SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 16, 1996
Boston Capital Tax Credit Fund IV L.P.
(Exact name of registrant as specified in its charter)
Delaware 0-26200
04-3208648
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
c/o Boston Capital Partners, Inc.,
One Boston Place, 21st Floor
Boston, Massachusetts
02108
(Address of principal executive offices)
Registrant's telephone number, including area code (617) 624-8900
313 Congress Street, 6th Floor, Boston, Massachusetts 02210-1232
(Former Name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On April 16, 1996, Boston Capital Tax Credit Fund IV L.P. (the
"Partnership") acquired a limited partnership interest in Smith House II
Limited Partnership, a Massachusetts limited partnership ("SH II"). On such
date, Boston Capital Corporate Tax Credit Fund IV, A Limited Partnership, a
Massachusetts limited partnership ("BCCTC IV"), an affiliate of the
Partnership, also acquired a limited partnership interest in SH II. The
aggregate limited partnership interest acquired by the Partnership and
BCCTC IV is 98.99%; the Partnership's interest is 45% thereof (44.5455%), and
BCCTC IV's interest is 55% thereof (54.4445%).
SH II has been formed to acquire, develop, rehabilitate, maintain
and operate an existing 132-unit apartment complex, consisting of 132 one-
bedroom dwelling units for senior citizens of low and moderate income,
contained in one, twelve-story building, known as Smith House Apartments, and
located in the Lower Roxbury section of Boston, Suffolk County, Massachusetts
(the "Apartment Complex").
Each dwelling unit will contain a refrigerator, a range, air
conditioning, a smoke detector, sprinklers, wall-to-wall carpeting and cable
TV hook-up. The Apartment Complex also will contain central laundry
facilities and a community room. Management will pay water, sewer and oil
heat charges.
Rehabilitation of the Apartment Complex commenced on or about
April 17, 1996, and is expected to be substantially completed in November,
1996. The Operating General Partner expects the Apartment Complex to be 100%
occupied by November, 1996.
Permanent financing for the Apartment Complex is being supplied
from the proceeds of a non-recourse mortgage loan, originally made to the
predecessor in interest of Smith House Associates ("SHA"), a Massachusetts
limited partnership, which subsequently conveyed its ownership interest in the
Apartment Complex to SH II on April 16, 1996, (the "Initial Closing"); and
which original mortgage loan was obtained from the Massachusetts Housing
Finance Agency, a public instrumentality of the Commonwealth of Massachusetts
("MHFA"), in the original principal amount of $3,139,760 (the "Original
Principal"), together with a subsequent increase of $243,290 (the "Principal
Increase") (the "Mortgage Loan"). The outstanding balance of the Mortgage
Loan, consisting of the principal amount of $2,396,070, was assumed by SH II
at the Initial Closing. The Mortgage Loan bears interest at the rate of
5.943% per annum, plus an MHFA interest override of 0.50% per annum, on the
Original Principal, and 7.50% per annum, plus an MHFA interest override of
0.50% per annum, on the Principal Increase, and shall mature and be due and
payable in full on March 1, 2014 (the "Maturity Date"). Monthly payments on
account of interest and principal, based upon a level annuity amortization
schedule over the remaining term of the Mortgage Loan, are due and payable
until the Maturity Date. The Original Principal portion of the Mortgage Loan
is subject to an Interest Subsidy Contract entered into among MHFA, the
predecessor in interest of SHA, and the Massachusetts Department of Community
Affairs (now the Executive Office of Communities and Development of the
Commonwealth of Massachusetts, hereinafter, "EOCD") and which was assigned by
SHA to SH II at the Initial Closing. The Interest Subsidy Contract is
renewable annually and provides for annual interest reduction payments to be
made by EOCD to SH II in an amount sufficient to reduce the effective interest
rate of the Original Principal portion of the Mortgage Loan to SH II to one
percent (1.00%) per annum.
MHFA also is supplying rehabilitation and permanent financing for
the Apartment Complex from the proceeds of a non-recourse second mortgage
loan, under MHFA's energy loan program, in the principal amount of $250,000
(the "Second Mortgage Loan"). The Second Mortgage Loan was made to SH II at
the Initial Closing, is to mature on March 1, 2006, and bears interest at the
rate of 7.00% per annum, plus a 0.50% MHFA interest override; payments on
account of principal of and interest, on a level annuity basis over the term
of the Second Mortgage Loan, are to commence on January 1, 2007, and continue
throughout the term of the Second Mortgage Loan.
Permanent financing also is being supplied from the proceeds of an
unsecured non-recourse third loan in the principal amount of $38,670,
originally made to SHA by Lower Roxbury Management Corporation, a
Massachusetts corporation ("LRMC"), and assumed by SH II at the Initial
Closing (the "Third Loan"). The Third Loan bears interest at the rate of
1.00% per annum, compounded annually, and is to mature on March 31, 2026.
Payments on account of principal and interest are to be made on an annual
basis throughout the term of the Third Loan, as and to the extent that Net
Cash Flow of SH II is available after payment of all obligations due with
respect to the Development Fee; and the entire outstanding balance of
principal and accrued interest shall be due and payable upon the maturity of
the Third Loan.
MHFA (in its capacity as financial intermediary of EOCD, under
EOCD's EURWAP loan program) also is supplying rehabilitation and permanent
financing for the Apartment Complex from the proceeds of a non-recourse
mortgage loan in the principal amount of $100,000 (the "Fourth Mortgage
Loan"). The Fourth Mortgage Loan was made to SH II at the Initial Closing, is
to mature on March 1, 2014, and bears interest at the rate of 1.00% per annum.
Payments on account of principal and interest are to be made on an annual
basis throughout the term of the Fourth Mortgage Loan, as and to the extent
that Net Cash Flow of SH II is available, after payment of all obligations due
with respect to the Development Fee and the Third Loan; and the entire
outstanding balance of principal and accrued interest shall be due and payable
upon the maturity of the Fourth Mortgage Loan.
The Operating General Partner of SH II is Smith II, Inc., a
Massachusetts corporation. The property management agent for the Apartment
Complex is Madison Park Village Associates ("MPVA"), a joint venture of
Madison Park Properties, Inc. and Maloney Properties, Inc.; for its property
management services, initially it shall receive a management fee in an amount
equal to five per cent (5%) of the gross rent collections per year; MPVA also
is serving as the construction manager with respect to the rehabilitation of
the Apartment Complex.
The Partnership and BCCTC IV acquired their interests in SH II
directly from SH II in consideration of their agreement to make capital
contributions to SH II in the aggregate amount of $2,299,008 ($1,034,554 from
the Partnership and $1,264,454 from BCCTC IV), payable in three installments
as follows: (i) a first installment of $2,069,107 ($931,098 from the
Partnership and $1,138,009 from BCCTC IV), which was made upon the admission
of the Partnership and BCCTC IV to SH II and the completion of the Initial
Closing; (ii) a second installment of $172,426 ($77,592 from the Partnership
and $94,834 from BCCTC IV), which is conditional upon the achievement of
Substantial Completion, State Designation, and receipt of the Operating
General Partner's certification of the rehabilitation and development costs,
and the eligible basis of the Apartment Complex, together with an accountants'
report thereon; and (ii) a third installment of $57,475 ($25,864 from the
Partnership and $31,611 from BCCTC IV), which is conditional upon the
achievement of the Initial 100% Occupancy Date, the Final Closing, Breakeven
Operations, and receipt by the Partnership and BCCTC IV of SH II's federal
income tax returns for the year in which Breakeven Operations occurred. The
total capital contributions of the Partnership and BCCTC IV, of $2,299,008,
were determined based on SH II achieving $4,146,830 of Federal Housing Tax
Credits over the eleven-year period consisting of the years 1996 through 2006.
The interests of the Partnership and BCCTC IV in SH II constitute an
aggregate 99% interest in allocations of profits, losses and tax credits from
normal operations of SH II (44.55% to the Partnership and 54.45% to BCCTC IV),
an aggregate 99% interest in distributions of net cash flow from normal
operations (44.55% to the Partnership and 54.45% to BCCTC IV), and an
aggregate 50% interest in allocations of profits and distributions from the
sale or refinancing of the Apartment Complex (22.50% to the Partnership and
27.50% to BCCTC IV). In conjunction with the admission of the Partnership and
BCCTC IV to SH II, BCTC 94, Inc., a Delaware corporation and a designee of the
Partnership and BCCTC IV, also was admitted to SH II as a special limited
partner; in the event of the removal of the Operating General Partner pursuant
to the SH II Operating Partnership Agreement, the interest of BCTC 94, Inc.
would be converted to a general partnership interest in SH II. The Operating
General Partner has made capital contributions to SH II in the amount of $100,
and has retained a 1% interest in allocations of profits, losses and tax
credits from normal operations of SH II, a 1% interest in distributions of
cash from normal operations, and a 50% interest in allocations of profits and
distributions from the sale or refinancing of the Apartment Complex. The
proceeds of the capital contributions of the Partnership and BCCTC IV will be
used by SH II to: (i) pay a development fee to Lower Roxbury Community
Corporation, a Massachusetts non-profit corporation ("LRCC") in its capacity
as the Developer, in the amount of $597,978 (a portion of which will be
deferred and paid from the Net Cash Flow of SH II), and (ii) pay direct
development and rehabilitation costs of the Apartment Complex in the amount of
$1,909,135.
Boston Capital Partners, Inc. will receive an annual Asset
Management Fee in the amount of $7,500, commencing in 1997, from the cash flow
of SH II, for its services in connection with SH II's accounting matters
relating to the Partnership and BCCTC IV and the preparation of tax returns
and reports for the Partnership and BCCTC IV. The Operating General Partner
will receive a partnership management fee from the net cash flow of SH II in
the annual amount of $7,500, commencing in 1997.
The Operating General Partner has agreed to provide all funds
necessary to pay any excess development costs which may arise in connection
with the development and rehabilitation of the Apartment Complex and the
completion of the Initial Closing and the Final Closing. The Operating
General Partner also has agreed to loan to SH II such amounts as shall be
necessary to pay all operating deficits of SH II which may arise during the
period from and after the Final Closing. (The "Final Closing" as used herein
shall refer to the occurrence of all of the following: (i) the occurrence of
completion of the rehabilitation of the Apartment Complex and receipt of
permanent certificates of occupancy from the applicable governmental
jurisdiction or authority for one hundred per cent (100%) of the dwelling
units in the Apartment Complex ("Substantial Completion"); (ii) approval by
MHFA, as and to the extent required, of SH II's certification of actual costs
as to the development and rehabilitation of the Apartment Complex;
(iii) closing of the Mortgage Loan, the Second Mortgage Loan, the Third Loan
and the Fourth Mortgage Loan; and (iv) payment or provision for payment, of
all acquisition, development and rehabilitation costs of the Apartment Complex
including all excess development costs). The foregoing obligations of the
Operating General Partner are guaranteed by LRCC.
After the Initial Closing, SH II will commence additional funding
of the existing Reserve Fund for Replacements as to the Apartment Complex as
required by MHFA in the approximate amount of $3,300 per month. All interest
earnings on funds on deposit in the Reserve Fund for Replacements shall be
retained therein, and all withdrawals shall be made only with the consent or
upon the direction of MHFA.
Pursuant to the SH II Operating Partnership Agreement, LRCC has
certain rights of first refusal, and option rights (at fair market value), to
acquire the interests in SH II of the Partnership and BCCTC IV, or the
Apartment Complex.
* * * * *
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
(i) There are no meaningful financial statements for SH II for
any relevant time period, since there have not yet been any substantial
operations subsequent to the rehabilitation.
(b) Pro forma financial information.
(i) No pro forma statements of operations of SH II have been
prepared since there are no meaningful historical numbers which are affected
by the acquisition.
(c) Exhibits.
(1) (a)
Form of proposed Dealer-Manager Agreement between
Boston Capital Services, Inc. and the Registrant (including, as an exhibit
thereto, the form of Soliciting Dealer Agreement).
(2) (a) Amended and Restated Agreement and Certificate of
Limited Partnership of SH II.
(b) Certification and Agreement for SH II.
(4) (a)
Agreement of Limited Partnership of Boston
Capital Tax Credit Fund IV L.P.
(16) None
(17) None
(21) None
(24) None
(25) None
(28) None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOSTON CAPITAL TAX CREDIT
FUND IV L.P.
By: Boston Capital Associates IV L.P.,
General Partner
By: Boston Capital Associates,
General Partner
By: /s/John P. Manning
Partner
Date: August __, 1996
Exhibit (2)(a)
Exhibit (2)(b)
EXHIBIT A
SMITH HOUSE II LIMITED PARTNERSHIP
FACT SHEET
1. Rehabilitation Financing:
A. First Mortgage Loan:
(i) Lender:Massachusetts Housing Finance Agency ("MHFA")
(ii) Mortgage Amount:Original principal of $3,139,760, together
with increase (in 1991) of $243,290, of which the outstanding balance of
approximately $2,396,070 will be assumed by the Partnership as of the Initial
Closing.
(iii) Note Date:Original Note: June 19, 1972
First Amendment: March 1, 1974
Substitute Note: April 30, 1991
(iv) Interest Rate:(i) 5.943% per annum, plus 0.50% MHFA interest
override, on original principal portion, reduced to effective 1% rate pursuant
to Interest Subsidy Contract; and (ii) 7.50% per annum, plus 0.50% MHFA
interest override, on increase portion
(v) Maturity Date:March 1, 2014
(vi) Amortization:Monthly payments of interest and principal (on
level-annuity amortization schedule) over remainder of loan term
(vii) Guarantor:N/A
(viii) Recourse/Non Recourse:Nonrecourse
B. Second Mortgage Loan:
(i) Lender:MHFA (energy loan program)
(ii) Mortgage Amount:$250,000
(iii) Note Date:April 16, 1996
(iv) Interest Rate:7% per annum, plus 0.50% MHFA interest
override
(v) Maturity Date:December 31, 2006
(vi) Amortization:Monthly payments of interest and principal (on
level annuity amortization schedule) over loan term, commencing January 1,
1997.
(vii) Guarantor:N/A
(viii) Recourse/Nonrecourse:Nonrecourse
C. Third Loan:
(i) Lender:Lower Roxbury Management Corporation
(ii) Mortgage Amount:$38,670
(iii) Note Date:April 16, 1996
(iv) Interest Rate:1% per annum
(v) Maturity Date:March 31, 2026
(vi) Amortization:Payments on account of interest and principal
from and to the extent of Net Cash Flow (if any) remaining available after
payment in full of entire outstanding balance of Development Fee; entire
outstanding balance due and payable at maturity
(vii) Recourse/nonrecourseNonrecourse
D. Fourth Mortgage Loan:
(i) Lender:MHFA (as financial intermediary of EOCD; EURWAP loan
program)
(ii) Amount:$100,000
(iii) Note Date:April 16, 1996
(iv) Interest Rate:1%
(v) Maturity Date:March 1, 2014
(vi) Amortization:Payments on account of interest and principal
from and to the extent of Net Cash Flow (if any) remaining available after
payment in full of entire outstanding balances of Development Fee and Third
Loan; entire outstanding balance due and payable at maturity.
(vii) Recourse/NonRecourse:Nonrecourse
2. Eligible Basis:$5,383,747
3. Qualified Basis:$6,286,802
4. GP Capital Contribution:$100
5. Type of Credit:
LIHC: 9% (rehabilitation)
4% (acquisition)
6. Rent-up Schedule:
100% occupancy by November, 1996
7. Projected Credit to the
Investment Partnership:$4,105,370
A. $117,680 in 1996
(lost credit: $-0-),
B. $410,537 per annum for each of
the years 1997 through 2005, and
C. $292,857 for 2006.
8. Total Projected Credit:$4,146,840
A. $118,868 in 1996,
B. $414,684 per annum for each of
the years 1997 through 2005, and
C. $295,816 for 2006.
9. Tax Credit Application
A. Reservation Date:
B. Reservation Amount:
C. Allocation Date:12/29/95
D. Allocation Amount$414,683 per year
10. Apartment Complex:
A. Name:Smith House Apartments
B. Address:757 Shawmut Avenue
Roxbury, Massachusetts
C. County:Suffolk
D. MSA:Boston
E. Type of Project:Senior Citizens
11. Median Income:$53,100
12. Kind of Apartments: Unit Basic Utility
Number Sq ft Rent Allowance
1 Bedroom 132 ___ $645 $-0-
13. Rental Assistance:
A. Type:HUD Rent Supplement Program
B. Number of Units:
C. Term:
D. Amount:
14. Annual Operating Expense:$804,439 (beginning 1996); inflated 3%
thereafter
15. Replacement Reserve Account:$39,600 per year; plus balance of $200,000
in Account (after Replacement Reserve Withdrawal)
16. Amount of Annual Asset Management Fee to Boston Capital: $7,500,
commencing in 1997
17. Amount of Incentive Management Fee: $7,500, commencing in 1997
18. Amount of Total Depreciable Base Allocated to Personal Property:
$99,158
19. Completion Date: November, 1996 (Anticipated)
20. Total Capital Contribution of Investment Partnerships: $2,299,008
21. Conditions on Capital
Amount InstallmentContributions
$2,069,107* FirstLatest of (i) Admission Date; (ii) Initial
Closing; or (iii) receipt by the Investment Partnerships of
local counsel opinion as set forth in Section 5.04 of the
Partnership Agreement
$172,426** SecondLatest of (i) Substantial Completion;
(ii) State Designation; (iii) receipt of General Partner
Certification of the construction, development costs, and
Eligible Basis of the Apartment Complex, together with
accountants' report thereon; or (iv) satisfaction of all of
the conditions to the payment of the First Installment.
$57,475 ThirdLatest of (i) the Initial 100% Occupancy
Date; (ii) the Final Closing; (iii) the occurrence of
Breakeven Operations; (iv) receipt of a tax return for the
year in which Breakeven Operations occurred; or
(v) satisfaction of all of the conditions to the payment of
the First and Second Installments.
* - Including BCCTC IV Loan proceeds
of $1,137,909.
** - Net of additional BCCTC IV Capital
Contributions of $1,137,909 (equal
to principal amount of BCCTC IV Loan),
and amount equal to accrued interest on
BCCTC IV Loan (estimated to be $43,212).
22.Fees and other items to be paid from Capital Contributions
A. Development Fee: $437,720 (Total Development Fee of $597,978;
Balance of $160,258 payable from Net Cash Flow).
B. Direct Development Costs: $1,861,288
23. General Partner:Smith II, Inc.
Address:122 DeWitt Drive
Roxbury, MA 02120
Telephone:(617) 445-1061
FAX: (617) 427-7030
Contact:Danette Jones
Primary Contact:(i) through Initial Closing:
Trinity Financial (Consultant)
40 Broad Street, Suite 905
Boston, MA 02109
Patrick Lee
(617) 482-0230
(ii) After Initial Closing:
Maloney Properties, Inc.
200 Reservoir Street, Suite 200
Needham, MA 02194
Contact: Susan Stockard
Phone: (617) 449-7887, Ext. 208
24. Ownership Interests:
Profits, Losses Capital Cash
and Credits Transactions Flow
General Partner 1% 50% 50%
Investment Partnerships 99% 50% 50%
25. Management Agent:Madison Park Village Associates (a joint venture of
Madison Park Properties, Inc. and Maloney Properties, Inc.)
Contact:Mark Maloney
President (of Maloney Properties, Inc.)
Address:200 Reservoir Street
Suite 200
Needham, MA 02194
Telephone:(617) 449-7887
Amount of Fee:5% of gross collections
26. Tax Return Preparer/Auditor:Ziner & Company
Contact:Eric Darling/John Mackey
Address:7 Winthrop Square
Boston, MA 02110
Telephone:(617) 542-8880
27. Federal ID Number:04-3293225
28. Operating Deficit Guarantees:Unlimited as to time and amount (also see
Section 8.18 of Operating Partnership Agreement re: reserve funds and escrows,
and Section 16.09 of Operating Partnership Agreement re: guarantee).
29. Building Breakdown
#1
# of Units: 132
Bin #: MA-95-10130
cc: Boston Capital Communications Limited Partnership
Accounting Department
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
BOSTON CAPITAL CORPORATE TAX CREDIT FUND IV,
A LIMITED PARTNERSHIP
___________________________________
CERTIFICATION AND AGREEMENT
___________________________________
CERTIFICATION AND AGREEMENT made as of April 16, 1996, by and among
SMITH HOUSE II LIMITED PARTNERSHIP, a Massachusetts limited partnership (the
"Operating Partnership"), SMITH II, INC., a Massachusetts corporation (the
"Operating General Partner"), and LOWER ROXBURY COMMUNITY CORPORATION, a
Massachusetts non-profit corporation (the "Guarantor"), for the benefit of
BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited partnership
("BCTC IV"), BOSTON CAPITAL ASSOCIATES IV L.P., a Delaware limited partnership
("BCA IV"), BOSTON CAPITAL CORPORATE TAX CREDIT FUND IV, A LIMITED
PARTNERSHIP, a Massachusetts limited partnership ("BCCTC IV"), C&M ASSOCIATES,
d/b/a BOSTON CAPITAL ASSOCIATES, a Massachusetts general partnership ("BCA"),
and BOSTON CAPITAL PARTNERS CORPORATION, a Massachusetts corporation ("BCPC")
(BCTC IV, BCA IV, BCCTC IV, BCA and BCPC are referred to collectively herein
as the "BC Parties"), and PEABODY & BROWN and certain other persons or
entities described herein.
WHEREAS, the Operating Partnership has admitted BCTC IV and BCCTC IV as
limited partners thereof, and proposes to set forth all of the terms and
conditions of the investments by BCTC IV and BCCTC IV pursuant to an Amended
and Restated Agreement and Certificate of Limited Partnership of the Operating
Partnership dated as of April 1, 1996 (the "Operating Partnership Agreement"),
in accordance with which BCTC IV and BCCTC IV each will make substantial
capital contributions to the Operating Partnership; and
WHEREAS, the BC Parties have relied upon certain information and
representations described herein in evaluating the merits of investment by
BCTC IV and BCCTC IV in the Operating Partnership; and
WHEREAS, Peabody & Brown, as counsel for BCTC IV and BCCTC IV, will rely
upon such information and representations in connection with its delivery of
certain opinions with respect to this transaction.
NOW, THEREFORE, for $1.00 and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Operating
Partnership, the Operating General Partner and the Guarantor hereby agree as
follows for the benefit of the BC Parties, Peabody & Brown and certain other
persons hereinafter described.
1. Representations, Warranties and Covenants
of the Operating Partnership, the
Operating General Partner and the Guarantor
The Operating Partnership, the Operating General Partner and the
Guarantor jointly and severally represent, warrant and certify to the BC
Parties and Peabody & Brown that, with respect to the Operating Partnership,
as of the date hereof:
1.1. The Operating Partnership is duly organized and in good
standing as a limited partnership pursuant to the laws of the state of its
formation with full power and authority to acquire and own its apartment
complex (the "Apartment Complex") and conduct its business; the Operating
Partnership, the Operating General Partner and the Guarantor each has the
power and authority to enter into and perform this Certification and
Agreement; the execution and delivery of this Certification and Agreement by
the Operating Partnership, the Operating General Partner and the Guarantor has
been duly and validly authorized by all necessary action; the execution and
delivery of this Certification and Agreement, the fulfillment of its terms and
consummation of the transactions contemplated hereunder do not and will not
conflict with or result in a violation, breach or termination of or constitute
a default under (or would not result in such a conflict, violation, breach,
termination or default with the giving of notice or passage of time or both)
any other agreement, indenture or instrument by which the Operating
Partnership, the Operating General Partner, or the Guarantor is bound or any
law, regulation, judgment, decree or order applicable to the Operating
Partnership, the Operating General Partner, the Guarantor or any of their
respective properties; this Certification and Agreement constitutes the valid
and binding agreement of the Operating Partnership, the Operating General
Partner and the Guarantor, enforceable against each of them in accordance with
its terms.
1.2. The Operating General Partner has delivered to the BC
Parties or their affiliates, all documents and information in its possession
which are material to decisions by BCTC IV and BCCTC IV to invest in the
Operating Partnership. All factual information, including without limitation
the information set forth in Exhibit A hereto, provided by the Operating
General Partner to the BC Parties and/or their affiliates, either in writing
or orally, did not contain at the time given and does not contain on the date
hereof, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they are made. The
estimates of occupancy rates, operating expenses, cash flow and tax credits
set forth on Exhibit A are reasonable in light of the knowledge and experience
of the Operating General Partner.
1.3. Neither the Operating Partnership, the Operating General
Partner, the Guarantor nor any affiliate or anyone acting on behalf of any of
the foregoing has, either directly or indirectly or through any agent, sold,
offered for sale, solicited offers to buy, or otherwise approached offerees
for, or negotiated in respect of, any interest in the Operating Partnership or
the Apartment Complex; neither the Operating Partnership, the Operating
General Partner, the Guarantor nor any affiliate thereof, has previously dealt
with, nor is presently under commitment to, any real estate, securities or
other broker, rental agent, finder or other intermediary with respect to the
interests being acquired by BCTC IV and BCCTC IV in the Operating Partnership
and in the Apartment Complex or any portion thereof, except for their
arrangements with the BC Parties; and the Operating General Partner and the
Guarantor, jointly and severally, shall indemnify and hold harmless the BC
Parties and their respective affiliates, agents and assignees from any and all
claims of any real estate, securities or other broker, rental agent, finder or
other intermediary with respect to the acquisition by BCTC IV and BCCTC IV of
their respective interests in the Operating Partnership and in the Apartment
Complex, and, at the request of the BC Parties (or any of them), the Operating
General Partner and the Guarantor shall assume the defense of any judicial
action(s) that might arise in connection with any such claim(s).
1.4. Neither the Operating Partnership, the Operating General
Partner, the Guarantor nor any affiliate nor anyone acting on behalf of any of
the foregoing has, either directly or indirectly or through any agent, sold,
offered for sale, solicited offers to buy, or otherwise approached offerees
for, or negotiated in respect of, or will, either directly or indirectly or
through any agent, sell, offer for sale, solicit offers to buy, or otherwise
approach offerees for, or negotiate in respect of, the purchase of interests
in real estate projects or entities which are or will be integrated with the
Apartment Complex or the Operating Partnership and treated as a single
offering under the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and any applicable state securities or Blue Sky Laws
(collectively "Applicable Securities Laws").
1.5. As of the date hereof, the Operating Partnership and the
Operating General Partner make each of the representations contained in
Exhibit B attached hereto which are required to be made under the state
securities or Blue Sky laws of the jurisdictions in which Beneficial Assignee
Certificates in BCTC IV (the "BACs") and/or limited partnership interests in
BCCTC IV (the "Units") were offered and sold, both as to themselves and as to
any of their affiliates, any of their predecessors and their affiliates'
predecessors, any of their general partners and/or beneficial owners of ten
per cent (10%) or more of any class of their equity securities (beneficial
ownership meaning the power to vote or direct the vote and/or the power to
dispose or direct the disposition of such securities), as the case may be, and
any promoters presently connected with them in any capacity.
1.6. Each of the representations and warranties of the Operating
General Partner contained in the Operating Partnership Agreement is true and
correct as of the date hereof.
1.7. Each of the covenants and agreements of the Operating
Partnership and the Operating General Partner contained in the Operating
Partnership Agreement has been duly performed to the extent that performance
of any such covenant and agreement is required on or prior to the date hereof.
1.8. No default has occurred and is continuing under the
Operating Partnership Agreement or the Project Documents.
1.9. The Operating General Partner agrees to take all actions
necessary to claim the Projected Credit, including, without limitation, the
filing of Form 8609 with the Internal Revenue Service.
1.10. No person or entity other than the Operating Partnership
will hold any equity interest in the Apartment Complex after the Initial
Closing.
1.11. The Operating Partnership will have the sole responsibility
to pay all maintenance and operating costs, including all taxes levied and all
insurance costs, attributable to the Apartment Complex after the Initial
Closing.
1.12. The Operating Partnership, except to the extent it is
protected by insurance and excluding any risk borne by lenders, will bear the
sole risk of loss if the Apartment Complex is destroyed or condemned or there
is a diminution in the value of the Apartment Complex after the Initial
Closing.
1.13. No person or entity except the Operating Partnership will
have the right to any proceeds, after payment of all indebtedness, from the
sale, refinancing or leasing of the Apartment Complex after the Initial
Closing.
1.14. The Operating General Partner is not related in any manner
to BCTC IV or BCCTC IV, nor is the Operating General Partner acting as an
agent of BCTC IV or BCCTC IV.
2. Indemnification and Contribution With Respect to
Securities Matters
2.1. The Operating General Partner and the Guarantor, jointly and
severally (for purposes of this Section 2.1, the "Indemnifying Party"), agree
to indemnify and hold harmless the BC Parties and their respective affiliates
(for purposes of this Section 2.1, the "Indemnified Parties" or, individually,
an "Indemnified Party") and each officer, director, employee and person, if
any, who controls any Indemnified Party within the meaning of the Applicable
Securities Laws against any losses, claims, damages or liabilities
(collectively "Liabilities"), joint or several, to which any Indemnified Party
or such officer, director, employee or controlling person may become subject,
under the Applicable Securities Laws or otherwise, insofar as such Liabilities
or actions in respect thereof arise out of or are based upon a breach by such
Indemnifying Party of any of its representations, warranties or covenants to
such Indemnified Party or any such of its officers, directors, employees or
controlling persons under this Certification and Agreement; and to reimburse
each such Indemnified Party and each such officer, director, employee or
controlling person for any legal or other expenses reasonably incurred by it
or them in connection with investigating or defending against any such
Liability or action; provided, however, that the Indemnifying Party shall not
be required to indemnify any Indemnified Party or any such officer, director,
employee or controlling person for any payment made to any claimant in
settlement of any Liability or action unless such payment is approved by the
Indemnifying Party or by a court having jurisdiction of the controversy. This
indemnity agreement shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the termination of any
agreement which refers to this indemnity and shall be in addition to any
liability which the Indemnifying Party may otherwise have.
2.2. The Indemnifying Party shall not be liable under the
indemnity agreements contained in Section 2.1 unless the Indemnified Party
shall have notified such Indemnifying Party in writing within ten (10)
business days after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Indemnified Party or any such of its officers, directors, employees or
controlling persons, but failure to notify the Indemnifying Party of any such
claim shall not relieve it from any liability which it may have to the
Indemnified Party or any such of its officers, directors, employees or
controlling persons against whom action is brought otherwise than on account
of its indemnity agreement contained in Section 2.1. In case any action is
brought against any Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it notifies the
Indemnifying Party of the commencement thereof as aforesaid, the Indemnifying
Party shall be entitled to participate at its own expense in the defense, or,
if it so elects, in accordance with arrangements satisfactory to any other
Indemnifying Party or parties similarly notified, to assume the defense
thereof, with counsel who shall be satisfactory to such Indemnified Party or
any such of its officers, directors, employees or controlling persons and any
other Indemnified Parties who are defendants in such action; and after notice
from the Indemnifying Party to such Indemnified Party or any such of its
officers, directors, employees or controlling persons of its election so to
assume the defense thereof and the retaining of such counsel by the
Indemnifying Party, the Indemnifying Party shall not be liable to such
Indemnified Party or any such of its officers, directors, employees or
controlling persons for any legal or other expenses subsequently incurred by
such Indemnified Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other than the
reasonable costs of investigation.
2.3. If the right to indemnification provided for in Section 2.1
of this Certification and Agreement would by its terms be available to a party
or parties hereunder, but is determined by a court of competent jurisdiction
to be unenforceable under Applicable Securities Laws, then, in that event, the
Operating General Partner shall contribute to the aggregate of such losses,
claims, damages and liabilities as are contemplated in such Section 2.1
(including, but not limited to, any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any claim,
action, suit or proceeding) to the extent of ninety per cent (90%) of the
aggregate of such losses, claims, damages and liabilities incurred by a
party(ies) who otherwise would be an Indemnified Party(ies) under and pursuant
to the provisions of such Section 2.1; provided, however, that no person
guilty of fraudulent misrepresentations within the meaning of Section 11(f) of
the Securities Act of 1933, as amended, shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against him or it in
respect of which a claim for contribution may be made against another party or
parties, notify such other party or parties. Failure so to notify such other
party or parties shall not relieve such other party or parties from any other
obligation it or they may have hereunder or otherwise. If such other party or
parties are so notified, such other party or parties shall be entitled to
participate in the defense of such action, suit, proceeding or claim at their
own expense or in accordance with arrangements satisfactory to all parties who
may be required to contribute. After notice from such other party or parties
to the party entitled to contribution of its or their own defense, the party
or parties so electing shall not be liable for any legal or other expenses of
litigation subsequently incurred by the party entitled to contribution in
connection with the defense thereof, other than the reasonable costs of
investigation. No party shall be required to contribute with respect to any
action or claim settled without its consent.
3. Miscellaneous
3.1. This Certification and Agreement is made solely for the
benefit of Peabody & Brown and the BC Parties (and, to the extent provided in
Section 2, the affiliates, officers, directors, partners, employees and
controlling persons referred to therein), and their respective successors and
assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement, and the term "successors and assigns" as used herein
shall not include any purchaser, as such, of any of the BACs and/or the Units.
3.2. This Certification and Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same Certification and Agreement.
3.3. Terms defined in the Operating Partnership Agreement and
used but not otherwise defined herein shall have the meanings given to them in
the Operating Partnership Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as
of the date first above written.
SMITH HOUSE II LIMITED PARTNERSHIP
By: Smith II, Inc.,
General Partner
By: /s/ Danette Jones
President
SMITH II, INC.
By: /s/ Danette Jones
President
LOWER ROXBURY COMMUNITY CORPORATION
By: /s/ Danette Jones
President
EXHIBIT B
CERTIFICATE OF ISSUER AND GENERAL PARTNER(S)
RE: LACK OF DISQUALIFICATIONS
The Issuer (for the purposes of this Exhibit B the term "Issuer" shall
be taken to refer to the "Operating Partnership" as identified in the
Certification and Agreement to which this document is attached as Exhibit B)
and its general partner (the "General Partner") hereby represent to you that
neither (i) the Issuer, (ii) any predecessor Issuer, (iii) any of the Issuer's
affiliates ("affiliate" meaning a person that controls or is controlled by, or
is under common control with, the Issuer), (iv) any sponsor (meaning any
person who (1) is directly or indirectly instrumental in organizing the
investment program, or (2) will directly or indirectly manage or participate
in the management of the investment program, or (3) will regularly perform, or
select the person or entity who will regularly perform, the primary activities
of the investment program), (v) any officer, director, principal or general
partner of the Issuer or of any sponsor, (vi) any officer, director,
principal, promoter or general partner of the General Partner, (vii) any
beneficial owner of ten per cent or more of any class of the equity securities
of the Issuer or of any sponsor (beneficial ownership meaning the power to
vote or direct the vote and/or the power to dispose or direct the disposition
of such securities), or (viii) any promoter of the Issuer (meaning any person
who, acting alone or in conjunction with one or more other persons, directly
or indirectly has taken, is taking or will take the initiative in founding and
organizing the business of the Issuer or any person who, in connection with
the founding and organizing of the business or enterprise of the Issuer,
directly or indirectly receives in consideration of services or property, or
both services and property, ten per cent or more of any class of securities of
the Issuer or ten per cent or more of the proceeds from the sale of any class
of such securities; however, a person who receives such securities or proceeds
either solely as underwriting commissions or solely in consideration of
property shall not be deemed to be a promoter if such person does not
otherwise take part in founding and organizing the enterprise) presently
connected with the Issuer in any capacity:
(1) has filed a registration statement which is the subject of
any pending proceeding or examination under the securities laws of any
jurisdiction, or which is the subject of any refusal order or stop order;
(2) has been convicted of or pleaded nolo contendere to a
misdemeanor or felony or, within the last ten years, been held liable in a
civil action by final judgment of a court based upon conduct showing moral
turpitude in connection with the offer, purchase or sale of any security,
franchise or commodity (which term, for the purposes of this Certificate shall
hereinafter include commodity futures contracts) or any other aspect of the
securities or commodities business, or involving racketeering, the making of a
false filing or a violation of Sections 1341, 1342 or 1343 of Title 18 of the
United States Code or arising out of the conduct of the business of an issuer,
underwriter, broker, dealer, municipal securities dealer, or investment
adviser, or involving theft, conversion, misappropriation, fraud, breach of
fiduciary duty, deceit or intentional wrongdoing including, but not limited
to, forgery, embezzlement, obtaining money under false pretenses, larceny,
fraudulent conversion or misappropriation of property or conspiracy to
defraud, or which is a crime involving moral turpitude, or within the last
five years of a misdemeanor or felony which is a criminal violation of
statutes designed to protect consumers against unlawful practices involving
insurance, securities, commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) is subject to (a) any administrative order, judgment or
decree entered or issued by or procured from a state securities commission or
administrator, the Securities and Exchange ("S.E.C."), the Commodities Futures
Trading Commission or the U.S. Postal Service, or to (b) any administrative
order or judgment arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment
adviser, or involving theft, fraud or fraudulent conduct, or breach of
fiduciary duty, or (c) has been the subject in any state of any administrative
order, judgment, or decree in which fraud, deceit, or intentional wrongdoing,
including but not limited to making untrue statements of material fact or
omitting to state material facts, was found;
(4) is subject to any pending proceeding in any jurisdiction
relating to the exemption from registration of any security or offering, or to
any order, judgment or decree in which registration violations were found or
which prohibits, denies or revokes the use of any exemption from registration
in connection with the offer, purchase or sale of securities, or to an S.E.C.
censure or other order based on a finding of false filing;
(5) is subject to any order, judgment or decree of any court or
regulatory authority or competent jurisdiction temporarily or preliminarily
restraining or enjoining, or is subject to any order, judgment or decree of
any court or regulatory authority of competent jurisdiction, temporarily,
preliminarily or permanently restraining or enjoining, such persons from
engaging in or continuing any conduct or practice in connection with any
aspect of the securities or commodities business or involving the making of
any false filing or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment
adviser, or which restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against unlawful or
deceptive practices involving insurance, banking, commodities, real estate,
franchises, business opportunities, consumer goods and services, or is subject
to a United States Postal Service false representation order entered within
five years prior to the commencement of the Offering or is subject to a
temporary restraining order or preliminary injunction with respect to conduct
alleged to have violated section 3005 of Title 39, United States Code;
(6) is suspended or expelled from membership in, or suspended or
barred from association with a member of, an exchange registered as a national
securities exchange, an association registered as a national securities
association, or any self regulatory organization registered pursuant to the
Securities Exchange Act of 1934 or a Canadian securities exchange or
association or self-regulatory organization operating under the authority of
the Commodity Futures Trading Commission or is subject to any currently
effective order or order entered within the past five years of the S.E.C., the
Commodity Futures Trading Commission or any state securities administrator
denying registration to or revoking or suspending the registration of such
person as a broker-dealer, agent, futures commission merchant, commodity pool
operator, commodity trading adviser or investment adviser and associated
persons of any of the foregoing, or prohibits the transaction of business as a
broker-dealer or agent;
(7) has, in any application for registration or in any report
required to be filed with or in any proceeding before the S.E.C. or any state
securities commission or any regulatory authority, willfully made or caused to
be made any statement which was at the time and in the light of the
circumstances under which it was made false or misleading with respect to any
material fact, or has willfully omitted to state in any such application,
report or proceeding any material fact which is required to be stated therein
or necessary in order to make the statements made, in the light of the
circumstances under which they are made, not misleading, or has willfully
failed to make any required amendment to or supplement to such an application,
report or statement in a timely manner;
(8) has willfully violated any provision of the Securities Act
of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939,
the Investment Advisers Act of 1940, the Investment Company Act of 1940, the
Commodity Exchange Act of 1974 or the securities laws of any state, or any
predecessor law, or of any rule or regulation under any of such statutes;
(9) has willfully aided, abetted, counseled, commanded, induced
or procured the violation by any other person of any of the statutes or rules
or regulations referred to in subsection (8) hereof;
(10) has failed reasonably to supervise his agents, if he is a
broker-dealer, or his employees, if he is an investment adviser, but no person
shall be deemed to have failed in such supervision if there have been
established procedures, and a system for applying such procedures, which would
reasonably be expected to prevent and detect, insofar as practicable, any
violation of statutes, rules or orders described in subsection (8) and if such
person has reasonably discharged the duties and obligations incumbent upon him
by reason of such procedures and system without reasonable cause to believe
that such procedures and system were not being complied with;
(11) is subject to a currently effective state administrative
order or judgment procured by a state securities administrator within five
years prior to the commencement of the Offering or is subject to a currently
effective United States Postal Service fraud order or has engaged in dishonest
or unethical practices in the securities business or has taken unfair
advantage of a customer;
(12) is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his obligations as they
mature, or is in such financial condition that he cannot continue his business
with safety to his customers, or has not sufficient financial responsibility
to carry out the obligations incident to his operations; or
(13) is selling or has sold, or is offering or has offered for
sale, in any state, securities through any unregistered agent required to be
registered under the Pennsylvania Securities Act of 1972, as amended (the
"Pennsylvania Act") or for any broker-dealer or issuer with knowledge that
such broker-dealer or issuer had not or has not complied with the Pennsylvania
Act.
If the Issuer is subject to the requirements of Sections 12, 14,
or 15(d) of the Securities Exchange Act of 1934, then, the Issuer has filed
all reports required by those Sections to be filed during the 12 calendar
months preceding the first sale of the Issuer's securities under Rule 505 (or
for such shorter period that the Issuer was required to file such
SMITH HOUSE II LIMITED PARTNERSHIP
AMENDED AND RESTATED AGREEMENT AND
CERTIFICATE OF LIMITED PARTNERSHIP
As of April 1, 1996
SMITH HOUSE II LIMITED PARTNERSHIP
AMENDED AND RESTATED AGREEMENT AND
CERTIFICATE OF LIMITED PARTNERSHIP
This Amended and Restated Agreement and Certificate of Limited
Partnership is made and entered into as of the 1st day of April, 1996 by and
among the undersigned parties.
WHEREAS, as of November 2, 1995, Smith II, Inc., a Massachusetts
corporation ("Smith II"), as the General Partner, and Danette Jones, an
individual resident of Massachusetts ("Jones"), as the Initial Limited
Partner, executed an Agreement of Limited Partnership (the "Partnership
Agreement") of Smith House II Limited Partnership (the "Partnership"); and
WHEREAS, as of November 17, 1995, Smith II, as the General Partner,
executed, and subsequently filed in the Office of the Secretary of State of
Massachusetts on December 1, 1995, a Certificate of Limited Partnership for
the formation of the Partnership; and
WHEREAS, the Partnership has been formed to acquire an existing
structure located in Roxbury, Massachusetts, and to develop, rehabilitate,
own, maintain and operate a 132-unit mid-rise apartment complex intended for
rental to senior citizens of low and moderate income, known as Smith House
Apartments (the "Apartment Complex"); and
WHEREAS, on December 22, 1995, the Partnership acquired an ownership
interest in the existing structure from Smith House Associates, a
Massachusetts limited partnership, by quit claim deed, which deed was
subsequently recorded in the Suffolk County, Massachusetts, Registry District
of the Land Court, on December 27, 1995; and
WHEREAS, the parties hereto now desire to enter into this Amended and
Restated Agreement and Certificate of Limited Partnership to (i) continue the
Partnership; (ii) admit Boston Capital Tax Credit Fund IV L.P. ("BCTC IV"), a
Delaware limited partnership, and Boston Capital Corporate Tax Credit Fund IV,
A Limited Partnership, a Massachusetts limited partnership ("BCCTC IV"), to
the Partnership as Limited Partners; (iii) withdraw the Initial Limited
Partner from the Partnership; (iv) admit BCTC 94, Inc., a Delaware corporation
("BCTC 94"), to the Partnership as the Special Limited Partner; (v) recognize
Lower Roxbury Community Corporation ("LRCC") as the guarantor (the
"Guarantor") of the obligations and duties of the General Partner as set forth
in this Partnership Agreement; (vi) reassign Interests in the Partnership; and
(vii) set forth all of the provisions governing the Partnership.
NOW, THEREFORE, in consideration of the foregoing, of mutual promises of
the parties hereto and of other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the parties hereby agree to
continue the Partnership pursuant to the Act, as set forth in this Amended and
Restated Agreement and Certificate of Limited Partnership, which reads in its
entirety as follows:
TABLE OF CONTENTS
Page
ARTICLE I CONTINUATION OF PARTNERSHIP
1
1.01. Continuation
1
1.02. Name
1
1.03. Principal Executive Offices;
Agent for Service of Process
1
1.04. Term
1
1.05. Recording of Certificate
1
ARTICLE II DEFINED TERMS
2
ARTICLE III PURPOSE AND BUSINESS OF THE PARTNERSHIP
15
3.01. Purpose of the Partnership
15
3.02. Authority of the Partnership
15
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS;
DUTIES AND OBLIGATIONS
17
4.01. Representations, Warranties & Covenants Relating
to the Apartment Complex and the Partnership
17
4.02. Duties and Obligations Relating to the
Apartment Complex and the Partnership
20
ARTICLE V PARTNERS, PARTNERSHIP INTERESTS AND
OBLIGATIONS OF THE PARTNERSHIP
22
5.01. Partners, Capital Contributions
and Partnership Interests
22
5.02. Return of Capital Contribution
26
5.03. Withholding of Capital Contributions Upon Default
26
5.04. Legal Opinions
26
5.05. Repurchase Obligation
28
5.06. Asset Management Fee
28
5.07. BCCTC IV Loan
28
ARTICLE VI CHANGES IN PARTNERS
30
6.01. Withdrawal of a General Partner
30
6.02. Admission of a Successor or Additional
General Partners
30
6.03. Effect of Bankruptcy, Death, Withdrawal, Dissolu-
tion or Incompetence of a General Partner
31
ARTICLE VII ASSIGNMENT TO THE PARTNERSHIP
33
ARTICLE VIII RIGHTS, OBLIGATIONS AND POWERS OF THE
GENERAL PARTNER
34
8.01. Management of the Partnership
34
8.02. Limitations Upon the Authority of the
General Partner
35
8.03. Management Purposes
36
8.04. Delegation of Authority
36
8.05. General Partner or Affiliates Dealing with
Partnership
36
8.06. Other Activities
37
8.07. Liability for Acts and Omissions
37
8.08. [Intentionally Omitted]
37
8.09. Rehabilitation of the Apartment Complex;
Rehabilitation Cost Overruns, Operating Deficits
37
8.10. Development Fee
38
8.11. Incentive Partnership Management Fee
39
8.12. Withholding of Fee Payments
39
8.13. Removal of the General Partner
40
8.14. Selection of Management Agent
42
8.15. Removal of the Management Agent
42
8.16. Replacement of the Management Agent
43
8.17. Loans to the Partnership
43
8.18. Reserve Funds and Operating Assurances
43
8.19. Option to Purchase; Right of First Refusal
44
8.20. Operating and Capital Budgets
45
ARTICLE IX TRANSFERS OF, AND RESTRICTIONS ON
TRANSFERS OF INTERESTS OF LIMITED PARTNERS
46
9.01. Acquisition for Investment
46
9.02. Restrictions on Transfer of Limited Partners'
Interests
46
9.03. Admission of Substitute Limited Partners
46
9.04. Rights of Assignee of Partnership Interest
48
ARTICLE X RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
49
10.01. Management of the Partnership
49
10.02. Limitation on Liability of Limited Partners
49
10.03. Other Activities
49
ARTICLE XI PROFITS, LOSSES AND DISTRIBUTIONS
50
11.01. Allocation of Profits, Losses, Credits and
Cash Distributions
50
11.02. Determination of Profits, Losses and Credits
51
11.03. Allocation of Gains and Losses
51
11.04. Distribution of Proceeds from Sale and
Liquidation of Partnership Property
52
11.05. Capital Accounts
53
11.06. Authority of General Partner to Vary Allocations
to Preserve and Protect Partners' Interest
54
11.07. Designation of Tax Matters Partner
55
11.08. Authority of Tax Matters Partner
55
11.09. Expenses of Tax Matters Partner
56
11.10. Minimum Gain Provisions
56
ARTICLE XII SALE, DISSOLUTION AND LIQUIDATION
59
12.01. Dissolution of the Partnership
59
12.02. Winding Up and Distribution
59
ARTICLE XIII BOOKS AND RECORDS, ACCOUNTING
61
TAX ELECTIONS, ETC.
13.01. Books and Records
61
13.02. Bank Accounts
61
13.03. Accountants
61
13.04. Reports to Partners
62
13.05. Section 754 Elections
65
13.06. Fiscal Year and Accounting Method
65
ARTICLE XIV AMENDMENTS
66
14.01. Proposal and Adoption of Amendments
66
ARTICLE XV CONSENTS, VOTING AND MEETINGS
67
15.01. Method of Giving Consent
67
15.02. Submissions to Limited Partners
67
15.03. Meetings; Submissions of Matters for Voting
67
ARTICLE XVI GENERAL PROVISIONS
68
16.01. Burden and Benefit
68
16.02. Applicable Law
68
16.03. Counterparts
68
16.04. Separability of Provisions
68
16.05. Entire Agreement
68
16.06. Liability of the Investment Partnerships
68
16.07. Environmental Protection
69
16.08. Notices 70
16.09. Continuing Guarantee of Financial Obligations
of the General Partner by the Guarantor
70
ARTICLE .I
CONTINUATION OF PARTNERSHIP
1.01. Continuation. The undersigned hereby continue the Partnership as
a limited partnership under the Act.
1.02. Name. The name of the Partnership is SMITH HOUSE II LIMITED
PARTNERSHIP.
1.03. Principal Executive Offices; Agent for Service of Process. The
principal executive and record office of the Partnership shall be c/o Smith
II, Inc., 122 DeWitt Drive, Roxbury, Massachusetts 02120. The Partnership may
change the location of its principal executive office to such other place or
places as may hereafter be determined by the General Partner. The General
Partner shall promptly notify all other Partners of any change in the
principal executive office. The Partnership may maintain such other offices
at such other place or places as the General Partner may from time to time
deem advisable.
The name of the registered agent for service of process and the address
of the Registered Office of the Partnership in Massachusetts is Danette Jones,
122 DeWitt Drive, Roxbury, Massachusetts 02120.
1.04. Term. The term of the Partnership commenced as of December 1,
1995, and shall continue until December 31, 2035, unless the Partnership is
sooner dissolved in accordance with the provisions of this Agreement.
1.05. Recording of Certificate. Upon the execution of this Amended and
Restated Agreement and Certificate of Limited Partnership by the parties
hereto, the General Partner shall take all actions necessary to assure the
prompt recording hereof as required by the Act, including filing with the
Secretary of State of the Commonwealth of Massachusetts. All fees for filing
shall be paid out of the Partnership's assets. The General Partner shall take
all other necessary action required by law to perfect and maintain the
Partnership as a limited partnership under the laws of the State, and shall
register the Partnership under any assumed or fictitious name statute or
similar law in force and effect in the State.
ARTICLE II
DEFINED TERMS
In addition to the abbreviations of the parties set forth in the
preamble to this Agreement, the following defined terms used in this Agreement
shall have the meanings specified below:
"Accountants" means Ziner & Company, of Boston, Massachusetts, or such
other firm of independent certified public accountants as may be engaged by
the General Partner, with the Consent of BCTC 94, to prepare the Partnership
income tax returns.
"Act" means the Uniform Limited Partnership Act of the Commonwealth of
Massachusetts, as amended from time to time during the term of the
Partnership.
"Actual Credit" means as of any point in time, the total amount of the
Tax Credits actually allocated by the Partnership to the Investment
Partnerships, representing ninety-nine per cent (99%) of the Tax Credits
actually received by the Partnership, as shown on the applicable tax return of
the Partnership.
"Admission Date" means the date upon which the Investment Partnerships
are admitted to the Partnership.
"Affiliate" means any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with a General Partner, or with another designated Person, as the context may
require.
"Agency" means EOCD, in its capacity as the designated agency of the
Commonwealth of Massachusetts to allocate Low-Income Housing Tax Credits,
acting through any authorized representative.
"Agreement" means this Amended and Restated Agreement and Certificate of
Limited Partnership, as amended from time to time.
"Apartment Complex" means the Land owned by the Partnership in Roxbury,
Massachusetts, and the 132-unit mid-rise rental apartment development and
other improvements located thereon, owned and to be rehabilitated and operated
thereon by the Partnership.
"Asset Management Fee" means the fee payable by the Partnership to
Boston Capital, or an Affiliate thereof, pursuant to Section 5.06.
"Bankruptcy" or "Bankrupt" as to any Person means the filing of a
petition for relief as to any such Person as debtor or bankrupt under the
Bankruptcy Act of 1898 or the Bankruptcy Code of 1978 or like provision of law
(except if such petition is contested by such Person and has been dismissed
within 60 days); insolvency of such Person as finally determined by a court
proceeding; filing by such Person of a petition or application to accomplish
the same or for the appointment of a receiver or a trustee for such Person or
a substantial part of his assets; commencement of any proceedings relating to
such Person under any other reorganization, arrangement, insolvency,
adjustment of debt or liquidation law of any jurisdiction, whether now in
existence or hereinafter in effect, either by such Person or by another,
provided that if such proceeding is commenced by another, such Person
indicates his approval of such proceeding, consents thereto or acquiesces
therein, or such proceeding is contested by such Person and has not been
finally dismissed within 60 days.
"BCCTC IV" means Boston Capital Corporate Tax Credit Fund IV, A Limited
Partnership, a Massachusetts limited partnership, which is a Limited Partner
of the Partnership.
"BCCTC IV Loan" means the loan in the principal amount of $1,137,909 to
be made to the Partnership by BCCTC IV as of the Admission Date, and as
described in Section 5.07 of this Agreement.
"BCTC IV" means Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, which is a Limited Partner of the Partnership.
"BCTC 94" means BCTC 94, Inc., a Delaware corporation, which is the
Special Limited Partner of the Partnership.
"Boston Capital" means Boston Capital Partners, Inc., a Massachusetts
corporation.
"Breakeven Operations" means the date upon which the aggregate of the
rental and miscellaneous income from the normal operation of the Apartment
Complex and payments received by the Partnership pursuant to the Interest
Subsidy Contract, the Rent Supplement Contract and the Operating Subsidy
Agreement, received on a cash basis for a period of six (6) consecutive
calendar months after the Final Closing, equals or exceeds all accrued
operational costs of the Apartment Complex, including but not limited to
taxes, assessments, Reserve Fund for Replacements deposits, scheduled and
required debt service payments, the Asset Management Fee, and a ratable
portion of the annual amount (as reasonably estimated by the General Partner)
of those seasonal and/or periodic expenses (such as utilities, maintenance
expenses and real estate taxes) which might reasonably be expected to be
incurred on an unequal basis during a full annual period of operation, for
such period of six (6) consecutive calendar months, with each such calendar
month taken individually.
"Capital Account" means the capital account of a Partner as described in
Section 11.05.
"Capital Contribution" means the total amount of money or other property
contributed or agreed to be contributed, as the context requires, to the
Partnership by each Partner pursuant to the terms of this Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Interest of such Partner.
"Capital Transaction" means any transaction the proceeds of which are
not includable in determining Cash Flow, including without limitation the
disposition, whether by partial sale (except when such sale proceeds are to be
used pursuant to a plan or budget approved by all of the Partners), casualty
(where the proceeds are not to be used for reconstruction), condemnation,
refinancing or similar event of any part of the Apartment Complex, prior to
the sale of the Apartment Complex, where the gross proceeds from such sale or
event exceed $50,000.
"Cash Flow" means, with respect to any year or other applicable period,
all Revenues received by the Partnership during such period, less
(i) operating expenses of the Partnership paid from Revenues during the
applicable period, (ii) all cash payments made from Revenues during such
period with respect to the Mortgage Loan and the Second Mortgage Loan, and
(iii) all amounts from Revenues, if any, added to the Reserve Fund for
Replacements and the Operating Reserve Account, as may be required from time
to time by the Lender pursuant to the Project Documents, during such period.
In no event will deductions in determining Cash Flow pursuant to clauses (i)
and (ii) above include payments made on account of amounts due on any
Subordinated Loans, the Asset Management Fee and/or the Incentive Partnership
Management Fee.
Cash Flow shall be determined separately for each fiscal year and shall
not be cumulative. Wherever there is a reference to the distribution of Cash
Flow pursuant to the provisions of this Agreement, Cash Flow shall be deemed
to be limited to Surplus Cash available for distribution.
"Certificate" means this Agreement, or any certificate of limited
partnership or any other instrument or document which is required under the
laws of the State to be signed and sworn to by the Partners of the Partnership
and filed in the appropriate public offices within the State to perfect or
maintain the Partnership as a limited partnership under the laws of the State,
to effect the admission, withdrawal or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State.
"Chapter 121A Regulatory Agreement" means that certain agreement among
the Partnership, Smith House Associates and the Boston Redevelopment
Authority, dated as of November 16, 1995.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding provision or provisions of succeeding law.
"Consent" means the prior written consent or approval of BCTC 94 (acting
on behalf of the Investment Partnerships) and/or any other Partner, as the
context may require, to do the act or thing for which the consent is
solicited.
"Counsel" or "Counsel for the Partnership" shall mean Hale and Dorr, of
Boston, Massachusetts, or such other attorney or law firm upon which BCTC 94
and the General Partner shall agree; provided, however, that if any section of
this Agreement either (i) designates particular counsel for the purpose
described therein, or (ii) provides that counsel for the purpose described
therein shall be chosen by another method or by another Person, then such
designation or provision shall prevail over this general definition.
"Declaration of Covenants" means the Tax Credit Regulatory Agreement and
Declaration of Restrictive Covenants to be entered into between the Agency and
the Partnership at or prior to the Final Closing, setting forth certain terms
and conditions pursuant to which the Apartment Complex is to be operated.
"Developer" means LRCC, in its capacity as the developer of the
Apartment Complex.
"Development Fee" means the fee payable by the Partnership to the
Developer pursuant to Section 8.10 of this Agreement.
"Development Sources" means the aggregate of: (a) the proceeds of the
Mortgage Loan, the Second Mortgage Loan, the Third Loan, the Fourth Mortgage
Loan and the Replacement Reserve Withdrawal, (b) the proceeds of the BCCTC IV
Loan, and (c) the Capital Contributions of the Investment Partnerships to the
Partnership.
"EOCD" means the Executive Office of Communities and Development of the
Commonwealth of Massachusetts.
"Excess Development Costs" means all funds in excess of the Development
Sources which are required to: (i) complete rehabilitation of the Apartment
Complex, including paying any cost overruns and the cost of any change orders
which have been approved by the Lender and by BCTC 94, as and to the extent
required, and which are not funded from proceeds of the Development Sources;
(ii) achieve Substantial Completion, (iii) achieve Initial Closing and Final
Closing, and satisfy any escrow deposit requirements which are conditions to
the Final Closing, including, without limitation, any amounts necessary for
local taxes, utilities, insurance premiums and other amounts which are
required (provided, however, that if any such deposits are made by the General
Partner, and the funds, or any portion thereof, subsequently are released from
such deposit, the funds so released shall not constitute Partnership property
and shall be paid to the General Partner); (iv) pay any applicable loan
assessment fees, discounts or other costs or expenses incurred by the
Partnership as a result of the occurrence of the Initial Closing and/or the
Final Closing; (v) pay any Operating Deficits incurred by the Partnership
prior to the Final Closing; (vi) pay the entire outstanding balance of
principal of and interest on the BCCTC IV Loan; and (vii) pay not less than
$437,720 on account of the Development Fee pursuant to Section 8.10 of this
Agreement.
"Final Closing" means the occurrence of all of the following:
(i) Substantial Completion; (ii) approval by the Lender, as and to the extent
required, of the Partnership's certification of actual costs as to the
development and rehabilitation of the Apartment Complex; (iii) closing of the
Mortgage Loan, the Second Mortgage Loan and the Fourth Mortgage Loan; and
(iv) payment, or provision for payment, of all acquisition, development and
rehabilitation costs of the Apartment Complex, including all Excess
Development Costs.
"40-60 Set-Aside Test" means the Minimum Set-Aside Test whereby at least
40% of the units in the Apartment Complex must be occupied by individuals with
incomes of 60% or less of area median income, as adjusted for family size.
"Fourth Mortgage Loan" means the nonrecourse mortgage loan to be made to
the Partnership by the Lender (in its capacity as the financial intermediary
of EOCD) at the Initial Closing in the principal amount of $100,000, which
loan is to be made with funds supplied to the Lender by EOCD, which will be
evidenced by a promissory note to be given by the Partnership to the Lender at
the Initial Closing, and which will be secured by the Third Mortgage and any
related security agreements and financing statements. The Fourth Mortgage
Loan is to bear interest at the rate of one per cent (1%) per annum; the
Fourth Mortgage Loan is to mature on March 1, 2014. Payments on account of
principal of and interest on the Fourth Mortgage Loan are to be made as
follows: (a) payments on account of interest on and principal of the Fourth
Mortgage Loan are to be made annually from and to the extent of Net Cash Flow
available after payment of all obligations due with respect to the Development
Fee and the Third Loan; and (b) the entire outstanding balance of principal of
and interest on the Fourth Mortgage Loan shall be due and payable upon the
maturity of the Fourth Mortgage Loan.
"General Partner" means Smith II, and any other Person admitted as a
general partner pursuant to this Agreement, and their respective successors
pursuant to this Agreement, including particularly the provisions of Sections
6.03 and 8.13.
"Guarantor" means LRCC, in its capacity as Guarantor pursuant to this
Agreement.
"Incentive Partnership Management Fee" means the fee payable by the
Partnership to the General Partner pursuant to Section 8.11 of this Agreement.
"Initial Closing" means the date upon which: (i) the Partnership
acquires the entire ownership of the Land and the improvements thereon from
the Seller; (ii) the Partnership assumes and agrees to perform the Seller's
obligations with respect to the Mortgage Loan; (iii) the Second Mortgage Loan
is closed and the proceeds of the Second Mortgage Loan are authorized to be
disbursed to the Partnership; (iv) the Fourth Mortgage Loan is closed and the
proceeds of the Fourth Mortgage Loan are authorized to be disbursed to the
Partnership; and (v) the proceeds of the Replacement Reserve Withdrawal are
authorized to be disbursed to the Partnership; the Initial Closing is expected
to occur on or about April 16, 1996.
"Initial 100% Occupancy Date" means the first date upon which 100% of
the apartment units in the Apartment Complex have been leased to, and have
been occupied by, qualified tenants under executed Lender-approved leases, if
any such approval is applicable.
"Installment" means an Installment of the Investment Partnerships'
Capital Contributions paid or payable to the Partnership pursuant to Section
5.01.
"Interest" or "Partnership Interest" means the ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which such Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of
such Partner to comply with all the terms and provisions of this Agreement and
of said Act. Such Interest of each Partner shall, except as otherwise
specifically provided herein, be that percentage of the aggregate of such
benefit or obligation specified by Section 5.01 as such Partner's Percentage
Interest.
"Interest Subsidy Contract" means the Interest Subsidy Contract entered
into among the Seller's predecessor in interest as owner of the Apartment
Complex (and subsequently assigned to and assumed by the Seller), MHFA and the
Massachusetts Department of Community Affairs (now EOCD), providing for
interest reduction payments to be made by EOCD with respect to the Mortgage
Loan; the Interest Subsidy Contract is renewable annually, will be assigned by
the Seller to the Partnership at the Initial Closing, and will provide for
annual payments to the Partnership in an amount sufficient to reduce the
effective interest rate to the Partnership of the initial principal portion of
the Mortgage Loan (and not the increase thereto) to one per cent (1.00%) per
annum.
"Invested Amount" means, as to the Investment Partnerships, an amount
equal to the Investment Partnerships' paid-in Capital Contributions, divided
by 73%.
"Investment Partnerships" means BCTC IV and BCCTC IV.
"Land" means the tract of land upon which the Apartment Complex is
located.
"Lender" means MHFA, in its capacity as the maker of the Mortgage Loan,
the Second Mortgage Loan and the Fourth Mortgage Loan, acting through any
authorized representative.
"Limited Partner(s)" means the Investment Partnerships and/or BCTC 94,
or any other Limited Partner in such Person's capacity as a limited partner of
the Partnership.
"Liquidator" means the General Partner or, if there is none at the time
in question, such other Person who may be appointed in accordance with
applicable law and who shall be responsible for taking all action necessary or
appropriate to wind up the affairs of, and distribute the assets of, the
Partnership upon its dissolution.
"Low-Income Housing Tax Credit" means the low-income housing tax credit
allowed for low-income housing projects pursuant to Section 42 of the Code.
"LRCC" means Lower Roxbury Community Corporation, a Massachusetts non-
profit corporation, which is an Affiliate of the General Partner.
"LRMC" means Lower Roxbury Management Corporation, a Massachusetts
corporation, which is an Affiliate of the General Partner.
"Management Agent" means the management and rental agent for the
Apartment Complex.
"Management Agreement" means the agreement among the Partnership, the
Management Agent and MHFA, providing for the marketing and management of the
Apartment Complex by the Management Agent.
"MHFA" means the Massachusetts Housing Finance Agency, a public
instrumentality of the Commonwealth of Massachusetts.
"MHFA Subsidy Escrow Account" means the account to be established
pursuant to the requirements of the Lender and the Investment Partnerships,
and described in Section 8.18(b) of this Agreement.
"Minimum Set-Aside Test" means the set-aside test selected by the
Partnership pursuant to Section 42(g) of the Code with respect to the
percentage of units in the Apartment Complex to be occupied by tenants with
incomes equal to no more than a certain percentage of area median income. The
Partnership has selected or will select the 40-60 Set-Aside Test as the
Minimum Set-Aside Test.
"Mortgage" means the mortgage, together with all amendments thereto,
given by the Seller in favor of the Lender as maker of the Mortgage Loan,
which constitutes a first lien on the Apartment Complex and which secures the
Mortgage Loan.
"Mortgage Loan" means the non-recourse permanent mortgage loan made by
the Lender, with an aggregate amount outstanding as of the Initial Closing of
approximately $2,396,070, and consisting of: (i) the original construction
and permanent mortgage loan financing made by the Lender to the Seller's
predecessor in interest as owner of the Apartment Complex (and subsequently
assigned to and assumed by the Seller), which bears interest at the rate of
five and nine hundred forty-three one-thousandths per cent (5.943%) per annum,
plus an annual interest override of one-half of one per cent (0.50%) of the
original principal balance; and (ii) the increase to the aforesaid original
mortgage loan financing made by the Lender to the Seller, which bears interest
at the rate of seven and one-half per cent (7.50%) per annum, plus an annual
interest override of one-half of one per cent (0.50%) of the original
principal amount of such increase. The Mortgage Loan is secured by the
Mortgage and other related security documents and financing statements; the
Mortgage Loan shall mature and be due and payable in full on March 1, 2014.
Monthly payments on account of interest (reflecting the interest rates on the
two components of the principal amount as aforesaid) and principal, based upon
a level annuity amortization schedule over the remaining term of the Mortgage
Loan, together with annual payments of the interest override as aforesaid, are
due and payable until the maturity date of the Mortgage Loan. The Mortgage
Loan is subject to the Interest Subsidy Contract, which reduces the effective
interest rate on the initial principal portion of the Mortgage Loan (and not
the increase thereto) to one per cent (1.00%) per annum.
"Net Cash Flow" means, with respect to any year or other applicable
period, Cash Flow with respect to such period, less payments from first
available Cash Flow of the Asset Management Fee.
"Notice" means a writing containing the information required by this
Agreement to be communicated to a Partner and sent by express courier, by
telephone facsimile transmission, or by registered or certified mail, postage
prepaid, return receipt requested, to such Partner at the last known address
of such Partner, the date of receipt thereof (or the next business day, if the
date of receipt is not a business day) (or, in the case of registered or
certified mail, the date of registry thereof or the date of the certification
receipt therefor, as applicable) being deemed the date of such Notice;
provided, however, that any written communication containing such information
sent to such Partner actually received by such Partner shall constitute Notice
for all purposes of this Agreement.
"Operating Deficit" means the amount by which the aggregate of the
income of the Partnership from rental payments made by tenants of the
Apartment Complex and all other income of the Partnership, including payments
received by the Partnership pursuant to the Interest Subsidy Contract, the
Rent Supplement Contract and the Operating Subsidy Agreement (other than
proceeds of any loans to the Partnership and investment earnings on funds on
deposit in the Reserve Fund for Replacements and other such reserve or escrow
funds or accounts), for a particular period of time, is exceeded by the sum
of: (i) all the operating expenses; all debt service payments due and payable
with respect to the Mortgage Loan and the Second Mortgage Loan, as applicable
(excluding any permitted accruals as to any of such loans); operating and
maintenance expenses; deposits into the Reserve Fund for Replacements; any
Lender fee payments; and all other Partnership obligations or expenditures as
and to the extent provided for in an approved budget pursuant to Section 8.20
of this Agreement, excluding payments for rehabilitation of the Apartment
Complex and fees and other expenses and obligations of the Partnership to be
paid from the Capital Contributions of the Investment Partnerships to the
Partnership pursuant to this Agreement; and (ii) commencing in 1997, the Asset
Management Fee.
"Operating Subsidy Agreement" means the Operating Subsidy Agreement to
be entered into as of the Initial Closing among the Partnership, BCTC 94, the
Developer and the Lender, which will provide the terms and conditions for the
administration of, and the making of withdrawals from, the MHFA Subsidy Escrow
Account.
"Partner" means any General Partner and any Limited Partner.
"Partnership" means Smith House II Limited Partnership.
"Partnership Agreement" means this Amended and Restated Agreement and
Certificate of Limited Partnership, as amended from time to time.
"Percentage Interest" means the percentage Interest of each Partner as
set forth in Section 5.01.
"Person" means any individual, partnership, corporation, trust or other
entity.
"Project Documents" means and includes the Repair Loan Agreement to be
entered into between the Partnership and the Lender at the Initial Closing,
the Development Fund Agreement to be entered into between the Partnership and
the Lender at the Initial Closing, the Mortgage, the Second Mortgage, the
Third Mortgage, the Declaration of Covenants, the Regulatory Agreement, the
Management Agreement, the Chapter 121A Regulatory Agreement, the Interest
Subsidy Contract, the Rent Supplement Contract, the Operating Subsidy
Agreement, and all other documents and instruments delivered to (or required
by) the Lender or the Agency, and all other documents relating to the
Apartment Complex and by which the Partnership is bound, as amended or
supplemented from time to time.
"Projected Credit" means Low-Income Housing Tax Credits in the amount of
$117,680 for 1996, $410,537 per year for each of the years 1997 through 2005,
and $292,857 for 2006, which the General Partner has projected to be the total
amount of the Tax Credits which will be allocated to the Investment
Partnerships by the Partnership, constituting ninety-nine per cent (99%) of
the aggregate amount of Tax Credits which are projected to be available to the
Partnership; provided, however, that if the Actual Credit for 1996 is greater
than (or less than) $117,680, the Projected Credit for the year 2006 shall be
reduced (increased) by an amount equal to the amount by which the Actual
Credit for 1996 exceeds (is less than) $117,680.
"Regulatory Agreement" means the regulatory agreement to be entered into
between the Partnership and the Lender at the Initial Closing, with respect to
the Mortgage Loan, which will set forth certain terms and conditions under
which the Apartment Complex is to be operated.
"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 cannot exceed 30% of the qualifying income levels of those
units.
"Rent Supplement Contract" means the Rent Supplement Contract entered
into between the Seller and the U.S. Department of Housing and Urban
Development ("HUD"), providing for rent supplement payments to be made by HUD
with respect to certain tenants of the Apartment Complex; the Rent Supplement
Contract will be assigned by the Seller to the Partnership at the Initial
Closing.
"Replacement Reserve Withdrawal" means funds in the amount of $200,000,
which are to be withdrawn from the Reserve Fund for Replacements at the
Initial Closing, with the approval of the Lender, and made available to the
Partnership for the payment of certain of the costs of rehabilitation of the
Apartment Complex.
"Reserve Fund for Replacements" means the reserve fund for replacements
with respect to the Apartment Complex as required by the Lender, and as is
described in Section 8.18(a) of this Agreement.
"Revenues" means all cash receipts of the Partnership during any period
except for Capital Contributions, proceeds from the liquidation, sale or
refinancing of Partnership property or of a Capital Transaction, the proceeds
of any loan to the Partnership, and investment earnings on funds on deposit in
the Reserve Fund for Replacements and the MHFA Subsidy Escrow Account.
"Second Mortgage" means the mortgage to be given by the Partnership in
favor of the Lender at the Initial Closing, which will constitute a second
lien on the Apartment Complex, subject and subordinate to the lien of the
Mortgage, and which will secure the Second Mortgage Loan.
"Second Mortgage Loan" means the nonrecourse permanent second mortgage
energy loan to be made by the Lender to the Partnership at the Initial Closing
with respect to the Apartment Complex, in the principal amount of $250,000,
and which will be secured by the Second Mortgage and any related security
agreements and financing statements. The Second Mortgage Loan will bear
interest at the rate of seven per cent (7.00%) per annum, plus an annual
interest override of one-half of one per cent (0.50%) of the original
principal amount; the Second Mortgage Loan shall mature on December 31, 2006,
and payments on account of principal of and interest on the Second Mortgage
Loan, based on a level annuity amortization schedule that will fully amortize
the principal of the Second Mortgage Loan as of its maturity date, are to be
made on a monthly basis commencing as of January 1, 1997, and continuing
throughout the term of the Second Mortgage Loan.
"Seller" means Smith House Associates, a Massachusetts limited
partnership, which owns an interest in the Apartment Complex, which interest
will be conveyed to the Partnership at the Initial Closing.
"State" means the Commonwealth of Massachusetts.
"State Designation" means, with respect to the Apartment Complex, the
allocation by the Agency of Low-Income Housing Tax Credits, as evidenced by
the receipt by the Partnership of an IRS Form 8609 executed by the Agency as
to the building constituting the Apartment Complex.
"Subordinated Loan" means any loan made by the General Partner to the
Partnership pursuant to Section 8.16.
"Subsidy Escrow Withdrawal" means funds in the amount of $60,000, which
are to be withdrawn from the Partnership's subsidy escrow funds at the Initial
Closing, and made available to the Partnership for the payment of certain of
the costs of development and rehabilitation of the Apartment Complex.
"Substantial Completion" means the date upon which all of the following
have occurred: (i) the rehabilitation of the Apartment Complex has been
completed as evidenced by the Partnership's receipt of the certification of
the inspecting architect as to the satisfactory substantial completion of all
rehabilitation and construction work as to the Apartment Complex, and by the
receipt by BCTC 94 of a certification as to such satisfactory substantial
completion of rehabilitation from the reviewing architect retained by BCTC 94;
(ii) the Partnership shall have received an updated owner's title insurance
policy (or endorsement thereto) satisfactory to BCTC 94; (iii) BCTC 94 shall
have received evidence satisfactory to it that all amounts payable to the
construction manager and all subcontractors have been paid in full (other than
agreed-upon retainage amounts payable at the Final Closing), and that the
Partnership is not in violation of the construction management agreement or
any subcontracts; (iv) BCTC 94 shall have received evidence satisfactory to it
that all due diligence recommendations as to the Apartment Complex remaining
unresolved as of the Initial Closing (if any), have been fully resolved and/or
performed in accordance with a separate letter agreement to be entered into
between the Partnership and BCTC 94 as of the Initial Closing (as and to the
extent applicable); and (v) the Partnership shall have received an estoppel
letter, satisfactory to BCTC 94, from the Lender.
"Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03.
"Surplus Cash" means, for the period from and after the Final Closing,
any cash from all sources (other than investment earnings on funds on deposit
in the Reserve Fund for Replacements and the MHFA Subsidy Escrow Account, and
withdrawals from the Reserve Fund for Replacements) remaining at the end of an
annual fiscal period (a) after the payment (on a thirty day current basis) of
(i) all sums due and currently required to be paid under the terms of the
Mortgage Loan and the Second Mortgage Loan, (ii) any amounts required by the
Lender to be deposited in the Reserve Fund for Replacements and/or the MHFA
Operating Reserve Account, and (iii) all obligations of or with respect to the
Apartment Complex, including operating expenses and escrow deposits for taxes
and insurance, other than the Mortgage Loan and the Second Mortgage Loan; and
(b) after the segregation of all tenant security deposits held, together with
accrued interest thereon payable to the tenant(s) pursuant to the laws of the
State.
"Tax Credit" means the Low-Income Housing Tax Credit.
"Third Mortgage" means the mortgage to be given by the Partnership in
favor of the Lender at the Initial Closing, which will constitute a third lien
on the Apartment Complex, subject and subordinate to the liens of the Mortgage
and the Second Mortgage, and which will secure the Fourth Mortgage Loan.
"Third Loan" means the unsecured nonrecourse loan made to the Seller by
LRMC in the original principal amount of $38,670; the rights, duties and
obligations of the Seller as to the Third Loan are to be assumed by the
Partnership as of the Initial Closing. The Third Loan: (i) is to be evidenced
by a certain promissory note to be executed by the Partnership as of the
Initial Closing; (ii) bears interest at the rate of one per cent (1%) per
annum, compounded annually; and (iii) is to mature on March 31, 2026. Payments
on account of principal of and interest on the Third Loan are to be made as
follows: (a) payments on account of interest on and principal of the Third
Loan are to be made annually from and to the extent of Net Cash Flow remaining
available after payment of all obligations due with respect to the Development
Fee; and (b) the entire outstanding balance of principal of and interest on the
Third Loan shall be due and payable upon the maturity of the Third Loan.
ARTICLE III
PURPOSE AND BUSINESS OF THE PARTNERSHIP
3.01. Purpose of the Partnership. The Partnership has been organized
exclusively to acquire the Apartment Complex, and to develop, finance,
rehabilitate, own, maintain, operate and sell or otherwise dispose of the
Apartment Complex, in order to obtain long-term appreciation, cash income, Tax
Credits and tax losses.
3.02. Authority of the Partnership. In order to carry out its purpose,
the Partnership is empowered and authorized to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of its purpose, and for the protection and
benefit of the Partnership, including but not limited to the following:
(a) acquire ownership of the Apartment Complex;
(b) rehabilitate, operate, maintain, improve, buy, own, sell,
convey, assign, mortgage, rent or lease any real estate and any personal
property necessary to the operation of the Apartment Complex;
(c) provide housing, subject to the Minimum Set-Aside Test and
the Rent Restriction Test and consistent with the requirements of the
Declaration of Covenants and the Regulatory Agreement, so long as the
Declaration of Covenants and the Regulatory Agreement, as applicable,
remain(s) in force;
(d) enter into any kind of activity, and perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to,
the accomplishment of the purposes of the Partnership;
(e) borrow money and issue evidences of indebtedness in
furtherance of the Partnership business and secure any such indebtedness by
mortgage, pledge, or other lien, provided, however, that the Mortgage Loan,
the Second Mortgage Loan, the Third Loan and the Fourth Mortgage Loan, and any
evidences of indebtedness thereof and any documents amending, modifying or
replacing them shall have the legal effect that the Partnership and the
Partners shall have no personal liability for the repayment of the principal
of or payment of interest on the Mortgage Loan, the Second Mortgage Loan, the
Third Loan and the Fourth Mortgage Loan, or other such indebtedness, and that
the sole recourse of any lender with respect to the principal thereof and
interest thereon shall be to the property securing the Mortgage Loan, the
Second Mortgage Loan, the Third Loan or the Fourth Mortgage Loan, as
applicable; except that any Partner shall be personally responsible (i) for
funds or property of the Apartment Complex coming into such party's hands,
which it is not entitled to retain, and (ii) for such party's own acts and
deeds, or the acts and deeds of others which it has authorized, in violation
of the provisions of any of the Project Documents;
(f) maintain and operate the Apartment Complex, including hiring
the Management Agent (which Management Agent may be any of the Partners or an
Affiliate thereof) and entering into any agreement for the management of the
Apartment Complex during its rent-up and after its rent-up period;
(g) subject to the approval of the Agency and/or the Lender, if
required, and to other limitations expressly set forth elsewhere in this
Agreement, negotiate and conclude agreements for the sale, exchange, lease or
other disposition of all or substantially all of the property of the
Partnership, or for the refinancing of any mortgage loan on the property of
the Partnership;
(h) enter into the Declaration of Covenants with the Agency and
the Regulatory Agreement with the Lender providing for regulations with
respect to rents, profits, dividends and the disposition of property;
(i) rent dwelling units in the Apartment Complex from time to
time, in accordance with the provisions of the Code applicable to Low-Income
Housing Tax Credits and in accordance with applicable federal, state and local
regulations, collecting the rents therefrom, paying the expenses incurred in
connection with the Apartment Complex, and distributing the net proceeds to
the Partners, subject to any requirements which may be imposed by the
Declaration of Covenants and/or the Regulatory Agreement; and
(j) do any and all other acts and things necessary or proper in
furtherance of the Partnership business.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS;
DUTIES AND OBLIGATIONS
4.01. Representations, Warranties and Covenants Relating to the
Apartment Complex and the Partnership. As of the date hereof, the General
Partner hereby represents, warrants and covenants to the Partnership and to
the Partners that:
(a) the rehabilitation of the Apartment Complex shall be
undertaken and completed in a timely and workmanlike manner in accordance with
(i) all applicable requirements of the Lender, (ii) all applicable
requirements of all appropriate governmental entities, and (iii) the plans and
specifications of the Apartment Complex that have been or shall be hereafter
approved by the Lender and any applicable governmental entities, as such plans
and specifications may be changed from time to time with the approval of the
Lender and any applicable governmental entities, if such approval shall be
required;
(b) at the Initial Closing and as of the date hereof, the Land
is and will be properly zoned for the Apartment Complex, it has obtained all
consents, permissions and licenses required by all applicable governmental
entities, and the Apartment Complex conformed and conforms to all applicable
federal, state and local land use, zoning, environmental and other
governmental laws and regulations;
(c) all appropriate public utilities, including sanitary and
storm sewers, water, gas and electricity, are currently available and are
operating properly for all dwelling units in the Apartment Complex;
(d) at the Initial Closing, good and marketable fee simple title
to the Apartment Complex will be acquired and held by the Partnership, and
title insurance policies of a financially responsible institution acceptable
to the Lender, in the amount of the replacement cost of the Apartment Complex,
which amount shall not be less than (i) as to the Partnership, the total of
(A) the aggregate of the principal amounts of the Mortgage Loan, the Second
Mortgage Loan, the Third Loan and the Fourth Mortgage Loan, and (B) the
Capital Contributions of the General Partner and the Invested Amount; and
(ii) a title insurance policy acceptable to the Lender, in an amount equal to
the aggregate of the principal amounts of the Mortgage Loan, the Second
Mortgage Loan and the Fourth Mortgage Loan, shall be issued in favor of the
Lender;
(e) there shall be no direct or indirect personal liability of
the Partnership or of any of the Partners for the repayment of the principal
of or payment of interest on either the Mortgage Loan, the Second Mortgage
Loan, the Third Loan or the Fourth Mortgage Loan, and the sole recourse of the
Lender and LRMC, respectively, under the Mortgage Loan, the Second Mortgage
Loan, the Third Loan and the Fourth Mortgage Loan, respectively, with respect
to the principal thereof and interest thereon, shall be to the property
securing the indebtedness;
(f) it is not aware of any default under any agreement,
contract, lease, or other commitment, or of any claim, demand, litigation,
proceedings or governmental investigation pending or threatened against it,
the Apartment Complex or the Partnership, or related to the business or assets
of the Partnership or of the Apartment Complex, which claim, demand,
litigation, proceeding or governmental investigation could result in any
judgment, order, decree, or settlement would materially and adversely affect
the business or assets of the Partnership or of the Apartment Complex;
(g) neither it nor any of its Affiliates nor the Partnership,
has entered, or shall enter, into any agreement or contract for the payment of
any Mortgage Loan or Second Mortgage Loan or Third Loan or Fourth Mortgage
Loan discounts, additional interest, yield maintenance or other interest
charges or financing fees or any agreement providing for the guarantee of
payment of any such interest charges or financing fees relating to the
Mortgage Loan, the Second Mortgage Loan, the Third Loan or the Fourth Mortgage
Loan; in no event will it or the Partnership enter into any such agreement or
guaranty of any kind whatsoever (such as an escrow arrangement or letter of
credit arrangement) which would subject the Partnership or any of the Partners
to personal liability with respect to the repayment of the principal of the
Mortgage Loan, the Second Mortgage Loan, the Third Loan or the Fourth Mortgage
Loan;
(h) the execution of this Agreement, the incurrence of the
obligations set forth in this Agreement, and the consummation of the
transactions contemplated by this Agreement do not violate any provision of
law, any order, judgment or decree of any court binding on the Partnership,
the General Partner or its Affiliates, any provision of any indenture,
agreement, or other instrument to which the Partnership or it or any of its
Affiliates is a party or by which the Partnership or the Apartment Complex is
affected, and is not in conflict with, and will not result in a breach of or
constitute a default under any such indenture, agreement, or other instrument
or result in creating or imposing any lien, charge, or encumbrance of any
nature whatsoever upon the Apartment Complex;
(i) at the Initial Closing, fire and extended coverage insurance
for the full replacement value of the Apartment Complex (excluding the value
of the Land, site utilities, landscaping and foundations) and worker's
compensation and public liability insurance, all in favor of the Partnership,
will be in full force and effect and will be kept in full force and effect
during the term of the Partnership; all such policies shall be in amounts and
with insurers satisfactory to the Lender, and shall be paid for out of
Partnership assets; until Final Closing, it, on behalf of the Partnership,
will maintain not less than $6,000,000 of liability insurance covering the
Land and the Apartment Complex;
(j) neither it, on behalf of the Partnership, nor the
Partnership, has incurred any financial responsibility with respect to the
Apartment Complex prior to the date of execution of this Agreement, other than
that disclosed to the Investment Partnerships;
(k) at the Initial Closing, as of the date hereof and at the
Final Closing, the Partnership is and will continue to be a valid limited
partnership, duly organized under the laws of the State, has and shall
continue to have full power and authority to acquire the Apartment Complex and
to develop, rehabilitate, operate and maintain the Apartment Complex in
accordance with the terms of this Agreement, and had taken and shall continue
to take all action under the laws of the State and any other applicable
jurisdiction that is necessary to protect the limited liability of the Limited
Partners and to enable the Partnership to engage in its business;
(l) no restrictions on the sale or refinancing of the Apartment
Complex, other than the restrictions set forth or to be set forth in the
Declaration of Covenants, the Regulatory Agreement and the other Project
Documents, exist as of the date hereof, and no such restrictions shall, at any
time while either of the Investment Partnerships is a Limited Partner, be
placed upon the sale or refinancing of the Apartment Complex;
(m) the Apartment Complex is being developed and operated in a
manner which satisfies, and shall continue to satisfy, all restrictions,
including tenant income and rent restrictions, applicable to projects
generating Low-Income Housing Tax Credits under Section 42 of the Code;
(n) the Projected Credits applicable to the Apartment Complex
are $117,680 of Low-Income Housing Tax Credits for 1996, $410,537 per year of
Low-Income Housing Tax Credits for each of the years 1997 through 2005, and
$292,857 of Low-Income Housing Tax Credits for 2006; provided, however, that
if the Actual Credit for 1996 is greater than (is less than) $117,680, the
Projected Credit for the year 2006 shall be reduced (increased) by an amount
equal to the amount by which the Actual Credit for 1996 exceeds (is less than)
$117,680;
(o) it shall use its best efforts to ensure that the Management
Agent adequately fulfills its obligations to the Partnership as construction
manager for the performance of the rehabilitation work as to the Apartment
Complex; and
(p) it shall use its best efforts to ensure that the Interest
Subsidy Contract is renewed annually so long as the Mortgage Loan shall remain
outstanding.
4.02. Duties and Obligations Relating to the Apartment Complex
and the Partnership.
The General Partner shall have the following duties and
obligations with respect to the Apartment Complex and the Partnership:
(a) all requirements shall be met which are necessary to obtain
or achieve (i) compliance with the Minimum Set-Aside Test, the Rent
Restriction Test, and any other requirements necessary for the Apartment
Complex to initially qualify, and to continue to qualify, for Tax Credits,
including all requirements set forth in the Declaration of Covenants and the
Regulatory Agreement, (ii) issuance of all necessary certificates of
occupancy, including all governmental approvals required to permit occupancy
of all of the apartment units in the Apartment Complex, subsequent to the
rehabilitation of the Apartment Complex, (iii) the Final Closing, and
(iv) compliance with all provisions of the Project Documents;
(b) while conducting the business of the Partnership, it shall
not act in any manner which it knows or should have known after due inquiry
will (i) cause the termination of the Partnership for federal income tax
purposes without the Consent of BCTC 94, or (ii) cause the Partnership to be
treated for federal income tax purposes as an association taxable as a
corporation;
(c) the Apartment Complex shall be managed upon Substantial
Completion so that (i) no less than eighty per cent (80%) of the gross income
from the Apartment Complex (other than receipts from the Interest Subsidy
Contract, the Rent Supplement Contract and the MHFA Subsidy Escrow Account) in
every year is rental income from dwelling units in the Apartment Complex used
to provide living accommodations not on a transient basis and (ii) the rental
of all units in the Apartment Complex comply with the tenant income
limitations and other restrictions under the Rent Restriction Test, the
Declaration of Covenants and the Regulatory Agreements;
(d) it shall exercise good faith in all activities relating to
the conduct of the business of the Partnership, including the development,
operation and maintenance of the Apartment Complex, and it shall take no
action with respect to the business and property of the Partnership which is
not reasonably related to the achievement of the purpose of the Partnership;
(e) all of (i) the fixtures, maintenance supplies, tools,
equipment and the like now and to be owned by the Partnership or to be
appurtenant to, or to be used in the operation of the Apartment Complex, as
well as (ii) the rents, revenues and profits earned from the operation of the
Apartment Complex, will be free and clear of all security interests and
encumbrances except those established pursuant to the Mortgage Loan, the
Second Mortgage Loan and the Fourth Mortgage Loan, as applicable, and any
additional security agreements executed in connection therewith;
(f) it will execute on behalf of the Partnership all documents
necessary to elect, pursuant to Sections 732, 743 and 754 of the Code, to
adjust the basis of the Partnership's property upon the request of BCTC 94,
if, in the sole opinion of BCTC 94, such election would be advantageous to the
Investment Partnerships;
(g) it guarantees the repayment by the Partnership of any Credit
Recovery Loan from the Investment Partnership to the Partnership made pursuant
to Section 5.01(d)(iii), and it guarantees payment by the Partnership of the
Development Fee pursuant to the terms of Section 8.10;
(h) it shall, during and after the period in which it is a
Partner, provide the Partnership with such information and sign such documents
as are necessary for the Partnership to make timely, accurate and complete
submissions of federal and state income tax returns; and
(i) it guarantees the completion of rehabilitation of the
Apartment Complex and the assumption and receipt of the funding provided by
the Mortgage Loan, the Second Mortgage Loan, the Third Loan and the Fourth
Mortgage Loan.
ARTICLE V
PARTNERS, PARTNERSHIP INTERESTS
AND OBLIGATIONS OF THE PARTNERSHIP
5.01. Partners, Capital Contributions and Partnership Interests.
(a) The General Partner, its principal address or place of
business, its Capital Contributions and its Percentage Interest are as
follows:
Smith II, Inc. $100 1.00%
122 DeWitt Drive
Roxbury, MA 02120
(b) (i) The Limited Partners, their principal offices or
places of business, their Capital Contributions and their Percentage Interests
are as follows:
Boston Capital Tax
44.5455%
Credit Fund IV L.P.
c/o Boston Capital $1,034,554, as more
Partners, Inc. specifically set forth
One Boston Place, 21st Floor in subparagraph (c)
Boston, MA 02108 immediately below
Boston Capital Corporate
54.4445%
Tax Credit Fund IV, A
Limited Partnership
c/o Boston Capital $1,264,454 (plus an amount
Partners, Inc. equal to interest accrued
One Boston Place, 21st Floor on the BCCTC IV Loan), as
Boston, MA 02108 more specifically set forth in
subparagraph (c)
immediately below.
(ii) The Special Limited Partner, its principal office or
place of business, its Capital Contribution and its Percentage Interest is as
follows:
BCTC 94, Inc. $ 1.00 0.01%
c/o Boston Capital
Partners, Inc.
One Boston Place, 21st Floor
Boston, MA 02108
(c) Subject to the provisions of this Agreement, including
without limitation, the provisions of Sections 5.01(d), 5.01(e) and 5.03, the
Investment Partnerships shall be obligated to make Capital Contributions to
the Partnership in the aggregate amount of $2,299,008 (plus an amount equal to
interest accrued on the BCCTC IV Loan, as set forth in Section 5.01(c)(ii)
below), in three (3) installments (the "Installments"), which Installments
shall be due and payable in cash by the Investment Partnerships, solely from
Capital Contributions of their investor limited partners to the Investment
Partnerships, within ten (10) days after BCTC 94 shall have received evidence,
reasonably satisfactory to it, of the occurrence of each of the conditions set
forth below as to the applicable Installment, as follows:
(i) $931,198 ($931,098 from BCTC IV and $100 from
BCCTC IV), upon the latest to occur of (A) the Admission Date, or
(B) the Initial Closing, or (C) receipt by the Investment
Partnerships of the legal opinion provided for in Section 5.04 of
this Agreement (the "First Installment");
(ii) $1,310,335 ($77,592 from BCTC IV, and $1,232,743, plus
an amount equal to interest accrued on the BCCTC IV Loan
(estimated to be $43,212), from BCCTC IV), upon the latest to
occur of (A) Substantial Completion, (B) State Designation,
(C) receipt by the Investment Partnerships of a certification by
the General Partner, in form and substance acceptable to BCTC 94,
of the construction and development costs of the Apartment Complex
and the Eligible Basis of the Apartment Complex for purposes of
Tax Credits, together with an accountants' report thereon issued
by the Accountants (the "Cost Certification"), (D) payment in full
of the entire outstanding balance of the BCCTC IV Loan (as and to
the extent that funds are available therefor from proceeds of the
Second Installment), or (E) satisfaction of the conditions to the
making of the First Installment (the "Second Installment"); and
(iii) $57,475 ($25,864 from BCTC IV and $31,611 from
BCCTC IV), upon the latest to occur of (A) the Initial 100%
Occupancy Date, (B) Final Closing, (C) the occurrence of Breakeven
Operations, (D) receipt by the Investment Partnerships of the
federal income tax return, and audited financial statements, of
the Partnership for the fiscal year in which Breakeven Operations
occurred, or (E) satisfaction of all of the conditions to the
payment of the First and Second Installments (the "Third
Installment").
As a condition precedent to each payment set forth above, the General
Partner shall, not less than ten (10) days nor more than twenty (20) days
prior to the time the applicable Installment is due, give BCTC 94 and the
Investment Partnerships Notice in the form of a written certification that:
[A] the representations, warranties and covenants given by the General Partner
in Section 4.01(a) are valid and accurate, where still applicable, with
respect to the General Partner, the Partnership and/or the Apartment Complex,
as of the date of such certificate, and [B] to the best of its knowledge,
after due inquiry, no condition exists which would, pursuant to Section 5.03,
entitle the Investment Partnerships to withhold the payment of such
Installment. Based upon the giving of such Notice, such Installment shall be
made on the due date therefor, or if such Notice is not timely given, then
within twenty (20) days after receipt of such Notice.
At such time as the conditions for the making of the First Installment
are satisfied, such amount (estimated to be $536,095) as shall be necessary to
achieve Initial Closing, shall be paid by the Investment Partnerships to, or
pursuant to the direction of the Partnership. The balance of the proceeds of
the BCCTC IV Loan and the First Installment (in the amount of approximately
$1,533,012) shall be disbursed to the Partnership on the basis of draw
requests as and to the extent approved by or on behalf of BCTC 94. The draw
requests shall include, or be subject to, as applicable: (i) certification by
the project architect as to the progress of the rehabilitation,
(ii) performance of a physical site inspection by or on behalf of BCTC 94 or
its engineering/construction consultant, and (iii) receipt of an endorsement
to the owner's title insurance policy with respect to such draw or alternative
evidence of the lien-free status of title reasonably acceptable to BCTC 94.
The parties hereto acknowledge and understand that the foregoing draw process
is part of a process for the preparation, review and approval of all draws
with respect to the rehabilitation of the Apartment Complex, and with respect
to the advance of all funds for such rehabilitation (including the proceeds of
the BCCTC IV Loan, the Capital Contributions of the Investment Partnerships,
the Capital Contributions of the General Partner, and the proceeds of the
Replacement Reserve Withdrawal, the Subsidy Escrow Withdrawal, the Second
Mortgage Loan and the Fourth Mortgage Loan), and that all such draws are to be
subject to review and approval by BCTC 94 and the Lender. The parties further
acknowledge and agree that funds in the amount of $125,000 shall be held and
not disbursed pursuant to draws as aforesaid until such time as the Lender,
BCTC 94 and the Partnership have received the opinion of Hale and Dorr,
Counsel for the Partnership, to the effect that all necessary zoning approvals
and/or variances have been granted to the Partnership, and the appeal period
therefrom has expired, with respect to the enclosure and renovation of the
balcony area located on the 12th floor of the Apartment Complex.
(d) (i) Upon the occurrence of Cost Certification and State
Designation, if ninety-nine per cent (99%) of the aggregate amount of Tax
Credits: (A) for which the Partnership would be eligible with respect to the
Apartment Complex based upon the Cost Certification, and/or (B) allocated by
the Agency with respect to the Apartment Complex, is less than the amount of
the Projected Credits attributable to Low-Income Housing Tax Credits (the
"Allocation Differential"), then the Capital Contribution of the Investment
Partnerships shall be reduced pro rata by the "Adjustment Amount." The
Adjustment Amount shall be equal to the Allocation Differential multiplied by
seventy-five and nine hundred forty-five one-thousandths per cent (75.945%),
and any such reduction in Capital Contribution shall be applied to reduce the
Second Installment. In the event that there is a reduction in Capital
Contributions equal to the Adjustment Amount, then the amount of the Projected
Credits shall be reduced to reflect the Allocation Differential, and
thereafter shall be referred to as the "Revised Projected Credits."
(ii) If at any time the Accountants determine that, for any
fiscal year or portion thereof during the Partnership's operation, ending on
the date five (5) years from and after the date of Substantial Completion (the
"Reduction Period"), the Actual Credit for such fiscal year or portion thereof
is less than the Projected Credit, or the Revised Projected Credit, if
applicable, applicable to such fiscal year or portion thereof, then the
Capital Contribution of the Investment Partnerships shall be reduced pro rata
by the Reduction Amount. The "Reduction Amount" shall be equal to the sum of
(A) the product of the difference between the Projected Credit, or the Revised
Projected Credit, if applicable, and the Actual Credit multiplied by seventy-
five and nine hundred forty-five one-thousandths per cent (75.945%), and
(B) the amount of any recapture, interest or penalty payable by the limited
partners of the Investment Partnership (assuming pass-through of all such
liability in the year incurred and a tax rate equal to the maximum individual
rate applicable in such year) as a result of the Credit Shortfall for such
year. Any reduction in Capital Contribution shall first be applied to reduce
the Installment next due to be paid by the Investment Partnerships, and any
portion of such reduction in excess of such Installment shall be applied to
reduce succeeding Installments. If no further Installments are due to be
paid, then the entire amount of such reduction shall be repaid by the
Partnership to the Investment Partnerships pro rata promptly after demand is
made therefor. The General Partner is obligated to provide such funds to the
Partnership as shall be necessary to cause the aforesaid payment to be made by
the Partnership to the Investment Partnerships.
(iii) In the event that, for any reason, at any time after the
Reduction Period, the amount of the Actual Credit shall be less than the
Projected Credit (or the Revised Projected Credit, if applicable) with respect
to any fiscal year during the Partnership's operation (such difference being
hereinafter referred to as a "Credit Shortfall"), the Investment Partnerships
shall be treated as having made a pro rata 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 (A) the Credit Shortfall for such year, plus (B) the amount of any
recapture, interest or penalty payable by the limited partners of the
Investment Partnerships (assuming pass-through of all such liability in the
year incurred and a federal tax rate equal to the maximum individual rate
applicable in such year) as a result of the Credit Shortfall for such year.
Credit Recovery Loans shall be deemed to bear simple (not compounded)
interest, from the respective dates on which such principal advances are
deemed to have been made under this Section 5.01(d)(iv) at 9% per annum.
Credit Recovery Loans shall be repayable by the Partnership as provided in
Section 11.04(c).
(e) Without the Consent of all of the Partners, no additional
Persons may be admitted as additional Limited Partners and Capital
Contributions may be accepted only as and to the extent expressly provided for
in this Article V.
5.02. Return of Capital Contribution. Except as provided in this
Agreement, no Partner shall be entitled to demand or receive the return of his
Capital Contribution.
5.03. Withholding of Capital Contribution Upon Default. In the event
that: (a) the General Partner or any successor General Partner shall not have
substantially complied with any material provisions under this Agreement, or
(b) any financing commitment of the Lender or any other lender, or any
agreement entered into by the Partnership for financing related to the
Apartment Complex shall have terminated prior to their respective termination
date(s), or (c) foreclosure proceedings shall have been commenced against the
Apartment Complex or any portion thereof, then the Partnership and the General
Partner shall be in default of this Agreement, and BCTC 94, at its sole
election, may cause the withholding of payment of any Installment otherwise
payable to the Partnership.
All amounts so withheld by the Investment Partnerships under this
Section 5.03 shall be promptly released to the Partnership only after the
General Partner or the Partnership has cured the default justifying the
withholding, as demonstrated by evidence reasonably acceptable to BCTC 94.
5.04. Legal Opinions. As a condition precedent to payment of the First
Installment, the Investment Partnerships shall have received the opinions of
Hale and Dorr, of Boston, Massachusetts, counsel to the Partnership, to the
General Partner, to the Guarantor and to the Developer, which opinions shall
explicitly state that Peabody & Brown, of Washington, D.C., counsel to the
Investment Partnerships, may explicitly rely upon them, that:
(a) the Partnership is a duly formed and validly existing
limited partnership under the Act, and the Partnership has full power
and authority to acquire, own and operate the Apartment Complex and to
conduct its business hereunder; each of the Investment Partnerships has
been validly admitted as a Limited Partner of the Partnership entitled
to all the benefits of a Limited Partner under this Agreement, and the
Interest of each of the Investment Partnerships in the Partnership is
the Interest of a limited partner, with no personal liability for the
obligations of the Partnership;
(b) Smith II is duly and validly organized and is validly
existing in good standing as a corporation under the laws of the State,
and is validly authorized to transact business in the State and is in
good standing in the State, with full power and authority to enter into
and perform its obligations hereunder;
(c) LRCC is a duly formed and validly existing non-profit
corporation in good standing under the laws of the State, and has the
full power and authority to enter into and perform the obligations of
the Developer under and pursuant to this Agreement, and to act in the
capacity of Guarantor of the General Partner's obligations pursuant to
the terms of this Agreement;
(d) execution of this Agreement by the General Partner, the
Guarantor and the Developer has been duly and validly authorized by or
on behalf of each of them and, having been executed and delivered in
accordance with its terms, this Agreement constitutes the valid and
binding agreement of each of the General Partner, the Guarantor and the
Developer, enforceable in accordance with its terms;
(e) there is no direct or indirect personal liability of the
Partnership or of any of the Partners for the repayment of the principal
of or payment of interest on the Mortgage Loan, the Second Mortgage
Loan, the Third Loan or the Fourth Mortgage Loan, and the sole recourse
of the Lender and LRMC, respectively, under the Mortgage Loan, the
Second Mortgage Loan, the Third Loan and the Fourth Mortgage Loan,
respectively, with respect to the principal thereof and interest
thereon, shall be to the property securing the indebtedness; under the
laws of the State, the Second Mortgage Loan, the Third Loan and the
Fourth Mortgage Loan each constitutes a valid debt obligation;
(f) the Partnership owns fee simple, good and marketable legal
title to the Apartment Complex, subject only to the liens, charges,
easements, restrictions and encumbrances as are set forth in the title
insurance policy issued to the Partnership, none of which materially
interfere with or adversely affect the development or operation of the
Apartment Complex;
(g) there are no defaults existing with respect to any of the
Project Documents; and
(h) no event of Bankruptcy has occurred with respect to the
Partnership, the General Partner, the Guarantor and/or the Developer.
5.05. Repurchase Obligation.
(a) If (i) Substantial Completion has not occurred by March 31,
1997; (ii) State Designation has not occurred by July 31, 1997;
(ii) foreclosure proceedings have been commenced against the Apartment Complex
prior to the Final Closing; (iv) the Final Closing has not occurred by
July 31, 1997 (or such later date as may be consented to by BCTC 94); (v) the
Partnership fails to meet the Minimum Set-Aside Test and the Rent Restriction
Test within 12 months of the occurrence of Substantial Completion, or at any
time prior to the date which is five (5) years from and after the date upon
which the Minimum Set-Aside Test and the Rent Restriction Test are initially
achieved; (vi) at any time the General Partner and/or the Guarantor fail to
make any Operating Deficit Loan(s) as and to the extent required pursuant to
Section 8.09(b); (vii) an event of default described in Section 5.03(a) and/or
(b) shall exist; then the General Partner shall, within 15 days of the
occurrence thereof, send to BCTC 94 Notice of such event and of its obligation
to purchase the Interests of the Investment Partnerships hereunder and return
to the Investment Partnerships the Invested Amount in the event BCTC 94 in its
sole discretion requires such purchase of the Interests of the Investment
Partnerships. Thereafter, the General Partner, within 30 days of the mailing
date of Notice by BCTC 94 of such election, shall acquire the entire Interests
of the Investment Partnerships in the Partnership by making payment to the
Investment Partnerships, in cash, of an aggregate amount equal to the Invested
Amount, plus the entire outstanding balance (if any) of principal of and
interest on the BCCTC IV Loan.
(b) Upon receipt by the Investment Partnerships of any such
payment as aforesaid, the Interests of the Investment Partnerships shall
terminate, and the General Partner shall indemnify and hold harmless the
Investment Partnerships from any losses, damages, and/or liabilities to which
the Investment Partnerships (as a result of their participation hereunder) may
be subject.
5.06. Asset Management Fee. The Partnership shall pay to Boston
Capital, or an Affiliate thereof, an annual Asset Management Fee in the amount
of $7,500 per annum, commencing in 1997, for its services in assisting with
the preparation of the reports required pursuant to Section 13.04. The Asset
Management Fee shall be payable from first available Cash Flow; 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 General
Partner is obligated to provide such funds to the Partnership as shall be
necessary to pay the full amount of the Asset Management Fee for such fiscal
year, as an Operating Deficit Loan pursuant to the provisions of
Section 8.09(b) of this Agreement.
5.07. BCCTC IV Loan. Concurrently with the making by the Investment
Partnerships of the First Installment of their Capital Contributions to the
Partnership, BCCTC IV shall make the BCCTC IV Loan to the Partnership in the
principal amount of $1,137,909.
The entire outstanding balance of the BCCTC IV Loan, together with all
accrued interest thereon, shall be due and payable by the Partnership to
BCCTC IV concurrently with the making by the Investment Partnerships of the
Second Installment; provided, however, that the sole recourse of BCCTC IV with
respect to repayment of the BCCTC IV Loan shall be to the proceeds of the
Second Installment.
ARTICLE VI
CHANGES IN PARTNERS
6.01. Withdrawal of a General Partner.
(a) A General Partner may withdraw from the Partnership or sell,
transfer or assign his or its Interest as General Partner only with the prior
Consent of BCTC 94, and of the Lender, and only after being given written
approval by the necessary parties as provided in Section 6.02, and by the
Lender, if required, of the General Partner(s) to be substituted for him or it
or to receive all or part of his or its Interest as General Partner.
(b) In the event that a General Partner withdraws from the
Partnership or sells, transfers or assigns his or its entire Interest pursuant
to Section 6.01(a), he or it shall be and shall remain liable for all
obligations and liabilities incurred by him or it as General Partner before
such withdrawal, sale, transfer or assignment shall have become effective, but
shall be free of any obligation or liability incurred on account of the
activities of the Partnership from and after the time such withdrawal, sale,
transfer or assignment shall have become effective.
6.02. Admission of a Successor or Additional General Partner. A
Person shall be admitted as a General Partner of the Partnership only if the
following terms and conditions are satisfied:
(a) the admission of such Person shall have been Consented to by
the General Partner or its successors and by BCTC 94, and consented to
by the Lender;
(b) the successor or additional Person shall have accepted and
agreed to be bound by (i) all the terms and provisions of this
Agreement, by executing a counterpart thereof, and (ii) all the terms
and provisions of the Regulatory Agreement and other applicable Lender
documents, by executing a counterpart(s) thereof, if and to the extent
required by the Lender, and (iii) all the terms and provisions of such
other documents or instruments as may be required or appropriate in
order to effect the admission of such Person as a General Partner, and
the amendment to this Agreement evidencing the admission of such Person
as a General Partner shall have been filed and all other actions
required by Section 1.05 in connection with such admission shall have
been performed;
(c) if the successor or additional Person is a corporation, it
shall have provided the Partnership with evidence satisfactory to
counsel for the Partnership of its authority to become a General
Partner, to do business in the State and to be bound by the terms and
provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion
that the admission of the successor or additional Person is in
conformity with the Act and that none of the actions taken in connection
with the admission of the successor Person will cause the termination or
dissolution of the Partnership or will cause it to be classified other
than as a partnership for federal income tax purposes.
6.03. Effect of Bankruptcy, Death, Withdrawal, Dissolution
or Incompetence of a General Partner.
(a) In the event of the Bankruptcy of a General Partner or the
withdrawal, death or dissolution of a General Partner or an adjudication that
a General Partner is incompetent (which term shall include, but not be limited
to, insanity) the business of the Partnership shall be continued by the other
General Partner(s) if any, (and the other General Partner, if any, by
execution of this Agreement, expressly so agrees to continue the business of
the Partnership); provided, however, that if the withdrawn, Bankrupt,
deceased, dissolved or incompetent General Partner is then the sole General
Partner, unless all remaining Partners, within ninety (90) days after
receiving Notice of such Bankruptcy, withdrawal, death, dissolution or
adjudication of incompetence, elect to designate a successor General
Partner(s) and continue the Partnership upon the admission of such successor
General Partner(s) to the Partnership, the Partnership shall be terminated.
(b) Upon the Bankruptcy, death, dissolution or adjudication of
incompetence of a General Partner, such General Partner shall immediately
cease to be a General Partner and his Interest shall without further action be
converted to a Limited Partner Interest; provided, however, that if such
Bankrupt, dissolved, incompetent or deceased General Partner is the sole
remaining General Partner, such General Partner shall cease, to the extent
permitted by the Act, to be a General Partner only upon the expiration of
ninety (90) days after Notice to all remaining Partners of the Bankruptcy,
death, dissolution or declaration of incompetence of such General Partner; and
provided further that if such Bankrupt, dissolved, incompetent or deceased
General Partner is the sole remaining General Partner, the converted
Partnership Interest of such replaced General Partner shall be ratably reduced
to the extent necessary to insure that the substitute General Partner(s) holds
a 1% Percentage Interest (as set forth in Section 5.01) and will receive a 5%
distribution pursuant to Section 11.04(f).
Except as set forth above, such conversion of a General Partner
Interest to a Limited Partner Interest shall not affect any rights,
obligations or liabilities (including without limitation, any of the General
Partner's obligations under Section 8.09 herein) of the Bankrupt, deceased,
dissolved or incompetent General Partner existing prior to the Bankruptcy,
death, dissolution or incompetence of such person as a General Partner
(whether or not such rights, obligations or liabilities were known or had
matured).
(c) If, at the time of the withdrawal, Bankruptcy, death,
dissolution or adjudication of incompetence of a General Partner, the
Bankrupt, deceased, dissolved or incompetent General Partner was not the sole
General Partner of the Partnership, the remaining General Partner or General
Partners shall immediately (i) give Notice to the Limited Partners of such
Bankruptcy, death, dissolution or adjudication of incompetence, (ii) make such
amendments to this Agreement and execute and file such amendments or documents
or other instruments as are necessary to reflect the conversion of the
Interest of the Bankrupt, deceased, dissolved or incompetent General Partner
and his or its having ceased to be a General Partner, and (iii) elect to
continue the business of the Partnership. The remaining General Partner or
General Partners are hereby granted an irrevocable power of attorney to
execute any or all documents on behalf of the Partners and the Partnership and
to file such documents as may be required to effectuate the provisions of this
Section 6.03.
ARTICLE VII
ASSIGNMENT TO THE PARTNERSHIP
The General Partner hereby transfers and assigns to the Partnership all
of its right, title and interest in and to the Apartment Complex, if any,
including the following:
(a) all contracts with architects, contractors and supervising
architects with respect to the rehabilitation and development of the
Apartment Complex;
(b) all plans, specifications and working drawings, heretofore
prepared or obtained in connection with the Apartment Complex and all
governmental approvals obtained, including planning, zoning and building
permits;
(c) any and all commitments with respect to the Mortgage Loan,
the Second Mortgage Loan, the Third Loan and the Fourth Mortgage Loan;
and
(d) any other work product related to the Apartment Complex.
ARTICLE VIII
RIGHTS, OBLIGATIONS AND POWERS
OF THE GENERAL PARTNER
8.01. Management of the Partnership.
(a) Except as otherwise set forth in this Agreement, the General
Partner, within the authority granted to it under this Agreement, shall have
full, complete and exclusive discretion to manage and control the business of
the Partnership for the purposes stated in Article III, shall make all
decisions affecting the business of the Partnership and shall manage and
control the affairs of the Partnership to the best of its ability and use its
best efforts to carry out the purpose of the Partnership. In so doing, the
General Partner shall take all actions necessary or appropriate to protect the
interests of the Limited Partners and of the Partnership. The General Partner
shall devote such of its time as is necessary to the affairs of the
Partnership.
(b) Except as otherwise set forth in this Agreement and subject
to the applicable Lender and/or Agency rules and regulations and the
provisions of the Regulatory Agreement, the General Partner (acting for and on
behalf of the Partnership), in extension and not in limitation of the rights
and powers given by law or by the other provisions of this Agreement, shall,
in its sole discretion, have the full and entire right, power and authority in
the management of the Partnership business to do any and all acts and things
necessary, proper, convenient or advisable to effectuate the purpose of the
Partnership. In furtherance and not in limitation of the foregoing
provisions, the General Partner is specifically authorized and empowered to
execute and deliver, on behalf of the Partnership, the Regulatory Agreement,
the Declaration of Covenants, the Second Mortgage and the Third Mortgage, and
to execute any and all other instruments and documents, and amendments
thereto, as shall be required in connection with the Mortgage Loan, the Second
Mortgage Loan, the Third Loan, the Fourth Mortgage Loan, the Replacement
Reserve Withdrawal, the Interest Subsidy Contract, the Rent Supplement
Contract and the MHFA Subsidy Escrow Account, including, but not limited to,
executing any mortgage, note, contract, building loan agreement, bank
resolution and signature card, release, discharge, hazardous indemnity
agreement, separate assignment of leases and rents, or any other document or
instrument in any way related thereto or necessary or appropriate in
connection therewith. All decisions made for and on behalf of the Partnership
by the General Partner shall be binding upon the Partnership. No person
dealing with the General Partner shall be required to determine its authority
to make any undertaking on behalf of the Partnership, nor to determine any
facts or circumstances bearing upon the existence of such authority.
8.02. Limitations Upon the Authority of the General Partner.
(a) The General Partner shall not have any authority to:
(i) perform any act in violation of any applicable law or
regulation thereunder;
(ii) perform any act in violation of the provisions of the
Regulatory Agreement, the Declaration of Covenants, or any other
Project Documents;
(iii) do any act required to be approved or ratified in writing by
all Limited Partners under the Act unless the right to do so is
expressly otherwise given in this Agreement;
(iv) rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Rent
Restriction Test or Minimum Set-Aside Test; or
(v) borrow from the Partnership or commingle Partnership funds
with funds of any other Person.
(b) The General Partner shall not, without the Consent of
BCTC 94, have any authority to:
(i) sell or otherwise dispose of, at any time, all or
substantially all of the assets of the Partnership;
(ii) make application(s) for an increase or increases in the
Mortgage Loan, the Second Mortgage Loan, the Third Loan or the
Fourth Mortgage Loan;
(iii) 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 Credit Recovery
Loans;
(iv) following Final Closing, construct any new or replacement
capital improvements on the Apartment Complex which substantially
alter the Apartment Complex or its use or which are at a cost in
excess of $10,000 in a single Partnership fiscal year, except
(A) replacements and remodeling in the ordinary course of business
or under emergency conditions or, (B) construction paid for from
insurance proceeds, or (C) as and to the extent provided in an
approved budget pursuant to Section 8.20;
(v) acquire any real property in addition to the Apartment
Complex; or
(vi) refinance the Mortgage Loan, the Second Mortgage Loan or the
Third Mortgage Loan.
8.03. Management Purposes. In conducting the business of the
Partnership, the General Partner shall be bound by the Partnership's
purpose(s) set forth in Article III.
8.04. Delegation of Authority. The General Partner may delegate all
or any of its powers, rights and obligations hereunder, and may appoint,
employ, contract or otherwise deal with any Person for the transaction of the
business of the Partnership, which Person may, under supervision of the
General Partner, perform any acts or services for the Partnership as the
General Partner may approve.
8.05. General Partner or Affiliates Dealing with
Partnership.
(a) The General Partner or any Affiliate may act as Management
Agent on such terms and conditions permitted by applicable Lender regulations,
and may receive compensation at the highest rates approved and permitted by
the Lender at any time.
(b) The General Partner or any Affiliates thereof shall have the
right to contract or otherwise deal with the Partnership for the sale of goods
or services to the Partnership in addition to those set forth herein, if
(i) compensation paid or promised for such goods or services is reasonable
(i.e., at fair market value) and is paid only for goods or services actually
furnished to the Partnership, (ii) the goods or services to be furnished shall
be reasonable for and necessary to the Partnership, (iii) the fees, terms and
conditions of such transaction are at least as favorable to the Partnership as
would be obtainable in an arm's-length transaction, (iv) no agent, attorney,
accountant or other independent consultant or contractor who also is employed
on a full-time basis by the General Partner or any Affiliate shall be
compensated by the Partnership for his services.
Any contract covering such transactions shall be in writing and
shall be terminable without penalty on sixty (60) days Notice. Any payment
made to the General Partner or any Affiliate for such goods or services shall
be fully disclosed to all Limited Partners in the reports required under
Section 13.04. Neither the General Partner nor any Affiliate shall, by the
making of lump-sum payments to any other Person for disbursement by such other
Person, circumvent the provisions of this Section 8.05(b).
8.06. Other Activities. The General Partner and any Affiliates
thereof may engage in or possess interests in other business ventures of every
kind and description for their own account, including, without limitation,
serving as general partner of other partnerships which own, either directly or
through interests in other partnerships, government-assisted housing projects
similar to the Apartment Complex. Neither the Partnership nor any of the
Partners shall have any rights by virtue of this Agreement in or to such other
business ventures or to the income or profits derived therefrom.
8.07. Liability for Acts and Omissions. No General Partner shall be
liable, responsible or accountable in damages or otherwise to any of the
Partners for any act or omission performed or omitted by him or it in good
faith on behalf of the Partnership and in a manner reasonably believed by him
or it to be within the scope of the authority granted to him or it by this
Agreement and in the best interest of the Partnership, except for negligence,
misconduct, fraud or any breach of his or its fiduciary duty as General
Partner with respect to such acts or omissions. Any loss or damage incurred
by any General Partner by reason of any act or omission performed or omitted
by him or it in good faith on behalf of the Partnership and in a manner
reasonably believed by him or it to be within the scope of the authority
granted to him or it by this Agreement and in the best interests of the
Partnership (but not, in any event, any loss or damage incurred by any General
Partner by reason of negligence, misconduct, fraud or any breach of his or its
fiduciary duty as General Partner with respect to such acts or omissions)
shall be paid from Partnership assets to the extent available (but the Limited
Partners shall not have any personal liability to the General Partner under
any circumstances on account of any such loss or damage incurred by the
General Partner or on account of the payment thereof).
8.08. [Intentionally Omitted.]
8.09. Rehabilitation of the Apartment Complex,
Rehabilitation Cost Overruns, Operating Deficits.
(a) (i) The General Partner shall be responsible for:
(A) achieving completion of
rehabilitation of the Apartment Complex in accordance with the
Project Documents;
(B) meeting all requirements for
obtaining all necessary certificates of occupancy for all the
apartment units in the Apartment Complex; and
(C) fulfilling all actions required
of the Partnership to assure that the Apartment Complex
satisfies the Minimum Set-Aside Test and the Rent Restriction
Test.
(ii) The General Partner hereby is obligated to pay all
Excess Development Costs.
(iii) In the event that the General Partner shall fail to
pay any such Excess Development Costs as required in this Section 8.09(a), an
amount not in excess of the total of any remaining installments of the
Development Fee due to the Developer pursuant to Section 8.10(a)(i), shall be
applied by the Partnership to meet such obligations of the General Partner.
(b) In the event that, at any time from and after the Final
Closing, an Operating Deficit shall exist, after all funds available for the
payment of Operating Deficits pursuant to Section 8.18(b) of this Agreement
have been exhausted, the General Partner shall provide such funds to the
Partnership as shall be necessary to pay such Operating Deficit(s), in the
form of a loan to the Partnership (the "Operating Deficit Loan(s)"). An
Operating Deficit Loan shall be a Subordinated Loan in accordance with the
provisions of Section 8.17; provided, however, that an Operating Deficit Loan
shall bear no interest, and shall be repayable to the General Partner from
Cash Flow or from the proceeds from a Capital Transaction. For the purpose of
this Section 8.09(b), all expenses shall be paid on a sixty (60) day current
basis.
8.10. Development Fee.
(a) The Partnership has entered into a Development Agreement of
even date herewith with the Developer for its services in connection with the
development and construction of the Apartment Complex. In consideration for
such services, a Development Fee in the total amount of $597,978 shall be
payable by the Partnership to the Developer, from Capital Contributions by the
Investment Partnerships, and from first available Net Cash Flow as provided in
Section 11.01(a), as follows:
(i) $437,720 from the Capital Contributions by the Investment
Partnerships, payable as follows:
(A) $304,509 upon receipt by the Partnership of the First
Installment;
(B) $75,736 upon receipt by the Partnership of the Second
Installment; and
(C) $57,475 upon receipt by the Partnership of the Third
Installment; and
(ii) $160,258, together with interest thereon at the rate
of six and fifty-one one-hundredths per cent (6.51%) per annum from and
after the occurrence of Substantial Completion, compounded annually,
pursuant to the promissory note to be executed by the Partnership in
favor of the Developer, payable from first available Net Cash Flow, as
provided in Section 11.01(a).
(b) In the event that, as of December 31, 2011, any portion of
the Development Fee pursuant to Section 8.10(a) shall be unpaid for any
reason, the General Partner shall provide funds to the Partnership on such
date in an amount equal to the amount of such unpaid portion of the
Development Fee; immediately upon receipt by the Partnership of such funds
from the General Partner, the Partnership shall pay such unpaid portion of the
Development Fee to the Developer, pursuant to Section 8.10(a). Any such funds
provided to the Partnership by the General Partner pursuant to this Section
8.10(b) shall be deemed to be Capital Contributions by the General Partner.
8.11. Incentive Partnership Management Fee. The Partnership has
entered
into a Partnership Management Services Agreement with the General Partner of
even date herewith for its services in managing the business of the
Partnership for the period from the date hereof throughout the term of the
Partnership. Such agreement includes provisions to the effect. that in return
for its services in administering and directing the business of the
Partnership, maintaining appropriate books and records relating to all
financial affairs of the Partnership, and reporting periodically to the
Partners, the Lender and the Agency, as applicable, with respect to the
financial and administrative affairs of the Partnership and the Apartment
Complex, the Partnership shall pay to the General Partner, solely from the Net
Cash Flow of the Partnership available for distribution and in accordance with
Section 11.01(a), an annual Incentive Partnership Management Fee.
Such fee shall be in accordance with the provisions of any applicable
Lender regulations and of the Project Documents, and shall be in an amount
equal to $7,500 per year, commencing in 1997.
8.12. Withholding of Fee Payments. In the event that (a) the General
Partner
or any successor General Partner shall not have substantially complied with-
any material provisions under this Agreement, or (b) any financing commitment
of the Lender or any other lender, or any agreement entered into by the
Partnership for financing related to the Apartment Complex shall have
terminated prior to their respective termination date(s), or (c) foreclosure
proceedings shall have been commenced against the Apartment Complex, then (i)
the General Partner shall be in default of this Agreement, and the Partnership
shall withhold payment of any installment of fees payable to the Developer,
pursuant to Section 8.10, and to the General Partner, pursuant to Section
8.11, and (ii) the General Partner shall be liable for the Partnership's
payment of any and all installments of the Development Fee payable pursuant to
Section 8.10(a)(i), to the extent that the Investment Partnerships have
withheld any Installment(s) pursuant to Section 5.03 as a result of the above
described default.
All amounts so withheld by the Partnership under this Section 8.12 shall
be promptly released only after the General Partner has cured the default
justifying the withholding, as demonstrated by evidence reasonably acceptable
to BCTC 94.
8.13. Removal of the General Partner.
(a) BCTC 94, acting on behalf of the Investment Partnerships, so
long as either of the Investment Partnerships is a Partner, shall have the
right to remove the General Partner (i) for any intentional misconduct or
failure to exercise reasonable care with respect to any material matter in the
discharge of its duties and obligations as General Partner (provided that such
misconduct or failure results in, or is likely to result in, a material
detriment to or an impairment of the Apartment Complex or assets of the
Partnership), or (ii) upon the occurrence of any of the following (except to
the extent that any such violation or action described in (A) or (C) below is
a result of events beyond the General Partner's reasonable. control):
(A) the General Partner shall have materially violated any
provisions of the Regulatory Agreement and/or the Declaration of
Covenants, or any provisions of any other Project Document or other
document required in connection with the Mortgage Loan, the Second
Mortgage Loan, the Third Loan or the Fourth Mortgage Loan, or any
provisions of the Lender and/or Agency regulations applicable to the
Apartment Complex;
(B) the General Partner shall have materially violated any
provision of this Agreement, or materially violated any provision of
applicable law, which violation, in either case, results in a material
adverse effect on the Partnership and/or its operations;
(C) the General Partner shall have caused the Mortgage
Loan, the Second Mortgage Loan, the Third Loan or the Fourth Mortgage
Loan to go into default and such default remains uncured beyond the time
provided for-cure thereof by the terms of the applicable Project
Documents; or
(D) the General Partner shall have conducted its own
affairs or the affairs of the Partnership in such manner as would:
(1) cause the termination of the Partnership for
federal income tax purposes; or
(2) cause the Partnership to be treated for federal
income tax purposes as an association, taxable as a
corporation.
(b) BCTC 94 shall give Notice to all Partners and to the Lender
of its determination that the General Partner shall be removed and of the
reasons for such determination. The General Partner shall have thirty (30)
days after receipt of such Notice to cure any default or other reason for such
removal, in which event it shall remain as General Partner. If, at the end of
such thirty (30) day period, the General Partner has not cured any default or
other reason for such removal, it shall cease to be General Partner and the
powers and authorities conferred on it as General Partner under this Agreement
shall cease and the Interest of such General Partner shall be transferred to
BCTC 94 which, subject to the approval of the Lender but without further
action, shall become a General Partner.
(c) (i) In the event that the General Partner is removed as
aforesaid prior to the Final Closing, it shall be and shall remain liable for
all obligations and liabilities incurred by it as General Partner of the
Partnership before such removal shall become effective, including but not
limited to the obligations and liabilities of the General Partner with respect
to its obligations set forth in Section 8.09 of this Agreement with regard to
Excess Development Costs; provided however, that if amounts otherwise payable
as fees are applied to meet the General Partner's obligations stated in
Sections 5.03 and 8.09 of this Agreement, such application shall serve to
reduce any such liabilities of the General Partner or any successor, except
for any liability incurred as the result of its negligence, misconduct, fraud
or breach of its fiduciary duties as General Partner of the Partnership.
If the General Partner is removed as a Partner of the Partnership
prior to the Final Closing as aforesaid, neither the Developer nor the General
Partner shall be entitled to payment of any further installments of the
Development Fee or other fees which otherwise would have been due and payable
under various Sections of this Article VIII.
(ii) In the event that the General Partner is removed as
aforesaid after the Final Closing, it shall be and shall remain liable for all
obligations and liabilities incurred by it as General Partner of the
Partnership before such removal shall become effective, including but not
limited to the General Partner's obligations and liabilities under Section
8.09(b) of this Agreement; provided, however, that if amounts otherwise
payable to the General Partner or the Developer as fees are applied by the
Partnership to pay operating Deficits, such application shall serve to reduce
any such liabilities after the Final Closing, except for any liability
incurred as the result of its negligence, misconduct, fraud or breach of its
fiduciary duty as the General Partner of the Partnership. If the General
Partner is removed as a Partner of the Partnership at any time after the Final
Closing, the Developer shall continue to be paid subsequent to such removal,
in accordance with the terms and conditions of this Agreement, any
installments of the Development Fee which would otherwise have been due and
payable to it pursuant to Section 8.10, and which are not otherwise being
withheld; provided, however, upon any such removal of the General Partner
after the Final Closing, no further installments of the Incentive Partnership
Management Fee shall be paid which are attributable to any period after such
removal.
(d) BCTC 94 hereby is granted an irrevocable power of attorney,
coupled with an interest, to execute any and all documents on behalf of the
Partners and the Partnership as shall be legally necessary and sufficient to
effect all of the foregoing provisions of this Section 8.13. The election by
BCTC 94 to remove the General Partner under this Section shall not limit or
restrict the availability and use of any other remedy which the Investment
Partnerships, BCTC 94 or any other Partner might have with respect to the
General Partner in connection with its undertakings and responsibilities under
this Agreement.
8.14. Selection of Management Agent. The Partnership, with the
approval
of the Mortgage Lender(s), if required, shall engage such person, firm or
company as the General Partner may select, and as BCTC 94 may approve, which
approval shall not be unreasonably withheld (hereinafter referred to as
"Management Agent") to manage the operation of the Apartment Complex. The
Management Agent shall be paid a management fee subject to the approval of
the Lender. The contract between the Partnership and the Management Agent
and the management plan for the Apartment Complex shall be in a form
acceptable to the Lender. Madison Park village Associates (a joint venture
of Madison Park Properties, Inc. and Maloney Properties, Inc.), hereby is
approved by the parties hereto as the Management Agent.
8.15. Removal of the Management Agent. The General Partner
(a) may, upon receiving any required approval of the Lender, dismiss the
Management Agent as the entity responsible for the Apartment Complex under
the terms of the contract between the Partnership and the Management Agent,
and (b) at the request of BCTC 94, shall remove the Management Agent in the
event that the Management Agent is declared Bankrupt, is dissolved, or makes
an assignment for the benefit of its creditors, or for any intentional
misconduct by the Management Agent or failure to exercise reasonable care in
the discharge of its duties and obligations as Management Agent, including,
without limitation, for any action or failure to take any action which:
(i) violates in any material respect any provision of the
Management Agreement entered into with the Partnership and
approved by the Lender, and/or any provision of the Project
Documents applicable to the Apartment Complex, or the Lender-
approved management plan for the Apartment Complex, or
(ii) violates in any material respect any provision of this
Agreement or provision of applicable law.
8.16. Replacement of the Management Agent. Upon the removal of the
Management Agent as the entity responsible for the management of the Apartment
Complex, a substitute Management Agent, which shall not be an Affiliate of the
General Partner, shall be named by the General Partner, subject to the
approval of the Lender and the approval of BCTC 94.
8.17. Loans to the Partnership. In the event that additional funds are
required by the Partnership for any purpose relating to the business of the
Partnership or for any of its obligations, expenses, costs or expenditures,
the Partnership may borrow such funds as are needed from any Partner or other
Person or organization, including the General Partner, for such period of time
and on such terms as the General Partner, BCTC 94 and the Lender, if so
required, may agree and at the rate of interest then prevailing for comparable
loans (except for Operating Deficit Loans made pursuant to Section 8.09(b),
which shall bear no interest); provided however, that no such ' additional
loans shall be secured by any mortgage or other encumbrance on the property of
the Partnership without the prior approval of BCTC 94 and the approval of the
Lender, if ' required; except that such approvals shall not be required in the
case of the hypothecation of personal property purchased by the Partnership
and not included in the security agreements executed by the Partnership at the
time of Initial Closing. Loans made under this Section shall be repaid as set
forth in Section 11.01(a) of this Agreement, but any amount of any such loan
that is outstanding at the time of the occurrence of any of the events
described in Sections 11.04 or 12.01 shall be repaid as provided in Section
11.04.
8.18. Reserve Funds and Operating Assurances.
(a) Reserve Fund for Replacements. The Reserve Fund for
Replacements has been established by the Seller pursuant to the requirements
of the Lender with respect to the Apartment Complex, and shall remain in
existence subsequent to the Initial Closing, and continue to be governed by
the provisions of the Regulatory Agreement. The Reserve Fund for Replacements
is expected to have a balance of approximately $400,000 as of the Initial
Closing; such balance will be reduced to approximately $200,000 at the Initial
Closing as a result of the Replacement Reserve Withdrawal. From and after the
Initial Closing, the Partnership shall satisfy the Lender's requirements as to
the Reserve Fund for Replacements as to the Apartment Complex by making
monthly deposits into the Reserve Fund for Replacements in an amount equal to
$3,300 per month, or such other amount as the Lender shall require pursuant to
the Project Documents. Funds in the Reserve Fund for Replacements are
intended to be employed for the replacement as needed of fixtures, equipment,
structural elements and other components of the Apartment Complex of a capital
nature. All interest earnings on funds on deposit in the Reserve Fund for
Replacements shall be retained therein for the aforesaid purposes. Proposals
or requisitions for withdrawals from the Reserve Fund for Replacements shall
be submitted to the Lender by the General Partner only with the Consent, or
upon the direction, of BCTC 94; withdrawals from the Reserve Fund for
Replacements shall be made only with the Consent of the Lender.
(b) MHFA Subsidy Escrow Account. At the Initial Closing, the
Partnership and the Developer shall satisfy the requirements of the Lender and
the Investment Partnerships by establishing the MHFA Subsidy Escrow Account,
pursuant to the operating Subsidy Agreement. The funding, use, management,
operation and maintenance of the MHFA Subsidy Escrow Account shall be governed
at all times by the operating Subsidy Agreement.
8.19. Option to Purchase; Right of First Refusal.
(a) option to Purchase Interests of the Investment Partnerships
and BCTC 94. LRCC shall have the option, exercisable at any time after the
date which is fifteen (15) years from and after the date of Substantial
Completion, to acquire the Interests of the Investment Partnerships and BCTC
94 in the Partnership for an amount equal to the lesser of: (i) the aggregate
of all income tax liability of the partners of (including the investors in)
the Investment Partnerships arising from such purchase of the Interests of the
Investment Partnerships in the Partnership, as determined by the Investment
Partnership or their accountants, or (ii) the Invested Amount (the "Purchase
Price"). In no event will the Purchase Price be less than the fair market
value of the Apartment Complex, taking into account any restriction on use in
the Declaration of Covenants, the Regulatory Agreement and the Chapter 121A
Regulatory Agreement. In the event the aforesaid option is exercised, the
closing of the purchase of the Interests of the Investment Partnerships and
BCTC 94 shall occur within sixty (60) days after the date upon which the
Purchase Price is determined as set forth above; at such closing the
Investment Partnerships and BCTC 94 each shall withdraw from the Partnership
and thereafter shall have no further rights, duties, obligations or
liabilities hereunder or with respect to the Partnership. The rights of LRCC
pursuant to this Section 8.19 may not be sold, assigned or transferred, in
whole or in part, by LRCC without the prior written Consent of the Investment
Partnership.
(b) Right of First Refusal. The Partners acknowledge and agree
that, subsequent to the execution of this Agreement, the Partnership shall
enter into an agreement with LRCC (the "Right of First Refusal Agreement"),
pursuant to which the Partnership will grant to LRCC a right of first refusal
to acquire the Apartment Complex from the Partnership subsequent to the
expiration of the Low-Income Housing Tax Credit compliance period. Such Right
of First Refusal Agreement shall be prepared by or on behalf of the General
Partner, and shall: (i) comply with the provisions of Section 42(i)(7) of the
Code, and (ii) be subject to the reasonable approval of BCTC 94.
8.20. Operating and Capital Budgets. Not less than seventy-five (75) days
prior to the commencement of each fiscal year, the General Partner shall
transmit to the Lender and to BCTC 94, proposed operating and capital budgets
for the Apartment Complex and the Partnership for the next fiscal year. Such
budgets shall specifically list all budgeted expenses in all major categories
including, but not limited to, administration, operation, repair and
maintenance, utilities, taxes, insurance, interest, Mortgage Loan and Second
Mortgage Loan debt service, capital improvements, and all budgeted expenses
which are to be paid to the General Partner or its Affiliates. Any such
proposed operating budget also shall include the Asset Management Fee and all
other Partnership obligations or expenditures which: (a) are reasonable and
necessary for the proper operation of the Partnership, (b) are currently and
unconditionally due and payable., and (c) are not payable from Net Cash Flow;
thus, no provision for payment(s) with respect to the Incentive Partnership
Management Fee, debt service on the Third Loan and/or debt service on the
Fourth Mortgage Loan is to be included in any such proposed operating budget.
Any such proposed operating budget shall be subject to review and approval by
the Lender, prior to its effectiveness, if: (i) the Partnership is requesting
the Lender's approval of an increase in the rents of units within the
Apartment Complex; or (ii) an operating Deficit existed with respect to the
previous fiscal year of the Partnership. The parties acknowledge and agree
that the annual operating budgets to be prepared And submitted to and approved
by MHFA, shall not include the Asset Management Fee, the Incentive Partnership
Management Fee, debt service on the Third Loan and/or debt service on the
Fourth Mortgage Loan, and no rent increases as to apartment units in the
Apartment Complex shall be attributable to the aforesaid excluded items.
ARTICLE IX
TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS
OF INTERESTS OF LIMITED PARTNERS
9.01. Purchase for Investment.
(a) The Investment Partnerships each hereby represents and
warrants to the General Partner and to the Partnership that the acquisition of
its Interest is made as principal for its account for investment purposes only
and not with a view to the resale or distribution of such Interest, except
insofar as the Securities Act of 1933 and any applicable securities law of any
state or other jurisdiction permit such acquisitions to be made for the
account of others or with a view to the resale or distribution of such
Interest without requiring that such Interest, or the acquisition, resale or
distribution thereof, be registered under the Securities Act of 1933 or any
applicable securities law of any state or other jurisdiction.
(b) The Investment Partnerships each agrees that it will not
sell, assign or otherwise transfer its Interest or any fraction thereof to any
Person who does not similarly represent and warrant and similarly agree not to
sell, assign or transfer such Interest or fraction thereof to any Person who
does not similarly represent and warrant and agree.
(c) Neither of the Investment Partnerships shall sell, assign or
otherwise transfer its Interest or any fraction thereof to any Person until
such Investment Partnership has provided the Partnership with a legal opinion,
reasonably satisfactory to the General Partner, that such sale, assignment or
other transfer does not violate any state or federal securities laws or
require the Interest to be registered under any such laws.
9.02. Restrictions on Transfer of Limited Partners' Interests.
(a) Under no circumstances will any offer, sale, transfer,
assignment, hypothecation or pledge of any Limited Partner Interest be
permitted, unless the General Partner, in its sole discretion, shall have
Consented.
(b) The Limited Partner whose interest is being transferred
shall pay such reasonable expenses as may be incurred by the Partnership in
connection with such transfer.
9.03. Admission of Substitute Limited Partners.
(a) Subject to the other provisions of this Article IX, an
assignee of the Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee, or other recipient of any
disposition of such Interest) shall be deemed admitted as a Substitute Limited
Partner of the Partnership only upon the satisfactory completion of the
following:
(i) Consent of the General Partner (which may be withheld
in its sole discretion) and the consent of the Lender, if required,
shall have been given, which Consent of the General Partner may be
evidenced by the execution by the General Partner of an amended
Certificate evidencing the admission of such Person as a Limited Partner
pursuant to the requirements of the Act;
(ii) the assignee shall have accepted and agreed to be
bound by the terms and provisions of this Agreement by executing a
counterpart thereof or an appropriate amendment hereto, and such other
documents or instruments as the General Partner may require in order to
effect the admission of such Person as a Limited Partner;
(iii) an amended Agreement and/or Certificate evidencing the
admission of such Person as a Limited Partner shall have been filed for
recording pursuant to the requirements of the Act;
(iv) the assignee shall have represented and agreed in
writing as required by Section .01;
(v) if the assignee is a corporation, the assignee shall
have provided the General Partner with evidence satisfactory to counsel
for the Partnership of its authority to become a Limited Partner under
the terms and provisions of this Agreement; and
(vi) the assignee or the assignor shall have reimbursed the
Partnership for all reasonable expenses, including all reasonable legal
fees and recording charges, incurred by the Partnership in connection
with such assignment, to the extent Partnership assets are not available
for such purpose.
(b) For the purpose of allocation of profits, losses and
credits, and for the purpose of distributing cash of the Partnership, a
Substitute Limited Partner shall be treated as having become, and as appearing
in, the records of the Partnership as a Partner upon his signing of an
amendment to this Agreement, agreeing to be bound hereby.
(c) -The General Partner shall cooperate with the Person approved to become
a Substitute Limited Partner by preparing the documentation required by this
Section and making all official filings and publications. The Partnership
shall take all such action, including the filing of any amended Agreement
and/or Certificate evidencing the admission of any Person as a Limited
Partner, and the making of any other official filings and publications, as
promptly as practicable after the satisfaction by the assignee of the Interest
of a Limited Partner of the conditions contained in this Article IX to the
admission of such Person as a Limited Partner of the Partnership.
9.04. Rights of Assignee of Partnership Interest.
(a) Except as provided in this Article and as required by
operation of law, the Partnership shall not be obligated for any purpose
whatsoever to recognize the assignment by any Limited Partner of his (its)
Interest until the Partnership has received actual Notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Interest, but does not become a Substitute Limited Partner and
desires to make a further assignment of such Interest, shall be subject to all
the provisions of this Article IX to the same extent and in the same -manner
as any Limited Partner desiring to make an assignment of his (its) Interest.
ARTICLE X
RIGHTS AND OBLIGATIONS
OF LIMITED PARTNERS
10.01. Management of the Partnership. No Limited Partner shall
take part in the management or control of the business of the Partnership nor
transact any business in the name of the Partnership. Except as otherwise
expressly provided in this Agreement, no Limited Partner shall have the power
or authority to bind the Partnership or to sign any agreement or document in
the name of the Partnership. No Limited Partner shall have any power or
authority with respect to the Partnership except insofar as the Consent of any
Limited Partner shall be expressly required and except as otherwise expressly
provided in this Agreement.
10.02 Limitation on Liability of Limited Partners. Except as otherwise
provided in the Act, the liability of each Limited Partner shall be limited to
its Capital Contribution as and when payable under the provisions of this
Agreement. No Limited Partner shall have any other liability to contribute
money to, or in respect of the liabilities or obligations of, the Partnership,
nor shall any Limited Partner be personally liable for any obligations of the
Partnership. No Limited Partner shall be obligated to make loans to the
Partnership.
10.03. Other Activities. Any Limited Partner may engage in or
possess interests in other business ventures of every kind and description for
their own accounts, including without limitation, serving as general or
limited partner of other partnerships which own, either directly or through
interests in other partnerships, government-assisted housing projects similar
to the Apartment Complex. Neither the Partnership nor any of the Partners
shall have any right by virtue of this Agreement in or to such other business
ventures to the income or profits derived therefrom.
ARTICLE XI
PROFITS, LOSSES AND DISTRIBUTIONS
11.01. Allocation of Profits, Losses, Credits and Cash Distributions.
(a) All profits, losses and credits, except those gains and
losses referred to in Sections 11.03 and 11.10, shall be allocated one per
cent (1%) to the General Partner, and ninety-nine per cent (99%) in the
aggregate to the Investment Partnerships (45% thereof to BCTC IV, and 55%
thereof to BCCTC IV); provided, however, that all losses, if any, in excess of
the losses projected in the Partnership Projections prepared on behalf of the
Investment Partnerships and agreed to by the Partners as of the Initial
Closing, shall be allocated to the General Partner. Subject to Lender
approval, if required, Net Cash Flow shall be applied and/or distributed in
the following priority: (i) payment on account of the Development Fee
pursuant to Section 8.10(a), until the Development Fee is paid in full;
(ii) payment to LRMC of all sums currently due and payable with respect to the
Third Loan; (iii) payment to the Lender of all sums currently due and payable
with respect to the Fourth Mortgage Loan; (iv) payment of any amounts due with
respect to any Subordinated Loans; (v) payment of the Incentive Partnership
Management Fee for the current year pursuant to Section 8.11; and (vi) of any
remaining sum, fifty per cent (50%) thereof to the General Partner, and fifty
per cent (50%) thereof in the aggregate to the Investment Partnerships (45%
thereof to BCTC IV, and 55% thereof to BCCTC IV); provided, however, that
during such time as Lender regulations are applicable to the Apartment
Complex, the total amount of Net Cash Flow which may be so distributed to the
Partners with respect to any fiscal year shall not exceed such amounts as
Lender regulations permit to be distributed.
(b) In any year in which a Partner sells, assigns or
transfers all or any portion of an Interest to any Person who during such year
is admitted as a substitute Partner, the share of all profits and losses
allocated to, and of all Net Cash Flow and of all cash proceeds distributable
under Section 11.04 distributed to, all Partners which is attributable to the
Interest sold, assigned or transferred shall be divided between the assignor
and the assignee using any one of the following methods as determined by
agreement between the assignor and assignee: (i) ratably on the basis of the
number of days in such year before, and the number of days on and after, the
execution by the assignee of this Agreement, or (ii) by dividing the
Partnership fiscal year into two segments, the first segment being the time
period in such year before the execution by the assignee of this Agreement and
the second segment being the time period in such year beginning on the date of
execution of this Agreement, and allocating profits and losses, Net Cash Flow,
and all cash proceeds distributable in each such segment among the persons who
were Partners during that segment, or (iii) such other method as provided by
the Code or regulations thereunder.
(c) The Partnership shall, subject to the limitations set
forth in the Chapter 121A Regulatory Agreement, any applicable limitation on
the distribution of Surplus Cash and any required approval by the Lender,
distribute Surplus Cash not less frequently than annually in the manner
provided in Section 11.01(a).
(d) In the event there is a determination that there is any
original issue discount or imputed interest attributable to the Capital
Contribution of any Partner, or any loan between a Partner and the
Partnership, any income or deduction of the Partnership attributable to such
imputed interest or original issue discount on such Capital Contribution or
loan (whether stated or unstated) shall be allocated solely to such Partner.
(e) In the event that the deduction of all or a portion of
any fee paid or incurred by the Partnership to a Partner or an Affiliate of a
Partner is disallowed for federal income tax purposes by the Internal Revenue
Service with respect to a taxable year of the Partnership, the Partnership
shall then allocate to such Partner an amount of gross income of the
Partnership for such year equal to the amount of such fee as to which the
deduction is disallowed.
(f) If any Partner's Interest in the Partnership is reduced
but not eliminated because of the admission of new Partners or otherwise, or
if any Partner is treated as receiving any items of property described in
Section 751(a) of the Code, the Partner's Interest in such items of Section
751(a) property that was property of the Partnership while such Person was a
Partner shall not be reduced, but shall be retained by the Partner so long as
the Partner has an Interest in the Partnership and so long as the Partnership
has an Interest in such property.
11.02. Determination of Profits, Losses and Credits. Profits, losses
and credits for all purposes of this Agreement shall be determined in
accordance with the accrual accounting method, except that any adjustments
made pursuant to Section 754 of the Code, other than the adjustments made with
respect to the admission of the Investment Partnership to the Partnership,
shall not be taken into account. Every item of income, gain, loss, deduction,
credit or tax preference entering into the computation of such profits or
losses, or applicable to the period during which such profits and losses were
realized, shall be considered allocated to each Partner in the same proportion
as profits and losses are allocated to such Partner.
11.03. Allocation of Gains and Losses. Gains and losses recognized
by the Partnership upon the sale, exchange or other disposition of all or
substantially all of the property owned by the Partnership shall be allocated
in the following manner:
(a) gains shall be allocated (i) first, to the Partners with
negative Capital Account balances, that portion of gains (including any gains
treated as ordinary income for federal income tax purposes) which is equal in
amount to and in proportion to, such Partners' respective negative Capital
Accounts in the Partnership; provided, that no gain shall be allocated to a
Partner under this clause (i) once such Partner's Capital Account is brought
to zero; and (ii) second, gain in excess of the amount allocated under (i)
shall be allocated to the Partners in the amount and to the extent necessary
to increase the Partners' respective Capital Accounts so that the proceeds
distributed under Sections 11.04(d), (e) and (f) will be distributed in
accordance with the Partners' respective Capital Accounts.
(b) Losses shall be allocated (i) first, to the extent and
in such proportions as the respective positive balances in all Partners'
Capital Accounts; and (ii) second, any remaining loss to the Partners in
accordance with the manner in which they bear the economic risk of loss
associated with such loss or, if none, as follows: 1.00% thereof to the
General Partner, and 99.00% thereof in the aggregate to the Investment
Partnerships (45% thereof to BCTC IV, and 55% thereof to BCCTC IV).
(c) Any portion of the gains treated as ordinary income for
federal income tax purposes under Sections 1245 and 1250 of the Code
("Recapture Amount") shall be allocated on a dollar for dollar basis to those
Partners to whom the items of Partnership deduction or loss giving rise to the
Recapture Amount had been previously allocated.
11.04. Distribution of Proceeds from Sale and Liquidation of
Partnership Property. Except as may be required under Section 12.02(b), the
proceeds resulting from the liquidation of the Partnership assets pursuant to
Section 12.02, and the net proceeds resulting from any sale of the property of
the Partnership or refinancing of the Apartment Complex or a Capital
Transaction, as the case may be, shall be distributed and applied in the
following order of priority:
(a) to the payment of all matured debts and liabilities of the
Partnership (including amounts due pursuant to the Mortgage Loan, the
Second Mortgage Loan, the Third Loan, and the Fourth Mortgage Loan, and
all expenses of the Partnership incident to any such sale or
refinancing), excluding (1) debts and liabilities of the Partnership to
Partners or any Affiliates, and (2) all unpaid fees owing to the General
Partner and/or its Affiliate(s) under this Agreement;
(b) to the setting up of any reserves which the Liquidator (or the
General Partner if the distribution is not pursuant to the liquidation
of the Partnership) deems reasonably necessary for contingent, unmatured
or unforeseen liabilities or obligations of the Partnership;
(c) to the payment of any debts and liabilities (including unpaid
fees) owed to the Partners or any Affiliates by the Partnership for
Partnership obligations, including the repayment of any loans made
pursuant to Sections 5.01(d)(iii), 8.09(b) or 8.17; provided, however,
that the foregoing debts and liabilities owed to Partners and their
Affiliates shall be paid or repaid, as applicable, in the following
order of priority, if and to the extent applicable: (i) the Asset
Management Fee currently due, if any, together with any accrued and
unpaid Asset Management Fees, (ii) any unpaid portion of the Development
Fee pursuant to Section 8.10(a), (iii) Credit Recovery Loans to the
Investment Partnership, (iv) Operating Deficit Loans to the General
Partner, and (v) any other such debts and liabilities;
(d) to the Investment Partnerships in an amount equal to the Invested
Amount, reduced (but not below zero) by all cash distributions
previously distributed to the Investment Partnership pursuant to this
Section 11.04;
(e) to the General Partner in the total amount of its Capital
Contributions paid to or on behalf of the Partnership, reduced by all
cash distributions previously distributed to them pursuant to this
Section 11.04; and
(f) the balance of such remaining sum, fifty per cent (50%) thereof to
the General Partner, and fifty per cent (50%) thereof in the aggregate
to the Investment Partnerships (45% thereof to BCTC IV, and 55% thereof
to BCCTC IV).
11.05. Capital Accounts. A separate Capital Account shall be
maintained and adjusted for each Partner. There shall be credited to each
Partner's Capital Account the amount of his Capital Contribution, the fair
market value of any property contributed to the Partnership (net of any
liabilities secured by such property) and such Partner's distributive share of
the profits for tax purposes of the Partnership; and there shall be charged
against each Partner's Capital Account the amount of all Net Cash Flow
distributed to such Partner, the fair market value of any property distributed
to such Partner (net of any liabilities secured by such property), the net
proceeds resulting from the liquidation of the Partnership's assets or from
any sale or refinancing of the Apartment Complex distributed to such Partner,
and such Partner's distributive share of the losses for tax purposes of the
Partnership. Each Partner's Capital Account shall be maintained and adjusted
in accordance with the Code and the Treasury Regulations thereunder. The
foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Treas. Reg.
Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such regulations. It is the intention of the Partners that
the Capital Accounts maintained under this Agreement be determined and
maintained throughout the full term of this Agreement in accordance with the
accounting rules of Treas. Reg. Section 1.704-1(b)(2)(iv), as amended from
time to time.
11.06. Authority of General Partner to Vary Allocations to Preserve
and Protect Partners' Intent.
(a) It is the intent of the Partners that each Partner's
distributive share of income, gain, loss, deduction, or credit (or item
thereof) shall be determined and allocated in accordance with this Article XI
and Section 5.01 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 Article XI and Section 5.01, the General Partner hereby
is authorized and directed to allocate income, gain, loss, deduction, or
credit (or item thereof) arising in any year differently than otherwise
provided for in this Article XI and Section 5.01 to the extent that allocating
income, gain, loss, deduction or credit (or item thereof) in the manner
provided for in Article XI and Section 5.01 would cause the determinations and
allocations of each Partner's distributive share of income, gain, loss,
deduction, or credit (or item thereof) not to be permitted by Section 704(b)
of the Code and Treasury Regulations promulgated thereunder. Any allocation
made pursuant to this Section 11.06 shall be deemed to be a complete
substitute for any allocation otherwise provided for in this Article XI and
Section 5.01 and no amendment of this Agreement or approval of any Partner
shall be required.
(b) In making any allocation (the "new allocation") under
Section 11.06(a), the General Partner is authorized to act only after:
(i) having been advised by the Accountants that, under Section 704(b) of the
Code and the Treasury Regulations thereunder, (A) the new allocation is
necessary, and (B) the new allocation is the minimum modification of the
allocations otherwise provided for in this Article XI and Section 5.01
necessary in order to assure that, either in the then current year or in any
preceding year, each Partner's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Article XI and Section 5.01 to the fullest extent
permitted by Section 704(b) of the Code and the Treasury Regulations
thereunder; and (ii) having received the approval of BCTC 94 to such proposed
new allocation.
(c) If the General Partner is required by Section 11.06(a)
to make any new allocation in a manner less favorable to the Limited Partners
than is otherwise provided for in this Article XI and Section 5.01, then the
General Partner is authorized and directed, only after having been advised by
the Accountants that it is permitted by Section 704(b) of the Code, to
allocate income, gain, loss, deduction, or credit (or item thereof) arising in
later years in such manner so as to bring the allocations of income, gain,
loss, deduction, or credit (or item thereof) to the Limited Partners as nearly
as possible to the allocations thereof otherwise contemplated by this Article
XI and Section 5.01.
(d) New allocations made by the General Partner under
Section 11.06(a) and Section 11.06(c) in reliance upon the advice of the
Accountants shall be deemed to be made pursuant to the fiduciary obligation of
the General Partner to the Partnership and the Limited Partners, and no such
allocation shall give rise to any claim or cause of action by any Limited
Partner.
11.07. Designation of Tax Matters Partner. Smith II, Inc. hereby is
designated as Tax Matters Partner of the Partnership, and shall engage in such
undertakings as are required of the Tax Matters Partner of the Partnership, as
provided in regulations pursuant to Section 6231 of the Code. If the General
Partner designated as the Tax Matters Partner of the Partnership withdraws
from the Partnership, the Partnership shall designate a successor Tax Matters
Partner, in accordance with Treasury Regulations Section 301.6231(a)(7)-1(T),
or any successor Regulation. The Partnership shall notify the Internal
Revenue Service of the designation of a successor Tax Matters Partner for such
year, as well as for all prior years that the withdrawn General Partner was
serving as Tax Matters Partner. Each Partner, by its execution of this
Agreement, Consents to such designation of the Tax Matters Partner and agrees
to execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate
to evidence such Consent.
11.08. Authority of Tax Matters Partner. The Tax Matters Partner
hereby is authorized, but not required:
(a) to enter into any settlement with the Internal Revenue
Service or the Secretary of the Treasury (the "Secretary") with respect to any
tax audit or judicial review, in which agreement the Tax Matters Partner may
expressly state that such agreement shall bind the other Partners, except that
such settlement agreement shall not bind any Partner who (within the time
prescribed pursuant to the Code and regulations thereunder) files a statement
with the Secretary providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner;
(b) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to the
Tax Matters Partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court, the
District Court of the United States for the district in which the
Partnership's principal place of business is located, or the United States
Claims Court;
(c) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with
the Internal Revenue Service at any time and, if any part of such request is
not allowed by the Internal Revenue Service, to file a petition for judicial
review with respect to such request;
(e) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax which is attributable to
any item required to be taken into account by a Partner for tax purposes, or
an item affected by such item; and
(f) to take any other action on behalf of the Partners or
the Partnership in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or regulations.
11.09. Expenses of Tax Matters Partner. The Partnership shall
indemnify and reimburse the Tax Matters Partner for all expenses, including
legal and accounting fees, claims, liabilities, losses and damages incurred in
connection with any administrative or judicial proceeding with respect to the
tax liability of the Partners. The payment of all such expenses shall be made
before any distributions are made from Cash Flow or any discretionary reserves
are set aside by the General Partner. The General Partner shall have the
obligation to provide funds for such purpose. The taking of any action and
the incurring of any expense by the Tax Matters Partner in connection with any
such proceeding, except to the extent required by law, is a matter in the sole
discretion of the Tax Matters Partner and the provisions on limitations of
liability of General Partner and indemnification set forth in Section 8.07 of
this Agreement shall be fully applicable to the Tax Matters Partner in its
capacity as such.
11.10. Minimum Gain Provisions.
(a) Notwithstanding any other provision of this Agreement,
no allocation of loss or deduction (or item thereof) attributable to any
nonrecourse debt of the Partnership shall be made by the Partnership to a
Partner if such allocation would cause the sum of the deficit capital account
balances of such Partner otherwise receiving such allocation (excluding the
portion of such deficit balances that must be restored to the Partnership upon
liquidation, if any) to exceed such Partner's share of Partnership "Minimum
Gain" (as defined in Treas. Reg. Section 1.704-2(b)(2) and determined at the
end of the Partnership taxable year to which the allocation relates).
(b) Notwithstanding any other provision of this Agreement,
if there is a net decrease in Partnership Minimum Gain during a Partnership
taxable year, all Partners with deficit Capital Account balances at the end of
such year (reduced by the portion of such deficit balances (i) that must be
restored upon liquidation, if any, and (ii) that would be eliminated under
applicable Regulations if the Partnership were liquidated at such time, and
increased by the items described in Treas. Reg. Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6)) shall be allocated items of income and gain
for such year in the amount and in the proportions needed to eliminate such
deficits, before any other allocation is made under this Agreement.
(c) In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Treas. Reg. Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain
shall be specially allocated to each such Partner in an amount and manner
sufficient to eliminate (to the extent required by the Regulations under Code
Section 704(b)) to the deficit balance in each such Partner's Capital Account
as quickly as possible, provided that an allocation pursuant to this Section
11.10(c) shall be made if and only to the extent that such Partner would have
a deficit Capital Account after all other allocations provided for in this
Article XI have been tentatively made as if this Section 11.10(c) were not in
the Agreement.
(d) In the event any Partner has a deficit Capital Account
at the end of any fiscal year in excess of the sum of (i) the amount that such
Partner must restore to the Partnership upon liquidation, if any, and (ii) the
amount such Partner is deemed obligated to restore pursuant to the penultimate
sentence of Treas. Reg. Section 1.704-2(g)(1) and Section 1.704-2(i)(5), such
Partner shall be specially allocated items of Partnership income and gain in
the amount of such excess as quickly as possible, provided that an allocation
pursuant to this Section 11.10(d) shall be made if and only to the extent that
such Partner would have a deficit Capital Account in excess of such sum after
all other allocations provided for in this Article XI has been tentatively
made as if this Section 11.10(d) and Section 11.10(c) hereof were not in the
Agreement.
(e) In the event that income, loss or items thereof are
allocated to one or more Partners pursuant to Sections 11.10(b), (c) or (d),
subsequent income, loss or items thereof shall be allocated (subject to the
provisions of Sections 11.10(b), (c) or (d)) to the Partners so that, to the
extent possible in the judgment of the General Partner, the net amount of
allocations shall be equal to the amount that would have been allocated had
Section 11.10 not been applied.
(f) Nonrecourse deductions as defined in Treas. Reg. Section
1.704-2(b) shall be allocated one per cent (1%) to the General Partner, and
ninety-nine per cent (99%) in the aggregate to the Investment Partnerships, in
the proportions set forth in Section 11.01(a).
ARTICLE XII
SALE, DISSOLUTION AND LIQUIDATION
12.01. Dissolution of the Partnership. The Partnership shall be
dissolved upon the earlier of the expiration of the term of the Partnership,
or upon:
(a) the withdrawal, Bankruptcy, death, dissolution or
adjudication of incompetency of a General Partner who is at that time
the sole General Partner without the election of the remaining General
Partners, pursuant to Section 6.03, to continue the Partnership;
(b) the sale or other disposition of all or substantially
all of the assets of the Partnership;
(c) the election by the General Partner, with the Consent of
BCTC 94; or
(d) any other event causing the dissolution of the
Partnership under the laws of the State.
12.02. Winding Up and Distribution.
(a) Upon the dissolution of the Partnership pursuant to
Section 12.01, (i) a Certificate of Cancellation shall be filed in such
offices within the State as may be required or appropriate, and (ii) the
Partnership business shall be wound up and its assets liquidated as provided
in this Section 12.02 and the net proceeds of such liquidation, except as
provided in Section 12.02(b) below, shall be distributed in accordance with
Section 11.04.
(b) It is the intent of the Partners that, upon liquidation
of the Partnership, any liquidation proceeds available for distribution to the
Partners be distributed in accordance with the Partners' respective positive
Capital Account balances and the Partners believe that distributions under
Section 11.04 will effectuate such intent. In the event that, upon
liquidation, there is any conflict between a distribution pursuant to the
Partners' respective Capital Account balances and the intent of the Partners
with respect to distribution of proceeds as provided in Section 11.04, the
Liquidator shall, notwithstanding the provisions of Sections 11.01, 11.02 and
11.03, allocate the Partnership's gains, profits and losses in a manner that
will cause the distribution of liquidation proceeds to the Partners to be in
accordance with the Partners' respective positive Capital Account balances.
(c) The Liquidator shall file all certificates and notices
of the dissolution of the Partnership required by law. The Liquidator shall
proceed without any unnecessary delay to sell and otherwise liquidate the
Partnership's property and assets; provided, however, that if the Liquidator
shall determine that an immediate sale of part or all of the Partnership
property would cause undue loss to the Partners, then in order to avoid such
loss, the Liquidator may, except to the extent provided by the Act, defer the
liquidation as may be necessary to satisfy the debts and liabilities of the
Partnership to Persons other than the Partners. Upon the complete liquidation
and distribution of the Partnership assets, the Partners shall cease to be
Partners of the Partnership, and the Liquidator shall execute, acknowledge and
cause to be filed all certificates and notices required by the law to
terminate the Partnership.
(d) Upon the dissolution of the Partnership pursuant to
Section 12.01, the Accountants shall promptly prepare, and the Liquidator
shall furnish to each Partner, a statement setting forth the assets and
liabilities of the Partnership upon its dissolution. Promptly following the
complete liquidation and distribution of the Partnership property and assets,
the Accountants shall prepare, and the Liquidator shall furnish to each
Partner, a statement showing the manner in which the Partnership assets were
liquidated and distributed.
ARTICLE XIII
BOOKS AND RECORDS, ACCOUNTING
TAX ELECTIONS, ETC.
13.01. Books and Records. The books and records of the Partnership
shall be maintained on an accrual basis in accordance with sound federal
income tax accounting principles. These and all other records of the
Partnership, including information relating to the status of the Apartment
Complex and information with respect to the sale by the General Partner or any
Affiliate of goods or services to the Partnership, shall be kept at the
principal office of the Partnership and shall be available for examination
there by any Partner, or his duly authorized representative, at any and all
reasonable times. Any Partner, or his duly authorized representative, upon
paying the costs of collection, duplication and mailing, shall be entitled to
a copy of the list of names and addresses of the Limited Partners.
13.02. Bank Accounts. All funds of the Partnership not otherwise
invested shall be deposited in one or more accounts maintained in such banking
institutions as the General Partner shall determine, and withdrawals shall be
made only in the regular course of Partnership business on such signature or
signatures as the General Partner may, from time to time, determine. No funds
of the Partnership shall be deposited in any financial institution in which
any Partner is an officer, director or holder of any proprietary interest.
13.03. Accountants. The Accountants shall annually prepare for
execution by the General Partner all tax returns of the Partnership, shall
annually audit the books of the Partnership, and shall certify, in accordance
with generally accepted accounting principles, a balance sheet, a profit and
loss statement, and a cash flow statement. With respect to each fiscal year
during the Partnership's operations, at such time as the Accountants shall
have prepared the proposed tax return for such year, the Accountants shall
provide copies of such proposed tax return to the Investment Partnerships and
to their accountants, Reznick, Fedder & Silverman, of Bethesda, Maryland, for
their review and comment. Any changes in such proposed tax return recommended
by the Investment Partnerships' accountants shall be made by the Accountants
prior to the completion of such tax return for execution by the General
Partner. The Partnership shall reimburse Boston Capital Communications
Limited Partnership, an affiliate of the Investment Partnerships, for its
expenses incurred in causing the Partnership's proposed tax return to be
reviewed by the Investment Partnerships' accountants, if and to the extent
that such review results in modifications to such proposed tax return. A full
detailed statement shall be furnished to all Partners, showing such assets,
properties, and net worth and the profits and losses of the Partnership for
the preceding fiscal year. All Partners shall have the right and power to
examine and copy, at any and all reasonable times, the books, records and
accounts of the Partnership.
13.04. Reports to Partners.
(a) The General Partner shall cause to be prepared and
distributed to all persons who were Partners at any time during a fiscal year
of the Partnership:
(i) By February 22 of the year after the end of each fiscal
year of the Partnership, (A) a balance sheet as of the end of such
fiscal year and statements of income, Partners' equity, and
changes in financial position and a Cash Flow and Net Cash Flow
statement, for the year then ended, all of which, except the Cash
Flow and Net Cash Flow statement, shall be prepared in accordance
with generally accepted accounting principles and accompanied by
an auditor's report containing an opinion of the Accountants, and
(B) a report of the activities of the Partnership during the
period covered by the report. Such report shall set forth
distributions to Limited Partners for the period covered thereby
and shall separately identify distributions from: (1) Cash Flow
and Net Cash Flow from operations during the period, (2) Cash Flow
and Net Cash Flow from operations during a prior period which had
been held as reserves, (3) proceeds from disposition of the
Apartment Complex or any other investments of the Partnership,
(4) lease payments on net leases with builders and sellers, and
(5) reserves. With respect to any distributions to the Investment
Partnerships, the report called for shall separately identify
distributions from (A) Cash Flow and Net Cash Flow from operations
during the period, (B) Cash Flow and Net Cash Flow from operations
during a prior period which had been held as reserves,
(C) proceeds from disposition of property and investments,
(D) reserves from the gross proceeds of the offering originally
obtained from the Investment Partnership, (E) borrowed monies,
(F) loans or contributions from the Investment Partnership, and
(G) transactions outside of the ordinary course of business with a
description thereof.
(ii) By February 8 of the year after the end of each fiscal
year of the Partnership, all information necessary for the
preparation of the Limited Partners' federal income tax returns.
(iii) Within forty (40) 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;
and
(B) a statement of income and expenses for the
quarter then ended, which may be unaudited;
(C) a Low-Income Housing Tax Credit monitoring form,
as specified by Boston Capital;
(D) a rent roll and occupancy/rental report for the
quarter then ended, each in the form specified by Boston Capital; and
(E) other pertinent information regarding the
Partnership and its activities during the quarter covered by the report.
(b) Within ninety (90) days after the end of each fiscal year of
the Partnership the General Partner shall provide to the Investment
Partnership:
(i) A certification by the General Partner that (A) all
required Mortgage Loan and Second Mortgage Loan payments, and tax
and insurance payments with respect to the Apartment Complex are
current as of the date of the year-end report, (B) there is no
default under the Project Documents or this Agreement, or if there
is any default, a description thereof, and (C) there is no
building, health or fire code violation or similar violation of a
governmental law, ordinance or regulation against the Apartment
Complex or, if there is any violation, a description thereof;
(ii) the information specified in Section 13.04(c);
(iii) a descriptive statement of all transactions during the
fiscal year between the Partnership and the General Partner and/or
any Affiliate, including the nature of the transaction and the
payments involved (including accrued cash or other payments);
(iv) a Cash Flow and Net Cash Flow statement; and
(v) 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 Agency concerning the same.
(c) Upon the written request of BCTC 94 for further information
with respect to any matter covered in items (a) or (b) above, the General
Partner shall utilize its best efforts to furnish such information within 30
days of receipt of such request.
(d) The General Partner, on behalf of the Partnership, shall
send to the Investment Partnerships, on or before July 31 in each year, a
report which shall state:
(i) the then occupancy level of the Apartment
Complex;
(ii) if there are any Operating Deficits or
anticipated Operating Deficits, the manner in which such deficits
will be funded; and
(iii) such other matters as shall be material to the
operation of the Partnership, including, without limitation, any
building, health or fire code violation or similar violation of a
governmental law, ordinance or regulation by the Apartment Complex
of which the General Partner is aware.
(e) Prior to October 22 of each year, the General Partner, on
behalf of the Partnership, shall send to the Investment Partnerships an
estimate of the Investment Partnerships' shares of the Tax Credits, profits
and losses of the Partnership for federal income tax purposes for the current
fiscal year. Such estimate shall be prepared by the General Partner and the
Accountants.
(f) 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) the General Partner has received any notice of a
material fact which may substantially affect further
distributions, or
(iv) any Partner has pledged or collateralized his
Interest in the Partnership,
the General Partner shall send the Investment Partnerships a
detailed report of such event.
(g) After the Admission Date, the General Partner, on behalf
of the Partnership, shall send to the Investment Partnerships, on or before
the tenth day of each month, a copy of all applicable periodic reports
covering the status of project operations from the previous period, as may be
required by the Agency. In addition, within thirty (30) days after the
occurrence of Substantial Completion, the General Partner, on behalf of the
Partnership, shall prepare and send to the Investment Partnerships a Credit
Basis Worksheet for each building within the Apartment Complex, in the format
provided by Boston Capital.
(h) (i) In the event that the reports or information provided for in Sections
13.04(a)(i) and/or 13.04(a)(ii) above are, at any time, not provided within
the time period(s) specified in such Sections, the General Partner shall be
obligated to pay to the Investment Partnerships the sum of $100 per day, as
liquidated damages, for each day from the date upon which such reports or
information is(are) due pursuant to the provisions of the aforesaid Sections
until the date upon which such reports or information is(are) provided.
(ii) In the event that the reporting requirements set forth in any of the
above
provisions of this Section 13.04 are not met, BCTC 94, in its sole discretion,
may direct the General Partner to dismiss the Accountants, and to designate
successor Accountants, subject to the approval of BCTC 94; provided, however,
that if the General Partner and BCTC 94 cannot agree on the designation of
successor Accountants, the successor Accountants shall be designated by
BCTC 94 in its sole discretion, and the fees of such successor Accountants
shall be paid by the Partnership.
13.05. Section 754 Elections. In the event of a transfer of all or
any part of the Interest of a General Partner or of a Limited Partner, the
Partnership may elect, pursuant to Sections 743 and 754 of the Code (or any
corresponding provision of succeeding law), to adjust the basis of the
Partnership property if, in the opinion of BCTC 94, based upon the advice of
the Accountants, such election would be most advantageous to the Investment
Partnerships. Each Partner agrees to furnish the Partnership with all
information necessary to give effect to such election.
13.06. Fiscal Year and Accounting Method. The fiscal year of the
Partnership shall be the calendar year. All Partnership accounts shall be
determined on the accrual basis.
ARTICLE XIV
AMENDMENTS
14.01. Proposal and Adoption of Amendments. This Agreement may be
amended by the General Partner with the Consent of BCTC 94. MHFA's Consent is
also required if the proposed amendment to this Agreement would directly
affect MHFA's rights under any of the Project Documents.
ARTICLE XV
CONSENTS, VOTING AND MEETINGS
15.01. Method of Giving Consent. Any Consent required by this
Agreement may be given by a written Consent given by the consenting Partner
and received by the General Partner at or prior to the doing of the act or
thing for which the Consent is solicited.
15.02. Submissions to Limited Partners. The General Partner shall
give the Limited Partners Notice of any proposal or other matter required by
any provision of this Agreement or by law to be submitted for consideration
and approval of the Limited Partners. Such Notice shall include any
information required by the relevant provision or by law.
15.03. Meetings; Submission of Matter for Voting. Subject to the
provisions of Section 10.01, a majority in Interest of the Limited Partners
shall have the authority to convene meetings of the Partnership and to submit
matters to a vote of the Partners.
ARTICLE XVI
GENERAL PROVISIONS
16.01. Burden and Benefit. 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.
16.02. Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State.
16.03. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties shall not have signed the same
counterpart.
16.04. Separability of Provisions. Each provision of this Agreement
shall be considered separable and if for any reason any provision which is not
essential to the effectuation of the basic purposes of this Agreement is
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those provisions of
this Agreement which are valid.
16.05. Entire Agreement. This Agreement sets forth all (and is
intended by all parties to be an integration of all) of the representations,
promises, agreements and understandings among the parties hereto with respect
to the Partnership, the Partnership business and the property of the
Partnership, and there are no representations, promises, agreements or
understandings, oral or written, express or implied, among them other than as
set forth or incorporated herein.
16.06. Liability of the Investment Partnerships. Notwithstanding
anything to the contrary contained herein, neither the Investment Partnerships
nor any of their respective partners, general or limited, shall have any
personal liability to any of the parties to this Agreement with regard to the
representations and covenants extended, or the obligations undertaken, by the
Investment Partnerships under this Agreement. In the event that the
Investment Partnerships, or either of them, shall be in default under any of
the terms of this Agreement, the sole recourse of any party hereto for any
indebtedness due hereunder, or for any damages resulting from any such default
by such Investment Partnership, shall be against the capital contributions of
the investor limited partners of such Investment Partnership allocated to, and
remaining for investment in, the Partnership; provided however, that under no
circumstances shall the liability of either of the Investment Partnerships for
any such default be in excess of the aggregate of: (a) the amount of Capital
Contribution payable by such Investment Partnership to the Partnership, under
the terms of this Agreement, at the time of such default, and (b) an amount
equal to reasonable attorneys' fees reasonably and necessarily incurred by the
General Partner in obtaining payment of any Installment(s) not made by the
Investment Partnerships when due and payable pursuant to the provisions of
this Agreement.
16.07. Environmental Protection.
(a) The General Partner represents and warrants that
(i) except as and to the extent disclosed in reports regarding the Land and
the Apartment Complex commissioned by the General Partner or its Affiliate(s)
or agents, copies of all of which have been supplied to BCTC 94 or its
Affiliate(s), it has no knowledge of any deposit, storage, disposal, burial,
discharge, spillage, uncontrolled loss, seepage or filtration of any Hazardous
Substances at, upon, under or within the Land or any contiguous real estate,
and (ii) it has not caused or permitted to occur, and it shall not permit to
exist, any condition which may cause a discharge of any Hazardous Substances
at, upon, under or within the Land or on any contiguous real estate.
(b) The General Partner further represents and warrants that
(i) it has not been, is not and will not be involved in operations at or,
pursuant to its best efforts, near the Land, which operations could lead to
(A) the imposition of liability under the Hazardous Waste Laws on the
Partnership or on any other subsequent or former owner of the Land or (B) the
creation of a lien on the Land under the Hazardous Waste Laws or under any
similar laws or regulations; and (ii) the General Partner has not permitted,
and will not permit, any tenant or occupant of the Apartment Complex to engage
in any activity that could impose liability under the Hazardous Waste Laws on
such tenant or occupant, on the Land or on any other owner of the Apartment
Complex.
(c) The General Partner shall comply strictly and in all
respects with the requirements of the Hazardous Waste Laws and related
regulations and with all similar laws and regulations.
(d) The General Partner shall at all times indemnify and
hold harmless the Investment Partnership against and from any and all claims,
suits, actions, debts, damages, costs, charges, losses, obligations,
judgments, and expenses, of any nature whatsoever, suffered or incurred by the
Investment Partnership, under or on account of the Hazardous Waste Laws or any
similar laws or regulations, including the assertion of any lien thereunder,
except for claims, suits, actions, debts, damages, costs, charges, losses,
obligations, judgments, or expenses arising from the Investment Partnership's
own negligence, misconduct or fraud.
(e) For purposes of this Section 16.07, "Hazardous
Substances" means oil, petroleum or chemical liquids or solids, liquid or
gaseous products or any hazardous wastes or hazardous substances, as those
terms are used in the Hazardous Waste Laws; and "Hazardous Waste Laws" means
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, and any other federal, state or local law governing Hazardous
Substances, as such laws may be amended from time to time.
16.0. Notices.
(a) Any Notice required by the provisions of this Agreement
to be given to the Investment Partnership shall be addressed as follows:
Boston Capital Tax Credit Fund IV L.P.
and/or
Boston Capital Corporate Tax Credit Fund IV,
A Limited Partnership
c/o Boston Capital Partners, Inc.
One Boston Place, 21st Floor
Boston, Massachusetts 02108
Attention: Jeffrey H. Goldstein
Senior Vice President
And a copy to:
Peabody & Brown
1255 23rd Street, NW
Suite 800
Washington, D.C. 20037
Attention: Kenneth G. Hance, Jr.
(b) Any Notice required by the provisions of this Agreement
to be given to the General Partner shall be addressed as follows:
Smith II, Inc.
122 DeWitt Drive
Roxbury, MA 02120
Attn: Danette Jones
And a copy to:
Hale and Dorr
60 State Street
Boston, MA 02109
Attn: Katharine E. Bachman
16.09. Continuing Guarantee of Financial Obligations of the General
Partner by the Guarantor. The Guarantor hereby unconditionally and
irrevocably guarantees to the Partnership and to the Investment Partnerships
the full and timely performance by Smith II of all of its financial
obligations as General Partner under and pursuant to the provisions of
Sections 4.02(g), 5.01(d), 5.05, 5.06, 8.09 and 8.10(b) of this Agreement, all
in accordance with the provisions hereof. Any payment made by the Guarantor
pursuant to this Guarantee shall satisfy the obligation of the General Partner
to make such payment as if the General Partner had made such payment itself.
Neither the Guarantor's obligations to make payment in accordance with
the terms of this guarantee, nor any remedy for enforcement thereof shall be
impaired, modified, changed, released, or limited in any manner whatsoever by
any impairment, modification, change, release or limitation of the liability
of the General Partner, or any remedy for the enforcement thereof, resulting
from the operation of any present or future provision of the Bankruptcy Reform
Act of 1978 or other applicable statute, nor shall such obligation or remedy
for enforcement be impaired, modified, changed, released or limited in any
manner by such event of bankruptcy.
The Guarantor's obligations as specified in this Partnership Agreement
constitute a continuing guarantee, such that any claim made by the Partnership
or either of the Investment Partnerships against the Guarantor, pursuant to
this Section 16.09, shall not preclude the Partnership or either of the
Investment Partnerships from making a claim against the Guarantor for future
payments.
The obligations of the Guarantor, as set forth in this Section 16.09,
shall not be transferred or assigned to a third party without the Consent of
BCTC 94.
IN WITNESS WHEREOF, the parties have affixed their signatures and
seals to this Amended and Restated Agreement and Certificate of Limited
Partnership of Smith House II Limited Partnership, as of the date first
written above.
GENERAL PARTNER:
WITNESS: SMITH II, INC.
____________________ By: /s/Danette Jones
Danette Jones
President
LIMITED PARTNERS:
BOSTON CAPITAL TAX CREDIT
FUND IV L.P.
WITNESS: By: Boston Capital Associates IV
L.P., its general partner
By: C&M Associates d/b/a
Boston Capital Associates,
its general partner
____________________ By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as
Attorney-in-fact of
John P. Manning,
Partner
BOSTON CAPITAL CORPORATE TAX CREDIT
FUND IV, A LIMITED PARTNERSHIP
By: C&M Associates d/b/a
Boston Capital Associates,
a general partner
WITNESS:
____________________ By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as
Attorney-in-fact of
John P. Manning,
Partner
And By: Boston Capital Partners
Corporation, a general partner
____________________ By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as
Attorney-in-fact of
John P. Manning,
President
SPECIAL LIMITED PARTNER:
WITNESS: BCTC 94, INC.
_______________________ By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-
in-fact of John P. Manning,
President
WITHDRAWING INITIAL LIMITED
PARTNER:
WITNESS:
______________________ /s/Danette Jones
DANETTE JONES
WITH RESPECT TO THE PROVISIONS
OF SECTIONS 8.10, 8.18 and 8.19:
WITNESS: LOWER ROXBURY COMMUNITY
CORPORATION
________________________ By: /s/ Danette Jones
Danette Jones
President
GUARANTOR:
WITNESS: LOWER ROXBURY COMMUNITY CORPORATION
_______________________ By: /s/Danette Jones
Danette Jones
President
COUNTY OF SUFFOLK )
: ss )
COMMONWEALTH OF MASSACHUSETTS )
Before me, the undersigned Notary Public in and for the aforesaid County
and State, personally appeared Bonnie Kate Fox, in her capacity as
attorney-in-fact of John P. Manning, in his capacities as: (i) general
partner of C&M Associates d/b/a Boston Capital Associates IV L.P., as the
general partner of Boston Capital Tax Credit Fund IV L.P., as a Limited
Partner of Smith House II Limited Partnership, and (b) a general partner of
Boston Capital Corporate Tax Credit Fund IV, a Limited Partnership, as a
Limited Partner of Smith House II Limited Partnership; (ii) the President of
Boston Capital Partners Corporation, as a general partner of Boston Capital
Corporate Tax Credit Fund IV, A Limited Partnership, as a Limited Partner of
Smith House II Limited Partnership; and (iii) President of BCTC 94, Inc., as
the Special Limited Partner of Smith House II Limited Partnership, and being
duly sworn, acknowledged the execution of the foregoing Amended and Restated
Agreement and Certificate of Limited Partnership.
Witness my hand and notarial seal this ____ day of April, 1996.
_________________________________
Notary Public
My Commission Expires: ______, 199_
COUNTY OF SUFFOLK )
: ss
COMMONWEALTH OF MASSACHUSETTS )
Before me, the undersigned Notary Public in and for the aforesaid County
and State, personally appeared Danette Jones, in: (i) her capacities as
President of Smith II, Inc., in its capacity as the General Partner of Smith
House II Limited Partnership, and (b) President of Lower Roxbury Community
Corporation, as a consenting party with respect to Sections 8.10, 8.18 and
8.19 of the foregoing Amended and Restated Agreement and Certificate of
Limited Partnership, and as the Guarantor under and pursuant to the provisions
of the foregoing Amended and Restated Agreement and Certificate of Limited
Partnership; and (ii) her individual capacity as the Withdrawing Initial
Limited Partner of Smith House II Limited Partnership, and being duly sworn,
acknowledged the execution of the foregoing Amended and Restated Agreement and
Certificate of Limited Partnership.
Witness my hand and notarial seal this ____ day of April, 1996.
_________________________________
Notary Public
My Commission Expires: __________, 199__
