex.
(g) 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 have been or will be duly
authorized by all necessary corporate or other action, 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.
(h) Any General Partner which is a corporation (a "Corporation")
has been duly organized, is validly existing and in good standing under
the laws of its state of incorporation and has all requisite corporate
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 of this Agreement nor the
performance of any of the actions of any Corporation contemplated hereby
has constituted or will constitute a violation of (i) the articles of
organization or by-laws of such Corporation, (ii) any agreement by which
such Corporation is bound or to which any of its property or assets is
subject, or (iii) any law, administrative regulation or court decree.
(i) Any General Partner which is a limited partnership has been
duly organized, is validly existing and in good standing under the laws
of its state of formation and has all requisite 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 limited partnership of this Agreement nor the performance of any
of the actions of any limited partnership contemplated hereby has
constituted or will constitute a violation of (i) the limited partnership
agreement of such limited partnership (ii) any agreement by which such
limited partnership is bound or to which any of its property or assets is
subject, or (iii) any law, administrative regulation or court decree.
(j) No Event of Bankruptcy has occurred with respect to any
General Partner.
(k) 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 required by the Lenders and/or any Agency.
(l) If the only General Partner(s) are one or more
corporation(s), limited partnership(s) or limited liability company(ies),
then the General Partner(s) have a net worth which satisfies the 89-12
Requirements.
(m) All payments and expenses required to be made or incurred in
order to complete 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 (other than
reserves described in Section 6.5(e)), and to satisfy all requirements
under the Project Documents and/or which form the basis for determining
the principal sum of the Permanent Mortgage (other than payments of the
Service Notes) have been or will be paid or provided for utilizing only
(i) the funds available from the Construction Mortgage, (ii) the Capital
Contribution of the Investment Limited Partners, (iii) the Capital
Contributions of the General Partners in the amounts set forth on
Schedule A as of the Admission Date and (iv) any funds furnished by the
General Partners pursuant to Sections 6.5(a) and 6.11.
(n) The amount of Tax Credit which is expected to be allocated by
the Partnership to the Investment Limited Partners is the Projected
Credit.
(o) The Apartment Complex is being developed in a manner which
satisfies and shall continue to satisfy all restrictions, including
tenant income and rent restrictions, applicable to projects generating
Tax Credits.
(p) The General Partners have provided to the Investment Limited
Partners a complete copy of the Environmental Reports. 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.
(q) To the best of the General Partners' knowledge, 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 or was disclosed in
the Environmental Reports for the Apartment Complex provided to the
Investment Limited Partners (and, if so disclosed, in which case has been
and will be stored, transported and disposed of in compliance with all
laws, ordinances and regulations pertaining thereto).
(r) The General Partners have fulfilled and will continue to
fulfill all of their duties and obligations under Section 6.5.
(s) The General Partners will not amend the Development Services
Agreement (1993), the Development Services Agreement (1995), Construction
Contract or the Management Services Agreement so as to affect the amount,
or the timing of payment, of any of the fees and other payments due
thereunder without the Consent of the Investment Limited Partners.
(t) The Partnership's basis in the Apartment Complex as of
December 31, 1993 was greater than 10% of the Partnership's reasonably
expected basis in the Apartment Complex as of December 31, 1995 and all
conditions set forth in Section 42 of the Code, Service notices, rulings,
regulations or releases and any other authorities to the validity of the
allocation of the Tax Credit have been or will be satisfied in a timely
manner.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at any time
after Permanent Mortgage Commencement bear the Economic Risk of Loss for the
payment of any portion of any Mortgage, and the General Partners 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 after Permanent Mortgage
Commencement, except as may be expressly permitted pursuant to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have liability
to the Partnership or to any Limited Partner for any loss suffered by the Part-
nership 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 negligence or
misconduct of such General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be indemnified by
the Partnership against losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained in connection with the Partnership,
provided that all of the following conditions are met: (i) such General Part-
ner 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 loss, judgment, liability, expense
or amount paid in settlement was not the result of negligence or 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 (including General Partner obligations to contribute
amounts equal to their Capital Account deficits on dissolution of the
Partnership) and not from the Limited Partners.
(c) Notwithstanding the above, no General Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer shall be
indemnified for any losses, liabilities or expenses arising from or out of an
alleged violation of Federal or state securities laws unless (i) there has been
a successful adjudication on the merits of each count involving securities laws
violations as to the particular indemnitee and the court approves the
indemnification of such litigation costs, (ii) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee and the court approves the indemnification of such
litigation costs or (iii) a court of competent jurisdiction approves a settle-
ment of the claims against a particular indemnitee and the court finds that
indemnification of the settlement and related costs should be made. 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, and any 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, 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 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 per cent (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, is any company for
which such General Partner acts in any such capacity.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partners will indemnify and hold the Partnership and
the Limited Partners harmless from and against (a) any and all losses, damages
and liabilities which the Partnership or any Limited Partner may incur by
reason of the past, present or future actions or omissions of the General
Partners or any of their Affiliates unless a General Partner or Affiliate in
good faith determines that such course of action was in the best interest of
the Partnership and such conduct did not constitute negligence or misconduct of
such General Partner or Affiliate thereof, or (b) any liabilities to which
either the Partnership or the Apartment Complex is subject; provided, however,
that the foregoing indemnification shall not apply to (i) any Mortgage or
(ii) necessary contractual obligations incurred pursuant to Agency or Lender
requirements or 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 may indemnify such General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold the Limited
Partners harmless from and against (i) any claim brought or threatened against
any Limited Partner or loss (as well as from any and all attorneys' fees and
expenses incurred in connection with any such claim or loss) on account of the
presence of any Hazardous Material at the Apartment Complex, and (ii) any loss
or damage incurred as a result of a title defect which is not covered by the
owner's title policy in effect as of the date of this Agreement or by the Title
Policy in effect as of the date of Permanent Mortgage Commencement. 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 Partners.
Notwithstanding anything else set forth herein, this indemnification shall
survive the withdrawal of any General Partner and/or the termination of this
Agreement.
6.10 Operating Deficits
Subject to the prior written consent of any Agency (if such consent shall
be required under applicable Agency regulations), the General Partners shall be
obligated for the period commencing on the occurrence of Rental Achievement and
continuing until the fifth (5th) anniversary of Rental Achievement to promptly
advance funds to meet operating expenses (including, without limitation, the
Asset Management Fee up to $12,500 per annum), reserves and debt service of the
Partnership which exceed operating income available for the payment thereof.
In addition, until Rental Achievement, the General Partners shall be obligated
to advance funds promptly to meet any negative amount of Cash Flow (including
the funding of any reserves required hereunder or under any Project Documents)
and to discharge all Partnership liabilities and obligations arising out of any
casualty giving rise to insurance proceeds. In the event that the General
Partners shall fail to make any such advance as aforesaid, (a) the Partnership
shall utilize amounts (the "Applied Amounts") otherwise payable to the General
Partners or Affiliates thereof under Section 6.12 and/or Article X to meet the
obligations of the General Partners pursuant to this Section 6.10, with such
utilization of Applied Amounts constituting payment and satisfaction of the
corresponding amounts payable to the General Partners or Affiliates thereof
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 Partners or Affiliates thereof pursuant to Section 6.12
and/or Article X being deemed satisfied to the extent thereof and (b) if the
obligations of the General Partners pursuant to this Section 6.10 remain
unfulfilled after the application of clause (a) of this sentence, the Special
Limited Partner shall have the option, exercisable in its sole discretion, to
cause itself or its designee to be admitted to the Partnership as additional
General Partner. An additional General Partner so admitted shall
automatically, without the need for any further action by any Partner, become
the Managing General Partner and be delegated all of the power 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 sentence 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 obligations
hereunder, and each other General Partner shall fully indemnify and hold
harmless each additional General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in settlement of any claims
sustained in connection with its capacity as a 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 Partners may in their 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 (except to the extent payable from Cash Flow).
All advances pursuant to this Section 6.10 (including any Applied Amounts)
shall be Subordinated Loans repayable without interest in accordance with the
provisions of Article X. The form and provisions of all Subordinated Loans
shall conform to any applicable rules and regulations.
6.11 Obligation to Complete the Construction of the Apartment Complex
The General Partners shall complete the construction of the Apartment
Complex substantially in accordance with the plans and specifications approved
by the Lenders and/or any Agency and all requirements necessary to obtain the
required certificates of occupancy for dwelling units, or cause the same to be
completed, in a good and workmanlike manner, free and clear of all mechanics',
materialmen's or similar liens, and shall equip the Apartment Complex or cause
the same to be equipped with all necessary and appropriate fixtures, equipment
and articles of personal property, including refrigerators and ranges, and
shall cause all necessary certificates of occupancy for all apartment units in
the Apartment Complex to be obtained, all in accordance with the Project
Documents. If the proceeds of the Construction Mortgage and the Permanent
Mortgage, the Capital Contribution of the Investment Limited Partners, and the
Capital Contributions of the General Partners in the amounts set forth on
Schedule A as of the Effective Date, as available from time to time are
insufficient to (i) acquire and complete the construction of the Apartment
Complex and satisfy all other obligations, all as provided in the first
sentence of this Section 6.11, (ii) arrive at Permanent Mortgage Commencement
in conformity with the Project Documents, (iii) discharge all Partnership
liabilities and obligations arising out of any casualty giving rise to any such
insurance proceeds, (iv) arrive at Rental Achievement, and (v) provide for all
other payments and expenses required to be made or incurred through Rental
Achievement, including the repayment in full of all obligations under the
Construction Mortgage, but excluding from items (i) through (v) all amounts
required to be funded by the General Partners under the second sentence of
Section 6.10, the General Partners shall be responsible for and obligated to
pay such deficiencies and shall, to the extent permitted under the Project
Documents and any applicable regulations or requirements of the Lenders and/or
any Agency, be reimbursed at or prior to Rental Achievement only out of the
proceeds designated in this sentence available from time to time after payment
of all costs described in this sentence. Any amounts not reimbursed through
Rental Achievement or from the proceeds of the Capital Contribution of the
Investment Limited Partners as provided in Section 5.1 shall not be
reimbursable or otherwise change the Interest of any Person in the Partnership
but shall be borne by the General Partners; provided, however, that,
notwithstanding the foregoing, to the extent any such amounts represent items
which are properly included in the Partnership's Qualified Basis and result in
an increase in the amount of Tax Credit allocated and available to the
Partnership over and above the amount of Credit required in order to achieve
State Designation ("Includable Items"), the General Partners shall make an
additional Capital Contribution in the amount of the Includable Items and the
Partnership shall utilize the proceeds of such additional Capital Contribution
to pay the Includable Items. In the event that the General Partners shall fail
to fund any such deficiency as required by this Section 6.11, an amount not in
excess of the next payment which would otherwise be made under the Service
Notes to the General Partners or any of their Affiliates under Section 6.12 or
any other provision hereof shall be applied by the Partnership to meet such
obligation of the General Partners, and, to the extent there may still be a
deficiency, any amounts otherwise payable as the Partnership Management Fee or
distributable to the General Partners pursuant to Article X shall also be so
applied. Any such application of funds as described in the immediately
preceding sentence shall constitute a payment of the amount under the Service
Notes or such other item which such funds had been earmarked to pay, and the
obligation of the General Partners to advance such amount under this
Section 6.11 shall be satisfied to the extent of such application.
6.12 Certain Payments to the General Partners and Others
(a) In consideration of the services which have been rendered under the
Development Services Agreement (1993), the Partnership has issued the
Development Services Agreement (1993) Note to SHLP. The amount of such Note
shall be paid by the Partnership from Cash Flow or otherwise in the manner and
priority provided in Sections 10.2 and 10.3 or from Capital Contributions by
the General Partners pursuant to Section 4.2(b), but prior to any payments
under any of the other Service Notes.
(b) In consideration of the consultation, advice and other services,
guarantees and personal liabilities in connection with the construction and
development of the Apartment Complex as provided in the Development Services
Agreement (1995), the Partnership has issued the Development Services Agreement
(1995) Note to SHLP. The amount of such Note shall be paid from Cash Flow or
otherwise in the manner and priority provided in Sections 10.2 and 10.3 or from
Capital Contributions by the General Partners pursuant to Section 4.2(b), after
the Development Services Agreement (1993) Note and the Construction Contract
Note (if issued) have been paid in full, but prior to any payments under the
Management Services Agreement Notes.
(c) The Partnership shall pay to BCCLP or an Affiliate thereof a fee
(the "Asset Management Fee") commencing in 1996 for its services in connection
with the Partnership's accounting matters relating to the Investment Limited
Partners and assisting with the preparation of tax returns and the reports
required by Section 12.7 in the amount of $12,500 per calendar year. 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 calendar year
commencing with 1996, Cash Flow is insufficient to pay the full amount of the
Asset Management Fee and the General Partners either have not provided or are
not obligated to provide, funds under Section 6.10 for the payment of such Fee,
the unpaid portion thereof shall accrue and be payable on a cumulative basis in
the first year in which there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X. Notwithstanding the foregoing,
the Asset Management Fee for 1996 shall be in an amount equal to $12,500
multiplied by a fraction, the numerator of which is the number of days in 1996
after the date of signing of this Agreement by the Investment Limited Partners
and the denominator of which is 366.
(d) In consideration for the services of constructing and equipping the
buildings and other improvements comprising the Apartment Complex, the
Partnership shall pay to SHLP a total fixed price equal to (a) $6,757,536,
minus (b) all costs incurred by the Partnership prior to January 1, 1996, in
obtaining the Permanent Mortgage, any limited partner's capital contribution,
Cost Certification and the reservation and allocation of a housing credit
dollar amount for the Apartment Complex from the Authority or in obtaining
start-up legal or accounting services the costs of which are amortizable under
Code Section 195, or in acquiring, constructing and developing the Apartment
Complex (including, but not limited to, the costs of acquiring the land
included in the Apartment Complex, and all Construction Mortgage costs and
interest and all real property taxes attributable to the construction period of
any building in the Apartment Complex), but not including any fees payable
under the Development Services Agreement (1993), the Development Services
Agreement (1995), or the Management Services Agreement. SHLP shall be required
to pay all costs of constructing the Apartment Complex (other than costs
incurred by the Partnership which offset the price payable to SHLP under the
Construction Contract). Under the circumstances set forth in the Construction
Contract, a portion of the price under such contract shall be paid by the
issuance of the Construction Contract Note from the Partnership to SHLP. The
amount of such Note shall be paid by the Partnership from Cash Flow or
otherwise in the manner and priority provided in Sections 10.2 and 10.3 or from
capital contributions by the General Partners pursuant to Section 4.2(b), after
the Development Services Agreement (1993) Note has been paid in full, but prior
to any payments under the Development Services Agreement (1995) Note or the
Management Services Agreement Notes. The balance of the price under the
Construction Contract (meaning the portion not paid by issuance of the
Construction Contract Note) shall be paid by the Partnership from the proceeds
of the Construction or Permanent Mortgage or the Capital Contributions of the
Investment Limited Partners.
(e) In consideration for the services described in the Management
Services Agreement, the Partnership has issued certain of the Management
Services Agreement Notes to SHLP and shall issue the remainder of such Notes to
SHLP as and when provided for under such Agreement. The amount of such Notes
shall be paid by the Partnership from Cash Flow or otherwise in the manner and
priority provided in Sections 10.2 and 10.3 or from Capital Contributions by
the General Partners pursuant to Section 4.2(b), after all the other Service
Notes have been paid in full.
(f) In consideration of the services of the General Partner in managing
the day-to-day business and affairs of the Partnership after the completion of
construction of the Apartment Complex, the Partnership shall pay to the General
Partner an annual fee (the "Partnership Management Fee") commencing in 1996 in
the amount of up to $12,500, payable from Cash Flow in the manner and priority
set forth in Section 10.2(a). The Partnership Management Fee shall be
cumulative so that if there is not sufficient Cash Flow in any year to pay the
amount of the Partnership Management Fee specified in Section 10.2(a), clause
Seventh, the unpaid portion thereof shall accrue and be payable on a cumulative
basis in the first year or years in which there is sufficient Cash Flow or from
the proceeds of a Capital Transaction as provided in Article X.
Notwithstanding the foregoing, the partnership Management Fee for 1996 shall be
in an amount equal to $12,500 multiplied by a fraction, the numerator of which
is the number of days in 1996 after the date of signing of this Agreement by
the Investment Limited Partners and the denominator of which is 366.
6.13 Delegation of General Partner Authority
Every contract, deed, mortgage, lease and other instrument executed by
the General Partner shall be conclusive evidence in favor of every Person
relying thereon or claiming thereunder that at the time of the delivery thereof
(a) the Partnership was in existence and (b) the execution and delivery of such
instrument was duly authorized by this Agreement. Any Person may always rely
on a certificate addressed to him and signed by the General Partner hereunder:
(1) As to who are the General Partners or Limited Partners here-
under;
(2) As to the existence or nonexistence of any fact which consti-
tutes 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, the
Certificate 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 General Partners 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 therefor, including, but not limited to,
those relating to planning, zoning, building permits and Tax Credit; (iv) any
and all commitments with respect to any Mortgage(s); (v) any and all contracts
or rights with respect to any agreements with the Lenders and any Agency; and
(vi) any other work product related to the Apartment Complex and/or the
Partnership; provided, however, that the right, title and interest so assigned
and transferred shall be subject to any lien or security interest which may be
required by the Construction Lender; and provided, further, that this Section
6.14 shall not apply to SHLP's (as distinguished from the Partnership's) right,
title and interest in and to the Construction Contract, the Development
Services Agreement (1993), the Development Services Agreement (1995), the
Management Services Agreement or any of the Service Notes.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
No General Partner shall Withdraw from the Partnership (other than by
reason of death or adjudication of incompetence or insanity) or sell, assign or
encumber its Interest without the Consent of the Investment Limited Partners
and all the other General Partners, except that if the Special Limited Partner
or a designee thereof becomes a General Partner pursuant to 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 of its interest as a
General Partner to a single new General Partner (which shall be either the
Special Limited Partner or a designee thereof), other than as may be required
under the Uniform Act. In the event of any Withdrawal by a General Partner in
violation of this Section 7.1, including but not limited to any removal of any
General Partner under Section 4.5(a)(iii), such General Partner, in addition to
being subject to the second sentence of Section 4.5(b) shall be subject to any
and all other legal remedies which may be pursued by the Partners.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining General Partners
shall have the right and obligation to continue the business of the Partnership
employing its assets and name, all as contemplated by the Uniform Act. Within
thirty (30) days after they obtain knowledge of the Withdrawal of a General
Partner, the remaining General Partners shall notify the Investment Limited
Partners or its designee of such Withdrawal.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and dis-
tribution) or Section 8.1(b), no Limited Partner may assign all or any part of
its Interest without the written consent of the General Partners, the giving or
withholding of which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the General Partners, 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, and shall only have, the right to receive the share
of allocations and 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 entire Interest is
validly assigned and 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) Every 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
No Limited Partner shall have the right to substitute an assignee as
Limited Partner in its place. Subject to Section 8.3, the General Partners
may, however, in their sole discretion, permit an assignee to become a Sub-
stituted Limited Partner. The consent of the General Partners to an assignment
of a Limited Partner Interest under Section 8.1 shall not, in and of itself,
constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such instrument or instru-
ments as shall be required by the General Partners 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 may be made if such Disposition would violate Sec-
tion 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 Partners may, in addition to any other requirement they
may impose, require as a condition of any Disposition 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 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,
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 Agree-
ment, including, but not limited to, the restrictions of Section 6.2, and may
be made from any source, including Partners and their Affiliates. Any Part-
nership borrowings from any Partner shall be subject to any prior written con-
sent required by any Agency. If any Partner shall lend any monies to the
Partnership, the amount of any such loan shall not be an increase of such
Partner's Capital Contribution. If any Partner shall so lend monies, each such
loan shall be an obligation of the Partnership and (except for advances
required by Section 6.11 and 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
provided by the General Partners to the Partnership pursuant to 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) Except as otherwise specifically provided in this Article, for each
calendar year or portion thereof occurring on or after the Effective Date, all
profits, gains, tax-exempt income, losses, deductions, non-deductible
non-capitalizable expenditures (including but not limited to
Section 705(a)(2)(B) expenditures as determined under Treasury Regulation
ss 1.704-1(b)(2)(iv)(i) or any amendment or successor to such Regulation), and
tax credits, other than those arising from a Capital Transaction, shall be
allocated 99% to the Investment Limited Partners (in accordance with their
Percentage Interests) and 1% to the General Partners.
(b) Except as otherwise specifically provided in this Article (not
including Section 10.1(a)), for each calendar year or portion thereof, gross
rental income equal to any distributions to the General Partners under Clauses
Fourth and Seventh of Section 10.2(a) for such year or portion shall be
allocated to the General Partners.
(c) Except as otherwise specifically provided in this Article (not
including Section 10.1(a) or (b)), all profits and losses arising from a
Capital Transaction shall be allocated to the Partners as follows:
As to profits:
First, an amount of profit equal to the aggregate negative balances
(if any) in the Capital Accounts of all Partners having negative balance
Capital Accounts shall be allocated to such Partners in proportion to
their negative Capital Account balances until all such Capital Accounts
shall have zero balances; and
Second, an amount of profits shall be allocated to each of the
Partners until the positive balance in the Capital Account of each
Partner equals, as nearly as possible, the amount of cash which would be
distributed to such Partner if the aggregate amount in the Capital
Accounts of all Partners were cash available to be distributed in
accordance with the provisions of Clauses Sixth through Tenth of
Section 10.2(b).
As to losses:
First, an amount of losses equal to the aggregate positive balances
(if any) in the Capital Accounts of all Partners having positive balance
Capital Accounts shall be allocated to such Partners in proportion to
their positive Capital Account balances until all such Capital Accounts
shall have zero balances; provided, however, that if the amount of losses
so to be allocated is less than the sum of the positive balances in the
Capital Accounts of those Partners having positive balances in their
Capital Accounts, then such losses shall be allocated to the Partners in
such proportions and in such amounts so that the Capital Account balances
of each Partner shall equal, as nearly as possible, the amount such
Partner would receive if an amount equal to the excess of (a) the sum of
all Partners' balances in their Capital Accounts computed prior to the
allocation of losses under this clause First over (b) the aggregate
amount of losses to be allocated to the Partners pursuant to this Clause
First were distributed to the Partners in accordance with the provisions
of Clauses Sixth through Tenth of Section 10.2(b); and
Second, the balance, if any, of such losses shall be allocated 1%
to the General Partners and 99% to the Investment Limited Partners (in
accordance with their Percentage Interests).
(d) Notwithstanding the foregoing provisions of Sections 10.1(a),
10.1(b) and 10.1(c), in no event shall any losses be allocated to the
Investment Limited Partners, the Special Limited Partner or any additional
General Partner admitted pursuant to any of Section 4.5(b), Section 5.2(e),
Section 6.2(b) or Section 6.10, if and to the extent that such allocation would
cause, as of the end of the Partnership taxable year, the negative balance in
such Partner's Capital Account to exceed such Partner's share, if any, of
Partnership Minimum Gain plus such Partner's share, if any, of Partner
Non-Recourse Debt Minimum Gain (such shares, if any, to be determined under
Code Section 704(b)). Any losses which are not allocated to a Partner by
virtue of the application of this Section 10.1(d) shall be allocated to the
General Partners, excluding any additional General Partner which shall have
been admitted pursuant to any of Section 4.5(b), Section 5.2(e), Section 6.2(b)
or Section 6.10. For the purposes of this Section 10.1(d), a Partner's Capital
Account shall be treated as reduced by adjustments, allocations and
distributions described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) or any amendment or successor to
any such Regulation.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required), Cash Flow for each
calendar year or portion thereof shall be applied as follows:
First, to the payment of the Asset Management Fee for such year and
for any previous year(s) as to which the Asset Management Fee shall not
yet have been paid in full;
Second, with respect to any year in which the Investment Limited
Partners have been allocated taxable profits pursuant to Section 10.1(a)
in an amount which, when added to all taxable profits allocated to the
Investment Limited Partners under Section 10.1(a) with respect to all
prior years, exceeds all losses allocated to the Investment Limited
Partners with respect to all prior years, a distribution shall be made to
the Investment Limited Partners in an amount equal to 39.6% of the lower
of (a) such excess, or (b) the amount of Cash Flow for the year in
question which would be applied to make payments under Clauses Third and
Fifth, below, if this Clause Second were not included in this Agreement;
Third, to the payment of the outstanding amount remaining to be
paid under the Development Services Agreement (1993) Note, the
Construction Contract Note (if issued), the Development Services
Agreement (1995) Note and the Management Services Agreement Notes, in
that order;
Fourth, to the General Partner in an amount equal to all amounts
which have been distributed to the Investment Limited Partners under
Clause Second above, minus all prior distributions to the General Partner
under this Clause Fourth or under Clause Sixth of Section 10.2(b); and
Fifth, to the payment of any Subordinated Loans;
Sixth, to the payment of the Partnership Management Fee for such
year and any previous year(s) as to which the Partnership Management Fee
shall not yet have been paid in full;
Seventh, the balance thereof, if any, shall be distributed
annually, within seventy-five (75) days after the end of the year, 10% to
the Investment Limited Partners and 90% to the General Partners;
provided, however, that during such time as Agency regulations are
applicable to the Apartment Complex, the total amount of Cash Flow which
may be so distributed to the Partners in respect to any year shall not
exceed such amounts as Agency regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine from time
to time that cash is available for distribution from a Capital Transaction,
such cash shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the
Partnership incident to the Capital Transaction), excluding (i) the
Service Notes and (ii) all unpaid fees owing to the General Partners or
their Affiliates; and to the establishment of any reserves which the
General Partners and the Auditors shall deem reasonably necessary for
contingent, unmatured or unforeseen liabilities or obligations of the
Partnership;
Second, to the payment of any accrued and unpaid Asset Management
Fees;
Third, to the payment of any accrued and unpaid Partnership
Management Fees;
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the repayment of any then-unpaid debts and liabilities
owed to Partners or Affiliates thereof by the Partnership (exclusive of
any Asset Management Fee, Partnership Management Fee and Subordinated
Loans), including, but not limited to, any outstanding amounts remaining
to be paid under the Development Services Agreement (1993) Note, the
Construction Contract Note (if issued), the Development Services
Agreement (1995) Note, and the Management Services Agreement Notes in
that order; provided, however, that any debts or obligations to be repaid
to any Limited Partner or Affiliate thereof pursuant to this Clause Fifth
shall be repaid prior to the repayment of any such debts or obligations
to any General Partner or Affiliate thereof;
Sixth, to the distribution to the General Partner of an amount
equal to all cumulative amounts distributed to the Investment Limited
Partners under Clause Second of Section 10.2(a), minus all prior
distributions to the General Partners under Clause Fourth of
Section 10.2(a) or under this Clause Sixth;
Seventh, to the payment to each Limited Partner of an amount equal
to its Invested Amount, 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 repayment to the General Partners of their paid-in
Capital Contributions minus any prior distributions made to them under
this Clause Eighth, but never an amount less than zero;
Ninth, to the distribution to the Investment Limited Partners (in
accordance with their Percentage Interests) of an amount equal to the sum
of all additional Capital Contributions of the General Partners made
pursuant to Sections 5.1(e), (f) and (g) (last sentence), minus any prior
distributions made to the Investment Limited Partners under this ▇▇▇▇▇▇
▇▇▇▇▇, but never an amount less than zero; and
Tenth, any balance 9.999% to the Investment Limited Partners (in
accordance with their Percentage Interests), .001% to the Special Limited
Partners and 90% to the General Partners.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership (including, but not
limited to, the unpaid balances payable under the Service Notes and all
Subordinated Loans, any accrued and unpaid Asset Management Fees and
Partnership Management Fees), 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 taxable year, including adjustments to Capital Accounts
pursuant to Sections 10.1(c) 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 taxable
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 taxable 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. For purposes of this
Section 10.3(a), the term "liquidation" shall have the meaning given to it in
Treasury Regulation ss 1.704-1(b)(2)(ii)(g) or any amendment or successor to
such Regulation.
(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 Section 10.1(c), 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), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market value of such
assets, taking into account the fair market value of the associated financing
(but subject to Section 7701(g) of the Code), and the Partnership's adjusted
basis for such assets as determined under Regulation Section 1.704-1(b). 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 Partners with the Consent of the Investment Limited Partners.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all profits, gains,
tax-exempt income, losses, deductions, non-deductible non-capitalizable
expenditures (including, but not limited to, Section 705(a)(2)(B) expenditures
as determined under Treasury Regulation ss 1.704-1(b)(2)(iv)(i) or any amendment
or successor to such Regulation) 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 (other
than a Mortgage or trade account payable incurred in the ordinary course
of business) or Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or expenses funded by additional Capital
Contributions of the General Partners under Section 6.10 (second and
next-to-last sentence) 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
taxable year, then the calculation and allocation of profits and losses
and shall be adjusted as follows: first, an amount of deductions
(consisting of deductions other than cost recovery deductions)
attributable to the Recourse Obligations shall be allocated to the
General Partners; second, the balance of deductions otherwise allocable
under Section 10.1(a) shall be allocated as provided in Section 10.1(a);
third, any gross income or gain later used to repay any Recourse
Obligations or constituting a recovery thereof shall be allocated to the
General Partners; and fourth, the balance of any gross income or gain
shall be allocated as otherwise provided in this Agreement.
(ii) If any profit arises 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. The foregoing provisions of this
Section 10.4(b)(ii) shall be carried out only to the extent possible
within the overall allocations of profits, gains and other items provided
for in this Agreement (meaning, without altering the overall effects on
Capital Accounts). To this end, corresponding adjustments shall be made
in allocations of those portions of profits or gains not constituting
recapture income but arising from asset dispositions giving rise to
recapture income.
(iii) If the Partnership shall receive any purchase money indebted-
ness 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 Part-
ners 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
Treasury Regulation Section 1.704-1(b) 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 Treasury Regulation Section 1.704-
1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement shall
mean net 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) If there is a net decrease in Partnership Minimum Gain during
a Partnership taxable year, each Partner will be allocated items of
income and gain for such year (and, if necessary, subsequent years) equal
to such Partner's share of the net decrease in Partnership Minimum Gain
during the year, before any other allocation of Partnership items for
such taxable year. A Partner shall not be subject to this mandatory
allocation of income or gain to the extent that any of the exceptions
provided in Treasury Regulation Section 1.704-2(f)(2)-(5) applies. All
allocations pursuant to this Section 10.4(b)(vi) shall be in accordance
with Treasury Regulation Section 1.704-2(f). This provision is a
"minimum gain chargeback" within the meaning of Treasury Regulation
Section 1.704-2(f) and shall be construed as such.
(vii) If there is a net decrease in Partner Non-Recourse Debt
Minimum Gain during a Partnership taxable year, then each Partner with a
share of that gain at the beginning of such year will be allocated items
of income and gain for such year (and, if necessary, subsequent years) in
an amount equal to such Partner's share of the net decrease in Partner
Non-Recourse Debt Minimum Gain during the year. A Partner is not subject
to this Partner Non-Recourse Debt Minimum Gain chargeback to the extent
that any of the exceptions provided in Treasury Regulation Section 1.704-
2(i)(4) applied consistently with Treasury Regulation Section 1.704-
2(f)(2)-(5) applies. Such allocations shall be made in a manner
consistent with the requirements of Treasury Regulation
Section 1.704-2(i)(4) under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives an adjustment,
allocation, or distribution described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) or any amendment or successor
to any such Regulations and such adjustment, allocation and/or
distribution would cause the negative balance in such Partner's Capital
Account to exceed (i) such Partner's share of Partnership Minimum Gain
plus (ii) the amount of such Partner's obligation, if any, to restore a
negative balance in such Partner's Capital Account pursuant to
Section 10.3(a), plus (iii) such Partner's share of Partner Non-Recourse
Debt Minimum Gain, then such Partner shall be allocated items of income
and gain in an amount and manner sufficient to eliminate such negative
balance as quickly as possible. For purposes of this
Section 10.4(b)(viii), a Partner's Capital Account shall be treated as
reduced by adjustments, allocations and distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) or any
amendments or successors to such Regulations. This Section 10.4(b)(viii)
is intended to constitute a "qualified income offset" within the meaning
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) or any amendment or
successor to such Regulation, and shall be construed in accordance with
such intention.
(ix) In the event that any fee payable to any General Partner or
any Affiliate thereof, or any payment under any Service Note, 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.
(x) 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
adjustments, allocations and distributions described in Treasury
Regulation Sections 1.704(b)(ii)(d)(4), (5) and (6).
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions from
Capital Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4(b)(vi) or Section 10.4(b)(vii).
(5) Capital Accounts shall be increased by any qualified
income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by allocations of
profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(a).
(8) Capital Accounts shall be increased by allocations of
gross income under Section 10.1(b).
(9) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(c).
(10) Capital Accounts shall be increased by allocations of
profits under Section 10.1(c).
(xi) To the maximum extent permitted under the Code, allocations
of profits, losses and other items shall be modified so that the
Partners' Capital Accounts reflect the amounts they would have reflected,
and all Partners will receive allocations of the same amounts and tax
character they would have received, if adjustments required by
Sections 10.4(b)(vi), 10.4(b)(vii) and 10.4(b)(viii) had not occurred.
10.5 Authority of the General Partners 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, gains, tax-exempt income, losses, deductions, non-deductible
non-capitalizable expenditures and 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. In order to preserve and
protect the determinations and allocations provided for in this Agreement, the
General Partners are hereby authorized and directed to allocate profits, gains,
tax-exempt income, losses, deductions, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any year differently
than otherwise provided for in this Agreement to the extent that allocating
profits, gains, tax-exempt income, losses, deductions, 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, gains, tax-exempt income, losses,
deductions, 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 Sec-
tion 10.5(a), the General Partners are authorized to act only after having been
advised in writing by the Tax Accountants that, under Section 704(b) of the
Code, (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 year or
in any preceding year, each Partner's distributive share of profits, gains,
tax-exempt income, losses, deductions, non-deductible non-capitalizable
expenditures and 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.
(c) If the General Partners are required by Section 10.5(a) to make any
New Allocation in a manner less favorable to any Partner than is otherwise
provided for herein, or if the General Partners are required by Section 10.1(d)
or Section 10.4(b) to make any allocation in a manner different from that
otherwise provided by Section 10.1(a), (b) or (c), then the General Partners
are 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, to allocate profits, gains, tax-exempt income, losses, deductions, 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, gains, tax-exempt income, losses, deductions, non-deductible non-
capitalizable expenditures and credits (and each item thereof) to the Partners
as nearly as possible to the allocations thereof otherwise contemplated by this
Agreement or by Section 10.1(a), (b) or (c) as the case may be.
(d) New Allocations or other allocations made by the General Partners
under Section 10.5(a) or 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 Partners to the Partnership and the Partners, and no such
allocation shall give rise to any claim or cause of action by any Partner. As
used in this Section 10.5, the term "non-deductible non-capitalizable
expenditures" shall include (without limitation) Section 7.05(a)(2)(B)
expenditures as determined under Treasury Regulation Section 1.704-
(1)(b)(2)(iv)(i)).
ARTICLE XI
Management Agent
A. The General Partners 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 the agency (if such approval
is required) or, when the Apartment Complex is not subject to agency
regulation, in accordance with a reasonable and competitive fee arrangement.
The Partnership shall not enter into any Management Agreement or modify or
extend any Management Agreement unless (i) the General Partners shall have
obtained the prior written consent of the Special Limited Partner 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 Partners.
B. No duplicate property management fees shall be paid to any Person.
C. If (i) the Management Agent is a General Partner or an Affiliate of
a General Partner, and (a) the Apartment Complex shall be subject to a
substantial building code violation which shall not have been cured within six
months after notice from the applicable governmental agency or department or
(b) the Management Agent shall not be managing the Apartment Complex in a
commercially reasonable manner and fails to correct this after receiving
written notice from the Special Limited Partner specifying the defect, or
(ii) an Event of Bankruptcy shall occur with respect to the Management Agent,
or (iii) the Management Agent shall commit willful misconduct or gross
negligence in its conduct of its duties and obligations under the Management
Agreement or (iv) SHLP ceases to be a General Partner, or (v) the Management
Agent is cited by any Agency, including any Tax Credit monitoring or compliance
agency of the State of Texas or any other governmental agency for a material
violation or alleged violation of any applicable rules, regulations or
requirements, including, but not limited to, non-compliance with the Minimum
Set-Aside Test, the Rent Restriction Test or any other Tax Credit-related
provision and the Management Agent fails to establish through administrative or
judicial proceedings that such violation did not occur, then, upon request by
the Special Limited Partner and subject to Agency approval, if required, the
General Partners must 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.C. Subject to Agency approval, if required, 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.
D. The General Partners 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 Uniform Act or by any governmental agency having jurisdiction and may
maintain such other books and records as the General Partners in their
discretion deem advisable. Every Limited Partner, or its duly authorized
representatives, shall at all times have access to the records of the Partner-
ship 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 names 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. A reasonable charge for copy work may be charged by the
Partnership.
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 Partners
shall determine. Withdrawals shall be made only in the regular course of
Partnership business on such signature or signatures as the General Partners
may determine. All deposits 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 Mortgage 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 Partners,
all tax returns of the Partnership. Prior to the filing of the Partnership tax
returns, and in no event later than February 15 of each year, the Auditors
shall deliver the tax returns for such year to the Tax Accountants for their
review and comment within ten (10) business days after delivery to them. 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 year, then the Tax
Accountants shall make the final decision on whether any changes are necessary.
The Partnership shall reimburse BCCLP for all costs and expenses paid to the
Tax Accountants for the aforementioned services.
(b) The Auditors shall audit and 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 and fails to cure any such failure within ten days after being notified
in writing by the Special Limited Partner to do so, at any time thereafter upon
notice from the Special Limited Partner that a change in the identity of the
Auditors is desired, the General Partners, on behalf of the Partnership, shall
promptly terminate the Partnership's engagement of the Auditors, and the prior
written consent of the Special Limited Partner must be received to the
appointment of replacement Auditors. If no such consent is received to the
appointment of 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 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 view of the
Special Limited Partner may be necessary or appropriate to accomplish the
purposes of this Section 12.3(c).
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 Partners and the limited partners 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 Partners in such manner as will, in the opinion of the
Auditors, be most advantageous to the Investment Limited Partners and the
limited partners thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of the
Investment Limited Partners or a transfer of all or any part of an interest of
a partner of the Investment Limited Partners, the Partnership shall elect, upon
the request of the Investment Limited Partners, 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 thereof. Each Partner will furnish the
Partnership all information necessary to give effect to such election. The
General Partners, in their discretion, may cause the Partnership to make the
Section 754 election even when the Partnership is not required to make it under
this Section 12.5.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the calendar year.
The books of the Partnership shall be kept on an accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and distributed to
all Persons who were Partners at any time during a fiscal year of the
Partnership:
(i) Within forty-five (45) days after the end of each calendar
year (or such other period as is necessary for compliance with Section
12.3(a)), (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 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 Partners, 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 Contribution of the Investment Limited Partners, (6) borrowed
monies, and (7) transactions outside of the ordinary course of business
with a description thereof.
(ii) Within forty-five (45) days after the end of each calendar
year (or such other period as is necessary for compliance with Section
12.3(a)), 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
together with a draft of the Partnership's Federal income tax return and,
promptly following the filing thereof with the Service, a final copy of
such return as filed.
(iii) Within thirty (30) days after the end of each quarter of a
calendar year, 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 certification of the General Partners that the
Apartment Complex and its tenants are in compliance with all
applicable federal, state and local requirements and regulations;
(E) a low-income housing tax credit monitoring form, a copy
of the rent roll for the Apartment Complex, a statement of income
and expenses, an operating statement and an Occupancy/Rental
Report, all in the form specified by BCCLP;
(F) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities
during the quarter covered by the report, as requested in writing
by notice from the Special Limited Partner to the Partnership; and
(b) Within sixty (60) days after the end of each calendar year a copy
of the annual report to be filed with the United States Department of the
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 reasonable written request of the Investment Limited
Partners for further information with respect to any matter covered in item (a)
or item (b) above, the General Partners shall furnish such information within
thirty (30) days of receipt of such request.
(d) Prior to October 15 of each year, the Partnership shall send to the
Investment Limited Partners an estimate of the Investment Limited Partners'
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 pre-
pared by the General Partners and the Auditors and shall be in the form
specified by BCCLP.
(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 Pro-
ject 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 (as
distinguished from amounts) of Cash Flow or Tax Credit allocations to any
Limited Partner, or
(iv) any Partner has pledged or collateralized its Interest in the
Partnership,
the General Partners shall send the Investment Limited Partners a detailed
report of such event.
(f) The Partnership shall send to the Investment Limited Partners, on
or before the tenth day of each month, the monthly housing credit monitoring
form, and copies of all applicable periodic reports covering the status of
project operations from the previous period, as may be required by any Agency.
(g) On or before May 1st of each year, the Partnership shall send to
the Investment Limited Partners a report on operations, in the form supplied by
BCCLP.
(h) Promptly after Permanent Mortgage Commencement, the General
Partners shall send to BCCLP a closing binder containing photocopies of the
fully-executed versions of all documents signed in connection with the
Permanent Mortgage. The General Partners hereby consent to any Agency's
providing BCCLP with copies of all material communications between any such
office and the General Partners and/or the Partnership, including, but not
limited to, any notices of default. From and after any date upon which the
General Partners receive notice from the Investment Limited Partners that the
Investment Limited Partners would like copies of the monthly rent rolls for the
Apartment Complex to be sent to BCCLP, the General Partners shall send copies
of the rent rolls to BCCLP no later than fifteen (15) days after the expiration
of each month.
(i) The General Partners shall cause to be prepared and delivered to
the Investment Limited Partner within sixty (60) days of the earliest date on
which all of the Partners have signed this Agreement an unaudited statement of
income of the Partnership for the time period of January 1, 1996 through May
31, 1996.
(j) Within thirty (30) days of the earliest date on which all of the
Partners have signed this Agreement, the General Partners 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 BCCLP.
(k) If the General Partners do 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 Partners shall pay as damages the sum of
$250 per day to the Investment Limited Partner until such obligations shall
have been fulfilled. Such damages shall be paid forthwith by the General
Partners, and failure to so pay shall constitute a material default of the
General Partners hereunder. In addition, if the General Partners shall fail so
to pay, the General Partners and their Affiliates shall forthwith cease to be
entitled to the payment of any Cash Flow or Capital Transaction proceeds to
which they may otherwise be entitled hereunder. Such payments of the
Partnership Management Fee, Cash Flow and Capital Transaction 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 payments of the Management Fee,
Cash Flow and Capital Transaction proceeds otherwise due to the General
Partners or their Affiliates.
(l) On or before each January 31, the Partnership shall send to the
Investment Limited Partner copies of the certificates, memoranda of insurance
or other evidence satisfactory to the Investment Limited Partner that insurance
policies required to be maintained on the Apartment Complex pursuant to Section
6.5(c) are in force, accompanied by a certificate of the General Partners
stating that such insurance policies satisfy the requirements of Section
6.5(c).
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.B., (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 or the Prospectus.
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 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
Investment Limited Partner, actually furnished to the Investment Limited
Partner, and provided at the lower of ten per cent (10%) of the construction
contract rate with respect to the Apartment Complex or ninety per cent (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 spent 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 or in the Prospectus.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition 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, could,
in the opinion of 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 or optional purchase or repurchase of the
Investment Limited Partner's Interest by the General Partners. 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 Certificate
Within one hundred twenty (120) days after the end of any year in which
the Investment Limited Partner shall have received any distributions under
Article X, the General Partners shall file an amendment to the Certificate
reducing by 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 as necessary to effect the substitution of substituted Limited
Partners.
Notwithstanding the foregoing provisions of this Section 13.2, no such
amendments to the Certificate need be filed by the General Partners if the
Certificate is not required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing and shall
be deemed adequately given if actually delivered or if sent by registered or
certified mail, postage prepaid, to the party for whom such notice is intended
at such party's last address of record on the Partnership books.
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 exe-
cuted shall constitute one agreement binding on all parties hereto, notwith-
standing that all the parties have not signed the original or the same
counterpart.
13.8 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 to be bound by the obligations of the Partnership (other than
requirements of any Lender), such provision or provisions shall be deemed void
and of no effect.
13.9 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.
13.10 Amendment Procedure
Notwithstanding any delegation under Section 6.13, any admission of the
Special Limited Partner or its designee as a new or additional General Partner,
or any other event, this Agreement may be amended only with (a) the prior
written consent of the General Partners (initially meaning SHLP solely) and
(b) the Consent of the Investment Limited Partners and the prior written
consent of the Special Limited Partner.
13.11 Fees of Tax Accountants
Except as otherwise expressly provided herein or as may be agreed to by
the General Partners, all fees and disbursements of the Tax Accountants shall
be paid by the Investment Limited Partner and its Affiliates and shall not
constitute a contribution of any Partner to the Partnership.
13.12 Extraordinary Limited Partner Expenses
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 Partners with respect to this Agreement, including
without limitation, reasonable attorneys' fees, shall be paid by the General
Partners 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 9%.
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 Partners
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 9%.
The provisions of this Section 13.12 shall not apply if the General
Partners contest in a judicial proceeding the existence of a breach or a
wrongdoing on their part, unless such breach or wrongdoing is established by a
court decree and time for any appeal from such decree has expired without an
appeal having been properly made. Further, in the event that the General
Partners so prevail in such proceeding, the Investment Limited Partners will
pay the legal fees and expenses of the General Partners.
13.13 Time of Admission
The Investment Limited Partners shall be deemed to have been admitted to
the Partnership as of the Commencement Date for all purposes of this
Agreement; provided, however, that if 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 Partners be deemed admitted on a date
other than as of the Commencement Date, then the General Partners shall select
a permitted admission date which is most favorable to the Investment Limited
Partners.
13.14 Superseding of Prior Agreements
This Agreement supersedes and replaces all prior agreements among the
parties concerning the subject matter hereof, including (but not limited to)
the First Partnership Agreement and the Second Partnership Agreement.
13.15 General Partner Division of Authority, Etc.
Except to the extent of any delegation pursuant to Section 6.13 or any
agreement in writing among the General Partners and any Limited Partners
succeeding to the Interests of any General Partners, all purchase rights,
funding obligations and other rights and obligations of the General Partners
and any such Limited Partners under this Agreement shall be in the ratio of
their paid-in Capital Contributions shown on Schedule A hereto.
13.16 Purchase of Investment and Special Limited Partner Interests
Upon the expiration of the Compliance Period, the General Partners shall
have the option, exercisable in their sole discretion, to acquire the Interests
of the Investment and Special Limited Partners upon payment of the greater of
(a) the then present fair market value of such Interests or (b) the tax
liability to the partners of the Investment Limited Partner as a result of such
sale (assuming that the partners are in the maximum federal income tax bracket
at the time of the sale, unless evidence is reasonably available as to all or
part of the actual tax liability, in which event such evidence shall be used in
lieu of the indicated assumption). Any dispute as to the value of the
Interests or portion thereof to be acquired pursuant to the immediately
preceding sentence shall be submitted to a committee composed of three
qualified real estate appraisers, one chosen by the General Partners, one
chosen by the Investment Limited Partners, and the third chosen by the two so
chosen. The proceedings of such committee shall conform to the rules of the
American Arbitration Association, as far as appropriate, and its decision shall
be final and binding. In the event that the first two committee members fail
to choose a third within a reasonable time, or the committee fails to determine
a value within a reasonable time, the American Arbitration Association shall
determine the value and its determination shall be final and binding. The
expense of arbitration shall be borne by the General Partners.
WITNESS the execution hereof under seal as of the 1st day of July, 1996.
GENERAL PARTNER: ▇▇▇▇▇▇▇ HOUSING LIMITED
PARTNERSHIP, a
Colorado limited partnership, by its
general partner, Paloma LLC, a Colorado
limited liability company, by its manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
manager
INVESTMENT LIMITED PARTNERS:
BOSTON CAPITAL TAX CREDIT FUND
III L.P., a
Delaware limited partnership
By: Boston Capital Associates
III L.P.,
its general partner
By: C & M Associates d/b/a Boston
Capital Associates, its
general partner
By: /s/▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇▇ ▇.
▇▇▇▇▇▇▇,
a general
partner
BOSTON CAPITAL TAX CREDIT
FUND IV
L.P., a Delaware limited partnership
By: Boston Capital
Associates IV
L.P., its general partner
By: C & M
Associates d/b/a
Boston Capital
Associates, its general
partner
By: /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇▇,
a
general partner
SPECIAL LIMITED PARTNER: BCTC 94, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Article XI of the foregoing Third Amended and
Restated Agreement of Limited Partnership notwithstanding any provision of the
Management Agreement to the contrary.
MANAGEMENT AGENT:
GREAT WEST MANAGEMENT & REALTY, LLC, a
Colorado limited liability company
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
STATE OF )
) SS.
COUNTY OF )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, known to me to be
the manager of Paloma LLC, a Colorado limited liability company, sole general
partner of ▇▇▇▇▇▇▇ Housing Limited Partnership, a Colorado limited partnership,
who being duly sworn, acknowledged that the statements therein are true and
that he did sign the same as his free act and deed and the same is the free act
and deed of Paloma LLC, sole general partner of ▇▇▇▇▇▇▇ Housing Limited
Partnership.
WITNESS my hand and official seal this ___ day of August, 1996.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:____________
My County of Residence:___________
STATE OF )
) SS.
COUNTY OF )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named ______________, known to me to be
the _________ of Great West Management & Realty, LLC, a Colorado limited
liability company, who, being duly sworn, acknowledged that the statements
therein are true and that he did sign the foregoing instrument as his free act
and deed and that the same is the duly authorized free act and deed of Great
West Management & Realty, LLC.
WITNESS my hand and official seal this ___________ day of August, 1996.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:____________
My County of Residence:___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, known to me
to be a general partner of C & M Associates d/b/a Boston Capital Associates,
which is the general partner of Boston Capital Associates III L.P., Boston
Capital Associates III L.P. being the general partner of Boston Capital Tax
Credit Fund III L.P., who, being duly sworn, acknowledged that he did sign the
foregoing instrument, that the statements therein contained are true and that
the same is the duly authorized free act and deed of Boston Capital Tax Credit
Fund III L.P.
WITNESS my hand and official seal this ________ day of August, 1996.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:____________
My County of Residence:___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, known to me
to be a general partner of C & M Associates d/b/a Boston Capital Associates,
which is the general partner of Boston Capital Associates IV L.P., Boston
Capital Associates IV L.P. being the general partner of Boston Capital Tax
Credit Fund IV L.P., who, being duly sworn, acknowledged that he did sign the
foregoing instrument, that the statements therein contained are true and that
the same is the duly authorized free act and deed of Boston Capital Tax Credit
Fund IV L.P.
WITNESS my hand and official seal this ________ day of August, 1996.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:____________
My County of Residence:___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, known to me
to be the President of BCTC 94, Inc., who, being duly sworn, acknowledged that
he did sign the foregoing instrument, that the statements therein contained are
true and that the same is the duly authorized free act and deed of BCTC 94,
Inc.
WITNESS my hand and seal this _____ day of August, 1996.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:____________
My County of Residence:________________
▇▇▇▇▇▇ ASSOCIATES LIMITED PARTNERSHIP
Schedule A
As of the Effective Date
General Partner
Capital Contributions
▇▇▇▇▇▇▇ Housing Limited Partnership
$38,743*
c/▇ ▇▇▇▇▇▇▇ Housing Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Special Limited Partner Capital
Contribution
BCTC 94, Inc.
$10
c/o Boston Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Investment Total Agreed-to
Paid-In
Limited Partner Capital Contribution Capital
Contribution**
Boston Capital Tax Credit $2,145,000
$1,71
6,000
Fund III L.P.
c/o Boston Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Boston Capital Tax Credit $848,708 $
678,966
Fund IV L.P.
c/o Boston Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________
*Subject to increase as provided in Sections 4.2(b) and 5.1(e), (f) and (g)
(last sentence).
**Paid-in Capital Contribution as of the Effective Date. 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
DUE DILIGENCE REQUIREMENTS
NONE
EXHIBIT B
INSURANCE REQUIREMENTS
The General Partners shall cause the Partnership to maintain insurance
for the term of the Partnership in accordance with the following:
I. Comprehensive Casualty.
The General Partners shall cause to be maintained comprehensive casualty
insurance including, but not limited to, fire, earthquakes and other risks
generally included under "extended coverage" policies in favor of the
Partnership in an amount not less than the replacement value of the Apartment
Complex and shall include loss of rents coverage in an amount not less than the
Apartment Complex's projected annual gross rent, an agreed amount endorsement
covering all property and rental values, and a standard building laws
endorsement which includes coverage for building ordinance compliance,
demolition and any increased cost of construction of the Apartment Complex.
II. Comprehensive General Liability.
The General Partners shall cause to be maintained commercial general
liability insurance in favor of the Partnership in an amount not less than
$1,000,000 per occurrence (combined single limit) and $2,000,000 in the
aggregate.
III. Worker's Compensation and Employer's Liability.
The General Partners shall cause to be maintained worker's compensation
and employer's liability insurance in favor of the Partnership in an amount
equal to the greater of (i) the amount required by the State's laws governing
such insurance or (ii) $1,000,000.
IV. Comprehensive Automobile.
The General Partners shall cause to be maintained comprehensive
automobile, including non-owned automobile liability, insurance in favor of the
Partnership in an amount not less than $1,000,000 (combined single limit).
V. Excess or Umbrella Liability.
The General Partners shall cause to be maintained excess or umbrella
liability insurance in favor of the Partnership in an amount not less than
$5,000,000 (combined single limit).
VI. Builder's Risk.
Through the Completion Date, or such later date as may be required by any
Agency or any Lender, the General Partners shall cause the Partnership to
maintain builder's risk insurance 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.
VII. Management Agent.
The Management Agent shall maintain for the term of the Management
Agreement liability insurance in the amount of $1,000,000 per incident and
$2,000,000 in the aggregate, worker's compensation insurance in accordance with
the State's laws governing such insurance, a fidelity bond in the amount of not
less than six (6) months of the Apartment Complex's projected gross rent, auto
liability insurance in the amount of $1,000,000 per incident and error and
omissions insurance in the amount of $1,000,000 per incident.
VIII. General Requirements.
All of the policies required above, including those to be maintained by
the Management Agent, shall be issued by insurance carriers which are
currently rated by Standard & Poors as A or better. No deductibles on such
policies shall exceed $2,500.