▇▇▇▇▇▇▇ HOUSING, L.P.
AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
Dated as of April 1, 1996
▇▇▇▇▇▇▇ HOUSING, L.P.
TABLE OF CONTENTS
Page
Preliminary Statement ................................... 1
ARTICLE I Defined Terms ............................ 1
ARTICLE II Name and Business ........................ 14
2.1 Name; Continuation ....................... 14
2.2 Office and Resident Agent ................ 14
2.3 Purpose .................................. 14
2.4 Term and Dissolution ..................... 14
ARTICLE III Mortgage, Refinancing and Disposition
of Property ............................ 15
ARTICLE IV Partners; Capital ........................ 16
4.1 Capital and Capital Accounts ............. 16
4.2 General Partner .......................... 17
4.3 Investment Limited Partner, Special
Limited Partner, and Original Limited
Partner ................................ 17
4.4 Liability of the Limited Partners......... 18
4.5 Special Rights of the Investment
Limited Partner ........................ 18
4.6 Meetings ................................. 20
ARTICLE V Capital Contributions of the Investment
Limited Partner and the Special Limited
Partner ................................ 21
5.1 Payments ................................. 21
5.2 Return of Capital Contributions .......... 25
ARTICLE VI Rights, Powers and Duties of General
Partners ............................... 28
6.1 Authorized Acts .......................... 28
6.2 Restrictions on Authority ................ 29
6.3 Personal Services ........................ 31
6.4 Business Management and Control; Tax
Matters Partner ........................ 31
6.5 Duties and Obligations ................... 32
6.6 Representations and Warranties ........... 35
6.7 Liability on the Permanent Mortgage ...... 39
6.8 Indemnification of the General Partners .. 39
6.9 Indemnification of the Partnership and the
Limited Partners ....................... 40
6.10 Operating Deficits ....................... 41
6.11 Obligation to Complete the Rehabilitation
of the Apartment Complex................ 42
6.12 Certain Payments to the General Partner
and Others ............................. 44
6.13 Delegation of General Partner Authority .. 45
6.14 Assignment to Partnership ................ 45
ARTICLE VII Withdrawal of a General Partner; New
General Partner ........................ 46
7.1 Withdrawal ............................... 46
7.2 Obligation to Continue ................... 47
7.3 Withdrawal of All General Partners ....... 47
7.4 Interest of General Partner After
Permitted Withdrawal ................... 47
7.5 Admission of Additional General Partner(s)
under Certain Circumstances............. 48
7.6 Withdrawal of Sole General Partner........ 49
ARTICLE VIII Transferability of Limited Partner
Interests .............................. 50
8.1 Assignments .............................. 50
8.2 Substituted Limited Partner .............. 50
8.3 Restrictions ............................. 51
ARTICLE IX Working Capital; Borrowings .............. 51
9.1 Working Capital Loan ..................... 51
9.2 Borrowings ............................... 51
ARTICLE X Profits, Losses, Tax Credits,
Distributions and Capital
Accounts ............................... 52
10.1 Profits, Losses and Tax Credits .......... 52
10.2 Cash Distributions Prior to Dissolution .. 54
10.3 Distributions Upon Dissolution ........... 57
10.4 Special Provisions ....................... 57
10.5 Authority of the General Partners to Vary
Allocations to Preserve and Protect the
Partners' Intent ....................... 61
ARTICLE XI Management Agent ......................... 62
ARTICLE XII Books and Records, Accounting, Tax
Elections, Etc. ........................ 63
12.1 Books and Records ........................ 63
12.2 Bank Accounts ............................ 64
12.3 Auditors ................................. 64
12.4 Cost Recovery and Elections .............. 65
12.5 Special Basis Adjustments ................ 65
12.6 Fiscal Year .............................. 65
12.7 Information to Partners .................. 66
12.8 Expenses of the Partnership .............. 69
ARTICLE XIII General Provisions ....................... 70
13.1 Restrictions by Reason of Section 708 of
the Code ............................... 70
13.2 Amendments to Certificate ................ 71
13.3 Notices .................................. 71
13.4 Word Meanings ............................ 71
13.5 Binding Effect ........................... 72
13.6 Applicable Law ........................... 72
13.7 Counterparts ............................. 72
13.8 Financing Regulations .................... 72
13.9 Separability of Provisions ............... 73
13.10 Paragraph Titles ......................... 73
13.11 Extraordinary Investment Limited Partner
Expenses ............................... 73
13.12 Time of Admission ........................ 73
GUARANTY................................................. 75
Consent and Agreement ................................... 76
Schedule A .............................................. 80
▇▇▇▇▇▇▇ HOUSING, L.P.
AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
Preliminary Statement
▇▇▇▇▇▇▇ Housing, L.P. (the "Partnership") was formed as a Mississippi
limited partnership pursuant to a Certificate and Agreement of Limited Part-
nership dated March 1, 1995 (the "Original Agreement") by and among Intervest
Development Corporation as general partner and Intervest Corporation as the
limited partner (the "Original Limited Partner"). The Original Agreement was
filed in the Filing Office on March 1, 1995. Certain capitalized terms used
herein shall have the respective meanings specified in Article I.
In consideration of mutual agreements set forth herein, it is agreed and
certified, and the Original Agreement is hereby amended and restated in its
entirety, as follows:
ARTICLE I
Defined Terms
The defined terms used in 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
Partner for such year. The Actual Credit shall be retroactively revised if the
amount of Tax Credit properly allocable to the Investment Limited Partner is
revised after audit or recaptured.
Additional Limited Partner means any holder of an Interest designated as
an Additional Limited Partner pursuant to Section 4.5(b) or Section 7.4.
Admission Date means the first date on which all parties hereto shall
have executed this Agreement, or, if, pursuant to the
Uniform Act, the Investment Limited Partner shall not be deemed admitted to the
Partnership on such date, then the next date thereafter on which the Investment
Limited Partner shall be deemed to be admitted to the Partnership under the
Uniform Act.
Affiliate means (A) as to the Investment Limited Partner, the Investment
General Partner or Boston Capital, (i) such Person; (ii) each member of the
Immediate Family of such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses (i) or (ii); (iv)
each trustee of a trust for the benefit of any Person referred to in the
preceding clauses (i) or (ii); or (v) any other Person (a) who directly or
indirectly controls, is controlled by, or is under common control with such
Person, (b) who is an officer of, director of, partner in or trustee of, or
serves in a similar capacity with respect to, such Person or of which such
Person is an officer, director, partner or trustee, or with respect to which
such Person serves in a similar capacity, (c) who, directly or indirectly, is
the beneficial owner of ten percent (10%) or more of any class of equity
securities of such Person or of which such Person is directly or indirectly the
owner of ten percent (10%) or more of any class of equity securities, (d) who
is an officer, director, general partner, trustee or holder of ten percent
(10%) or more of the voting securities or beneficial interests of any Person
referred to in the foregoing clauses (v)(a), (v)(b) or (v)(c) or (e) who,
whatever his title, performs functions for such Person or any Affiliate of such
Person similar to a Chairman or member of the Board of Directors, or executive
officer such as the President, Executive Vice President or Senior Vice
President, Corporate Secretary, or Treasurer, or any Person holding a five
percent (5%) or more equity interest in such Person, or any Person having the
power to direct or cause the direction of such Person, whether through the
ownership of voting securities, by contract or otherwise; and (B) as to any
other named Person or Persons (i) such Person; (ii) each member of the
Immediate Family of such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses (i) or (ii); (iv)
each trustee of a trust for the benefit of any Person referred to in the
preceding clauses (i) or (ii); or (v) any other Person (a) who directly or
indirectly controls, is controlled by, or is under common control with such
Person, (b) who owns or controls ten percent (10%) or more of the outstanding
voting securities of such Person, (c) of which ten percent (10%) or more of the
outstanding voting securities is owned by such Person or any of the Persons
referred to in the foregoing clauses (i) through (iii), (d) who is an officer,
director, partner or trustee of such Person, or (e) for which such Person acts
in the capacity of officer, director, partner or trustee. An Affiliate of the
Investment Limited Partner or of the Investment General Partner does not
include a Person who is a partner in a partnership or joint venture with the
Investment Limited Partner or any other Affiliate of the Investment Limited
Partner if such Person is not otherwise an Affiliate of the Investment Limited
Partner or the Investment General Partner. For purposes of this definition,
the term Affiliate shall not be deemed to include any law firm (or member or
associate thereof) providing legal services to the Investment Limited Partner,
the Investment General Partner or any Affiliate of either of them.
Aggregate Cost means the sum of (i) the total Capital Contributions made
or anticipated to be made by the Investment Limited Partner 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 Partner's 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 four Installments of the Capital Contribution of the
Investment Limited Partner shall not thereafter be reduced.
Agreement means this Amended and Restated Agreement and Certificate of
Limited Partnership, including Schedule A, as amended from time to time.
Annual Partnership Management Fee means the fee payable to the General
Partners pursuant to the provisions of Section 6.12(a).
Apartment Complex means the real property located in ▇▇▇▇▇▇▇, ▇▇▇ County,
Mississippi, 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 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 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ & Company of Jackson, Mississippi,
or such other firm of independent certified public accountants as may be
engaged by the General Partners with the consent of Boston Capital for the
purposes of preparing the Partnership income tax returns, compiling the books
and records of the Partnership and reviewing financial reports of the Part-
nership.
BCCLP means Boston Capital Communications Limited Partnership, a
Massachusetts limited partnership, and its successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a Massachusetts
corporation, its successors and assigns.
Breakeven Confirmation means the date upon which the Investment Limited
Partner receives a copy of the federal income tax return of the Partnership for
the Partnership fiscal year in which the Breakeven Point shall have occurred.
Breakeven Point means the first time at which, as certified by the
General Partners, based upon four (4) consecutive full calendar months of
Partnership operation occurring after the later to occur of (i) the Admission
Date or (ii) Permanent Mortgage Commencement (with each month taken
individually), during which the rental income (including government subsidies)
of the Partnership actually received on a cash basis (excluding prepaid rent)
for each of such four (4) months shall have exceeded all the Partnership's
expenses for such month on an accrual basis (including, but not limited to, (a)
all operational costs and expenses, (b) all items payable in connection with
any Mortgage, and (c) the funding of any reserves required by FmHA and/or
pursuant to the terms of this Agreement), except for depreciation, distribu-
tions of Cash Flow and Capital Transaction proceeds to the Partners and the
fees payable pursuant to this Agreement. For purposes of the foregoing,
expenses shall (i) include monthly payments of principal and interest in the
amount specified in the Mortgage regardless of any forbearance thereof, (ii)
include a ratable portion of the annual amount (as estimated by the General
Partners) of those seasonal expenses (such as utilities and maintenance
expense) which might reasonably be expected to be incurred on an unequal basis
during a full annual period of operation, and (iii) be adjusted, if necessary,
so that the expenses of real estate taxes and insurance are based on the
General Partners' estimate of the full value of the Apartment Complex after
completion of construction.
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 Contributions.
Carryover Certification means the date upon which the Investment Limited
Partner shall have received, in a form and in substance satisfactory to the
Investment Limited Partner, the certification of the Auditors that as of a date
no later than December 31, 1996, the Partnership had 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, 1998, so that each building in the Apartment Complex constitutes a
"qualified building" for the purposes of Section 42(h)(E)(ii) of the Code.
Cash Flow means the profits or losses of the Partnership from and after
the Commencement Date subject to any applicable FmHA or Lender requirements and
to the following adjustments:
(a) Cost recovery deductions of buildings, improvements and per-
▇▇▇▇▇ property and amortization of any financing fees shall not be de-
ducted;
(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 shall be deducted,
unless paid from any replacement reserve or funded through insurance;
(f) The proceeds of any Construction Mortgage or Permanent
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;
(h) The fees set forth in Sections 6.12, any interest on the
Construction and Development Fee, and any fee payable in connection with
any transaction referred to in clause (f) above shall not be deducted;
and
(i) Prior to the later of Permanent Mortgage Commencement or the
Admission Date, an amount equal to the amount, if any, of net rental
income applied to complete the construction of the Apartment Complex
pursuant to Section 6.11(a) shall 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 Invest-
ment Limited Partner, the Special Limited Partner or any Additional Limited
Partner.)
Code means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations (permanent or temporary) issued thereunder.
References herein to any Code section shall include any successor provisions.
Commencement Date means the first day of the month in which the Admission
Date occurs.
Competitive Real Estate Commission means that real estate or brokerage
commission paid for the purchase or sale of the Apartment Complex or other
Partnership property which is reasonable, customary and competitive in light of
the size, type and location of the Apartment Complex or other property.
Completion Date means the date upon which the Apartment Complex has been
completed as evidenced by the issuance by the inspecting architect and by each
governmental agency having jurisdiction of certificates of substantial
completion or occupancy (or local equivalents) with respect to all 48 apartment
units in the Apartment Complex.
Compliance Period means the fifteen (15)-year period commencing with the
first year of the Credit Period.
Consent of the Investment Limited Partner means the prior written consent
or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in Section
6.12(b).
Construction Lender means Deposit Guaranty National Bank of Jackson,
Mississippi in its capacity as holder of the Construction Mortgage, or its
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 $368,600.
Construction Mortgage Closing means the first date upon which the
Construction Mortgage shall have closed and the initial draw thereunder shall
have been 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.
Credit Recovery Loan means a constructive interest-bearing advance of the
Investment Limited Partner as more fully described in Section 5.1(f). Credit
Recovery Loans and interest thereon shall not be treated as loans or interest,
respectively, for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(1). For the purposes of Article X, the term Credit Recovery Loan
shall not include any portion of such an advance which shall have theretofore
been paid to the Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section 5.1(f).
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.
Economic Risk of Loss has the meaning set forth in Treasury Regulation
Section 1.752-2.
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 taxed as a partnership and not as an association taxable as
a corporation for Federal income tax purposes.
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 or association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person 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 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 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 to any such decree,
order or the appointment, or taking of any action by such Person in
furtherance of any of the foregoing.
Filing Office means the Secretary of the State.
FmHA means the Rural Economic and Community Development Administration,
formerly known as the Farmers Home Administration of the United States
Department of Agriculture.
FmHA Loan Agreement means the FmHA Transfer and Rehabilitation Loan
Agreements by and between the Partnership and FmHA, as amended from time to
time.
General Partners means the Persons designated as the General Partners in
Schedule A 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 shall have 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
one hundred percent (100%) of the 48 apartment units in the Apartment Complex
shall have been leased to and physically occupied by tenants on such date
meeting the terms of the Minimum Set-Aside Test under executed FmHA-approved
leases at rentals meeting the requirements of the Rent Restriction Test.
Installment means an installment of the Investment Limited Partner's
Capital Contribution paid or payable to the Partnership pursuant to Section
5.1.
Interest means the entire interest of a Partner in the Partnership at any
particular time, including the right of such Partner to any and all benefits to
which a Partner may be entitled hereunder and the obligation of such Partner to
comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited Partner, an amount
equal to the Capital Contribution of the Investment Limited Partner divided by
81.3% and (ii) as to any other Partner, an amount equal to its Capital
Contribution.
Investment General Partner means Boston Capital Associates IV, L.P., a
Delaware limited partnership in its capacity as the general partners of the
Investment Limited Partner, and any other Person who may become a successor or
additional general partner of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit Fund IV, L.P.,
a Delaware limited partnership, specifically Series 25 thereof), and any Person
or Persons who replace it as Substituted Limited Partner, but shall not include
any Special Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Agreement of Limited Partner-
ship of the Investment Limited Partner, as amended from time to time.
Lender means the Construction Lender or FmHA, each in its capacity as
maker of a Mortgage loan, or its successors and assigns in such capacity.
Limited Partners means the Investment Limited Partner, the Special
Limited Partner and any Additional Limited Partner.
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.
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 the Con-
struction Lender and/or FmHA; and 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 FmHA documentation related thereto.
Original Agreement has the meaning specified in the Preliminary State-
ment.
Original Certificate has the meaning specified in the Preliminary State-
ment.
Original General Partner has the meaning specified in the Preliminary
Statement.
Original Limited Partner 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
Regulations Sections 1.704-2(d) and 1.704(g)(3).
Partnership means the limited partnership continued pursuant to this
Agreement.
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 in 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.
Permanent Mortgage means the permanent financing provided, or to be pro-
vided, by the FmHA for the Apartment Complex following the completion thereof.
The Permanent Mortgage is to be funded in two stages. The first stage shall is
assumed FmHA financing in the initial principal amount of $912,000. The second
stage shall be funded in the initial principal amount of $368,600.
Permanent Mortgage Commencement means the first date on which all of the
following shall have occurred: (a) the Completion Date; (b) the principal
amount and maturity date of the Permanent Mortgage shall have been finally
determined; and (c) amortization of the Permanent Mortgage shall have
commenced.
Permanent Mortgage Commitment means the first date on which the
Partnership receives the written commitment of FmHA to make the Permanent
Mortgage.
Person means any individual or Entity.
Phase I Compliance means the date on which the Investment Limited Partner
receives from the General Partner a Phase I Environmental Site Assessment
satisfactory to the Investment Limited Partner in its sole discretion.
Project Documents means and includes the Construction Mortgage and the
Permanent Mortgage, the FmHA Loan Agreement, the Housing Assistance Agreement,
the Management Agreement, all other instruments delivered to (or required by)
the Construction Lender and/or FmHA 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 to the Investment Limited Partner (Projected Credit)
means $7,155 for 1996; $57,241 per annum for the years 1997 through 2005
(inclusive); and $50,086 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 $7,155 and provided further that upon the occurrence of any of the
events described in clauses (i), (ii) and (iii) of Section 5.1(g), the
Projected Credit shall thereafter be the Revised Projected Credit.
Prospectus means the prospectus contained in the registration statement
(File No. 33-70564) filed with the Securities and Exchange Commission on behalf
of the Investment Limited Partner 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 Income Offset Item means (1) an allocation of loss or deduction
that, as of the end of each year, reasonably is expected to be made (a) pur-
suant to Section 704(e)(2) of the Code to a donee of an interest in the Part-
nership, (b) pursuant to Section 706(d) of the Code as the result of a change
in any Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership of unrealized
receivables or inventory items and (2) a distribution that, as of the end of
such year, reasonably is expected to be made to a Partner to the extent it
exceeds offsetting increases to such Partner's Capital Account which reasonably
are expected to occur during or prior to the Partnership taxable year in which
such distribution reasonably is expected to occur.
Related Person means a person related to a Partner within the meaning of
Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42 of the Code
whereby the gross rent charged to tenants of the low-income units in the
Apartment Complex may not exceed thirty percent (30%) of the qualifying income
levels.
Revised Projected Credit has the meaning given to it in Section 5.1(g).
Schedule A means Schedule A to this Agreement as amended from time to
time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal Comprehensive Environ-
mental 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 Massachusetts 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 Mississippi.
State Designation means the date upon which the Partnership receives the
allocation by the authorized agency of the State of a Tax Credit for the
building(s) constituting the Apartment Complex in an annual dollar amount of
not less than $57,819, as evidenced by the execution by or on behalf of such
agency of Form(s) 8609. For the purposes of determining State Designation,
each building in the Apartment Complex shall be treated as having received an
allocation of Tax Credit in an amount equal to the lesser of (i) the amount of
Tax Credit carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of Tax Credit set forth on the
Form 8609 as to such building.
Subordinated Loan means any loan made by the General Partners to the
Partnership pursuant to Section 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 the date upon which the Partnership receives a
preliminary reservation, effective for the year 1996, the year the Apartment
Complex is expected to receive an allocation of Tax Credit, by the authorized
agency of the State of Tax Credit for the building(s) constituting the
Apartment Complex in an annual dollar amount of not less than $57,819, which
reservation shall not have expired or been revoked prior to the date on which
the First Installment is paid.
Uniform Act means the Uniform Limited Partnership Act as adopted by the
State.
Vessel has the meaning given to it in the Federal Comprehensive Environ-
mental 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
insanity or incompetence, Event of Bankruptcy, dissolution, liquidation, or
voluntary or involuntary withdrawal or retirement from the Partnership for any
reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement. Withdrawal
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 or partnership shall be deemed to have sold, assigned, transferred
or encumbered its interest as a General Partner in the event (as a result of
one or more transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to the laws of descent
and distribu tion) of a controlling interest in a corporate General Partner or
of a general partner interest in a General Partner which is a partnership. 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.
Working Capital Loan means a loan made by the General Partners to the
Partnership as described in Section 9.1
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is ▇▇▇▇▇▇▇ Housing, L.P. 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 as follows:
J. Stephen Nail
▇▇▇▇ ▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in, construct,
rehabilitate, develop, improve, maintain, operate, lease and otherwise deal
with the Apartment Complex. The Partnership shall operate the Apartment
Complex in accordance with any applicable FmHA 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 March 1,
2094 or such other time as may be set forth in the Original Agreement 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) A General Partner dying, being adjudicated bankrupt, insane or in-
competent, (if a corporation or partnership) being dissolved or liquidated, or
voluntarily or involuntarily withdrawing from the Partnership for any reason,
including an inability to continue serving as a General Partner by law or
pursuant to the terms of this Agreement, if (i) the remaining General Part-
ner(s), if any, shall fail to continue the business of the Partnership and
reconstitute the Partnership as a successor limited partnership as provided in
Section 7.2 and (ii) the Investment Limited Partner shall fail to exercise the
right provided in Section 7.3;
(c) The election to dissolve the Partnership made in writing by the
General Partners with the Consent of the Investment Limited Partner and the
approval (if required) of FmHA;
(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 Partnership is not reconstituted pursuant to
Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners (or for
purposes of this paragraph, their trustees, receivers or successors) shall
cause the cancellation of the Certificate, liquidate the Partnership assets 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 (except the Working Capital Loan and
Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly and severally,
are hereby authorized to incur personal liability for the repayment of funds
advanced by the Construction Lender (and interest thereon) pursuant to the
Construction Mortgage. 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.
The General Partners shall cause the Partnership to elect promptly, to the
extent permitted and in the manner prescribed by FmHA, that all debt service
payments made by the Partnership to FmHA shall be applied first to interest
determined at the stated rate set forth in the promissory note to FmHA, all as
provided under FmHA regulations, and then to principal due under the Permanent
Mortgage.
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 fifty-year 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 Partner.
C. The Partnership may sell, lease, exchange or otherwise transfer or
convey all or substantially all the assets of the Partnership only with the
Consent of the Investment Limited Partner. Notwithstanding the foregoing and
except as set forth in Section 6.2(a)(6), no Consent of the Investment Limited
Partner 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 each FmHA 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 percent (6%) of the contract price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as set forth on
Schedule A. 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 the Partnership. 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 Partner-
ship 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 or which are not allowable as additions to the basis of
Partnership property and shall be (viii) 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.
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 Part ner" 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(b) shall affect
the limitations on transferability of Interests set forth in Article VII or
Article VIII.
4.2 General Partner
The name, address and Capital Contribution of each General Partner are as
set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
The Original Limited Partner hereby withdraws as a limited partner of the
Partnership and acknowledges that it no longer has any Interest in, or rights
or claims against, the Partnership as a Limited Partner as of the Admission
Date. The Investment Limited Partner and the Special Limited Partner are hereby
admitted to the Partnership as the sole Limited Partners in substitution for
the Original Limited Partner as of the Admission Date and agrees to be bound by
the terms and provisions of the Project Documents and this Agreement. The names
and addresses of the Investment Limited Partner 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 Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, 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.
4.5 Special Rights of the Investment Limited Partner
(a) Notwithstanding any other provision herein, to the extent the law
of the State is not inconsistent, each of the Investment Limited Partner and
the Special Limited Partner shall have the right, subject to the prior written
consent of FmHA (if such consent is required) to:
(i) amend this Agreement in any particular;
(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, negligence,
misconduct or breach of fiduciary duty, or (B) upon the occurrence of any
of the following: (1) such General Partner shall have violated any
provisions of any Project Document or other document required in
connection with any Mortgage, or any provisions of the FmHA regulations
applicable to the Apartment Complex; (2) such General Partner shall have
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;
(3) any Mortgage shall have gone into default; or (4) such General
Partner shall have conducted its own affairs or the affairs of the
Partnership in such a manner as would (a) cause the termination of the
Partnership for Federal income tax purposes; 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; and
(v) approve or disapprove the sale of all or substantially all of
the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any further
action by any Partner, the Special Limited Partner or its designee shall
automatically become a General Partner and acquire in consideration of a cash
payment of $100 such portion of the Interest of the removed General Partner as
counsel to the Investment Limited Partner 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 remaining
portion of the economic Interest of the removed General Partner shall
automatically be converted to an equal economic Interest as an Additional
Limited Partner, (iii) the economic Interest of the Special Limited Partner as
the Special Limited Partner shall continue unaffected by the new status of the
Special Limited Partner or its designee as a General Partner, and (iv) the new
General Partners pursuant to Section 6.13. The Special Limited Partner or any
successor General partner proposed by the Special Limited Partner shall have
the option, exercisable in its sole discretion, to acquire the Additional
Limited Partner. Interest, or any portion thereof, of any removed General
Partner upon payment of the agreed or then present fair market value of such
Interest or portion thereof. Any dispute as to the value of the Interest 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 removed General Partner, one chosen by the
successor General Partner, 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. The expense of arbitration shall be born equally by the removed
General Partner and the Partnership. The method of payment to the removed
General Partner shall be fair and must protect the solvency and liquidity of
the Partnership. The method of payment will be deemed presumptively fair where
it provides for an interest-bearing promissory note coming due in no less than
five (5) years with equal installments each year. In addition, upon removal,
the Partnership must promptly pay to the removed General Partner all amounts
then accrued and owing to the removed General Partner; provided, however, that
notwithstanding the language of Section 6.12, Article X, Article XI and any
other provision hereof, no removed General Partner or any Affiliate thereof
shall be entitled to receive any fee, compensation or other remuneration from
the Partnership, other than (i) the above-described payment for the Interest,
or portion thereof, of the removed General Partner, and (ii) any such fee,
compensation or other remuneration which had already been earned in full prior
the date of such removal. The Partnership is not authorized to enter into any
arrangement whereby any fee, compensation or other remuneration could be
payable directly or indirectly to any General Partner or Affiliate thereof in a
manner inconsistent with the immediately preceding sentence unless the prior
written consent of the Special Limited Partner shall have been obtained to such
particular agreement. The Partnership may offset against any payments to a
General Partner removed under this Section 4.5 any damages suffered by the
Partnership as a result of any breach of the obligations of such General
Partner hereunder. A General Partner so removed will not be liable as a
General Partner for any obligations of the Partnership incurred after the
effective date of its removal. Each General Partner hereby grants to the
Special Limited Partner an irrevocable (to the extent permitted by applicable
law) power of attorney coupled with an interest to execute and deliver any and
all documents and instruments on behalf of such General Partner and the
Partnership as the Special Limited Partner may deem to be necessary or
appropriate in order to effect the provisions of this Section 4.5 and to enable
the new General Partner to manage the business of the Partnership.
(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 offer to
purchase the Apartment Complex or all of the Interests in the Partnership, to
send a copy of such offer (or a written description of any such oral offer) to
each of the Limited Partners. 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 with all deliberate
speed 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 appropriately 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 appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten percent
(10%) of the then outstanding Limited Partner Interests may call meetings of
the Partnership for any matters for which the Limited Partners may vote as set
forth in this Agreement. A list of the names and addresses of all Limited
Partners shall be maintained as part of the books and records of the
Partnership and shall be made available upon request to any Limited Partner or
his representative at his cost. Upon receipt of a written request either in
person or by certified mail stating the purpose(s) of the meeting, the General
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.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10 shall be
paid in full in cash on the Admission Date. The Investment Limited Partner's
Capital Contribution shall be paid in cash installments (the "Installments"),
as follows:
(1) $149,399 (the "First Installment") on the latest of (i) the
Admission Date, (ii) Tax Credit Set-Aside, (iii) Construction Mortgage
Closing, (iv) Permanent Mortgage Commitment, or (v) Phase I Compliance;
(2) $82,999 (the "Second Installment") on the latest of (i) the
Completion Date, (ii) Cost Certification, (iii) State Designation or (iv)
receipt of an updated title insurance policy satisfactory to the
Investment Limited Partner;
(3) $82,999 (the "Third Installment") on the latest of (i) the
Initial 100% Occupancy Date, (ii) Permanent Mortgage Commencement, or
(iii) the Breakeven Point; and
(4) $16,600 (the "Fourth Installment") on receipt of a tax return
and an audited financial statement for the year in which Breakeven
occurred;
provided, however, that the General Partners shall give the Investment Limited
Partner not less than twenty-one (21) days' written notice prior to the due
date of each Installment subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner to pay each In-
stallment is conditioned upon delivery by the General Partners to the Invest-
ment Limited Partner of a written certificate (the "Payment Certificate")
stating that as of the date of such certificate (i) all the conditions to the
payment of such Installment have been satisfied and (ii) all representations
and warranties of the General 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 confirma-
tion that, as of the date of payment, all such conditions are satisfied and all
such representations and warranties are true and correct. The obligation of
the Investment Limited Partner to pay the First Installment is also conditioned
upon delivery by the General Partners to the Investment Limited Partner of both
(i) a legal opinion of independent counsel to the Partnership, which opinion
must be satisfactory to the Investment Limited Partner as to form, content and
identity of counsel and (ii) a photocopy of an owner's title insurance policy,
or an endorsement thereto, issued to the Partnership with respect to the
Apartment Complex with an effective date on or after the Admission Date, in an
insured amount not less than $1,631,997 from a title insurance company
reasonably satisfactory to the Investment Limited Partner and evidencing the
Partnership's ownership of the Apartment Complex subject only to such
exclusions, exceptions, conditions and stipulations as shall be acceptable to
the Investment Limited Partner, in its sole discretion. The obligation of the
Investment Limited Partner to pay the Second Installment is also conditioned
upon the receipt by the Investment Limited Partner or its counsel of any
documents requested by either of them in connection with the Partnership. The
General Partner agrees to use best efforts to provide any such documents within
five days of request. 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 Partner may, at its option, waive the requirement of the
delivery of the Payment Certificate or any other condition with respect to part
or all of such Installment and pay such part or all of such Installment,
provided that the proceeds of the amount so paid are used by the Partnership to
fully fund such Operating Deficit; provided, however, that if the proceeds of
such amount so paid are designated in Section 6.12 or Section 10.2(c) to be
used to pay fee(s) or special distribution(s), then such proceeds shall be
utilized to pay such fee(s) or special distribution(s) and the recipient(s)
thereof shall be required to, and hereby agree to, utilize the proceeds of such
fee(s) or special distribution(s) to fund such Operating Deficit, in which case
the Investment Limited Partner is hereby authorized to directly fund such
Operating Deficit with the funds so applied being deemed to have been paid as
aforesaid.
(c) The Payment Certificate for each Installment shall be dated and de-
livered not less than ten (10) nor more than thirty (30) days prior to the due
date for such Installment.
(d) If, as of the date when an Installment would otherwise be due, any
statement required to be made in the Payment Certificate for such Installment
cannot be truthfully made, the General Partners shall notify the Investment
Limited Partner of the reason why such statement would be untrue if made, and
the Investment Limited Partner shall not be required to pay such Installment;
provided, however, that if (i) any such statement can subsequently be truth-
fully made and (ii) the Investment Limited Partner shall not have irrevocably
lost, in the good faith judgment of the Investment General Partner, any
material tax or other benefits hereunder, then the Investment Limited Partner
shall pay such Installment to the Partnership thirty (30) days after delivery
by the General Partners to the Investment Limited Partner of the Payment
Certificate together with an explanation of the manner in which each such
statement had become true.
(e) If with respect to any year all or a portion of which occurs during
the 60-month period commencing on the later of (i) the Admission Date or (ii)
the date on which the first building in the Apartment Complex is placed in
service for the purposes of Section 42 of the Code (a "Reduction Year") the
Actual Credit is or was less than the Projected Credit, then the General
Partners shall pay to the Investment Limited Partner the Reduction Amount. The
Reduction Amount shall be equal to the sum of (A) the excess of the Projected
Credit for such year over the Actual Credit for such year multiplied by .759
plus (B) the amount of any recapture, interest or penalty payable by the
limited partners and/or the holders of beneficial assignee certificates of the
Investment Limited Partner as a result of such shortfall, assuming that each
limited partner and/or each holder of a beneficial assignee certificate in the
Investment Limited Partner used all of the Tax Credits allocated to him in the
year of allocation and that such Person was subject to interest at the rate set
forth in Section 6621(a)(2) of the Code and to the penalty for understatement
of tax set forth in Section 6662(d) of the Code. 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 Partner shall be eligible to be paid a Reduction Amount as hereinabove
described with respect to each Reduction Year. Any Reduction Amount shall, at
the option of the Investment Limited Partner, either (i) first be applied to
the Installment next due to be paid by the Investment Limited Partner, with any
portion of such Reduction Amount in excess of the amount of such Installment
then being applied to succeeding Installments, provided, that if no further
Installments remain to be paid or if the Reduction Amount shall exceed the sum
of the amounts of the remaining Installments, then the entire Reduction Amount
or the balance of the Reduction Amount, as the case may be, shall be paid by
the General Partners to the Investment Limited Partner promptly after demand is
made therefor, as a payment of damages for breach of warranty, regardless of
the reason for the occurrence of such event or (ii) be paid in its entirety by
the General Partners to the Investment Limited Partner promptly after demand is
made therefor, as a payment of damages for breach of warranty, regardless of
the reason for the occurrence of such event.
(f) In the event that, for any reason, at any time after the end of the
year during which there occurs the sixty (60)-month anniversary of the later of
(i) the Admission Date or (ii) the date on which the first building in the
Apartment Complex is placed in service for the purposes of Section 42 of the
Code, the amount of the Actual Credit shall be less than the Projected Credit
with respect to any fiscal year of the Partnership (such difference being
hereinafter referred to as a "Credit Shortfall"), the Investment Limited
Partner shall be treated as having made a constructive advance to the
Partnership with respect to such year (a "Credit Recovery Loan"), which shall
be deemed to have been made on January 1 of such year in an amount equal to the
sum of (i) the Credit Shortfall for such year plus (ii) the amount of any
recapture, interest or penalty payable by the limited partners and/or the
holders of beneficial assignee certificates of the Investment Limited Partner
as a result of the Credit Shortfall for such year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the Investment
Limited Partner used all of the Tax Credits allocated to him in the year of
allocation and that each such Person was subject to interest at the rate set
forth in Section 6621(a)(s) of the Code and to the penalty for understatement
of tax set forth in Section 6662(d) of the Code. Credit Recovery Loans shall be
deemed to bear simple (not compounded) interest from the respective dates on
which such principal advances shall have been deemed to have been made under
this Section 5.1(f) at 9% per annum. Credit Recovery Loans shall be payable by
the Partnership as provided in Section 10.2(b), Clause Fourth.
(g) In the event that (i) by March 1, 1997, the Limited Partners shall
not have received a written certification of the Auditors in a form and in
substance satisfactory for the purpose of achieving Cost Certification and
indicating that the product of the Apartment Complex's Eligible Basis and its
Applicable Percentage is such that the Apartment Complex will be eligible to
receive Tax Credit in an annual amount of at least $57,819, or (ii) at any time
after the Completion Date the product of the Apartment Complex's Eligible Basis
and its Applicable Percentage is determined by the Auditors, the Tax
Accountants or the Service to be such that the Apartment Complex will not be
eligible to receive Tax Credit in an annual dollar amount of at least $57,819,
then (a) the General Partners shall pay to the Investment Limited Partner an
amount equal to 99% of the product of (A) difference between (i) $57,819 and
(ii) the total amount of Tax Credit allocated and available to the Partnership
and (B) 7.59 and (b) the Projected Credit for each year shall thereafter be
redefined to mean 99% of the total amount of Tax Credit actually so allocated
and available to the Partnership for such year (the "Revised Projected
Credit"). Any amount payable by the General Partners to the Investment Limited
Partner pursuant to this Section 5.1(g) shall, at the option of the Investment
Limited Partner, either (i) be applied first to the Installment, if any, next
due to be paid by the Investment Limited Partner, and any balance of such
amount payable by the General Partners in excess of the amount of such
Installment shall be applied to succeeding Installments, if any, provided that
if such amount payable by the General Partners exceeds the sum of the remaining
Installments, if any, then an amount equal to the amount of such excess shall
be paid by the General Partners to the Investment Limited Partner promptly
after demand is made therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event, or (ii) be paid in
its entirety by the General Partners to the Investment Limited Partner promptly
after demand is made therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit Benchmarks and
Standards. If (i) all 48 apartment units in the Apartment Complex shall not
have been placed in service by February 1, 1997 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner) or (ii) by
March 1, 1997 (or any later date fixed by the General Partners with the Consent
of the Investment Limited Partner) less than 48 apartment units in the
Apartment Complex shall have been occupied by tenants meeting the terms of the
Minimum Set-Aside Test under executed leases which shall have received any
necessary Agency or Lender approvals at rental levels meeting the requirements
of the Rent Restriction Test, or (iii) Permanent Mortgage Commencement shall
not have occurred prior to March 1, 1997 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner), or (iv)
State Designation shall not have occurred by March 1, 1997 (or any later date
fixed by the General Partner with the Consent of the Investment Limited
Partner), and by said date the General Partners shall not have made any payment
as described in the last sentence of Section 5.1(g) or, if the Investment
Limited Partner shall have elected to have all or a portion of any payment
under Section 5.1(g) applied toward future Installment obligations of the
Investment Limited Partner, amendments to this Agreement and, if applicable, to
the Certificate shall not have been adopted and, in the case of the
Certificate, if applicable, filed in the Filing Office, reflecting such event,
or (v) the Partnership shall fail to meet the Minimum Set-Aside Test or the
Rent Restriction Test by the close of the first year of the Credit Period
and/or fails to continue to meet either of those Tests at any time during the
sixty (60)-month period commencing on such date or (vi) prior to Permanent
Mortgage Commencement, (a) foreclosure proceedings shall have commenced under
the Construction Mortgage and such proceedings shall not have been dismissed
within thirty (30) days, (b) any of the commitments of FmHA to provide the
Permanent Mortgage and/or any subsidy financing shall be terminated or
withdrawn and not reinstated or replaced within sixty (60) days with terms
equally or more favorable to the Investment Limited Partner or terms for which
the Consent of the Investment Limited Partner and (if required) the approval of
FmHA shall have been obtained, or (c) 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 thirty (30) days, or (vii) if (assuming the buildings
constituting the Apartment Complex are not placed in service by December 31,
1996) by January 15, 1997 (or any later date fixed by the General Partners with
the Consent of the Investment Limited Partner), the Investment Limited Partner
shall not have received, in form and substance satisfactory to the Investment
Limited Partner, the certification of the Auditors that as of a date no later
than December 31, 1996, the Partnership had 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, 1998 so that each building in the Apartment Complex is a "qualified
building" for the purposes of Section 42 (h)(1)(E)(ii) of the Code, or (vii) if
at any time it shall be determined by the Service or by the Tax Accountants
that as of December 31, 1996 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, 1998, or (ix) if by March 1, 1997 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner) Cost
Certification shall not have occurred, or (x) if by (or any later date fixed by
the General Partners with the Consent of the Investment Limited Partner) the
Breakeven Point shall not have been achieved, or (xii) if by Admission (or any
later date fixed by the General Partners with the Consent of the Investment
Limited Partner) the Partnership shall not have received from the duly
authorized agency of the State, a "carryover allocation" of Tax Credit pursuant
to Section 42(h)(1)(E) of the Code in an annual dollar amount of not less than
$57,819, then the General Partners shall, within five (5) days of the
occurrence thereof, send to the Investment Limited Partner and the Special
Limited Partner notice of such event and of the General Partners' obligation to
repurchase the Interests of the Investment Limited Partner and the Special
Limited Partner by paying to the Investment Limited Partner and the Special
Limited Partner an amount (the "Repurchase Amount") equal to each such
Partner's Invested Amount minus the 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 Partner
and/or the Special Limited Partner requires such a repurchase. If either the
Special Limited Partner or the Investment Limited Partner elects to require a
repurchase of its Interest and the payment to it of an amount equal to its
Repurchase Amount, it shall send notice thereof to the Partnership within
thirty (30) days after the mailing date of the General Partners' notice, or at
any time after the occurrence of any of the foregoing if the General Partners
shall not have sent such a notice thereof, and the General Partners shall
within ten (10) days after the Partnership receives any such notice from a
Partner requiring the purchase of its Interest repurchase the Interest of such
Partner and the Special Limited Partner by paying to each such Partner an
amount equal to its Repurchase Amount.
(b) Lender Disapproval. If the Construction Lender and/or FmHA shall
disapprove, or fail to give any required approval of, the Investment Limited
Partner and/or the Special Limited Partner as a Limited Partner hereunder
within one hundred eighty (180) days of the Admission Date, then the Partner
being disapproved or not approved shall, effective as of such time or such
later time as may be selected by the Partner being disapproved or not approved
(or such other time as may be specified by the Construction Lender and/or FmHA
in its disapproval), at the option of the Partner being disapproved or not
approved (if not directed by the Construction Lender and/or FmHA 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 receipt by the Investment
Limited Partner and/or the Special Limited Partner of the amount due to it
pursuant to either Section 5.2(a) or Section 5.2(b), the Interest of such
Partner shall terminate, and the General Partners shall indemnify and hold
harmless such Partner from any losses, damages, and liabilities to which such
Partner (as a result of its participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited Partner shall
have the right to irrevocably waive its right to have its Interest repurchased
pursuant to any clause or clauses of Section 5.2(a), or any portion thereof, at
any time during which any of such rights shall be in effect. Such a waiver
shall be exercised by delivery to the General 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,
receiving from the pre-existing General Partners, proportionally out of their
Interests, in consideration of $10, a one percent (1%) interest in the profits,
losses, tax credits and distributions of the Partnership, with the Special
Limited Partner retaining its status as such and its economic interest in the
Partnership as the Special Limited Partner not being effected thereby. Upon
any such admission of the Special Limited Partner or its designee as an
additional General Partner, each of the General Partners hereby agrees that all
of its rights and powers hereunder as a General Partner shall automatically be
irrevocably delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each Partner
hereby grants to the Special Limited Partner an irrevocable (to the extent
permitted by applicable law) power of attorney coupled with an interest to take
any action and to execute, deliver and file or record any and all documents and
instruments on behalf of such Partner and the Partnership as the Special
Limited partner may deem necessary or appropriate in order to effectuate the
provisions of this Section 5.2(e) and to allow the additional General Partner
to manage the business of the Partnership. The admission of the Special
Limited Partner or its designee as an additional General Partner shall not
relieve any other General Partner of any of its economic obligations hereunder,
and each other General Partner shall fully indemnify and hold harmless the
additional General Partner 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.
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, rehabilitate, 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 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, devel-
opment 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
services;
(7) To employ their respective Affiliates to perform services
for, or sell goods to, the partnership;
(8) To execute contracts with FmHA, the State 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, FmHA 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 FmHA or other government regulations or re-
quirements of any 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 Partner and the
prior written consent of the Special Limited Partner:
(1) To borrow 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 or the Working Capital Loan;
(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 replace-
ment 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 con-
ditions 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 fifty-year amortization provided for in the
Permanent Mortgage Commencement), 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 FmHA;
(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 Partner or the proceeds thereof; 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 violates any provision of
Section 6.2(a), the Special Limited Partner, in its sole discretion, may cause
itself or its designee to be admitted as an additional General Partner without
any further action by any other Partner. Upon any such admission of an
additional General Partner, each pre-existing General Partner shall be deemed
to have assigned proportionally to the additional General Partner,
automatically and without further action, such portion of its General Partner
interest so that the additional General Partner shall receive not less than one
percent (1%) interest in the profits, losses, tax credits and distributions of
the Partnership in consideration of $1.00 and any other consideration which may
be agreed upon. An additional General Partner so admitted shall automatically
become the Managing General Partner and 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 notwith-
standing. 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 economic
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.
(c) Neither the Investment General Partner nor any Affiliate thereof
shall be given an exclusive right to sell, or exclusive employment to sell, the
Apartment Complex.
6.3 Personal Services
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 Partner 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 Partner 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 Partner any participation in
the control of the Partnership business. Each of the Special Limited Partner
and the Investment Limited Partner hereby consents to the exercise by the
General 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 an impediment
to the ability of either the Investment Limited Partner or the Special Limited
Partner to take any action hereunder. All Partners hereby agree that Intervest
Development Corporation 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 Partner 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 Construction and Development Fee to the extent
Capital Contributions are insufficient. The General Partners are 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 Part-
nership to generate Cash Flow for distribution to the Partners at the maximum
realizable level in view of (i) any applicable FmHA 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 Partners shall cause the Partnership to obtain and keep
in force, during the term of the Partnership, comprehensive casualty insurance,
including, but not limited to, fire and other risks generally included under
"extended coverage" policies, workmen's compensation and public liability
insurance in favor of the Partnership (i) with such companies and in such
amounts as shall be satisfactory to FmHA, or, if the Apartment Complex is no
longer subject to FmHA regulation or requirements, as shall be customary for
apartment complexes similar to the Apartment Complex and (ii) in amounts which
shall be (A) no less than those amounts which are customary in the area for
apartment complexes similar to the Apartment Complex, (B) no less than such
amounts as may be reasonably requested by the Investment Limited Partner and/or
the Special Limited Partner from time to time, and (C) in any event, sufficient
to prevent the Partnership from becoming a co-insurer under any such policies.
No deductibles on such policies may exceed $5,000. The Partnership's fire and
other casualty insurance shall be in an amount at least equal to the full
replacement value of the Apartment Complex. The General Partner shall cause
the Partnership and all Partners to be named as additional insured parties on a
combined single limit bodily injury and property damage liability insurance
policy in the amount of not less than $6,000,000 (of which up to $5,000,000 may
be provided under an umbrella policy). Through the Completion Date, or such
later date as may be required by the Construction Lender or FmHA, the General
Partners shall also cause the Partnership to obtain and keep in force a
builder's risk policy in favor of the Partnership in an amount not less than
the greater of (i) the full replacement value of the Apartment Complex
(excluding the value of the underlying land, the site utilities and the
foundations) or (ii) such other amount as shall be required by FmHA or the
Construction Lender. Throughout the term of the Partnership, the General
Partners shall provide copies of all such policies (or binders) to the
Investment Limited Partner promptly after their receipt thereof. Upon the
request of the Investment Limited Partner to the General Partners, the General
Partners shall cause the applicable insurer to name the Investment Limited
Partner as an "additional insured" on each Partnership insurance policy.
(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) (1) The General Partners shall establish and maintain reasonable re-
serves 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 $12,806 from its Cash Flow into
replacement reserves until fully funded at $128,060; 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 Partner receives the full amount of the Projected
Credit, including, without limitation, the rental of apartments to appropriate
tenants and the filing of annual certifications as may be required. In this
regard, the General 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 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 Tax Credit throughout the Compliance
Period so as to permit the Partnership to be entitled to the maximum available
Tax Credit, (ii) the Partnership to comply with all State Tax Credit monitoring
procedures, (iii) all dwelling units in the Apartment Complex to be leased for
periods of not less than six months to persons satisfying the Rent Restriction
Test, (iv) the Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex to be of
equal quality with comparable amenities available to low-income tenants on a
comparable basis without separate fees.
(h) On or before the Admission Date, the General Partners shall provide
to the Investment Limited Partner either (i) an appraisal of the Apartment
Complex prepared by a competent independent appraiser or (ii) completed FmHA
1924-13 (estimate and certificate of actual cost) and 1930-7 (statement of
budget, income and expense) or HUD project cost and budget analysis on Form
2264, or any successor FmHA or HUD form, any comparable form of a state or
other governmental agency, including any applicable Tax Credit allocation
agency, setting forth estimates with respect to construction and mortgage
financing costs and initial rental income and operating expense figures for the
Apartment Complex.
(i) 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 Partner with written notice (x) upon any General
Partner's obtaining knowledge of any potential or known release, or threat of
release, of any Hazardous Material at or from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General Partner, any
Affiliate of a General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a lien on the
Apartment Complex; (y) upon any General Partner's receipt of any notice to such
effect from any Federal, state, or other governmental authority; and (z) upon
any General Partner's obtaining knowledge of any incurrence of any expense or
loss by any such 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.
(j) The General Partners shall promptly request in writing of FmHA that
FmHA cause the Investment Limited Partner to be named as an "interested party"
in the Permanent Mortgage documents, so that FmHA will notify the Investment
Limited Partner of any default or other problem under the Permanent Mortgage.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment Limited
Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership validly
existing and in good standing under the laws of the State and has com-
plied with all filing requirements necessary for its existence and to
preserve the limited liability of the Investment Limited Partner and the
Special Limited Partner.
(2) No event or proceeding has occurred or is pending or threatened
which would (a) materially adversely affect the Partnership or its pro-
perties, or (b) 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)
labor disputes; and (z) acts of any governmental authority.
(3) No default (or event which, with the giving of notice or the
passage of time or both, would constitute a default) has occurred and is
continuing under this Agreement or under any material provision of the
Project Documents, and the same are in full force and effect.
(4) No Partner or Related Person bears the economic risk of loss
with respect to the Permanent Mortgage. 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
Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been rehabilitated 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 regu lation 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.
(6) 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 (a) are both permitted by the Project
Documents and are noted or excepted in the title insurance policy
submitted to the Investment Limited Partner as a precondition of its
funding the First Installment, as endorsed through the Admission Date,
and (b) 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.
(7) The execution and delivery of all instruments and the perform-
ance 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, administra-
tive regulation or court decree.
(8) 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 per
formance of any of the actions of any Corporation contemplated hereby has
constituted or will constitute a violation of (a) the articles of
organization or by-laws of such Corporation, (b) any agreement by which
such Corporation is bound or to which any of its property or assets is
subject, or (c) any law, administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect to any General
Partner.
(10) All accounts of the Partnership required to be maintained
under the terms of the FmHA Loan Agreement, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by FmHA.
(11) If the only General Partner(s) are one or more corporations,
then the General Partner(s) have a net worth which satisfies the 89-12
Requirements.
(12) 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, to satisfy all
requirements under the Project Documents and/or which form the basis for
determining the principal sum of the Permanent Mortgage and to pay the
Construction and Development Fee have been or will be paid or provided
for utilizing only (a) the funds available from the Construction
Mortgage, (b) the Capital Contribution of the Investment Limited Partner,
(c) the Capital Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, (d) the available net
rental income, if any, earned by the Partnership prior to Permanent
Mortgage Commencement (to the extent that it is permitted to be used for
such purposes by FmHA), (e) any insurance proceeds and (f) the funds
furnished by the General Partners pursuant to Sections 6.5(a) and
6.11(a).
(13) The amount of Tax Credit which is expected to be allocated by
the Partnership to the Investment Limited Partner is $7,155 for 1996;
$57,819 per annum for each of the years 1997 through 2005 (inclusive);
and $50,086 for 2006.
(14) 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.
(15) No General Partner, Affiliate of a General Partner or Person
for whose conduct any General Partner is or was responsible has ever: (i)
owned, occupied, or operated a Site or Vessel on which any Hazardous
Material was or is stored, transported, or disposed of, except if such
storage, transport or disposition was and is at all times in compliance
with all laws, ordinances, and regulations pertaining thereto; (ii)
directly or indirectly transported, or arranged for transport, of any
Hazardous Material (except if such transport was or 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 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 assess ment, containment, or
removal of any release or threat of release of any Hazardous Material
from the Apartment Complex or any such Site or Vessel.
(16) To the best 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.
(17) The Apartment Complex is being developed and will be rented in
a manner which satisfies and shall continue to satisfy all restrictions,
including tenant income and rent restrictions, applicable to projects
generating Tax Credit.
(18) No building which constitutes any part of the Apartment
Complex was last placed in service for any purpose within ten years of
the date such building was purchased by the Partnership, the General
Partners, or any of them, or any Affiliate of any General Partner.
(19) No building which constitutes any part of the Apartment
Complex has ever been placed into service by any General Partner, or any
them, or any Person related to the General Partners or any of them,
within the meaning of Section 42 of the Code.
(20) No building which constitutes any part of the Apartment
Complex has received an allocation of low-income housing tax credit for
which the fifteen year compliance period is still in effect.
(21) Within the ten years prior to the Partnership's acquisition of
the Apartment Complex, no rehabilitation work has been performed, on any
building which constitutes any part of the Apartment Complex, the cost
for which was greater than 25% of such building's adjusted basis.
(22) The total cost of rehabilitation expenses, as that term is
defined in Section 42 of the Code, incurred during any 24 month period
with respect to each building constituting any part of the Apartment
Complex was equal to, or greater than, the greater of (a) ten percent
(10%) of such building's unadjusted basis, or $3,000 per low-income
housing unit in such building.
(23) The Partnership has fulfilled all requirements set forth in
Section 42 of the Code for each building to qualify for the acquisition
and rehabilitation tax credits as set forth in said Section.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at any time bear
the Economic Risk of Loss for the payment of any portion of any Mortgage, 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, except as may be expressly permitted with respect to the Construction
Mortgage 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 Part-
nership 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 Partner
has determined, in good faith, that the course of conduct which caused the
loss, judgment, liability, expense or amount paid in settlement was in the best
interests of the Partnership; and (ii) such loss, judgment, liability, expense
or amount paid in settlement was not the result of negligence or misconduct on
the part of the General Partner or Affiliate thereof; and (iii) such
indemnification or agreement to hold harmless is recoverable only out of the
assets of the Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no 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
settlement 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, the Mississippi Securities Division, and any other
applicable state securities administrator with respect to the issue of
indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance, 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 the 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 percent (10%) or more of the
outstanding voting securities of a General Partner; (iii) is an officer,
director, partner or trustee of a General Partner; or (iv) if a General Partner
is an officer, director, partner or trustee, 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 any and all losses, damages and
liabilities which the Partnership or
any Limited Partner may incur by reason of the (a) past, present or future
actions or omissions of the General Partner or any of their Affiliates, 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 FmHA requirements in connection with the operation of the Apartment Complex
in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be liable to
a Limited Partner or the Partnership for any act or omission for which the
Partnership is required to indemnify such General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold the Investment
Limited Partner harmless from and against any claim brought or threatened
against the Investment 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. Any claim or loss described in the immediately preceding sentence may
be defended, compromised, settled, or pursued by the Investment Limited Partner
with counsel of the Investment Limited Partners' selection, but at the expense
of the 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 each FmHA (if such consent shall
be required under applicable FmHA regulations), the General Partners shall be
obligated from the later to occur of (i) Permanent Mortgage Commencement or
(ii) the Admission Date to advance funds to meet operating expenses and debt
service of the Partnership which exceed operating income available for the
payment thereof. For purposes of this Section 6.10, "Operating Expenses" shall
expressly include the Asset Management Fee guaranteed in the amount of $750 per
annum. In the event that the General Partners shall fail to make any such
advance as aforesaid, the Partnership shall utilize amounts (the "Applied
Fees") otherwise payable to the General Partners or Affiliates thereof under
Section 6.12 to meet the obligations of the General Partners pursuant to this
Section 6.10. Such Applied Fees shall also constitute 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 the obligation of the Partnership to make such
installment payments to the General Partners or the Affiliates thereof pursuant
to Section 6.12 and/or Article X being deemed satisfied to the extent thereof
and (b) the Special Limited Partner shall have the option, exercisable in its
sole discretion, to cause it or one or more of its designees to be admitted to
the Partnership as additional General Partners(s). An additional General
Partner so admitted shall automatically, without the need for any further
action by any Partner, become the Managing General Partner and 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 Section 6.10 and to manage the business of the Partnership.
The admission of an additional General Partner shall not relieve any other
General Partner of any of its economic obligations hereunder, and each other
General Partner shall 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 discretion at any time advance funds to the
Partnership to pay operating expenses and/or debt service of the Partnership in
order to facilitate the Partnership's compliance with the Rent Restriction
Test. All advances pursuant to this Section 6.10 (including any Applied Fees)
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 applicable rules and regulations.
6.11 Obligation to Complete the Rehabilitation of the Apartment
Complex
(a) The General Partners shall complete the construction of the Apartment
Complex substantially in accordance with the plans and specifications approved
by FmHA and the Lenders 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 and Permanent Mortgages, the
net rental income, if any, of the Apartment Complex generated prior to the
later of Permanent Mortgage Commencement or the Admission Date and which is
permitted by FmHA to be utilized for any of the purposes hereinafter set forth,
the Capital Contribution of the Investment Limited Partner, the Capital
Contributions of the General Partners in the amounts set forth on Schedule A as
of the Admission Date, and any insurance proceeds arising out of casualties
prior to the later of Permanent Mortgage Commencement or the Admission 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(a), (ii) make the special
distributions to the General Partners described in Section 10.2(c), (iii) pay
the Construction and Development Fee, (iv) arrive at Permanent Mortgage
Commencement in conformity with the Project Documents, (v) discharge all
Partnership liabilities and obligations arising out of any casualty giving rise
to any such insurance proceeds, and (vi) provide for all other payments and
expenses required to be made or incurred through the later of Permanent
Mortgage Commencement or the Admission Date, including the funding of any
reserves required hereunder or under any other Project Document and the
repayment in full of all obligations under the Construction Mortgage, 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 FmHA, be reimbursed at or prior
to the later of Permanent Mortgage Commencement or the Admission Date 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 the later of Permanent Mortgage Commencement or Admission Date only out
of the proceeds of the Capital Contribution of the Investment Limited Partner
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
Tax 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(a), an amount not in excess of the next
installment of the Construction and Development Fee due 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 Annual Partnership Management Fee or distributable to
the General Partners pursuant to Article X shall be so applied. Any such
application of funds as described in the immediately preceding sentence shall
constitute a payment of the amount of the Fee 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(a) shall be satisfied to the extent
of such application.
(b) The completion of the Apartment Complex shall be secured by a com-
pletion bond in an amount at least equal to the full amount of the construction
contract for the Apartment Complex or by other security satisfactory to the
Investment Limited Partner, which other security may include, but shall not be
limited to, the following:
(i) a written guaranty of completion by a Person, supported
by financial statements demonstrating sufficient net worth or
adequately collateralized by other real or personal properties or
other Persons' guarantees; and/or
(ii) a retention of a reasonable portion of the Capital
Contribution of the Investment Limited Partner and/or fees to the
General Partner as a potential offset in the event the General
Partners do not perform in accordance with this Agreement.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners a non-cumulative
fee (the "Annual Partnership Management Fee") commencing in 1997 for their
services in connection with the administration of the day to day business of
the Partnership in the amount of $750. The Annual Partnership Management Fee
for each fiscal year of the Partnership shall be payable from Cash Flow in the
manner and priority set forth in Section 10.2(a) to the extent Cash Flow is
available therefor for such year.
(b) In consideration of their consultation, advice and other services in
connection with the construction and development of the Apartment Complex and
as consideration for the assignment described in Section 6.14, the Partnership
shall pay to the General Partners (or their designee) a construction and
development fee (the "Construction and Development Fee") in the principal
amount of $56,680 which fee shall be earned in full as to each building in the
Apartment Complex as of the date such building is completed. The Construction
and Development Fee shall be payable $40,080 from the proceeds of the Third
Installment and $16,600 from the proceeds of the Fourth Installment. Any
portion of the Construction and Development Fee which shall not have been paid
as of the date which is six months after it shall have been earned shall accrue
interest at the Applicable Federal Rate in effect at the time earned from the
date earned through the date of payment; any such interest shall be payable in
accordance with the provisions of Article X.
(c) The Partnership shall pay to BCCLP or an Affiliate thereof a fee (the
"Asset Management Fee") commencing in 1997 for its services in connection with
the Partnership's accounting matters relating to the Investment Limited Partner
and assisting with the preparation of tax returns and the reports required by
Section 12.7 in the amount of $750. The Asset Management Fee shall be payable
from Cash Flow in the manner and priority set forth in Section 10.2(a);
provided, however, that if in any fiscal year commencing with 1997, Cash Flow
is insufficient to pay the full amount of the Asset Management Fee, the unpaid
portion thereof shall be funded directly by the General Partner in the form of
a Subordinated Loan.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving hereunder, each
General Partner may from time to time, by an instrument in writing, delegate
all or any of his powers or duties hereunder to another General Partner or
General Partners.
Every contract, deed, mortgage, lease and other instrument executed by
any General Partner shall be conclusive evidence in favor of every Person
relying thereon or claiming thereunder that at the time of the delivery thereof
(a) the Partnership was in existence, (b) this Agreement had not been amended
in any manner so as to restrict the delegation of authority among General Part-
ners (except as shown in certificates or other instruments duly filed in the
Filing Office) and (c) the execution and delivery of such instrument was duly
authorized by the General Partners. Any Person may always rely on a cer-
tificate addressed to him and signed by any 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 and amend-
ments 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 Construction Lender or FmHA;
and (vi) any other work product related to the Apartment Complex and/or the
Partnership.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) 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 Partner 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 or any portion of its interest as a
General Partner, 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,
such General Partner, in addition to being subject to any and all other legal
remedies which may be pursued by the Partners, shall forfeit to the Special
Limited Partner or its designee, such General Partner's Interest and all unpaid
fees from the Partnership and shall remain liable for all of the Withdrawing
Partner's obligations under this Agreement. In addition, upon such Withdrawal
and transfer, the Special Limited Partner or its designee shall automatically
become a General Partner without further action by the Withdrawing General
Partner or any other Partner, and each Partner hereby consents to such transfer
and to the admission of the Special Limited Partner or its designee as a
General Partner in such a situation. Such transfer shall occur automatically
upon such Withdrawal without further action by such Withdrawing General
Partner.
(b) If at any time the only General Partners shall be one of more
corporations (or partnerships with corporations as sole general partners), they
shall be obligated to have a net worth which satisfies the 89-12 Requirements.
If the General Partners shall at any time fail to meet the requirements of this
Section 7.1(b), then they shall be deemed to have withdrawn from the
Partnership in violation of the provisions of this Section 7.1 and shall be
subject to the provisions of Section 7.1(a). Notwithstanding the foregoing,
the provisions of this Section 7.1(b) shall not apply to the Special Limited
Partner or its designee in the event it becomes the sole General Partner.
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
30 days after they obtain knowledge of the Withdrawal of a General Partner, the
remaining General Partners shall notify the Investment Limited Partner or its
designee of such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is no remaining
General Partner, the Investment Limited Partner and the Special Limited Partner
may elect to reconstitute the Partnership and continue the business of the
Partnership for the balance of the term specified in Section 2.4 by selecting a
successor General Partner. If the Investment Limited Partner and the Special
Limited Partner elect to reconstitute the Partnership pursuant to this Section
7.3 and admit the designated successor General Partner, the relationship among
the then Partners shall be governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in violation of
Section 7.1 and except as otherwise provided in Section 4.5(b), the Withdrawing
General Partner hereby covenants and agrees to transfer to the remaining
General Partners or to a successor General Partner selected in accordance with
Section 7.3, as the case may be, such portion of the Withdrawing General
Partner's Interest as such remaining or successor General Partners may
designate, such transfer to be made in consideration of the payment by the
transferee of either the agreed value of such Interest or, if such value is not
agreed to, the fair market value of such Interest as determined by a committee
of three qualified real estate appraisers, one selected by the Withdrawing
General Partner, one selected by the transferee and a third selected by the
other two. The portion of the Withdrawing General Partner's Interest
designated to be transferred in accordance with the provisions of this Section
7.4 shall be sufficient to ensure the continued treatment of the Partnership as
a partnership under the Code and as a limited partnership under the Uniform
Act, and, for the purposes of Article X, shall be deemed to be effective as of
the date of Withdrawal, but the Partnership shall not make any distributions to
the designated transferee until the transfer shall have been made. Any holder
of any portion of the Interest of a Withdrawing General Partner which is not
designated to be transferred to the remaining or successor General Partners
pursuant to the provisions of this Section 7.4 shall become an Additional
Limited Partner but (i) with the same share of the profits, losses, tax
credits, Cash Flow and other distributions to which the holder of such Interest
was entitled when held as a General Partner Interest, and (ii) shall not
participate in the votes or Consents of the Investment Limited Partner
hereunder. The admission of any successor or additional General Partner shall
be subject to the consent of FmHA (if required) and the Consent of the
Investment Limited Partner.
7.5 Admission of Additional General Partner(s) under Certain
Circumstances
In the event each of the General Partners is a corporation and the
General Partners at any time, or from time to time, fail to have a net worth
which satisfies the 89-12 Requirements, the Special Limited Partner or its
designee(s) shall be admitted (and each hereby agrees to be admitted),
automatically and without further action by them or any Partner, as additional
General Partner(s), notwithstanding any other provision of this Agreement. The
General Partners hereby agree to take all action necessary to implement this
Section 7.5. Further, the General Partners agree in such event to give prompt
written notice thereof to each Lender and to FmHA. If any Lender or FmHA
rejects the admission of any additional General Partner so admitted as a
General Partner, then such additional General Partner shall withdraw as a
General Partner promptly after an additional General Partner acceptable to each
Lender and FmHA is admitted to the Partnership. Simultaneously with such
admission, each of the previously admitted General Partners shall be deemed to
have assigned proportionally to the additional General Partner(s),
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 percent (1%) interest (or such greater percentage as may be required either
(i) in the opinion of the Tax Accountants, to assure the partnership status of
the Partnership for Federal income tax purposes or (ii) by FmHA) in the
profits, losses, tax credits and distributions of the Partnership in
consideration of $1.00 and any other consideration which may be agreed upon.
An additional General Partner so admitted shall automatically become the
Managing General Partner and be irrevocably delegated all of the power and
authority of all of the General Partners pursuant to Section 6.13. Each such
additional General Partner shall remain a General Partner until a Lender or
FmHA shall object thereto in writing or until such time as, in the opinion of
the Tax Accountants, the Partnership would continue to be treated as a
partnership for Federal income tax purposes notwithstanding their Withdrawal.
At such time, each such additional General Partner may, at its option, then
Withdraw without the approval of the Limited Partners upon reassignment of its
entire Interest to the remaining General Partners. 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 7.5 or to manage the business of the Partnership. The admission
of an additional General Partner shall not relieve any other General Partner of
any of its economic obligations hereunder, and each other General Partner shall
fully indemnify and hold harmless the additional General Partner from and
against any and all losses, judgments liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its capacity as a General
Partner.
7.6 Withdrawal of Sole General Partner
Notwithstanding any other provision of this Article VII to the contrary,
and except as provided in Section 4.5, in the event that (a) any sole General
Partner shall Withdraw from the Partnership and (b) neither the Special Limited
Partner nor the Investment Limited Partner or its designee becomes the
successor General Partner hereunder, J. Stephen Nail hereby agrees, subject
only to the approval of FmHA, if required, to make a Capital Contribution of
$100 to the Partnership and become the successor General Partner hereunder.
The Investment Limited Partner and the Special Limited Partner hereby consent
to J. Stephen Nail becoming the successor General Partner subject only to (i)
compliance, at the time of succession, with the representations set forth in
Sections 6.6(8) and 6.6(11), to the extent applicable, and (ii) the
stockholders, officers and directors of Intervest Development Corporation at
that time consisting of only J. Stephen Nail and ▇▇▇▇▇▇ ▇▇▇▇▇▇ and the
Investment Limited Partner and the Special Limited Partner hereby agree to
execute and deliver any amendments to this Agreement and/or the Certificate
which are necessary to carry out the provisions of this Section 7.6. The
entire Interest of the Withdrawing General Partner as a General Partner
hereunder shall be automatically transferred to the successor General Partner
hereunder immediately upon the admission of the successor General Partner to
the Partnership.
In the event that J. Stephen Nail is unable to meet the requirements set
forth in the immediately preceding paragraph to the extent applicable, the
selection of a successor General Partner shall be made in accordance with
Section 7.3.
Further, the General Partners agree in such event to give prompt written
notice thereof to FmHA. If FmHA rejects the admission of J. Stephen Nail as a
General Partner, then J. Stephen Nail shall withdraw as a General Partner
promptly after an additional General Partner acceptable to FmHA is admitted to
the Partnership. J. Stephen Nail hereby agrees to use best efforts to obtain
such an additional General Partner acceptable to FmHA.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and
distribution) 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 owner-
ship of its Interest; provided, however, that such assignment shall not be
binding on the Partnership until there shall have been filed with the Partner-
ship 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 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
instruments 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 Section
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.
ARTICLE IX
Working Capital; Borrowings
9.1 Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement, including, but not limited to, the restrictions of Section 6.2, and
may be made from any source, including Partners and their Affiliates. Any
Partnership borrowings from any Partner shall be subject to the prior written
consent of FmHA (if required under applicable FmHA regulations or
requirements). 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, such loans shall be an
obligation of the Partnership and (except for advances required by Section 9.1
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(a) shall not constitute borrowings
for the purposes of this Section 9.2 or for any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions
and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4, for each Part nership
fiscal year or portion thereof, all profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures, and tax credits incurred or
accrued on or after the Commencement Date, other than those arising from a
Capital Transaction, shall be allocated 99% to the Investment Limited Partner
and 1% to the General Partners.
(b) Except as otherwise specifically provided in this Article, all pro-
fits and losses arising from a Capital Transaction shall be allocated to the
Partners as follows:
As to profits:
First, that portion of profits (including any profits treated
as ordinary income for Federal income tax purposes) shall be
allocated to the Partners who have negative Capital Account
balances in proportion to the amounts of such balances, provided
that no profits shall be allocated to a Partner under this Clause
First to increase any such Partner's Capital Account above zero;
Second, profits in excess of the amounts allocated under
Clause First above shall be allocated to the General Partners in an
amount equal to the amount of cash distributed or available to be
distributed to them pursuant to Clause Second of Section 10.2(b) as
to the particular Capital Transaction;
Third, profits in excess of the amounts allocated under
Clauses First and Second above shall be allocated to the Investment
Limited Partner in an amount equal to the amount of cash required
to pay to the Investment Limited Partner the full amount (including
interest) of the Credit Recovery Loans;
Fourth, profits in excess of the amounts allocated under
Clauses First, Second and Third above shall be allocated (i) to the
Investment Limited Partner in an amount equal to the sum of (a) its
Invested Amount plus (b) the full amount (including interest) of
any Credit Recovery Loans and (ii) to each other Limited Partner in
an amount equal to the amount of its respective Invested Amount,
reduced (but not below zero) in the case of each Limited Partner
(whether under clause (i) or clause (ii) by the sum of (A) the
total amount of all prior cash made to such Limited Partner
pursuant to Section 10.2(b), Clause Fifth plus (B) the positive
balance in the Capital Account of such Limited Partner prior to the
allocation made pursuant to this Clause Fourth;
Fifth, profits in excess of the amounts allocated under
Clauses First, Second, Third and Fourth above shall be allocated to
each General Partner in the amount of its respective paid-in
Capital Contribution, reduced (but not below zero) by the sum of
(i) the total amount of distributions previously made to it
pursuant to Section 10.2(b), Clause Eighth after the application of
the first paragraph of Section 10.2(b) to credit amounts
distributed under Clause Second of Section 10.2(b) against amounts
distributable under Clause Eighth of Section 10.2(b) (and not
including the amounts so credited) plus (ii) the positive balance
in such General Partner's respective Capital Accounts prior to the
allocations made pursuant to this Clause Fifth; and
Sixth, profits in excess of the amounts allocated under
Clauses First, Second, Third, Fourth, and Fifth above shall be
allocated to the Partners in the same percentages as cash is
distributed under Clause Tenth of Section 10.2(b) after the
application of the final sentence of Section 10.2(b) to credit
amounts distributed under Clause Second of Section 10.2(b) against
amounts distributable under said Clause Tenth (and not including
the amounts so credited.)
As to losses:
First, an amount of losses shall be allocated to the Partners
to the extent and in such proportions as shall be necessary such
that, after giving effect thereto, the respective balances in all
Partners' Capital Accounts shall be in the ratio of 99% for the
Investment Limited Partner and 1% for the General Partners;
Second, an amount of losses shall be allocated to the
Partners until the balance in each Partner's Capital Account equals
the amount of such Partner's Capital Contribution (after the
allocation under Clause First above);
Third, an amount of losses shall be allocated to the Partners
to the extent of and in proportion to such Partners' Capital
Account balances (after the allocations under Clauses First and
Second above); and
Fourth, any remaining amount of losses after the allocations
under Clauses First, Second and Third above shall be allocated to
the Partners in accordance with the manner in which they bear the
Economic Risk of Loss; provided, however, that no Partner bears an
Economic Risk of Loss, then any remaining losses shall be allocated
99% to the Investment Limited Partner and 1% to the General
Partners.
(c) Notwithstanding the foregoing provisions of Sections 10.1(a) and
10.1(b), in no event shall any losses be allocated to the Investment Limited
Partner, the Special Limited Partner or any additional General Partner admitted
pursuant to any Section 4.5(b), Section 5.2(e), Section 6.2(b), Section 6.10 or
Section 7.5, if and to the extent that such allocation would cause, as of the
end of the Partnership taxable year, the negative balance in the Investment
Limited Partner's Capital Account to exceed such Partner's share of Partnership
Minimum Gain plus such Partner's share, if any of Partner Non-Recourse Debt
Minimum Gain. Any losses which are not allocated to a Partner by virtue of the
application of this Section 10.1(c) shall be allocated to the General Partners,
excluding any General Partner which shall have been admitted pursuant to any of
Section 4.5(b), Section 5.2(e), Section 6.2(b), Section 6.10 or Section 7.5.
For purposes of this Section 10.1(c), a Partner's Capital Account shall be
treated as reduced by Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to FmHA approval (if required), Cash Flow for each fiscal year or
portion thereof of the Partnership 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, to the repayment of any Subordinated Loans;
Third, to the payment of the Annual Partnership Management Fee
attributable to such year; and
Fourth, the balance thereof, if any, shall be distributed annually,
within seventy-five (75) days after the end of the fiscal year, 30% to the
Investment Limited Partner and 70% to the General Partners; provided, however,
that during such time as FmHA 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 fiscal year shall not exceed such amounts as FmHA
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 Part-
nership (including, but not limited to, all expenses of the Partnership inci-
dent to the Capital Transaction), excluding (i) debts and liabilities of the
Partnership to Partners or their Affiliates 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, if the Permanent Mortgage is in place at the time of such Capital
Transaction of if such Capital Transaction constitutes a refinancing of the
Permanent Mortgage, to the General Partners in an aggregate amount equal to 5%
of the proceeds remaining after the payment of the items set forth in Clause
First of this Section 10.2(b);
Third, to the payment of any accrued and unpaid Asset Management Fee;
Fourth, to the payment to the Investment Limited Partner of the full
amount (including interest) of any Credit Recovery Loans;
Fifth, 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 Fifth, but never an amount less than zero;
Sixth, to the repayment of any Subordinated Loans;
Seventh, to the repayment of any then-unpaid debts and liabilities owed
to Partners or Affiliates thereof by the Partnership for Partnership
obligations (exclusive of Credit Recovery Loans and Subordinated Loans) to any
of them, including, but not limited to, accrued and unpaid interest on the
Construction and Development Fee and the Annual Partnership Management Fee for
the fiscal year of the Capital Transaction, but excluding the Working Capital
Loan; provided, however, that any debts or obligations to be repaid to any
Limited Partner or Affiliate thereof pursuant to this Clause Sixth shall be
repaid prior to the repayment of any such debts or obligations to any General
Partner or Affiliate thereof;
Eighth, to the Investment Partnership an amount equal to the paid-in
Capital Contributions;
Ninth, to the repayment to the General Partners of their paid-in
Capital Contributions minus any prior distributions made to them under
this Clause Eighth and under Section 10.2(c), but never an amount less
than zero;
Tenth, to each partner in an amount equal to the positive balance
in his capital account after adjustments pursuant to Clauses First
through Ninth of this Section 10.2(b); and
Eleventh, any balance 39.999% to the Investment Limited Partner,
.001% to the Special Limited Partner and 60% to the General Partners.
Notwithstanding the foregoing, however, for the purpose of
determining the amounts to be distributed under Clauses Seventh and
Tenth for a particular Capital Transaction, any distribution to the
General Partners under Clause Second for such Capital Transaction shall
be credited against and reduce any distributions which would otherwise
be made to the General Partners under Clauses Ninth and Eleventh (with
such credit operating first against Clause Ninth distributions and then
against Clause Eleventh distributions); and the amount not distributed
to the General Partners under Clauses Ninth and Eleventh as a result
thereof shall be distributed as if it were additional proceeds of such
Capital Transaction. Any proceeds of a Capital Transaction distributed
to the General Partners under Clause Second which are not currently
credited against a distribution to the General Partners under either of
Clause Ninth or Clause Eleventh from such Capital Transaction shall be
applied as additional credits against any distributions to the General
Partners under either Clauses Ninth and Eleventh which may be the result
of any future Capital Transactions.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the Partnership,
the remaining assets of the Partnership shall be distributed to the
Partners in accordance with the positive balances in their Capital
Accounts after taking into account all Capital Account adjustments for
the Partnership taxable year, including adjustments to Capital Accounts
pursuant to Sections 10.1(b) and 10.3(b). In the event that a General
Partner or Additional Limited Partner has a negative balance in its
Capital Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership 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 90 days after the date of such liquidation) and shall, upon
liquidation of the Partnership, be paid to recourse creditors of the
Partnership or distributed to other Partners in accordance with the
positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits
and losses realized by the Partnership immediately prior to the
liquidation or other distribution event; and (ii) such profits and
losses shall be allocated to the Partners in accordance with Section
10.1(b), and any property so distributed shall be treated as a
distribution of an amount in cash equal to the excess of such fair
market value over the outstanding principal balance of and accrued
interest on any debt by which the property is encumbered. For the
purposes of this Section 10.3(b), "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 Partner with the Consent of the Investment
Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all profits,
tax exempt income, losses, non-deductible non-capitalizable
expenditures, tax credits and cash distributions shared by a class of
Partners shall be shared by each Partner in such class in the ratio of
such Partner's paid-in Capital Contribution to the paid-in Class
Contribution of the class of Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses from
extraordinary events which are not recovered from insurance or
otherwise (collectively "Recourse Obligations") in respect of any
Partnership taxable year, then the calculation and allocation of
profits and losses shall be adjusted as follows: first, an amount
of deductions attributable to the Recourse Obligations shall be
allocated to the General Partners; and second, the balance of such
deductions shall be allocated as provided in Section 10.1(a).
(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.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or Section
10.3, the distributions of the cash portion of such purchase price
and the principal amount of such purchase money indebtedness
hereunder shall be allocated among the Partners in the following
manner: On the basis of the sum of the principal amount of the
purchase money indebtedness and cash payments received on the sale
(net of amounts required to pay Partnership obligations and fund
reasonable reserves), there shall be calculated the percentage of
the total net proceeds distributable to each class of Partners
based on Section 10.2(b) or Section 10.3, as applicable, treating
cash payments and purchase money indebtedness principal
interchangeably for this purpose, and the respective classes shall
receive such respective percentages of the net cash purchase price
and purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated to
the respective classes of Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness
shall be sold, the sale proceeds shall be allocated in the same
proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with 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-l(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as
determined in accordance with the accounting methods followed by
the Partnership and computed in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). Profits and losses for
Federal income tax purposes shall be allocated in the same manner
as set forth in this Article X, except as provided in Section
10.4(b)(iv).
(vi) 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) in an amount 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 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 the minimum gain attributable to such debt
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 chargeback to the extent
that any of the exceptions provided in Treasury Regulation Section
1.704-2T(i)(4) applied consistently with Treasury Regulation
Section 1.704-2(f)(2)-(5) under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in
Section 705(a)(2)(B) of the Code made (1) pursuant to Section
704(e)(2) of the Code to a donee of an Interest, (2) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (3) pursuant to Regulation Section
1.751-1(b)(2)(ii) as a result of a distribution by the Partnership
of unrealized receivables or inventory items or (b) a
distribution, and such 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, plus (iii) such
Partner's share of Partner Non-Recourse Debt Minimum Gain with
respect to which such partner or a Related Person or a Related
Person to such Partner bears the Economic Risk of Loss, 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
Qualified Income Offset Items.
(ix) In the event that any fee payable to the General
Partner or any Affiliate thereof shall instead be determined to be
a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for Federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(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 Qualified Income Offset Items.
(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 reduced by allocations
of losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that the
Partners' Capital Accounts reflect the amounts they would have
reflected 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, tax-exempt income, losses, 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, tax-exempt income, losses, nondeductible
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, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive share of
profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures, or credits (or any item thereof) not to be permitted by
Section 704(b) of the Code and the Treasury Regulations promulgated
thereunder. 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, tax-exempt income, losses, 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 the Limited
Partners than is otherwise provided for herein, 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, tax-exempt income,
losses, non-deductible non-capitalizable expenditures, and credits (and
any item thereof) arising in later years in such manner so as to bring
the allocations of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures, and credits (and each item thereof) to
the Limited
Partners as nearly as possible to the allocations thereof otherwise
contemplated by this Agreement.
(d) New Allocations made by the General Partners under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General Partners to the Partnership and the Limited
Partners, and no such allocation shall give rise to any claim or cause
of action by any Limited Partner.
ARTICLE XI
Management Agent
A. The General Partner shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement. The
Management Agent shall receive a Management Fee of those amounts payable
from time to time by the Partnership to the Management Agent for
management services in accordance with a management contract approved by
FmHA or, when the Apartment Complex is not subject to FmHA regulation,
in accordance with a reasonable and competitive fee arrangement. From
and after the Admission Date, the Partnership shall not enter into any
Management Agreement or modify or extend any Management Agreement unless
(i) the General 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. Notwithstanding the foregoing, however, should the Investment
General Partner or an Affiliate thereof perform property management
services for the Partnership, property management, rent-up or leasing
fees shall be paid to the Investment General Partner or such Affiliate
only for services actually rendered and shall be in an amount equal to
the lesser of (i) fees competitive in price and terms with those of
non-affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably be
available to the Partnership, or (ii) five percent (5%) of the gross
revenues of the Apartment Complex. No duplicate property management
fees shall be paid to any Person.
C. If (i) the Management Agent is the General Partner or an
Affiliate of the 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 Partnership shall not have
Cash Flow of at least $500 during any year after 1995, 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) there is any change in the identity of the General
Partners, or (v) the Management Agent is cited by FmHA, any Tax Credit
monitoring or compliance agency of the State or any other governmental
agency for a 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, then upon request by the Special
Limited Partner and subject to FmHA 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 not an Affiliate of the 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 FmHA 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 Partnership at the principal office of the
Partnership at any and all reasonable times, and may inspect and copy
any of such records. A list of the 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 (including security
deposits and other funds required to be escrowed by FmHA) 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 FmHA 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 20 of
each year, the Auditors shall deliver the tax returns for such year to
the Tax Accountants for their review and comment. If a dispute arises
between the Auditors and the Tax Accountants over the proper preparation
of the tax returns and such dispute cannot be resolved by the Auditors
and the Tax Accountants by March 1 of such 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 annually review FmHA 19308 reports to the
Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations
under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time
periods set forth therein, at any time thereafter upon 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 as approved by FmHA. 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 Partner and the limited partners
and/or holders of beneficial assignee certificates thereof.
(b) Subject to the provisions of Section 12.5, all other elections
required or permitted to be made by the Partnership under the Code shall
be made by the General Partners in such manner as will, in the opinion
of the Auditors, be most advantageous to the Investment Limited Partner
and the limited partners and/or holders of beneficial assignee
certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of
the Investment Limited Partner or a transfer of all or any part of an
interest of a partner and/or holders of beneficial assignee certificates
of the Investment Limited Partner, the Partnership shall elect, upon the
request of the Investment Limited Partner, pursuant to Section 754 of
the Code, to adjust the basis of the Partnership property. Any
adjustments made pursuant to said Section 754 shall affect only the
successor in interest to the transferring Partner or partner or holder
of beneficial assignee certificate thereof. Each Partner will furnish
the Partnership all information necessary to give effect to such
election.
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 sixty (60) days after the end of each fiscal year
of the Partnership, (A) a balance sheet as of the end of such
fiscal year, a statement of income, a statement of partners'
equity, and a statement of cash flows, each for the year then
ended, all of which, except the statement of cash flows, shall be
prepared in accordance with generally accepted accounting
principles, and (B) a report of the activities of the Partnership
during the period covered by the report. With respect to any
distribution to the Investment Limited Partner, the report called
for shall separately identify distributions from (1) Cash Flow
from operations during the period, (2) Cash Flow from operations
during a prior period which had been held as reserves, (3)
proceeds from disposition of property and investments, (4) lease
payments on net leases with builders and sellers, (5) reserves
from the gross proceeds of the Capital Contribution of the
Investment Limited Partner, (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
fiscal year of the Partnership, all information relating to the
Partnership and/or the Apartment Complex which is necessary, in
the view of the Tax Accountants, for the preparation of the
Limited Partners' Federal income tax returns.
(iii) Within thirty (30) days after the end of each quarter
of a fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended,
which may be unaudited;
(C) a statement of cash flows for the quarter then
ended, which may be unaudited;
(D) a 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 and
(b) Within sixty (60) days after the end of each fiscal year of
the Partnership a copy of the annual report to be filed with the United
States Treasury concerning the status of the Apartment Complex as
low-income housing and, if required, a certificate to the appropriate
state agency concerning the same.
(c) Upon the written request of the Investment Limited Partner for
further information with respect to any matter covered in item (a) or
item (b) above, the General 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 Partner an estimate of the Investment Limited
Partner's share of the tax credits, profits and losses of the
Partnership for Federal income tax purposes for the current fiscal year.
Such estimate shall be prepared by the General Partners and the
Auditors.
(e) Within 15 days after the end of any calendar quarter during
which:
(i) there is a material default by the Partnership under the
Project Documents or in payment of any mortgage, taxes, interest
or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further distributions
or Tax Credit allocations to any Limited Partner, or
(iv) any Partner has pledged or collateralized its Interest
in the Partnership,
the General Partner shall send the Investment Limited Partner a detailed
report of such event.
(f) After the Admission Date, the Partnership shall send to the
Investment Limited Partner, 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 FmHA.
(g) On or before May St. of each of the Partnership's fiscal year,
the Partnership shall send to the Investment Limited Partner a report on
operations, in the form supplied by BCCLP.
(h) The General Partners shall cause the Partnership to send to
the Investment Limited Partner a copy of each Construction Mortgage draw
requisition and any notification or correspondence from the Construction
Lender indicating that any such draw will not be paid as requisitioned.
Upon receipt, the Partnership shall send to the Investment Limited
Partner copies of the Form(s) 8609 evidencing the Tax Credit allocation.
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 the relevant
FmHA District Office, as well as any other applicable FMHA office,
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 Partner that the Investment Limited Partner 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 ten (10) days after the expiration of each month.
(i) If the earlier of (A) the Completion Date or (B) the date upon
which tenants first occupied apartment units in the Apartment Complex
after the rehabilitation of such units shall have occurred six months or
more prior to the date upon which the Investment Limited Partner
acquired its Interest in the Partnership, then the General Partners
shall cause to be prepared and delivered to the Investment Limited
Partner within sixty (60) days of the Admission Date the following
items:
(i) An unaudited statement of income of the Partnership for
the year (or such shorter period as there may be from the date of
the most recent audited statement of income of the Partnership)
ended on the date upon which the Investment Limited Partner
acquired its Interest in the Partnership; and
(ii) An unaudited statement of income of the Partnership for
any fiscal year of the Partnership ending between (A) the earlier
of (1) the Completion Date or (2) the date upon which tenants
first occupied apartment units in the Apartment Complex after the
rehabilitation of such units and (B) the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership.
(j) Within thirty (30) days of the Completion Date, 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 may be required by the Investment Limited Partner to
pay as damages the sum of $200 per day (plus interest at a rate equal to
the general base rate of interest established by The First National Bank
of Boston or its successors and assigns and announced by it as the rate
charged by it to its prime commercial customers on short-term unsecured
borrowings as its "base rate" from time to time in effect plus 3%) 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 so fail to pay, the General Partners and their Affiliates shall
forthwith cease to be entitled to the Annual Partnership Management Fee,
and to the payment of any Cash Flow or Capital Transaction proceeds to
which they may otherwise be entitled hereunder. Such payments of the
Annual 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 Annual Partnership Management Fee, Cash Flow and
Capital Transaction proceeds otherwise due to the General Partners or
their Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the Investment
General Partner nor any Affiliate thereof shall be permitted to contract
or otherwise deal with the Partnership for the sale of goods or services
or the lending of money to the Partnership or the General Partners,
except for (i) management services, subject to the restrictions set
forth in Article XI.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 in the Offering Memorandum. 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 percent (10%) of the construction contract rate with respect to
the Apartment Complex or ninety percent (90%) of the competitive price
charged for such services by independent parties for comparable goods
and services in the same geographic location (except that in the case of
transfer agent, custodial and similar banking-type fees, and insurance
fees, the compensation, price or fee shall be at the lesser of costs or
the compensation, price or fee of any other Person rendering comparable
services as aforesaid). Cost of services as used herein means the pro
rata cost of personnel, including an allocation of overhead directly
attributable to such personnel, based on the amount of time such
personnel 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 Offering Memorandum.
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 repurchase of the Investment Limited Partner's Interest. Any
Disposition in contravention of any of the provisions of this Section
13.1 shall be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing provisions
of this Section 13.1, however, the Investment Limited Partner may waive
the provisions of this Section 13.1 at any time as to a Disposition or
series of Dispositions, and in the event of such a waiver, this Section
13.1 shall have no force or effect upon such Disposition or series of
Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner shall
have received any distributions under Article X, the General Partners
shall file an amendment to this Agreement 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 this Agreement. However, Schedule A shall not be amended
on account of any such distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of Substituted Limited
Partners, although the General Partners may elect to do so more
frequently. In the case of assignments, where the assignee does not
become a Substituted Limited Partner, the Partnership shall recognize
the assignment not later than the last day of the calendar month
following receipt of notice of assignment and all docu mentation
required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2, no
such amendments to this Agreement 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
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the
same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each of
the provisions of this Agreement shall be subject to, and the General
Partners covenant to act in accordance with, the Project Documents; (b)
the Project Documents shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successors and assigns
to the extent expressly provided therein; (c) upon any dissolution of
the Partnership or any transfer of the Apartment Complex, no title or
right to the possession and control of the Apartment Complex and no
right to collect the rent therefrom shall pass to any Person who is not,
or does not become, bound by the Project Documents and other FmHA
documents in a manner satisfactory to the FmHA; (d) no amendment to any
provision of the Project Documents shall become effective without the
prior written consent of FmHA (if required); and (e) the affairs of the
Partnership shall be subject to FmHA regulation and no action shall be
taken which would require the consent or approval of FmHA unless the
same is first obtained. No new Partner shall be admitted to the
Partnership, and no Partner shall withdraw from the Partnership or be
substituted for without the consent of FmHA (if such consent is then
required). No amendment to this Agreement relating to matters governed
by FmHA regulations or requirements shall become effective until the
prior written consent of FmHA (if required) to such amendment shall have
been obtained.
Any conveyance or transfer of title to all or any portion of the
Apartment Complex required or permitted under this Agreement shall in
all respects be subject to all conditions, approvals and other
requirements of FmHA rules and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable and
(a) if for any reason any provision is determined to be invalid, such
invalidity shall not impair the operation of or affect those portions of
this Agreement which are valid, and (b) if for any reason any provision
would cause the Investment Limited Partner to be bound by the
obligations of the Partnership (other than the rules and regulations of
FmHA and the requirements of any other Lender), such provision or
provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only with
the Consent of the Investment Limited Partner and the prior written
consent of the Special Limited Partner.
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 breech. 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%.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been
admitted to the Partnership as of the Commencement Date for all purposes
of this Agreement, including Article X hereof; 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 Partner 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 Partner.
INTENTIONALLY LEFT BLANK
INTENTIONALLY LEFT BLANK
WITNESS the execution hereof under seal as of the 1st day of
April, 1996.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER(S): GENERAL PARTNER(S):
Intervest Corporation Intervest Development Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ J. Stephen Nail
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, its J. Stephen Nail, its
duly authorized duly authorized President
Vice President
INVESTMENT LIMITED PARTNER: SPECIAL LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT BCTC 94, INC.
FUND IV, L.P.,
a Delaware
limited partnership
By: Boston Capital Associates By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
IV, L.P. a Delaware ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, Attorney-
limited partnership, in-Fact for ▇▇▇▇ ▇.,
a general partner ▇▇▇▇▇▇▇, its duly
authorized President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇,
Attorney-In-Fact for
▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
its duly authorized
President
GUARANTY
The undersigned unconditionally guarantee the performance by the
General Partner of all of its obligations under Sections 5.1, 5.2, 6.5,
6.10, 6.11(a), 6.12 and 12.7(k) of the Amended and Restated Agreement of
Limited Partnership and hereby waive any right to require that any
action be brought against any other Person or to require that resort be
made to any security prior to enforcement of this guaranty. The
obligations of the undersigned hereunder shall be binding upon the
respective heirs, executors and legal representatives of the
undersigned. Execution of this Agreement by the undersigned is solely
for the purposes of undertaking this guaranty and shall not be deemed to
make the undersigned a partner of the partnership.
/s/ J. Stephen
Nail
J. Stephen
Nail, Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Individually
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the foregoing
Amended and Restated Agreement and Certificate of Limited Partnership
notwithstanding any provision of the Management Agreement to the
contrary.
Management Agent
Intervest Corporation
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice
President
STATE OF MISSISSIPPI )
) ss.
COUNTY OF __________________ )
BEFORE ME, the undersigned Notary Public in and for said County
and State, personally appeared the above-named J. Stephen Nail, known to
me to be the person who executed the foregoing instrument, and, being
duly sworn, acknowledged that the statements therein contained are true
and that he did sign the same is his free act and deed.
WITNESS my hand and official seal this ______ day of _________,
19__.
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF MISSISSIPPI )
) ss.
COUNTY OF __________________ )
BEFORE ME, the undersigned Notary Public in and for said County
and State, personally appeared the above-named J. Stephen Nail, known to
me to be the President of Intervest Development Corporation, who, being
duly sworn, acknowledged that the statements therein contained are true
and that he did sign the same is his free act and deed and that the same
is the duly authorized free act and deed of Intervest Development
Corporation.
WITNESS my hand and official seal this ______ day of _________,
19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence
STATE OF MISSISSIPPI )
) 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 person who executed the foregoing instrument, and being
duly sworn, acknowledged that the statements therein contained are true
and that he did sign the same as his free act and deed.
WITNESS my hand and official seal this ______ day of _________,
19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF MISSISSIPPI )
) 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 Vice President of Intervest Corporation, 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 Intervest Corporation.
WITNESS my hand and official seal this ______ day of _________,
19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
Personally appeared before me, the undersigned authority in and
for said County and State, on this _______ day of ____________, 1996,
within my jurisdiction, the within named ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, Attorney in
Fact for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who acknowledged that he is a general partner
of Boston Capital Associates, which is the general partner of Boston
Capital Associates IV, L.P., which is the general partner of Boston
Capital Tax Credit Fund IV, L.P., and that in said representative
capacity she executed the above and foregoing instrument, after first
having been duly authorized to do so.
(Notary Public)
My Commission Expires:
___________________________
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
Personally appeared before me, the undersigned authority in and
for said County and State, on this _______ day of ____________, 1996,
within my jurisdiction, the within named ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, Attorney in
Fact for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who acknowledged that he is the President of
BCTC 94, Inc., a Delaware corporation, and that for and on behalf of the
said corporation, and as its act and deed she executed the above and
foregoing instrument, after first having been duly authorized by said
corporation to do so.
(Notary Public)
My Commission Expires:
___________________________
▇▇▇▇▇▇▇ Housing, L.P.
Schedule A
As of
April 1, 1996
General Partner Capital
Contribution
Intervest Development Corporation $19,400
▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Special Limited Partner Capital
Contribution
BCTC 94, Inc. $100
c/o Boston Capital
Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution*
Boston Capital $331,997 $149,399
Tax Credit Fund IV, L.P.
c/o Boston Capital
Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
____________________________
*Paid-in Capital Contribution as of the date of this Schedule A. Future
Installments of Capital Contribution are subject to adjustment and are
due at the times and subject to the conditions set forth in the
Agreement to which this Schedule is attached.
13707_1