SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 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) February 20, 1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-70564 04-3208648
(Commission File Number) (IRS Employer Identification No. )
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108-4406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
On February 20, 1997, Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, specifically Series 26 thereof (the "Partnership")
completed various agreements relating to Brookhaven Apartments Partnership, A
Louisiana Partnership In Commendam (the "Operating Partnership"), including a
Second Amended and Restated Articles of Partnership In Commendam of the
Operating Partnership dated as of February 1, 1997 (the "Operating Partnership
Agreement"), pursuant to which the Partnership acquired a limited partner
interest in the Operating Partnership. Capitalized terms used and not
otherwise defined herein have their meanings set forth in the Operating
Partnership Agreement, a copy of which is attached hereto as Exhibit (2)(a).
The Operating Partnership owns and operates a recently constructed
apartment complex located in Shreveport, Louisiana which is known as
Brookhaven Apartments (the "Apartment Complex"). The Apartment Complex
consists of twelve 1-bedroom, twenty 2-bedroom and three 3-bedroom apartment
units for a total of 35 apartments. The Apartment Complex was substantially
completed by February 1997 and is currently 100% occupied.
Construction mortgage financing for the Apartment Complex was provided
by Bank One Louisiana in the amount of $1,091,650 (the "Construction
Mortgage"). The Construction Mortgage bore interest at the rate of 8.25% per
annum. Permanent mortgage financing in the amount of $471,650 (the "Permanent
Mortgage") is also being provided by Bank One Louisiana. The Permanent
Mortgage has a15-year term and bears interest at a contract rate equal to
8.25% per annum which will be subject to adjustment from time to time. Second
Permanent Mortgage financing (the "Second Permanent Mortgage") in the amount
of $535,650 is being provided by the City of Shreveport. The Second Permanent
Mortgage has a 15-year term and bears interest at a rate of 4% per annum.
100% of the apartment units (35 units) in the Apartment Complex are
believed to qualify for the low-income housing tax credit (the "Tax Credits")
under Section 42 of the Internal Revenue Code of 1986, as amended (the
"Code").
Community Support Programs, Inc., is the Managing General Partner of the
Operating Partnership and M. Riemer Calhoun, Jr., is the Fiscal Partner of the
Operating Partnership. The Managing General Partner is a non-profit agency
active in providing a variety of support services to the Shreveport community,
including involvement in affordable housing. The Fiscal Partner is the
President of Calhoun Builders, Inc. (the Builder for the Apartment Complex)
and the Chief Executive Officer and Chairman of the Board of Calhoun Property
Management, Inc. (the Management Agent for the Apartment Complex) and he owns
and/or controls an integrated group of companies and partnerships that are
involved in the development, construction and management of rental housing.
Mr. Calhoun has been involved in the real estate business for more than 30-
years with over 110 completed multi-family housing projects in Louisiana and
Texas. The Builder (Calhoun Builders, Inc.) has received total compensation
of $1,200,000 and the Management Agent (Calhoun Property Management, Inc.) is
receiving a management fee of $35 per occupied unit per month.
The Partnership acquired its interest in the Operating Partnership
directly from the Operating Partnership in consideration of an agreement to
make a Capital Contribution of $761,008 which has been or will be payable to
the Operating Partnership in four (4) Installments as follows:
1. $418,554 (the "First Installment") on the latest of (i) Admission
Date, (ii) Tax Credit Set Aside, (iii) Construction Mortgage
Closing, or (iv) Permanent Mortgage Commitment;
2. $190,252 (the "Second Installment") on the latest to occur of (i)
the Completion Date, (ii) Cost Certification, (iii) State
Designation, (iv) receipt of an updated title insurance policy
satisfactory to the Partnership, (v) compliance with due diligence
recommendations, (vi) receipt of release of liens, in a form
acceptable to the Partnership, from the Contractor stating that
all amounts payable to the Contractor have been paid in full and
that the Operating Partnership is not in default under the
Construction Contract, (vii) receipt of an estoppel letter and
consent to syndication from the Lender, (viii) Carryover
Certification, or (ix) satisfaction of all of the conditions to
the payment of the First Installment;
3. $114,151 (the "Third Installment") on the latest to occur of (i)
the Initial 100% Occupancy Date, (ii) Permanent First Mortgage
Commencement, (iii) Rental Achievement, or (iv) satisfaction of
all of the conditions to the payment of the First and Second
Installments; and
4. $38,051 (the "Fourth Installment") on the later to occur of (i)
the receipt by the Partnership of an executed copy of the federal
tax return and audited financial statement for the fiscal year in
which the Breakeven Point occurs or (ii) satisfaction of all
conditions to the payment of the First, Second and Third
Installments.
The total Capital Contribution of the Partnership to the Operating Partnership
is based on the Operating Partnership receiving $1,239,830 of Tax Credits
during the 10-year period commencing in 1997 of which $1,227,432 will be
allocated to the Partnership as the Investment Limited Partner of the
Operating Partnership. The Special Limited Partner of the Operating
Partnership is BCTC 94, Inc., an affiliate of the Partnership.
The Partnership believes that the Apartment Complex is adequately
insured.
Ownership interests in the Operating Partnership are as follows, subject
in each case to certain priority allocations and distributions:
Normal Capital Cash
Operations Transactions Flow
Managing General
Partner 00.50% 0% 0%
Fiscal Partner 00.50% 25% 50%
Partnership 99% 75% 50%
The Partnership used the funds obtained from the payments of the holders
of its beneficial assignee certificates to make the acquisition of its
interest in the Operating Partnership.
Boston Capital Asset Management Limited Partnership ("BCAMLP"), an
affiliate of the general partner of the Partnership, or another affiliate
thereof, will receive an annual Asset Management Fee of $1,750 commencing in
1997 from the Operating Partnership for services in connection with the
Operating Partnership's accounting matters and the preparation of tax returns
and reports to the Partnership. The Asset Management Fee for each fiscal year
will be payable from Cash Flow in the manner and priority set forth in Article
X of the Operating Partnership Agreement; provided, however, that if in any
fiscal year commencing with 1998, Cash Flow is insufficient to pay the entire
amount of the Asset Management Fee and such shortfall is not paid from funds
advanced by the Fiscal Partner, the amount of such deficiency shall accrue and
be payable on a cumulative basis in the first year in which there is
sufficient Cash Flow available for payment of such fee, or in the first year
in which proceeds of a Capital Transaction are available.
The Operating Partnership shall pay to the General Partners a non-
cumulative fee (the "Partnership Management Fee") commencing in 1997 for their
services in connection with the administration of the day to day business of
the Operating Partnership in an annual amount equal to $1,750 per annum (to be
divided equally between the Fiscal Partner and the Managing General Partner).
The Partnership Management Fee for each fiscal year of the Operating
Partnership shall be paid in the manner and priority set forth in Article X of
the Operating Partnership Agreement.
The Operating Partnership shall pay to the Managing General Partner an
annual non-cumulative Incentive Management Fee for its services in achieving
high operating efficiency of the Apartment Complex, which fee for each fiscal
year shall be in an amount equal to $2,125 and payable only from and to the
extent of available Cash Flow after payment of all other obligations of the
Operating Partnership, including the Asset Management Fee.
The Operating Partnership will pay a Construction and Development Fee to
the General Partners (or their designees) for its service in connection with
the construction and development of the Apartment Complex in an amount equal
to $221,900 (of which $58,280 will be paid to the Managing General Partner and
$163,620 to the Fiscal Partner). The Construction and Development Fee will be
paid $48,161 from the proceeds of the First Installment, $21,537 from the
proceeds of the Second Installment, $114,151 from the proceeds of the Third
Installment and $38,051 from the proceeds of the Fourth Installment.
As a reimbursement for costs incurred in connection with the development
of the Apartment Complex, the Operating Partnership paid to the General
Partners (or their designees) an overhead reimbursement (the "Developer's
Overhead Reimbursement") in the amount of $66,808 which was paid at the time
of the First Installment.
In consideration of its services in connection with any sale of the
Apartment Complex, the Managing General Partner (or its designee) shall be
entitled to a Sales Disposition Fee in the amount of 3% of the sales price of
the Apartment Complex. Such fee will be reduced to the extent necessary so
that all fees and expenses to the Operating Partnership in connection with
such sale do not exceed 6%.
Item 7. Exhibits.
(c) Exhibits. Page
(1) (a)1 Form of Dealer-Manager Agreement between Boston
Capital Services, Inc. and the Registrant
(including, as an exhibit thereto, the form of
Soliciting Dealer Agreement)
(2) (a) Second Amended and Restated Articles of
Partnership In Commendam of Brookhaven
Apartments Partnership, A Louisiana Partnership
In Commendam
(2) (b) Certification and Agreement of Brookhaven
Apartments Partnership, A Louisiana Partnership
In Commendam
(4) (a)2 Agreement of Limited Partnership of the
Partnership
(16) None
(17) None
(21) None
(24) None
(25) None
(28) None
_______________
1 Incorporated by reference to Exhibit (1) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities and Exchange
Commission.
2 Incorporated by reference to Exhibit (4) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities and Exchange
Commission.
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 hereto duly authorized.
Dated: May 19, 1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
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/ Herbert F. Collins______
Herbert F. Collins, Partner
BOS2. 62291_1
SECOND AMENDED AND RESTATED
ARTICLES OF PARTNERSHIP IN COMMENDAM
OF
BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
By and Among
COMMUNITY SUPPORT PROGRAMS, INC.
as the Managing General Partner
and
M. RIEMER CALHOUN, JR.
as the Fiscal Partner
and
T.F. MANAGEMENT, INC.
as the Withdrawing Original Limited Partner
and
BOSTON CAPITAL TAX CREDIT FUND, IV, L.P.
(SERIES 26)
as the Investment Limited Partner
and
BCTC 94, INC.
as the Special Limited Partner
Dated as of February 1, 1997
BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
TABLE OF CONTENTS
Page
ARTICLE I Defined Terms 4
ARTICLE II Name and Business 15
2.1 Name; Continuation 15
2.2 Office and Resident Agent 15
2.3 Purpose 16
2.4 Term and Dissolution 16
ARTICLE III Mortgage, Refinancing and Disposition of Property 16
ARTICLE IV Partners 17
4.1 General Partners 17
4.2 Investment Limited Partner, Special Limited Partner and Original
Limited Partner 17
4.3 Liability of the Limited Partners 17
4.4 Special Rights of the Investment Limited Partner and the Special
Limited Partner 17
4.5 Meetings 19
ARTICLE V Capital Contributions of the Investment Limited Partner and the
Special Limited Partner 19
5.1 Payments 19
5.2 Return of Capital Contributions 22
ARTICLE VI Rights, Powers and Duties of General Partners 24
6.1 Authorized Acts 24
6.2 Restrictions on Authority 25
6.3 Personal Services 26
6.4 Business Management and Control; Tax Matters Partner 26
6.5 Special Duties of the Managing General Partner 26
6.6 [Intentionally Deleted] 27
6.7 Special Duties of the Fiscal Partner 27
6.8 Duties and Obligations 28
6.9 Representations and Warranties 29
6.10 Liability on the Permanent Mortgage 32
6.11 Indemnification of the General Partners 32
6.12 Indemnification of the Partnership and the Limited Partners 33
6.13 Operating Deficits 34
6.14 Obligation to Complete the Construction of the Apartment Complex 34
6.15 Certain Payments to the General Partners and Others 35
6.16 Assignment to Partnership 36
ARTICLE VII Withdrawal of a General Partner; New General Partners 36
7.1 Withdrawal 36
7.2 Obligation to Continue 37
7.3 Withdrawal of All General Partners 37
7.4 Interest of General Partner After Permitted Withdrawal 37
7.5 Admission of Additional General Partner(s) under Certain Circumstances
38
ARTICLE VIII Transferability of Limited Partner Interests 38
8.1 Assignments 38
8.2 Substituted Limited Partner 38
8.3 Restrictions 39
ARTICLE IX Borrowings 39
ARTICLE X Profits, Losses, Tax Credits, Distributions and Capital Accounts
39
10.1 Capital and Capital Accounts 39
10.2 Profits, Losses and Tax Credits 40
10.3 Cash Distributions Prior to Dissolution 41
10.4 Distributions Upon Dissolution 42
10.5 Special Provisions 43
10.6 Authority of the General Partners to Vary Allocations to Preserve and
Protect the Partners' Intent 46
ARTICLE XI Management Agent 47
ARTICLE XII Books and Records, Accounting, Tax Elections, Etc 48
12.1 Books and Records 48
12.2 Bank Accounts 48
12.3 Auditors 48
12.4 Cost Recovery and Elections 49
12.5 Special Basis Adjustments 49
12.6 Fiscal Year 49
12.7 Information to Partners 49
12.8 Expenses of the Partnership 52
ARTICLE XIII General Provisions 52
13.1 Restrictions by Reason of Section 708 of the Code 52
13.2 Amendments to Certificate 52
13.3 Notices 53
13.4 Word Meanings 53
13.5 Binding Effect 53
13.6 Applicable Law 53
13.7 Counterparts 53
13.8 Financing Regulations 53
13.9 Separability of Provisions 54
13.10 Paragraph Titles 54
13.11 Amendment Procedure 54
13.12 Extraordinary Limited Partner Expenses 54
13.13 Time of Admission 54
BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
SECOND AMENDED AND RESTATED
ARTICLES OF PARTNERSHIP IN COMMENDAM
Preliminary Statement
Brookhaven Apartments Partnership, A Louisiana Partnership In Commendam
(the "Partnership"), was formed as a Louisiana partnership in commendam
pursuant to an Articles of Partnership In Commendam dated December 15, 1995
(the "Original Agreement"), by and among M. Riemer Calhoun, Jr., as the
general partner (the "Original General Partner") and T.F. Management, Inc., as
the limited partner (the "Withdrawing Original Limited Partner"). The
Original Agreement was filed and registered in the Filing Office on
December 15, 1995 (as so filed, the "Original Certificate"). The Original
Agreement was thereafter amended by the First Amended and Restated Articles of
Partnership In Commendam dated June 7, 1996 and filed with the Filing Office
on June 7, 1996, whereby Community Support Programs, Inc. was admitted as the
Partnership's Managing General Partner and M. Riemer Calhoun, Jr. was
designated as the Partnership's Fiscal Partner. Certain capitalized terms
used herein shall have the respective meanings specified in Article I.
The parties hereto now desire to enter into this Second Amended and
Restated Articles of Partnership In Commendam to: (i) continue the
Partnership; (ii) admit Boston Capital Tax Credit Fund IV, L.P., a Delaware
limited partnership (specifically Series 26 thereof), to the Partnership as
its Investment Limited Partner; (iii) admit BCTC 94, Inc., a Delaware
corporation, as Special Limited Partner; (iv) acknowledge the withdrawal of
the Withdrawing Original Limited Partner; (v) reassign the Interests in the
Partnership; and (vi) set forth all of the provisions governing the
Partnership and the Partners herein.
In consideration of mutual agreements set forth herein, it is agreed and
certified, and the Original Agreement and the Original Certificate are hereby
amended and restated in their entireties, as follows:
ARTICLE I Defined Terms
The following defined terms used in this Agreement shall have the
meanings specified below:
Act means Article 2801 et seq. of the Louisiana Civil Code and Louisiana
Revised Statutes 93401, et. seq. as amended from time to time.
Actual Credit means, with respect to a particular year, the total amount
of Tax Credit properly allocable by the Partnership to the Investment Limited
Partner for such year. The Actual Credit for a year shall be retroactively
revised if the amount of Tax Credit properly allocable to the Investment
Limited Partner for such year is revised after audit or recaptured.
Additional Limited Partner means any holder of an Interest designated as
an Additional Limited Partner pursuant to Section 4.4(b) or Section 7.4.
Admission Date means the first date on which all parties hereto shall
have executed this Agreement, or, if, pursuant to the Louisiana Civil Code,
the Investment Limited Partner shall not be deemed admitted to the Partnership
on such date, then the next date thereafter on which the Investment Limited
Partner shall be deemed to be admitted to the Partnership under the Louisiana
Civil Code.
Affiliate means (A) as to the Investment Limited Partner or Boston
Capital; (i) such Person; (ii) each member of the Immediate Family of such
Person; (iii) each legal representative, successor or assignee of any Person
referred to in the preceding clauses (i) or (ii); (iv) each trustee of a trust
for the benefit of any Person referred to in the preceding clauses (i) or
(ii); or (v) any other Person (a) who directly or indirectly controls, is
controlled by, or is under common control with such Person, (b) who is an
officer of, director of, partner in or trustee of, or serves in a similar
capacity, (c) who, directly or indirectly, is the beneficial owner of ten
percent (10%) or more of any class of equity securities of such Person of
which such Person is directly the owner of ten percent (10%) or more of any
class of securities, (d) who is an officer, director, general partner, trustee
or holder of ten percent (10%) or more of the voting securities or beneficial
interests of any Person referred to in the foregoing clauses (v)(a), (v)(b) or
(v)(c) or (e) who, whatever his title, performs functions for such Person or
any Affiliate of such Person similar to a Chairman or member of the Board of
Directors, or executive officer such as the President, Executive Vice
President or Senior Vice President, Corporate Secretary, or Treasurer, or any
Person holding a five percent (5%) or more equity interest in such Person, or
any Person having the power to direct or cause the direction of such Person
whether through the ownership of voting securities, by contract or otherwise;
and (B) as to any other named Person or Persons (i) such Person; (ii) each
member of the Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred to in the
preceding clauses (i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii); or (v) any other
Person(a) who directly or indirectly controls, is controlled by, or is under
common control with such Person, (b) who owns or controls ten percent (10%) or
more of the outstanding voting securities of such Person, (c) of which ten
percent (10%) or more of the outstanding voting securities is owned by such
Person or any of the Persons referred to in the foregoing clauses (i) through
(iii), (d) who is an officer, director, partner or trustee of such Person, or
(e) for which such Person acts in the capacity of the officer, partner or
trustee of such Person, or (e) for which such Person acts in the capacity of
the officer, director, partner or trustee. An affiliate of the Investment
limited Partner does not include a Person who is a partner in a partnership or
joint venture with the Investment Limited Partner or any other Affiliate of
the Investment Limited Partner if such Person is not otherwise an Affiliate of
the Investment Limited Partner. For the purposes of this definition, the term
Affiliate shall not be deemed to include any law firm (or member or associate
thereof) providing legal services to the Investment Limited Partner or any
Affiliate.
Agency means, as applicable, the Credit Agency and/or any other
governmental agency having jurisdiction over the particular matter to which
reference is being made.
Agency Regulatory Agreement means the HOME Affordable Rental Housing
Program Regulatory Agreement between the Agency and the Partnership.
Agreement means this Second Amended and Restated Articles of Partnership
In Commendam, including Schedule A, as amended from time to time.
Apartment Complex means the real property located in Shreveport, Caddo
Parish, Louisiana, as more fully described in the Mortgages, together with
(i) all buildings and other improvements constructed or to be constructed
thereon and (ii) all furnishings, equipment, fixtures and personal property
covered by the Mortgages, known or to be known as Brookhaven Apartments.
Applicable Federal Rate means the "applicable federal rate" as defined
in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section 42(b) of
the Code.
Asset Management Fee means the fee payable to BCCLP or an Affiliate
thereof pursuant to Section 6.15(c).
Auditors means Coles, Evans & Peterson, or such other firm of
independent certified public accountants as may be engaged by the General
Partners with the consent of the Special Limited Partner for the purposes of
preparing the Partnership income tax returns, auditing the books and records
of the Partnership and certifying financial reports of the Partnership.
BCCLP means Boston Capital Communications Limited Partnership, a
Massachusetts limited partnership, and its successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a Massachusetts
corporation, and its successors and assigns.
Breakeven Confirmation means the date upon which each of the Limited
Partners receives a copy of the federal income tax return of the Partnership
for the Partnership fiscal year in which the Breakeven Point shall have
occurred, evidencing to the satisfaction of the Special Limited Partner that
the Breakeven Point occurred in such year.
Breakeven Point means thirty (30) days after the first time at which, as
certified by the Fiscal Partner to the Limited Partners in writing together
with a statement fully disclosing the basis therefor and the manner of
calculation thereof, there have been three (3) consecutive full calendar
months of Partnership operations occurring after the later to occur of (i) the
Admission Date or (ii) Permanent Mortgage Commencement, during which Revenues
for each of such months shall have exceeded all the Partnership's expenses for
such month on an accrual basis (including, but not limited to, (a) all
operational costs and expenses, (b) all items payable in connection with any
Mortgage, and (c) the funding of any reserves required by any Lender or Agency
and/or pursuant to the terms of this Agreement), except for depreciation,
amortization and other non-cash charges, distributions of Cash Flow and
Capital Transaction proceeds to the Partners and the fees payable pursuant to
this Agreement. If free rent or other rental concessions shall have been
granted to tenants, the calculation of income pursuant to the preceding
sentence shall be adjusted so that the effect of such concessions is amortized
equally over the term of all leases (excluding renewal periods) to which it
applies. For purposes of the foregoing, expenses shall (i) include monthly
payments of principal and interest in the amount specified in any Mortgage
regardless of any forbearance thereof, (ii) include a ratable portion of the
annual amount (as estimated by the Fiscal Partner) of those seasonal expenses
(such as utilities and maintenance expenses) which might reasonably be
expected to be incurred on an unequal basis during a full annual period of
operation, and (iii) be adjusted, if necessary, so that the expenses of real
estate taxes and insurance are based on the General Partners' reasonable
estimate of the full assessed value of the Apartment Complex after completion
of construction.
Capital Account has the meaning specified in Section 10.1(b).
Capital Contribution means the total value of cash or property contri-
buted and agreed to be contributed to the Partnership by each Partner, as
shown in Schedule A. Any reference in this Agreement to the Capital
Contribution of a then Partner shall include a Capital Contribution previously
made by any prior Partner for the Interest of such then Partner.
Capital Transaction means any transaction the proceeds of which are not
includable in determining Cash Flow, including, without limitation, the sale
or other disposition of all or substantially all of the assets of the
Partnership, casualty where any insurance proceeds are not to be used for
reconstruction, condemnation or refinancing of the Apartment Complex, but
excluding the payment of Capital Contributions.
Carryover Certification means the date upon which the Limited Partners
shall have received, in a form and in substance satisfactory to the Special
Limited Partner, the certification of the Auditors that as of a date no later
than December 31, 1996, the Partnership had owned land or depreciable property
constituting part of the Apartment Complex and had incurred capitalizable
costs with respect to the Apartment Complex of at least ten per cent (10%) of
the Partnership's reasonably expected basis in the Apartment Complex as of
December 31, 1998, so that each building in the Apartment Complex constitutes
a "qualified building" for the purposes of Section 42(h)(1)(E)(ii) of the
Code.*
Cash Flow means, with respect to any fiscal year of the Partnership, or
any other applicable period, from and after the Commencement Date, subject to
any applicable Agency requirements (a) all Revenues received by the
Partnership during such period plus (b) any amounts which the General
Partners, with the prior written consent of each Lender or Agency whose
consent may be required and the Consent of the Investment Limited Partner,
release from any Partnership reserve account as no longer being necessary to
be held as part of such reserve account, less (i) operating expenses of the
Partnership paid from Revenues during the applicable period, (ii) all cash
payments made from Revenues during such period to discharge interest and/or
principal obligations of Partnership indebtedness, and (iii) all amounts from
Revenues, if any, added to Partnership reserves during such period; provided,
however, that in no event will the deductions in determining Cash Flow
pursuant to clauses (i) and (ii) above include payments made on account of the
Asset Management Fee, the Partnership Management Fee or Subordinated Loans.
Cash Flow Shall be determined separately for each fiscal year and shall not be
cumulative.
Certificate means the Original Certificate as amended from time to time
(including any amendment thereto effected by or in connection with this
Agreement).
Class Contribution means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partners, the
Investment Limited Partner, the Special Limited Partner or any Additional
Limited Partner).
Code means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations (permanent and temporary) issued thereunder.
References herein to any Code section shall include any successor provisions.
Commencement Date means the first day of the month in which the
Admission Date occurs.
Competitive Real Estate Commission means that real estate or brokerage
commission paid for the purchase or sale of the Apartment Complex or other
Partnership property which is reasonable, customary and competitive in light
of the size, type and location of the Apartment Complex or other property.
Completion Date means the latest of (a) the date upon which the
Apartment Complex has been completed as evidenced by the issuance by the
inspecting architect and by each governmental agency having jurisdiction of
certificates of substantial completion or occupancy (or local equivalents)
with respect to all apartment units in the Apartment Complex and (b) the
Partnership shall have obtained and furnished to the Investment Limited
Partner all due diligence documentation with respect to the construction and
development of the Apartment Complex (which documentation shall be
satisfactory in form and content to the Investment Limited Partner in its sole
discretion), including without limitation (i) an estoppel letter from each of
the Lenders stating that the Mortgages are in full force and effect and no
defaults have occurred thereunder (provided, however, that if an estoppel
letter is not obtainable from the City of Shreveport notwithstanding the best
efforts of the General Partners, then the Investment Limited Partner shall be
provided with such certification and other evidence as it may request to the
effect that the Permanent Second Mortgage is in full force and effect and no
defaults have occurred thereunder), and (ii) a letter from the contractor
stating all amounts due to it pursuant to the construction contract and
otherwise in connection with the construction and development of the Apartment
Complex have been paid in full and the Partnership is not in default under
said construction contract (or, instead of such payoff letter, submission to
the Investment Limited Partner of other evidence demonstrating the truth of
said payoff letter statements).
Compliance Period means the fifteen (15)-year period commencing with the
first year of the Credit Period.
Consent of the Investment Limited Partner means the prior written
consent or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in Section
6.15(b).
Construction Lender means the Bank One, Louisiana, National Association,
in its capacity as holder of the Construction Mortgage, or its successors or
assigns in such capacity.
Construction Mortgage means the financing for the construction of the
Apartment Complex provided by the Construction Lender in a principal amount of
up to $1,091,650.
Construction Mortgage Closing means the first date upon which (i) the
Partnership shall have received all necessary governmental and other permits
and approvals for the construction and operation of the Apartment Complex in
accordance with the plans and specifications therefor and (ii) the
Construction Mortgage shall have closed and the initial draw thereunder shall
have been disbursed.
Construction Permitting Date means the first date upon which the
Partnership shall have received all necessary governmental and other permits
and approvals for the construction and operation of the Apartment Complex in
accordance with the plans and specifications therefor.*
Controlling Person has the meaning given to it in the context of Section
15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited Partner shall
have received the written certification of the Auditors, in a form and in
substance satisfactory to the Special Limited Partner, as to the itemized
amounts of the construction and development costs of the Apartment Complex and
the Eligible Basis and Applicable Percentage pertaining to each building in
the Apartment Complex.
Credit Agency means the Louisiana Housing Finance Agency.
Credit Period has the meaning given to it in Section 42(f)(1) of the
Code.
Credit Recovery Loan means a constructive interest-bearing advance of
the Investment Limited Partner, as more fully described in Section 5.1(g).
Credit Recovery Loans and interest thereon shall not be treated as loans or
interest, respectively, for accounting, tax or liability purposes or for the
purposes of Section 6.2(1). For the purposes of Article X, the term Credit
Recovery Loan shall not include any portion of such an advance which shall
have theretofore been paid to the Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section 5.1(g).
Developer's Overhead Reimbursement means the reimbursement to the
General Partners described in Section 6.12(e).
Disposition (including the forms Dispose and Disposing) means, as to a
Limited Partner, the assignment, sale, transfer, exchange or other disposition
of all or any part of its Interest.
Economic Risk of Loss has the meaning set forth in Treasury Regulation
Section 1.752-2.
89-12 Requirements means the net worth requirement set forth in Internal
Revenue Procedure 89-12, which procedure describes the prerequisites to the
issuance with respect to a limited partnership, assuming that each general
partner of such limited partnership is a corporation by the Service of an
advance ruling that such limited partnership lacks the corporate
characteristics of limited liability.
Eligible Basis has the meaning given to it in Section 42(d) of the Code.
Entity means any general partnership, limited partnership, limited
liability company, limited liability partnership, corporation, joint venture,
trust, business trust, cooperative or association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person or in respect of any Controlling
Person of such Person in a case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or of any Controlling Person of such
Person or for any substantial part of such Person's property or of the
property of any Controlling Person of such Person, or the issuance of
an order for the winding-up or liquidation of such Person's affairs or
the affairs of any Controlling Person of such Person and the
continuance of any such decree or order unstayed and in effect for a
period of sixty (60) consecutive days, or
(ii) the commencement by such Person or by any Controlling
Person of such Person of a proceeding seeking any decree, order or
appointment referred to in clause (i), the consent by such Person or by
any Controlling Person of such Person to any such decree, order or the
appointment, or taking of any action by such Person or by any
Controlling Person of such Person in furtherance of any of the
foregoing.
Filing Office means the Office of the Secretary of the State.
Fiscal Partner means M. Riemer Calhoun, Jr., as Fiscal Partner hereunder
together with his permitted successors and assigns in such capacity.
General Partners means the Persons designated as General Partners in
Schedule A and any Persons who become General Partners as provided herein, in
their capacities as general partners of the Partnership. At any and all
times where there is only one General Partner, the term General Partners
shall mean such sole General Partner.
Hazardous Material has the collective meanings given to the terms
"hazardous material", "hazardous substances" and "hazardous wastes" in the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the term
"radioactive materials" in the context of the Atomic Energy Act, 28 U.S.C.
Sec. 2344, and also includes any meanings given to such terms in any similar
state or local statutes, ordinances, regulations or by-laws. In addition,
the term Hazardous Material also includes oil and any other substance known
to be hazardous.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means with respect to any Person, such Person's
spouse, parents, parents-in-law, descendants, nephews, nieces, brothers,
sisters, brothers-in-law, sisters-in-law, children-in-law and grandchildren-
in-law.
Incentive Management Fee has the meaning specified in Article XIE.
Initial 100% Occupancy Date means the first date upon which not less
than 100% of the 35 apartment units in the Apartment Complex shall have been
leased to and physically occupied by Qualified Tenants.
Installment means an installment of the Investment Limited Partner's
Capital Contribution paid or payable to the Partnership pursuant to
Section 5.1.
Interest means the entire interest of a Partner in the Partnership at
any particular time, including the right of such Partner to any and all
benefits to which a Partner may be entitled hereunder and the obligation of
such Partner to comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited Partner, an
amount equal to the quotient of (a) the paid-in Capital Contribution of the
Investment Limited Partner, divided by (b) 0.759% and (ii) as to any other
Partner, an amount equal to its Capital Contribution.
Investment General Partners means C&M Associates d/b/a Boston Capital
Associates, a Massachusetts general partnership, and Boston Capital Partners
Corporation, a Massachusetts corporation in their capacities as the general
partners of the Investment Limited Partner, and any other Persons who may
become successor or additional general partners of the Investment Limited
Partner.
Investment Limited Partner means Boston Capital Tax Credit Fund IV,
L.P., a Delaware limited partnership (specifically Series 26 thereof), and any
Person or Persons who replace it as Substituted Limited Partner, but shall not
include any Special Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Amended and Restated
Agreement of Limited Partnership of the Investment Limited Partner, as
amended from time to time.
Lenders means the Construction Lender, Permanent First Lender and the
Agency, each in their capacity as maker of a Mortgage loan, and their
successors and assigns in such capacity.
Limited Partners means the Investment Limited Partner, the Special
Limited Partner and any Additional Limited Partner.
Low-Income Apartment Units means the 35 units in the Project with
respect to which the Partnership has agreed to comply with the requirements
for the Tax Credit under Section 42 of the Code.
Management Agent means the management and rental agent for the
Apartment Complex.
Management Agreement means the agreement between the Partnership and
the Management Agent providing for the management of the Apartment Complex.
Management Fee means the Management Fee to which reference is made in
Article XI.A.
Managing General Partner means Community Support Programs, Inc. as
Managing General Partner hereunder, together with its permitted successors and
assigns in such capacity.
Management Sub-Contract means the Agreement between Calhoun Property
Management, Inc. and the Managing General Partner relating to certain
management obligations and responsibilities of the Apartment Complex.
Minimum Set-Aside Test means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40% of the
units in the Apartment Complex must be occupied by individuals with incomes
equal to 60% or less of area median income, as adjusted for family size.
Mortgage means the mortgage indebtedness of the Partnership to a
Lender, the Permanent First Lender and the Agency; where the context admits,
Mortgages shall mean the Construction Mortgage and include the mortgage notes
evidencing such indebtedness, the mortgage or deed of trust and security
agreements securing such indebtedness, the loan agreements and all other
documentation related thereto which evidence and secure such indebtedness,
including any Agency documentation related thereto.
Original Agreement has the meaning specified in the Preliminary
Statement.
Original Certificate has the meaning specified in the Preliminary
Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability (a) that is
considered non-recourse under Treasury Regulation Section 1.1001-2 or for
which the creditor's right to repayment is limited to one or more assets of
the Partnership and (b) for which any Partner or Related Person bears the
Economic Risk of Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of partner
nonrecourse debt minimum gain and the net increase or decrease in partner
nonrecourse debt minimum gain determined in a manner consistent with Treasury
Regulation Sections 1.704-2(d) and 1.704-2(g)(3).
Partnership means the limited partnership continued pursuant to this
Agreement.
Partnership Management Fee means the fee payable to the General
Partners pursuant to the provisions of Section 6.15(a).
Partnership Minimum Gain means the amount determined by computing, with
respect to each Partnership Non-Recourse Liability, the amount of gain, if
any, that would be realized by the Partnership if it disposed of (in a
taxable transaction) the property subject to such liability in full
satisfaction of such liability, and by then aggregating the amounts so
computed. Such computations shall be made in a manner consistent with
Treasury Regulation Section 1.704-2(d).
Partnership Non-Recourse Liability means any Partnership liability (or
portion thereof) for which no Partner or Related Person bears the Economic
Risk of Loss.
Permanent Lenders mean, collectively, the Permanent First Lender,
together with its successors and assigns in such capacity, and the Agency,
together with its successors and assigns in such capacity.
Permanent First Lender means Bank One, Louisiana, National Association.,
in its capacity as maker and holder of the Permanent First Mortgage, together
with its successors and assigns in such capacity.
Permanent First Mortgage means the permanent financing provided, or to
be provided, by the Permanent First Lender for the Apartment Complex following
the completion thereof in the initial principal amount of up of $471,650.
Permanent Mortgages means the Permanent First Mortgage and the Permanent
Second Mortgage.
Permanent Second Mortgage means the permanent financing provided, or to
be provided, by the City of Shreveport for the Apartment Complex following the
completion thereof in the initial principal amount of up of $535,650
Permanent Mortgage Commencement means the first date on which all of the
following shall have occurred: (a) the Completion Date; (b) the principal
amount and maturity date of the Permanent Mortgages shall have been finally
determined; and (c) amortization of the Permanent Mortgages shall have
commenced.
Permanent Mortgage Commitment means the first date on which the
Partnership receives the written commitment of the Permanent Lenders to make
the Permanent Mortgages.
Person means any individual or Entity.
Project Documents means and includes all documents evidencing or
relating to the Construction Mortgage and the Permanent Mortgages, the
Management Agreement, the Agency Regulatory Agreement, all other instruments
delivered to (or required by) the Construction Lender and/or the Permanent
Lenders 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 $112,515 for 1997, $122,743 per annum for each
of the years 1998 through 2006 (inclusive) and $10,229 for 2007; provided,
however, that the Projected Credit for 2007 shall be reduced by the amount,
if any, by which the Actual Credit for 1997 exceeds $112,515; and provided
further that upon the occurrence of any of the events described in clauses
(i), (ii) and (iii) of Section 5.1(e), the Projected Credit shall thereafter
be the Revised Projected Credit.
Qualified Basis has the meaning given to it in Section 42(c) of the
Code.
Qualified Income Offset Item means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to be made
(a) pursuant to Section 704(e)(2) of the Code to a donee of an interest in
the Partnership, (b) pursuant to Section 706(d) of the Code as the result of
a change in any Partner's Interest, or (c) pursuant to Regulation
Section 1.751-1(b)(2)(ii) as the result of a distribution by the Partnership
of unrealized receivables or inventory items and (2) a distribution that, as
of the end of such year, reasonably is expected to be made to a Partner to
the extent it exceeds offsetting increases to such Partner's Capital Account
which reasonably are expected to occur during or prior to the Partnership
taxable year in which such distribution reasonably is expected to occur.
Qualified Tenant means a tenant (i) with income not exceeding that
permitted by the Minimum Set-Aside Test who leases a Low-Income Apartment
Unit in the Apartment Complex at a rent which satisfies the Rent Restriction
Test and (ii) complying with any other requirements imposed by the Project
Documents.
Related Person means a Person related to a Partner within the meaning
of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42 of the Code
whereby the gross rent (as defined therein) charged to tenants of the Low-
Income Apartment Units may not exceed thirty per cent (30%) of the qualifying
income levels.
Rental Achievement means the thirtieth (30th) day after the first date
on at which, as certified by the General Partners, there shall have
previously occurred a period of three (3) consecutive full calendar months of
Partnership operations (all of which months occurring after the later the
Admission Date or Permanent Mortgage Commencement), during each of which
months (x) the Net Operating Income for such month divided by (y) all debt
service and other payments required to be made on all Mortgages during such
month (regardless of any forbearance thereof) equaled or exceeded 115%. "Net
Operating Income" for a period shall be the excess of (a) the Revenues for
such period, over (b) all of the Partnership's expenses for such period on an
accrual basis. For purposes of the foregoing clause (b), expenses shall
(i) include, but not limited to, all operational costs and expenses, adjusted
to include a ratable portion of the annual amount (as reasonably estimated by
the General Partners) of those seasonal expenses (such as utilities and
maintenance expenses) which might reasonably be expected to be incurred on an
unequal basis during a full annual period of operation, (ii) include the
funding of any reserves required by any Lender, Agency and/or pursuant to the
terms of this Agreement, (iii) be adjusted, if necessary, so that the
expenses of real estate taxes and insurance are based on the General
Partners' reasonable estimate of the full assessed value and the full
replacement cost, respectively, of the Apartment Complex after completion of
construction, and (iv) exclude all Mortgage payments referred to in
clause (y) above, depreciation, distributions of Cash Flow and Capital
Transaction proceeds to the Partners and the fees payable pursuant to this
Agreement other than the Asset Management Fee.
Rental Achievement Confirmation means the date upon which each of the
Limited Partners receives (a) a copy of the federal income tax return of the
Partnership and (b) the financial reports to be provided pursuant to Section
12.7(a)(i), in each case for the Partnership fiscal year in which Rental
Achievement shall have occurred, evidencing to the satisfaction of the
Special Limited Partner that Rental Achievement occurred in such year.
Revenues means all cash receipts (actually received) of the Partnership
during a specified period of time, including rental assistance payments,
operating subsidies and the proceeds of rental interruption insurance
receipts, but excluding the proceeds of Capital Contributions, the proceeds
of the sale or other disposition of Partnership assets, liquidation proceeds,
loan or refinancing proceeds, casualty proceeds, condemnation or eminent
domain proceeds. Any net rental income applied to complete the construction
of the Apartment Complex pursuant to Section 6.11 prior to the later of the
Admission Date or Permanent Mortgage Commencement shall not be included when
determining Revenues. For the purposes of computing Revenues, rental
receipts shall not include pre-paid rent and, if attributable to Low-Income
Apartment Units, shall be included only if attributable to Qualified Tenants.
Revised Projected Credit has the meaning given to it in Section 5.1(e).
Sales Disposition Fee has the meaning given to it in Section 6.15(d).
Schedule A means Schedule A to this Agreement, as amended from time to
time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sec. 9601 et seq., as amended, and shall also include any meaning given to it
in any similar state or local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a Massachusetts
corporation, and any Person who becomes a Special Limited Partner as provided
herein, in its capacity as a special limited partner of the Partnership.
State means the State of Louisiana.
State Designation means the date upon which the Partnership receives
the final allocation from the Credit Agency for the building(s) constituting
the Apartment Complex in an annual dollar amount of not less than $123,983,
as evidenced by the execution by or on behalf of said agency of Form(s) 8609.
For the purposes of determining State Designation, each building in the
Apartment Complex shall be treated as having received an allocation of Tax
Credit in an amount equal to the lesser of (i) the amount of Tax Credit
carryover allocation received from the Credit Agency as to such building or
(ii) the amount of Tax Credit set forth on the Form 8609 as to such building.
Subordinated Loan means any loan made by the General Partners to the
Partnership pursuant to Section 6.13.
Substituted Limited Partner means any Person who is admitted to the
Partnership as Limited Partner under Section 8.2 or acquires the Interest of
a Limited Partner pursuant to Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman of Bethesda, Maryland
or such other firms of independent certified public accountants as may be
engaged by Boston Capital to review the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant to
Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the Partnership receives
a reservation, effective for the year 1996, in an annual dollar amount of not
less than $123,983, which reservation shall not have expired or been revoked
prior to the date on which the First Installment is paid.
Vessel has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sec. 9601 et seq., as amended, and shall also include any meaning given to it
in any similar state or local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of
insanity or incompetence, Event of Bankruptcy, dissolution, liquidation, or
voluntary or involuntary withdrawal or retirement from the Partnership for
any reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement.
Withdrawal shall also mean the sale, assignment, transfer or encumbrance by a
General Partner of its interest as a General Partner. A General Partner
which is a corporation or partnership shall be deemed to have sold, assigned,
transferred or encumbered its interest as a General Partner in the event (as
a result of one or more transactions) of any sale, assignment or other
transfer (but specifically excluding any transfer occurring pursuant to the
laws of descent and distribution) or encumbrance of a controlling interest or
the interest of a Controlling Person in a corporate General Partner or of a
general partner interest in a General Partner which is a partnership. For
purposes of this definition of Withdrawal, "controlling interest" shall mean
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise.
Withdrawing Original Limited Partner has the meaning specified in the
Preliminary Statement.
ARTICLE II Name and Business
2.1 Name; Continuation
The name of the Partnership is Brookhaven Apartments Partnership, A
Louisiana Partnership in Commendam. The Partners agree to continue the
Partnership which was formed pursuant to the provisions of the Louisiana
Civil Code.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is:
907 Polk Street
PO Box 799
Mansfield, LA 71052
at which office there shall be maintained those records required by the
Uniform Act to be kept by the Partnership.
The Partnership may have such other or additional offices as the
General Partners shall deem desirable. The General Partners may at any time
change the location of the Partnership offices and shall give due notice
thereof to the Limited Partners.
(b) The resident agents in the State for the Partnership for service
of process are as follows:
M. Riemer Calhoun, Jr.
907 Polk Street
P.O. Drawer 799
Mansfield, Louisiana 71052
or
Community Support Programs, Inc.
3811 Gilbert Avenue
Shreveport, Louisiana 71104
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
construct, develop, improve, maintain, operate, lease and otherwise deal with
the Apartment Complex. The Partnership shall operate the Apartment Complex
in accordance with any applicable Agency regulations and requirements. The
Partnership shall not engage in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect until
December 31, 2036, except that the Partnership shall be dissolved and its
assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially all of the
assets of the Partnership;
(b) The Withdrawal of a General Partner if (i) the remaining General
Partner(s), if any, shall fail to continue the business of the Partnership
and reconstitute the Partnership as a successor limited partnership as
provided in Section 7.2 and (ii) the Investment Limited Partner and the
Special Limited Partner shall fail to exercise the right provided in Section
7.3;
(c) The election to dissolve the Partnership made in writing by the
General Partners with the Consent of the Investment Limited Partner and the
approval (if required) of each applicable Agency;
(d) The entry of a final decree of dissolution of the Partnership by
a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the Partnership
under the Act if the Partnership is not reconstituted pursuant to Section 7.2
or Section 7.3.
Upon dissolution of the Partnership, the General Partners (or for
purposes of this paragraph, their trustees, receivers or successors) shall
cause the cancellation of the Certificate, liquidate the assets of the
Partnership and apply and distribute the proceeds thereof in accordance with
Section 10.3. Notwithstanding the foregoing, if, during liquidation, the
General Partners shall determine that an immediate sale of part or all of the
Partnership's assets would be impermissible, impractical or cause undue loss
to the Partners, the General Partners may defer liquidation of, and withhold
from distribution for a reasonable time, any assets of the Partnership except
those necessary to satisfy Partnership debts and obligations (other than
Subordinated Loans).
ARTICLE III Mortgage, Refinancing and Disposition of Property
A. The Fiscal Partner and his Affiliates, jointly and severally, are
hereby authorized to incur personal liability for the repayment of funds
advanced by the Construction Lender (and interest thereon) pursuant to the
Construction Mortgage. However, from and after Permanent Mortgage
Commencement, neither any General Partner nor any Related Person shall at any
time bear, nor shall the General Partners permit any other Partner or any
Related Person to bear, the Economic Risk of Loss for the payment of any
portion of any Mortgage.
B. The Partnership may amend, modify, decrease, increase or
refinance the Construction or Permanent Mortgages and may make any required
transfer or conveyance of Partnership assets for security or mortgage
purposes, provided, however, any such amendment, modification, decrease
(except through the Permanent Mortgage amortization schedule anticipated at
Permanent Mortgage Commencement), increase or refinancing of the Construction
or Permanent Mortgages may be made by the Fiscal Partner only with the
Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise transfer
or convey all or any substantial part of the assets of the Partnership only
with the Consent of the Investment Limited Partner. Notwithstanding the
foregoing and except as set forth in Section 6.2(6), no Consent of the
Investment Limited Partner shall be required for the leasing of apartments to
tenants in the normal course of operations.
D. The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real Estate Commission,
not to exceed three percent (3%) of the contract price for the sale of the
Apartment Complex.
ARTICLE IV Partners
4.1 General Partners
The name, address and Capital Contribution of each General Partner are
as set forth on Schedule A. The Fiscal Partner shall make additional
Capital Contributions to the Partnership in an amount sufficient to enable
the Partnership to pay any deferred portion of the Construction and
Development Fee not paid by December 31, 2008.
4.2 Investment Limited Partner, Special Limited Partner and Original
Limited Partner
The Original Limited Partner hereby withdraws as a limited partner of
the Partnership and acknowledges that the Original Limited Partner no longer
has any Interest in, or rights or claims against, the Partnership as a
Limited Partner as of the Admission Date. The Investment Limited Partner and
the Special Limited Partner are hereby admitted to the Partnership as the
sole Limited Partners in substitution for the Original Limited Partner as of
the Admission Date and agree to be bound by the terms and provisions of the
Project Documents and this Agreement. The names and addresses of the
Investment Limited Partner and the Special Limited Partner are as set forth
on Schedule A. The General Partners shall have no authority to admit
additional Limited Partners without the Consent of the Investment Limited
Partner.
4.3 Liability of the Limited Partners
None of the Investment Limited Partner, the Special Limited Partner and
any Person who becomes an Additional Limited Partner shall be liable for any
debts, liabilities, contracts or obligations of the Partnership and shall
only be liable to pay their respective Capital Contributions as and when the
same are due hereunder and under the Act.
4.4 Special Rights of the Investment Limited Partner and the Special
Limited Partner
(a) Notwithstanding any other provision herein, to the extent the law
of the State is not inconsistent, each of the Investment Limited Partner and
the Special Limited Partner shall have the right, subject to the prior
written consent of any Lender or Agency (if such consent is required) to:
(i) amend this Agreement in any particular;
(ii) remove any General Partner and elect a new General Partner
(A) on the basis of the performance and discharge of any General
Partner's obligations constituting fraud, bad faith, negligence,
misconduct or breach of fiduciary duty, or (B) upon the occurrence of
any of the following: (1) a General Partner shall have materially
violated any provisions of any Project Document or other document
required in connection with any Mortgage, or any provisions of any
Agency regulations applicable to the Apartment Complex; (2) a General
Partner shall have materially violated any provision of this Agreement,
including, but not limited to, any obligation to fund any Partnership
expense under Section 6.13, or a General Partner shall have materially
violated any provision of applicable law; (3) any Mortgage shall have
gone into default; (4) the termination of the Partnership for Federal
income tax purpose; (5) the treatment of the Partnership for federal
income tax purposes as an association taxable as a corporation; or
(6) the Partnership failing to pay on a timely basis any of its real
estate or personal property tax obligations to any county. city, town
or other local government;
(iii) continue the business of the Partnership with a substitute
General Partner; and
(iv) approve or disapprove the sale of all or substantially all
of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any further
action by any Partner, the Special Limited Partner or its designee shall
automatically become a General Partner and acquire in consideration of a cash
payment of $100 such portion of the Interest of the removed General Partner
as counsel to the Investment Limited Partnership shall determine is the
minimum appropriate interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the Uniform Act, (ii)
the remaining portion of the Interest of the removed General Partner shall
automatically be converted to an equal Interest as an Additional Limited
Partner, (iii) the Interest of the Special Limited Partner as the Special
Limited Partner shall continue unaffected by the new status of the Special
Limited Partner or its designee as a General Partner, and (iv) the new
General Partner shall automatically be irrevocably delegated all of the
powers and duties of the General Partners pursuant to Section 6.13. The
Special Limited Partner or any successor General Partner proposed by the
Special Limited Partner shall have the option, exercisable in its sole
discretion, to acquire the Additional Limited Partner Interest, or any
portion thereof, of any removed General Partner upon payment of the agreed or
then present fair market value of such Interest or portion thereof. Any
dispute as to the value of the Interest or portion thereof to be acquired
pursuant to the immediately preceding sentence shall be submitted to a
committee composed of three qualified real estate appraisers, one chosen by
the removed General Partner, one chosen by the successor General Partner, and
the third chosen by the two so chosen. The committee of appraisers shall
meet in Shreveport, Louisiana, and the proceedings of such committee shall
conform to the rules of the American Arbitration Association, as far as
appropriate, and its decision shall be final and binding. The expense of
arbitration shall be born equally by the removed General Partner and the
Partnership. The method of payment to the removed General Partner shall be
fair and must protect the solvency and liquidity of the Partnership. The
method of payment will be deemed presumptively fair where it provides for an
interest-bearing promissory note coming due in no less than five (5) years
with equal installments each year. In addition, upon removal, the
Partnership must promptly pay to the removed General Partner all amounts then
accrued and owing to the removed General Partner; provided, however, that
notwithstanding the language of Section 6.15, Article X, Article XI and any
other provision hereof, no removed General Partner or any Affiliate thereof
shall be entitled to receive any fee, compensation or other remuneration from
the Partnership, other than (i) the above-described payment for the Interest,
or portion thereof, of the removed General Partner, and (ii) any such fee,
compensation or other remuneration which had already been earned in full
prior to the date of such removal. The Partnership is not authorized to
enter into any arrangement whereby any fee, compensation or other
remuneration could be payable directly or indirectly to any General Partner
or Affiliate thereof in a manner inconsistent with the immediately preceding
sentence unless the prior written consent of the Special Limited Partner
shall have been obtained to such particular arrangement. The Partnership may
offset against any payments to a General Partner removed under this
Section 4.4 any damages suffered by the Partnership as a result of any breach
of the obligations of such General Partner hereunder. A General Partner so
removed will not be liable as a general partner for any obligations of the
Partnership incurred after the effective date of its removal. Each General
Partner hereby grants to the Special Limited Partner an irrevocable (to the
extent permitted by applicable law) power of attorney coupled with an
interest to execute and deliver any and all documents and instruments on
behalf of such General Partner and the Partnership as the Special Limited
Partner may deem to be necessary or appropriate in order to effect the
provisions of this Section 4.4 and to enable the new General Partner to
manage the business of the Partnership.
(c) In order to implement Section 4.4(a)(iv), the General Partners
are hereby required, within five (5) days after their receipt of any offer to
purchase the Apartment Complex or all of the Interests in the Partnership, to
send a copy of such offer (or a written description of any such oral offer)
to each of the Limited Partners. If, within thirty (30) days of its receipt
of any such copy of such an offer, the Special Limited Partner shall send
notice to the General Partners that the Special Limited Partner desires that
the Partnership accept such offer, then the General Partners shall be
required to accept such offer on behalf of the Partnership and proceed
promptly to close such transaction unless otherwise instructed by the Special
Limited Partner at any point prior to the closing of such transaction. To
the extent, if any, that the Special Limited Partner shall determine, in its
discretion, that the General Partners are not proceeding in a manner
satisfactory to it with respect to any such offer or closing, each Partner
hereby grants to the Special Limited Partner an irrevocable (to the extent
permitted by law) power of attorney coupled with an interest to execute and
deliver any and all documents and instruments on behalf of the Partnership
and any Partner as the Special Limited Partner may deem to be necessary or
appropriate in order to effect the acceptance of and/or closing pursuant to
any such offer in such a manner as the Special Limited Partner shall, in its
discretion, determine to be satisfactory.
4.5 Meetings
The General Partners or Limited Partners holding more than ten per cent
(10%) of the then outstanding Limited Partner Interests may call meetings of
the Partnership for any matters for which the Limited Partners may vote as
set forth in this Agreement. A list of the names and addresses of all
Limited Partners shall be maintained as part of the books and records of the
Partnership and shall be made available upon request to any Limited Partner
or his representative at his cost. Upon receipt of a written request either
in person or by certified mail stating the purpose(s) of the meeting, the
General Partners shall provide all Limited Partners within ten (10) days
after receipt of said request, written notice (either in person or by
certified mail) of a meeting and the purpose of such meeting to be held on a
date not less then fifteen (15) nor more than sixty (60) days after receipt
of said request, at a time convenient to the Limited Partners. All meetings
shall be held at the principal office of the Partnership.
ARTICLE V Capital Contributions of the Investment Limited Partner and
the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution shall be $10,
payable in full in cash on the Admission Date. The Investment Limited
Partner may deliver to the Partnership, on behalf of the Special Limited
Partner, the Special Limited Partner's Capital Contribution. The Investment
Limited Partner's Capital Contribution shall be paid in cash installments
(the "Installments"), as follows:
(1) $418,554 (the "First Installment") on the latest of (i) the
Admission Date, (ii) Tax Credit Set-Aside, (iii) Construction Mortgage
Closing, Permanent Mortgage Commitment or (iv) Carryover Certification;
(2) $190,252 (the "Second Installment") on the latest of
(i) the Completion Date, (ii) Cost Certification or (iii) State
Designation;
(3) $114,151 (the "Third Installment") on the later of (i) the
Initial 100% Occupancy Date, (ii) Permanent Mortgage Commencement,
(iii) receipt by the Limited Partners of a copy of the Partnership's
owner's title insurance policy, as endorsed through Permanent Mortgage
Commencement, with such policy, and endorsement in form and substance
satisfactory to the Special Limited Partner, (iv) an opinion of counsel
to the Partnership concerning the Permanent Mortgage, including the
non-recourse nature thereof, satisfactory as to form, content and
counsel to the Special Limited Partner and (v) Rental Achievement; and
(4) $38,050 (the "Fourth Installment") on Rental Achievement
Confirmation;
provided, however, that the Fiscal Partner shall give the Investment Limited
Partner not less than twenty-one (21) days' written notice prior to the due
date of each Installment subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the Fiscal Partner to the
Investment Limited Partner of a written certificate (the "Payment
Certificate") stating that as of the date of such certificate (i) all the
conditions to the payment of such Installment have been satisfied and
(ii) all representations and warranties of the Fiscal Partner contained in
this Agreement are true and correct. Except as provided in the final
sentence of this Section 5.1(b), acceptance by the Partnership of any
Installment shall constitute a confirmation that, as of the date of payment,
all such conditions are satisfied and all such representations and warranties
are true and correct. In addition, the obligation of the Investment Limited
Partner to pay the First Installment is also conditioned upon delivery by the
Fiscal Partner to the Investment Limited Partner of (i) a legal opinion of
independent counsel to the Partnership, which opinion must be satisfactory to
the Investment Limited Partner as to form, content and identity of counsel
and (ii) a photocopy of an owner's title insurance policy, or an endorsement
thereto, issued to the Partnership with respect to the Apartment Complex with
an effective date on or after the Admission Date, in an insured amount of not
less than $1,768,408, from a title insurance company reasonably satisfactory
to the Investment Limited Partner and evidencing the Partnership's ownership
of the Apartment Complex subject only to such exclusions, exceptions,
conditions and stipulations as shall be acceptable to the Investment Limited
Partner, in its sole discretion. In no event shall any Installment become
due until all of the conditions for all of the Installments listed prior to
the Installment in question in Section 5.1(a) shall have been satisfied and
all of such prior Installments shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an Installment
becomes due and payable, the Partnership has any unpaid items enumerated in
the numbered clauses of the second sentence of Section 6.14 or an "Operating
Deficit" (expenses in excess of revenues which the Fiscal Partner would be
required to fund pursuant to Section 6.13), then the Investment Limited
Partner may, at its option, waive the requirement of the delivery of the
Payment Certificate or any other condition with respect to part or all of
such Installment and pay such part or all of such Installment, provided that
the proceeds of the amount so paid are used by the Partnership to fully fund
such unpaid item and/or Operating Deficit; provided, however, that if the
proceeds so paid are designated in this Agreement to be used to pay fee(s) or
distributions to the Fiscal Partner of their Affiliates, then such proceeds
shall be deemed to have first been paid to the Fiscal Partner or their
Affiliates as such fees or distributions and then applied by the Fiscal
Partner to fund such unpaid item and/or Operating Deficit as provided in said
Sections 6.14 or 6.13, as the case may be.
(c) The Payment Certificate for each Installment shall be dated and
delivered not less than ten (10) nor more than thirty (30) days prior to the
due date for such Installment.
(d) If, as of the date when an Installment would otherwise be due,
any statement required to be made in the Payment Certificate for such
Installment cannot be truthfully made, the Fiscal Partner shall notify the
Investment Limited Partner of the reason why such statement would be untrue
if made, and the Investment Limited Partner shall not be required to pay such
Installment; provided, however, that if (i) any such statement can
subsequently be truthfully made and (ii) the Investment Limited Partner shall
not have irrevocably lost, in the good faith judgment of the Investment
General Partner, any material tax or other benefits hereunder, then the
Investment Limited Partner shall pay such Installment to the Partnership
thirty (30) days after delivery by the Fiscal Partner to the Investment
Limited Partner of the Payment Certificate together with an explanation of
the manner in which each such statement had become true.
(e) In the event that (i) State Designation does not occur by
March 31, 1998, or (ii) by March 31, 1997, the Limited Partners shall not
have received a written certification of the Auditors in a form and in
substance satisfactory for the purpose of achieving Cost Certification and
indicating that the product of the Apartment Complex's Qualified Basis and
its Applicable Percentage is such that the Apartment Complex will be eligible
to receive Tax Credit in an annual amount of at least $123,983, or (iii) at
any time after the Completion Date the product of the Apartment Complex's
Qualified Basis and its Applicable Percentage is determined by the Auditors,
the Tax Accountants or the Service to be such that the Apartment Complex will
not be eligible to receive Tax Credit in an annual dollar amount of at least
$122,983, then (a) the Fiscal Partner shall pay to the Investment Limited
Partner an amount equal to 99% of the excess of $1,239,830 over (ii) the
total amount of Tax Credit actually allocated or expected to be allocated to
the Partnership over the entire Credit Period, and (b) the Projected Credit
for each year shall thereafter be redefined to mean 99% of the annual amount
of Tax Credit actually so allocated to the Partnership (the "Revised
Projected Credit"). Any amount payable by the Fiscal Partner to the
Investment Limited Partner pursuant to this Section 5.1(e) shall, at the
option of the Investment Limited Partner, (i) be applied first to the
Installment, if any, next due to be paid by the Investment Limited Partner,
and any balance of such amount payable by the Fiscal Partner in excess of the
amount of such Installment shall be applied to succeeding Installments, if
any, and/or (ii) be paid in its entirety by the Fiscal Partner directly to
the Investment Limited Partner promptly after demand is made therefor, as a
payment of damages for breach of warranty, regardless of the reason for the
occurrence of such event.
(f) If with respect to any fiscal year commencing during the sixty
(60)-month period commencing on the later of (i) the Admission Date or (ii)
the date on which the first building in the Apartment Complex is placed in
service for the purposes of Section 42 of the Code (a "Reduction Year") the
Actual Credit is or was less than the Projected Credit, then the Fiscal
Partner shall pay to the Investment Limited Partner the Reduction Amount.
The Reduction Amount shall be equal to the sum of (A) 62% the excess of the
Projected Credit for such year over the Actual Credit for such year, plus (B)
the amount of any recapture, interest or penalty payable by the limited
partners of the Investment Limited Partner as a result of such shortfall,
assuming that each limited partner in the Investment Limited Partner used all
of the Tax Credits allocated to it in the year of allocation and that each
such Person was subject to interest at the rate set forth in Section
6621(a)(2) of the Code and to the penalty for understatement of tax set forth
in Section 6662(d) of the Code. The Auditors shall make their determination
of the amount of the Actual Credit with respect to each Reduction Year within
thirty (30) days following the end of such year but such amount shall be
subject to later adjustment by the Auditors or by the Service in connection
with an audit. The Investment Limited Partner shall be eligible to be paid a
Reduction Amount as hereinabove described with respect to each Reduction Year
and may receive multiple payments of Reduction Amounts in the event of
multiple changes in the Actual Credit. Any Reduction Amount shall, at the
option of the Investment Limited Partner, (i) first be applied to the
Installment next due to be paid by the Investment Limited Partner, with any
portion of such Reduction Amount in excess of the amount of such Installment
then being applied to succeeding Installments, and/or (ii) be paid in its
entirety by the General Partners directly to the Investment Limited Partner
promptly after demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such event.
(g) In the event that, for any reason, with respect to any fiscal
year following the fiscal years referred to in Section 5.1(f), the amount of
the Actual Credit shall be less than the Projected Credit (such difference
being hereinafter referred to as a "Credit Shortfall"), the Investment
Limited Partner shall be treated as having made a constructive advance to the
Partnership (a "Credit Recovery Loan"), which shall be deemed to have been
made on January 1 of such year in an amount equal to the sum of (i) the
Credit Shortfall for such year plus (ii) the amount of any recapture,
interest or penalty payable by the limited partners of the Investment Limited
Partner as a result of the Credit Shortfall for such year, assuming that each
limited partner in the Investment Partnership used all of the Tax Credits
allocated to it in the year of allocation and that each such Person was
subject to interest at the rate set forth in Section 6621(a)(2) of the Code
and to the penalty for understatement of tax set forth in Section 6662(d) of
the Code. Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such constructive
advances shall have been deemed to have been made under this Section 5.1(g)
at 9% per annum. Credit Recovery Loans shall be payable by the Partnership
as provided in Section 10.3(b), Clause Third.
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit Benchmarks and
Standards. If:
(1) all of the Low-Income Apartment Units shall not have been
placed in service by December 31, 1997 (or any later date fixed by the
General Partners with the Consent of Investment Limited Partner), or
(2) by June 30, 1998 (or any later date fixed by the Fiscal
Partner with the Consent of the Investment Limited Partner) less than
35 apartment units in the Apartment Complex shall have been occupied by
Qualified Tenants, or
(3) Permanent Mortgage Commencement shall not have occurred
prior to December 31, 1997 (or any later date fixed by the Fiscal
Partner with the Consent of the Investment Limited Partner), or
(4) State Designation shall not have occurred by December 31,
1997 (or any later date fixed by the Fiscal Partner with the Consent of
the Investment Limited Partner), or
(5) the Partnership shall fail to meet the Minimum Set-Aside
Test or the Rent Restriction Test by the close of the first year of the
Credit Period and/or fails to continue to meet either of those Tests at
any time during the sixty (60)-month period commencing on such date, or
(6) prior to Permanent Mortgage Commencement, (a) foreclosure
proceedings shall have commenced under the Construction Mortgage and
such proceedings shall not have been dismissed within thirty (30) days,
(b) any of the commitments of any Lender or Agency to provide the
Permanent Mortgage and/or any subsidy financing shall be terminated or
withdrawn and not reinstated or replaced within sixty (60) days with
terms equally or more favorable to the Investment Limited Partner or
terms for which the Consent of the Investment Limited Partner and (if
required) the approval of any Agency or other Lender shall have been
obtained, or (c) the Construction Lender shall have irrevocably refused
to make any further advances under the Construction Mortgage and such
decision shall not have been reversed or the Construction Lender
replaced within thirty (30) days, or
(7) if by June 30, 1997 (or any later date fixed by the Fiscal
Partner with the Consent of the Investment Limited Partner), the
Investment Limited Partner shall not have received, in form and
substance satisfactory to the Investment Limited Partner, the
certification of the Auditors that as of a date no later than
December 31, 1996, the Partnership had incurred capitalizable costs
with respect to the Apartment Complex of at least ten per cent (10%) of
the Partnership's reasonably expected basis in the Apartment Complex as
of December 31, 1998, so that each building in the Apartment Complex is
a "qualified building" for the purposes of Section 42(h)(1)(E)(ii) of
the Code, or
(8) if at any time it shall be determined by the Service or by
the Tax Accountants that as of December 31, 1996 the Partnership had
not incurred capitalizable costs with respect to the Apartment Complex
of at least ten per cent (10%) of the Partnership's reasonably expected
basis in the Apartment Complex as of December 31, 1998, or
(9) if by December 31, 1997 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner)
Cost Certification shall not have occurred, or
(10) if by December 30, 1998 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner)
Rental Achievement shall not have been achieved, or
(11) the Fiscal Partner fail to make any advances necessary to
fund payment of the Asset Management Fee pursuant to Section 6.13,
then the Fiscal Partner shall, within five (5) days of the occurrence
thereof, send to the Investment Limited Partner and the Special Limited
Partner notice of such event and of the Fiscal Partner's obligation to
repurchase the Interests of the Investment Limited Partner and the Special
Limited Partner by paying to the Investment Limited Partner and the Special
Limited Partner an amount (the "Repurchase Amount") equal to each such
Partner's Invested Amount minus the amount, if any, of such Partner's Capital
Contribution which shall not yet have been paid (or deemed to have been paid)
to the Partnership plus the amount of any third-party costs, including, but
not limited to, attorney's fees incurred by or on behalf of such Partner in
implementing this Section 5.2(a) in the event the Investment Limited Partner
and/or the Special Limited Partner requires such a repurchase. If either the
Special Limited Partner or the Investment Limited Partner elects to require a
repurchase of its Interest and the payment to it of an amount equal to its
Repurchase Amount, it shall send notice thereof to the Partnership within
thirty (30) days after the mailing date of the Fiscal Partner's notice, or at
any time after the occurrence of any of the foregoing if the General Partners
shall not have sent notice thereof, and the General Partners shall within ten
(10) days after the Partnership receives any such notice from a Partner
requesting the purchase of its Interest repurchase the Interest of such
Partner by paying to such Partner an amount equal to its Repurchase Amount.
(b) Lender Disapproval. If any Lender and/or Agency shall
disapprove, or fail to give any required approval of, the Investment Limited
Partner and/or the Special Limited Partner as a Limited Partner hereunder
within one hundred eighty (180) days of the Admission Date, then such Limited
Partner shall, effective as of such time or such later time as may be
selected by such Limited Partner (or such other time as may be specified by
the Lender and/or Agency in its disapproval), at the option of such Limited
Partner (if not directed by the Lender and/or Agency to withdraw), cease to
be a Limited Partner. The Fiscal Partner shall, within ten (10) days of the
effective date of such cessation, pay to such Limited Partner an amount equal
to its Invested Amount minus the amount, if any, of such Limited Partner's
Capital Contribution which shall not yet have been paid (or deemed to have
been paid) to the Partnership plus the amount of any third party costs,
including, but not limited to attorney's fees, incurred by or on behalf of
such Partner in implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner of the amount
due to it pursuant to either Section 5.2(a) or Section 5.2(b), the Interest
of such Partner shall terminate, and the Fiscal Partner shall indemnify and
hold harmless such Partner from any losses, damages, and liabilities to which
such Partner (as a result of its participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited Partner shall
have the right to irrevocably waive its right to have its Interest
repurchased pursuant to any clause or clauses of Section 5.2(a), or any
portion thereof, at any time during which any of such rights shall be in
effect. Such a waiver shall be exercised by delivery to the Fiscal Partner
of a written notice stating that the rights being waived pursuant to any
specified clause or clauses of Section 5.2(a), or any specified portion
thereof, are thereby waived from that date forward.
(e) Failure to Perform. If the Fiscal Partner shall fail to make on
the due date therefor any payment required under Section 5.2(a) or Section
5.2(b), time being of the essence, then, in addition to all other remedies
available for such failure, the Special Limited Partner shall have the rights
set forth in Section 7.5.
ARTICLE VI Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions of this
Agreement, the General Partners for, in the name and on behalf of the
Partnership, are hereby authorized to do the following in furtherance of the
purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any
real or personal property;
(2) To construct, operate, maintain, finance and improve, and
to own, sell, convey, assign, mortgage or lease any real estate and any
personal property;
(3) To borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment
Complex or any other assets of the Partnership;
(4) To execute the Construction and Permanent Mortgages, the
other Project Documents and all such other documents as the General
Partners deem necessary or appropriate in connection with the
acquisition, development and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or amend or modify
the Construction and Permanent Mortgages or any other financing
affecting the Apartment Complex;
(6) To employ the Management Agent (which may be an Affiliate
of the General Partners) and to pay reasonable compensation for its
services;
(7) To employ their respective Affiliates to perform services
for, or sell goods to, the Partnership;
(8) To execute contracts with the State or any subdivision or
agency thereof or any other government agency to make apartments or
tenants in the Apartment Complex eligible for any public-subsidy
program;
(9) To execute leases of some or all of the apartment units of
the Apartment Complex to a public housing authority and/or to a non-
profit corporation, cooperative or other non-profit Entity; and
(10) To enter into any kind of activity and to perform and carry
out contracts of any kind which may be lawfully carried on or performed
by a partnership and to file all certificates and documents which may
be required under the laws of the State.
6.2 Restrictions on Authority
Notwithstanding any other Section of this Agreement, the General
Partners shall have no authority to perform any act in violation of
applicable law, Agency or other government regulations, requirements of any
Lender, or the Project Documents. In the event of any conflict between the
terms of this Agreement and any applicable Agency or other government
regulations or requirements of the Lender, the terms of such regulations or
requirements shall govern. Neither shall the General Partners have any
authority to do any of the following acts without the Consent of the
Investment Limited Partner and the prior written consent of the Special
Limited Partner, and in the event that any General Partner violates any
provision of this Section 6.2, the Special Limited Partner shall have the
rights set forth in Section 7.5:
(1) To have borrowings in excess of $10,000 in the aggregate at
any one time outstanding on the general credit of the Partnership,
except borrowings constituting Subordinated Loans;
(2) To borrow from the Partnership or commingle Partnership
funds with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the Apartment Complex or its use or which are at a
cost in excess of $10,000 in a single Partnership fiscal year, except
(a) replacements and remodeling in the ordinary course of business or
under emergency conditions or (b) construction paid for from insurance
proceeds;
(4) To acquire any real property in addition to the Apartment
Complex;
(5) To increase, decrease (except through the amortization
schedule provided for in the Permanent Mortgage), amend or modify the
terms of or refinance the Construction or Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Minimum
Set-Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer the
Apartment Complex or all or any substantial part of the assets of the
Partnership;
(8) To terminate any agreement with any Agency;
(9) To cause the Partnership to commence a proceeding seeking
any decree, relief, order or appointment in respect to the Partnership
under the federal bankruptcy laws, as now or hereafter constituted, or
under any other federal or state bankruptcy, insolvency or similar law,
or the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the Partnership or for
any substantial part of the Partnership's business or property, or to
cause the Partnership to consent to any such decree, relief, order or
appointment initiated by any Person other than the Partnership;
(10) To amend the Construction Contract, except for change
orders approved by the Lender;
(11) To pledge or assign any of the Capital Contribution of the
Investment Limited Partner or the proceeds thereof; or
(12) To do any act required to be approved or ratified by all
limited partners under the Act.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any salary or
other direct or indirect compensation for any services or goods provided in
connection with the Partnership or the Apartment Complex, except as may be
specifically provided in Section 6.15 and Article XI or as to which the prior
written consent of the Special Limited Partner shall have been obtained to
the precise terms thereof prior to the commencement of such services or the
provision of such goods. Any Partner may engage independently or with
others in other business ventures of every nature and description; neither
the Partnership nor any other Partner shall have any rights in and to such
independent ventures or the income or profits derived therefrom. Any and all
contractual relationships between the Partnership and any General Partner or
Affiliate thereof must (i) be cancelable upon sixty (60) days' notice from
the Special Limited Partner and (ii) not provided for payments in excess of
those determined by the Special Limited Partner to be reasonable. Any and
all compensation received directly or indirectly by any General Partner or
Affiliate thereof pursuant to any such relationship must be fully disclosed
and specifically itemized in reports pursuant to Section 12.7.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General Partners shall
have the exclusive right to control the business of the Partnership. The
Investment Limited Partner shall have no right to take part in the management
or control of the business of the Partnership or to transact any business in
the name of the Partnership. No provision of this Agreement which makes the
Consent of the Investment Limited Partner a condition for the effectiveness
of an action taken by the General Partners is intended, and no such provision
shall be construed, to give the Investment Limited Partner any participation
in the control of the Partnership business. Each of the Special Limited
Partner and the Investment Limited Partner hereby consents to the exercise by
the General Partners of the powers conferred on them by law and this
Agreement, and the General Partners agree to exercise control of the business
of the Partnership only in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the provisions of this Section
6.4 be invoked by any General Partner or by any other Person as a defense
against or as an impediment to the ability of the Investment Limited Partner
or the Special Limited Partner to take any action hereunder. All Partners
hereby agree that the Fiscal Partner shall serve as the "Tax Matters
Partner." In the case of litigation, the Tax Matters Partner is required to
file suit in the United States Tax Court unless the Consent of the Investment
Limited Partner is obtained to file suit in the United States Claims Court or
the United States District Court. Nothing herein shall be construed to
restrict the Partnership from engaging the Auditors to assist the Tax Matters
Partner in discharging his duties hereunder.
6.5 Special Duties of the Managing General Partner
The Managing General Partner is delegated the following non-exclusive
roles and responsibilities:
(i) selection of a site manager with the consent of the Fiscal
Partner, which shall not be unreasonably withheld;
(ii) selection of the caretaker or maintenance person, with the
consent of the Fiscal Partner, which shall not be unreasonably withheld;
(iii) marketing of the Apartment Complex units;
(iv) tenant eligibility certification;
(v) tenant leasing policies;
(vi) rent collection procedures; and
(vii) tenant participation programs and tenant/management
relations, procedures, arbitrations and evictions.
6.6 [Intentionally Deleted]
6.7 Special Duties of the Fiscal Partner
(a) The Fiscal Partner is delegated the following non-exclusive roles
and responsibilities:
(i) to prepare and file timely on behalf of the Partnership all
necessary tax returns and other financial reports and other information
relevant to the financial affairs of the Partnership;
(ii) to insure the Management Agent is operating the Apartment
Complex in compliance with the requirements of Section 42 of the Code, and to
make all certifications required by Section 42(1) of the Code;
(iii) make inspections of the Apartment Complex in conjunction
with the site manager and assure that the Apartment Complex is being properly
maintained and necessary repairs are being made;
(iv) to prepare or cause to be prepared in conformity with good
business practices all reports required to be furnished to the Partners or
required by taxing bodies or other governmental agencies;
(v) to pay on behalf of the Partnership, out of Partnership
funds, all taxes and other governmental charges assessed against the
Partnership, and all other reasonable expenses incurred in connection with the
ownership, maintenance and operation of the Partnership;
(vi) to take out and maintain adequate insurance coverage,
including public liability for property damage and bodily injury, and such
other insurance coverage as may be necessary and advisable; and
(vii) to employ, engage or contract with persons in the operation
of the Partnership business, including, but not limited to, supervisory
managing agents, insurance brokers, building management agents, real estate
brokers, on such terms and for such compensation as is reasonable subject to
the consent of the Managing General Partner and Special Limited Partner.
6.8 Additional Duties and Obligations of the General Partners
(a) The General Partners shall manage the affairs of the Partnership
to the best of their ability, shall use their best efforts to carry out the
purpose of the Partnership, and shall devote to the Partnership such time as
may be necessary for the proper performance of their duties and the business
of the Partnership. The General Partners shall promptly take all action
which may be necessary or appropriate for the proper development, maintenance
and operation of the Apartment Complex in accordance with the provisions of
this Agreement, the Project Documents and applicable laws and regulations,
including, without limitation, funding the Construction and Development Fee
to the extent Capital Contributions are insufficient. The General Partners
shall be responsible for the management and operation of the Partnership,
including the oversight of the rent-up and operational stages of the
Apartment Complex.
(b) The General Partners shall use their best efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at the
maximum realizable level in view of (i) any applicable Agency and other
regulations, (ii) the Minimum Set-Aside Test and (iii) the Rent Restriction
Test, and, if necessary, the General Partners shall also use their best
efforts to obtain approvals and implementation of appropriate adjustments in
the rental schedule of the Apartment Complex.
(c) The Fiscal Partner shall cause the Partnership to obtain and keep
in force, during the term of the Partnership, comprehensive casualty
insurance, including, but not limited to, fire and other risks generally
included under "extended coverage" policies, workmen's compensation and
public liability insurance in favor of the Partnership (i) with such
companies and in such amounts as shall be satisfactory to the Lenders and any
Agency, or, if the Apartment Complex is no longer subject to Lender or Agency
regulation or requirements, as shall be customary for apartment complexes
similar to the Apartment Complex, and (ii) in amounts which shall be (A) no
less than those amounts which are customary in the area for apartment
complexes such as the Apartment Complex, (B) in the case of the "extended
coverage" portion, no less than the full original replacement value of the
Apartment Complex, (C) no less than such amounts as may be reasonably
requested by the Investment Limited Partner and/or the Special Limited
Partner from time to time, and (D) in any event, sufficient to prevent the
Partnership from becoming a co-insurer under any such policies. No
deductibles on such policies may exceed $1,000. The public liability
insurance in favor of the Partnership shall be in an amount not less than
$5,000,000. Through the Completion Date, or such later date as may be
required by the Construction Lender or any Agency, the Fiscal Partner shall
also cause the Partnership to obtain and keep in force a builder's risk
policy in favor of the Partnership in an amount not less than the greater of
(i) the full replacement value of the Apartment Complex (excluding the value
of the underlying land, the site utilities and the foundations) or (ii) such
other amount as shall be required by any Agency or the Construction Lender.
Throughout the term of the Partnership, the Fiscal Partner shall provide
copies of all such policies (or binders) to the Investment Limited Partner
promptly after their receipt thereof or upon request but no less frequently
than annually. The Fiscal Partner shall cause the applicable insurer to name
the Investment Limited Partner as an "additional insured" on each Partnership
insurance policy. Prior to the expiration date for any such Partnership
insurance policy, the Fiscal Partner shall deliver to the Investment Limited
Partner a copy of the comparable new or replacement policy, including all
endorsements, exhibits and riders thereto.
(d) Except as otherwise provided herein, the obligations of the
General Partners hereunder shall be the joint and several obligations of each
General Partner. Except as otherwise provided in Sections 4.4(b) and 7.1,
such obligations shall survive any Withdrawal of a General Partner from the
Partnership.
(e) The Fiscal Partner shall establish and maintain reasonable
reserves to provide for working capital needs, improvements, replacements and
any other contingencies of the Partnership. At a minimum, the Fiscal Partner
shall cause the Partnership to annually deposit, commencing in 1998, $7,000
from its Cash Flow into replacement reserves; to the extent that Cash Flow
(as determined before deduction of this reserve deposit) for any year shall
be insufficient to make such deposit in full, the Fiscal Partner shall fund
such shortfall from their own funds as a Subordinated Loan.*
(f) Each General Partner shall be bound by the Project Documents, and
no additional General Partner shall be admitted if he, she or it has not
first agreed to be bound by this Agreement (and assume the obligations of a
General Partner hereunder) and by the Project Documents to the same extent
and under the same terms as the other General Partners.
(g) The General Partners shall take all actions necessary to ensure
that the Investment Limited Partner receives the full amount of the Projected
Credit, including, without limitation, the rental of apartments to Qualified
Tenants and the filing of annual certifications as may be required. In this
regard, the General Partners shall, inter alia, cause (i) the Partnership to
satisfy all requirements imposed from time to time under the Code with
respect to rental levels and occupancy by Qualified Tenants by the close of
the first year of the Credit Period and throughout the Compliance Period so
as to permit the Partnership to be entitled to the maximum available Tax
Credit, (ii) the Partnership to comply with all Tax Credit monitoring
procedures, (iii) all Low-Income Apartment Units to be occupied pursuant to
leases to Qualified Tenants for periods of not less than six (6) months, (iv)
the Partnership to make all appropriate Tax Credit elections in a timely
fashion, and (v) all rental units in the Apartment Complex to be available
for rental by the general public and to be of equal quality and all Apartment
Complex amenities to be made available to all tenants on a comparable basis
without separate fees.
(h) On or before the Admission Date, the General Partners shall
provide to the Investment Limited Partner either (i) an appraisal of the
Apartment Complex prepared by a competent independent appraiser or (ii) a
project cost and budget analysis on an Agency form or any comparable form of
a state or other governmental agency, including any applicable Tax Credit
allocation agency, setting forth estimates with respect to construction and
mortgage financing costs and initial rental income and operating expense
figures for the Apartment Complex.
(i) The General Partners shall (i) not store (except in compliance
with all laws, ordinances, and regulations pertaining thereto) or dispose of
any Hazardous Material at the Apartment Complex, or at or on any other Site
or Vessel owned, occupied, or operated either by any General Partner, any
Affiliate of a General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor indirectly transport
or arrange for the transport of any Hazardous Material (except in compliance
with all laws, ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any General
Partner's obtaining knowledge of any potential or known release, or threat of
release, of any Hazardous Material at or from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General Partner, any
Affiliate of a General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a lien on the
Apartment Complex; (y) upon any General Partner's receipt of any notice to
such effect from any Federal, state, or other governmental authority; and
(z) upon any General Partner's obtaining knowledge of any incurrence of any
expense or loss by any such governmental authority in connection with the
assessment, containment, or removal of any Hazardous Material for which
expense or loss any General Partner may be liable or for which expense or
loss a lien may be imposed on the Apartment Complex.
6.9 Representations and Warranties
The General Partners represent and warrant to the Investment Limited
Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State and
has complied with all filing requirements necessary for its existence
and to preserve the limited liability of the Investment Limited Partner
and the Special Limited Partner.
(2) No event or proceeding has occurred or is pending or
threatened which would (a) materially adversely affect the Partnership
or its properties, or (b) materially adversely affect the ability of
the General Partners or any of their Affiliates to perform their
respective obligations hereunder or under any other agreement with
respect to the Apartment Complex, other than legal proceedings which
have been bonded against without recourse to Partnership assets in such
manner as to stay the effect of the proceedings or otherwise have been
adequately provided for. This subparagraph shall be deemed to include,
without limitation, the following: (x) legal actions or proceedings
before any court, commission, administrative body or other governmental
authority having jurisdiction over the zoning applicable to the
Apartment Complex; (y) disputes with suppliers of labor and/or
materials; and (z) acts of any governmental authority.
(3) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default) has occurred
and is continuing under this Agreement or under any provision of the
Project Documents, and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic Risk of
Loss with respect to the Permanent Mortgage, except as may be
expressly permitted by Article III. No General Partner has, either on
its own behalf or on behalf of the Partnership, incurred any financial
responsibility with respect to the Partnership prior to the Admission
Date, other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been completed in a
timely manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners of any zoning,
environmental or similar regulation applicable to the Apartment Complex
which could have a material adverse effect thereon, and the Partnership
has complied with all applicable municipal and other laws, ordinances
and regulations relating to such construction and use of the Apartment
Complex. All appropriate public utilities, including, but not limited
to, water, electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will be
available and operating properly for each unit in the Apartment Complex
at the time of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple title
to the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (a) are both permitted by the
Project Documents and are noted or excepted in title insurance policy
number 207-658281 dated August 30, 1996 issued by Commonwealth Land
Title Insurance Company to the Partnership in the amount of $1,760,408,
as endorsed through ________, 1997, and (b) do not materially interfere
with use of the Apartment Complex (or any part thereof) for its
intended purpose or have a material adverse effect on the value of the
Apartment Complex.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or a limited
liability company have been or will be duly authorized by all necessary
organizational action, and the consummation of any such transactions
with or on behalf of the Partnership will not constitute a breach or
violation of, or a default under, the charter, by-laws or other
organizational documents of such Affiliate or any agreement by which
such Affiliate or any of its properties is bound, nor constitute a
violation of any law, administrative regulation or court decree.
(8) Any General Partner which is a corporation or limited
liability company has been duly organized, is validly existing and in
good standing under the laws of its state of organization and has all
requisite power to be a General Partner and to perform its duties and
obligations as contemplated by this Agreement and the Project
Documents. Neither the execution and delivery by such General Partner
of this Agreement nor the performance of any of the actions of such
General Partner contemplated hereby has constituted or will constitute
a violation of (a) the articles of organization, by-laws, operating
agreement or other organizational documents of such General Partner,
(b) any agreement by which such General Partner is bound or to which
any of its property or assets is subject, or (c) any law,
administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner or any Controlling Person of a General Partner.
(10) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by the Lenders and/or any
Agency.
(11) If the only General Partner(s) are one or more corporations
or limited liability companies, then the General Partner(s) have a net
worth which satisfies the 89-12 Requirements.
(12) All payments and expenses required to be made or incurred
in order to complete construction of the Apartment Complex in
conformity with the Project Documents, to fund any reserves hereunder
or under any other Project Document required to be funded at or prior
to [the later of the Admission Date or ]Permanent Mortgage
Commencement, to satisfy all requirements under the Project Documents
and/or which form the basis for determining the principal sum of the
Permanent Mortgage and to pay the Construction and Development Fee have
been or will be paid or provided for utilizing only (a) the funds
available from the Construction Mortgage, (b) the Capital Contribution
of the Investment Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as of the
Admission Date, (d) the available net rental income, if any, earned by
the Partnership prior to Permanent Mortgage Commencement (to the extent
that it is permitted to be used for such purposes by the Lenders and/or
any Agency), (e) any insurance proceeds and (f) any funds furnished by
the General Partners pursuant to Sections 6.7(a) and 6.13.*
(13) The amount of Tax Credit which is expected to be allocated
by the Partnership to the Investment Limited Partner is $109,592 for
1997, $122,743 per annum for each of the years 1998 through 2006
(inclusive) and $13,151 for 2007.
(14) The Apartment Complex is being developed in a manner which
satisfies and shall continue to satisfy all restrictions, including
tenant income and rent restrictions, applicable to projects eligible
for Tax Credits and in accordance with the Agency Regulatory Agreement.
(15) The Fiscal Partner has provided to the Investment Limited
Partner a complete copy of a "Phase I" hazardous waste site assessment
report for the Apartment Complex, prepared in accordance with ASTM
standards. No General Partner, Affiliate of a General Partner or
Person for whose conduct any General Partner is or was responsible has
ever: (i) owned, occupied, or operated a Site or Vessel on which any
Hazardous Material was or is stored, transported, or disposed of,
except if such storage, transport or disposition was and is at all
times in compliance with all laws, ordinances, and regulations
pertaining thereto; (ii) directly or indirectly transported, or
arranged for transport, of any Hazardous Material (except if such
transport was and is at all times in compliance with all laws,
ordinances and regulations pertaining thereto); (iii) caused or was
legally responsible for any release or threat of release of any
Hazardous Material; (iv) received notification from any Federal, state
or other governmental authority of (x) any potential, known, or threat
of release of any Hazardous Material from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General
Partner, by any Affiliate of a General Partner, or by any Person for
whose conduct any General Partner is or was responsible or whose
liability may result in a lien on the Apartment Complex; or (y) the
incurrence of any expense or loss by any such governmental authority or
by any other Person in connection with the assessment, containment, or
removal of any release or threat of release of any Hazardous Material
from the Apartment Complex or any such Site or Vessel.
(16) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on, transported, or
disposed of on the land comprising the Apartment Complex, except to the
extent any such storage, transport or disposition was at all times in
compliance with all laws, ordinances, and regulations pertaining
thereto.
(17) The General Partners have fulfilled and will continue to
fulfill all of their duties and obligations under Sections 6.5 through
6.8.
(18) Community Support Programs, Inc. is a not-for-profit
corporation which is a qualifying corporation under Section 501(c)(3)
of the Code and is exempt from tax under Section 501(a) of the Code.
One of the stated tax-exempt purposes of Community Support Programs,
Inc. is the fostering of affordable housing in the geographic area in
which the Apartment Complex is located.*
6.10 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at any time
bear the Economic Risk of Loss for the payment of any portion of any
Mortgage, and the General Partners shall not permit any other Partner or any
Related Person to bear the Economic Risk of Loss for the payment of any
portion of any Mortgage, except as may be expressly permitted pursuant to
Article III.
6.11 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have liability
to the Partnership or to any Limited Partner for any loss suffered by the
Partnership which arises out of any action or inaction of any General Partner
or Affiliate thereof if such General Partner or Affiliate thereof in good
faith determined that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute negligence or
misconduct of such General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be indemnified by
the Partnership against losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained in connection with the
Partnership, provided that all of the following conditions are met: (i) such
General Partner has determined, in good faith, that the course of conduct
which caused the loss, judgment, liability, expense or amount paid in
settlement was in the best interests of the Partnership; and (ii) such loss,
judgment, liability, expense or amount paid in settlement was not the result
of negligence or misconduct on the part of such General Partner or Affiliate
thereof; and (iii) such indemnification or agreement to hold harmless is
recoverable only out of the assets of the Partnership, and not from the
Limited Partners.
(c) Notwithstanding the above, no General Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer shall be
indemnified for any losses, liabilities or expenses arising from or out of an
alleged violation of Federal or state securities laws unless (i) there has
been a successful adjudication on the merits of each count involving
securities laws violations as to the particular indemnitee and the court
approves the indemnification of such litigation costs, (ii) such claims have
been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee and the court approves the
indemnification of such litigation costs or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular
indemnitee and the court finds that indemnification of the settlement and
related costs should be made. In any claim for indemnification for Federal
or state securities law violations, the party seeking indemnification shall,
prior to seeking court approval for such indemnification, place before the
court the positions of the Securities and Exchange Commission, and any
applicable state securities administrator with respect to the issue of
indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance, which insures any party
against any liability as to which such party is herein prohibited from being
indemnified.
(e) The Partnership may indemnify Affiliates of a General Partner
under this Section 6.11 only if the loss involves activity in which such
Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.11 only, the term "Affiliate"
shall mean any Person performing services on behalf of the Partnership who
(i) directly or indirectly controls, is controlled by or is under common
control with a General Partner; (ii) owns or controls ten per cent (10%) or
more of the outstanding voting securities of a General Partner; (iii) is an
officer, director, partner or trustee of a General Partner; or (iv) if a
General Partner is an officer, director, partner or trustee, is any company
for which such General Partner acts in any such capacity.
6.12 Indemnification of the Partnership and the Limited Partners
(a) The Fiscal Partner will indemnify and hold the Partnership and
the Limited Partners harmless from and against any and all losses, damages
and liabilities which the Partnership or any Limited Partner may incur by
reason of the (a) past, present or future actions or omissions of the General
Partners or any of their Affiliates, or (b) any liabilities to which either
the Partnership or the Apartment Complex is subject; provided, however, that
the foregoing indemnification shall not apply to (i) any Mortgage or
(ii) necessary contractual obligations incurred pursuant to Agency or Lender
requirements in connection with the operation of the Apartment Complex in the
ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be liable
to a Limited Partner or the Partnership for any act or omission for which the
Partnership is required to indemnify such General Partner under Section 6.11.
(c) The Fiscal Partner shall indemnify, defend, and hold the Limited
Partners harmless from and against any claim brought or threatened against
any Limited Partner or loss (as well as from any and all attorneys' fees and
expenses incurred in connection with any such claim or loss) on account of
the presence of any Hazardous Material at the Apartment Complex. Any claim
or loss described in the immediately preceding sentence may be defended,
compromised, settled, or pursued by the Limited Partners with counsel of the
Limited Partners' selection, but at the expense of Fiscal Partner.
Notwithstanding anything else set forth herein, this indemnification shall
survive the withdrawal of any General Partner and/or the termination of this
Agreement.
6.13 Operating Deficits
The Fiscal Partner shall be obligated to promptly advance funds to meet
operating expenses (including full payment of the Asset Management Fee and
reserve deposits required pursuant to Section 6.8(e) or by any Lender or
Agency) and debt service of the Partnership following the later to occur of
(i) the Admission Date or (ii) Permanent Mortgage Commencement which exceed
operating income attributable to such period and available for the payment
thereof; provided, however, that the obligation to advance funds to pay the
Asset Management Fee shall continue for the entire term of the Partnership.
In the event that the Fiscal Partner shall fail to make any such advance as
aforesaid, (a) the Partnership shall utilize amounts (the "Applied Amounts")
otherwise payable to the General Partners or Affiliates thereof under
Section 6.15 and/or Article X to meet the obligations of the General Partners
pursuant to this Section 6.13, with such utilization of Applied Amounts
constituting payment and satisfaction of the corresponding amounts payable to
the General Partners or Affiliates thereof under Section 6.15 and/or Article
X, with the proceeds thereof being applied to such obligations, and with the
obligation of the Partnership to make such payments to the General Partners
or Affiliates thereof pursuant to Section 6.15 and/or Article X being deemed
satisfied to the extent thereof and (b) the Special Limited Partner shall
have the rights set forth in Section 7.5. For the purpose of this
Section 6.13, all expenses shall be paid on a sixty (60)-day current basis.
Moreover, the Fiscal Partner may in his sole discretion at any time advance
funds to the Partnership to pay operating expenses and/or debt service of the
Partnership in order to facilitate the Partnership's compliance with the Rent
Restriction Test. All advances pursuant to this Section 6.13 (including any
Applied Amounts) shall be Subordinated Loans repayable without interest in
accordance with the provisions of Article X.
6.14 Obligation to Complete the Construction of the Apartment Complex
The Fiscal Partner shall complete the construction of the Apartment
Complex substantially in accordance with the plans and specifications
approved by the Lenders and/or any Agency and all requirements necessary to
obtain the required certificates of occupancy for dwelling units, or cause
the same to be completed, in a good and workmanlike manner, free and clear of
all mechanics', materialmen's or similar liens, and shall equip the Apartment
Complex or cause the same to be equipped with all necessary and appropriate
fixtures, equipment and articles of personal property, including
refrigerators and ranges, and shall cause all necessary certificates of
occupancy for all apartment units in the Apartment Complex to be obtained,
all in accordance with the Project Documents. If the proceeds of the
Construction and Permanent Mortgages, the net rental income, if any, of the
Apartment Complex generated prior to the later of Permanent Mortgage
Commencement or the Admission Date and which is permitted by the Lenders
and/or any Agency to be utilized for any of the purposes hereinafter set
forth, the Capital Contribution of the Investment Limited Partner, the
Capital Contributions of the General Partners in the amounts set forth on
Schedule A as of the Admission Date, and any insurance proceeds arising out
of casualties prior to the later of Permanent Mortgage Commencement or the
Admission Date as available from time to time are insufficient to (i) acquire
and complete the construction of the Apartment Complex and satisfy all other
obligations, all as provided in the first sentence of this Section 6.14,
(ii) pay the Construction and Development Fee, (iii) arrive at Permanent
Mortgage Commencement in conformity with the Project Documents,
(iv) discharge all Partnership liabilities and obligations arising out of any
casualty giving rise to any such insurance proceeds, and (v) provide for all
other payments and expenses required to be made or incurred through the later
of Permanent Mortgage Commencement or the Admission Date, including the
funding of any reserves required hereunder or under any other Project
Document and the repayment in full of all obligations under the Construction
Mortgage, the General Partners in their capacity as developers shall be
responsible for and obligated to pay such deficiencies and shall, to the
extent permitted under the Project Documents and any applicable regulations
or requirements of the Lenders and/or any Agency, be reimbursed at or prior
to the later of Permanent Mortgage Commencement or the Admission Date only
out of the proceeds designated in this sentence available from time to time
after payment of all costs described in this sentence. Any amounts not
reimbursed through the later of Permanent Mortgage Commencement or the
Admission Date or from the proceeds of the Capital Contribution of the
Investment Limited Partner as provided in Section 5.1 shall not be
reimbursable or otherwise change the Interest of any Person in the
Partnership but shall be borne by the General Partners in their capacity as
developers; provided, however, that, notwithstanding the foregoing, to the
extent any such amounts represent items which are properly included in the
Partnership's Qualified Basis and result in an increase in the amount of Tax
Credit allocated and available to the Partnership over and above the amount
of Tax Credit required in order to achieve State Designation ("Includable
Items"), the General Partners shall make an additional Capital Contribution
in the amount of the Includable Items and the Partnership shall utilize the
proceeds of such additional Capital Contribution to pay the Includable Items.
In the event that the General Partners and/or the Developer shall fail to
fund any such deficiency as required by this Section 6.14, an amount not in
excess of the unpaid portion of the Construction and Development Fee due to
the Developer, the General Partners or any of their Affiliates under Section
6.15 or any other provision hereof shall be applied by the Partnership to
meet such obligation of the General Partners and/or the Developer, and, to
the extent there may still be a deficiency, any amounts otherwise payable as
the Partnership Management Fee or distributable to the General Partners
pursuant to Article X shall also be so applied. Any such application of
funds as described in the immediately preceding sentence shall constitute a
payment of the amount of the Fee or such other item which such funds had been
earmarked to pay, and the obligation of the General Partners and/or the
Developer to advance such amount under this Section 6.14 shall be satisfied
to the extent of such application.
6.15 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners a non-
cumulative fee (the "Partnership Management Fee") commencing in 1997 for
their services in connection with the administration of the day to day
business of the Partnership in an annual amount equal to $1,750 per annum (to
be divided equally between the Fiscal Partner and the Managing General
Partner). The Annual Partnership Management Fee for each fiscal year of the
Partnership shall be payable from Cash Flow in the manner and priority set
forth in Section 10.3(a) to the extent Cash Flow is available therefor for
such year; provided, however, that if in any fiscal year commencing with
1998, Cash Flow is insufficient to pay the full amount of the Partnership
Management Fee, the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first year in which there is sufficient Cash Flow or
from the proceeds of a Capital Transaction as provided in Article X.
(b) In consideration of their consultation, advice and other services
in connection with the construction and development of the Apartment Complex
and as consideration for the assignment described in Section 6.16, the
Partnership shall pay to the General Partners (or their designee) a
construction and development fee (the "Construction and Development Fee") in
the amount of $221,900 (of which $58,280 shall be paid to the Managing
General Partner and $163,620 to the Fiscal Partner), which fee shall be
earned in full as to each building in the Apartment Complex as of the date
such building is completed. The Construction and Development Fee shall be
payable $48,161 at the time of payment of the First Installment, $21,537 at
the time of the payment of the Second Installment, $114,151 at the time of
the payment of the Third Installment and $38,050 at the time of the payment
of the Fourth Installment.
(c) The Partnership shall pay to BCCLP or an Affiliate thereof a fee
(the "Asset Management Fee") commencing in 1997 for its services in
connection with the Partnership's accounting matters relating to the
Investment Limited Partner and assisting with the preparation of tax returns
and the reports required by Section 12.7 in the annual amount of $1,750. The
Asset Management Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.3(a); provided, however, that if in any
fiscal year commencing with 1998, Cash Flow is insufficient to pay the full
amount of the Asset Management Fee and the shortfall is not paid from funds
advanced pursuant to Section 6.13, the unpaid portion thereof shall accrue
and be payable on a cumulative basis in the first year in which there is
sufficient Cash Flow or from the proceeds of a Capital Transaction as
provided in Article X.
(d) In consideration of its services in connection with any sale of
the apartment complex in accordance with this Agreement, the Managing General
Partner (or its designee) shall be entitled to a Sales Disposition Fee (the
"Sales Disposition Fee") in the amount of 3% of the sales price of the
Apartment Complex. Such fee will be reduced to the extent necessary so that
all fees and expenses to the partnership in connection with such sale will
not exceed 6% as required by Article III.D.
(e) As reimbursement for costs incurred in connection with the
development of the Apartment Complex, the Partnership shall pay to the General
Partners (or their designees) an overhead reimbursement (the "Developers'
Overhead Reimbursement") in the amount of $66,808, which amount shall be
earned in full as to each building in the Apartment Complex as of the date
such building is completed. The Developers' Overhead Reimbursement shall be
payable in the amount of $66,808 at the time of the payment of the First
Installment.
6.16 Assignment to Partnership
The General Partners hereby transfer and assign to the Partnership all
of their right, title and interest in and to the Apartment Complex and in and
to all of the Project Documents, including, but not limited to, the
following: (i) all contracts with architects, supervising architects,
engineers and contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings heretofore
prepared or obtained in connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and applications therefor,
including, but not limited to, those relating to planning, zoning, building
permits and Tax Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with respect to any
agreements with the Lenders and any Agency; and (vi) any other work product
related to the Apartment Complex and/or the Partnership, all of which shall
have an agreed to value of $1.00 for purposes of determining the opening
Capital Account of the General Partners.
ARTICLE VII Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the Partnership (other
than by reason of death or adjudication of incompetence or insanity) or sell,
assign or encumber its Interest without the Consent of the Investment Limited
Partner and all the other General Partners, except that if the Special
Limited Partner or a designee thereof becomes a General Partner, it shall not
require the consent of any other General Partner to transfer all or any
portion of its interest as a General Partner, other than as may be required
under the Act. In the event of any Withdrawal by a General Partner in
violation of this Section 7.1, such General Partner, in addition to being
subject to any and all other legal remedies which may be pursued by the
Partners, shall forfeit to the Special Limited Partner or its designee, such
General Partner's Interest and all unpaid fees from the Partnership and shall
remain liable for all of the Withdrawing General Partner's obligations under
this Agreement. In addition, upon such Withdrawal and transfer, the Special
Limited Partner or its designee shall automatically become a General Partner
on the terms set forth in Section 7.5 without further action by the
Withdrawing General Partner or any other Partner, and each Partner hereby
consents to such transfer and to the admission of the Special Limited Partner
or its designee as a General Partner in such a situation. Such transfer
shall occur automatically upon such Withdrawal without further action by such
Withdrawing General Partner.
(b) If at any time the only General Partners shall be one or more
corporations (or partnerships with corporations as sole general partners),
they shall be obligated to have a net worth which satisfies the 89-12
Requirements. If the General Partners shall at any time fail to meet the
requirements of this Section 7.1(b) and no additional General Partner is
admitted pursuant to Section 7.5, then they shall be deemed to have withdrawn
from the Partnership in violation of the provisions of this Section 7.1 and
shall be subject to the provisions of Section 7.1(a). Notwithstanding the
foregoing, the provisions of this Section 7.1(b) shall not apply to the
Special Limited Partner or its designee in the event it becomes the sole
General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining General
Partners shall have the right and obligation to continue the business of the
Partnership employing its assets and name, all as contemplated by the Act.
Within thirty (30) days after they obtain knowledge of the Withdrawal of a
General Partner, the remaining General Partners shall notify the Limited
Partners of such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is no
remaining General Partner, the Investment Limited Partner and the Special
Limited Partner may elect to reconstitute the Partnership and continue the
business of the Partnership for the balance of the term specified in
Section 2.4 by selecting a successor General Partner. If the Investment
Limited Partner and the Special Limited Partner elect to reconstitute the
Partnership pursuant to this Section 7.3 and admit the designated successor
General Partner, the relationship among the then Partners shall be governed
by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in violation of
Section 7.1 and except as otherwise provided in Section 4.4(b), the
Withdrawing General Partner hereby covenants and agrees to transfer to the
remaining General Partners or to a successor General Partner selected in
accordance with Section 7.3, as the case may be, such portion of the
Withdrawing General Partner's Interest as such remaining or successor General
Partners may designate, such transfer to be made in consideration of the
payment by the transferee of either the agreed value of such Interest or, if
such value is not agreed to, the fair market value of such Interest as
determined by a committee of three qualified real estate appraisers, one
selected by the Withdrawing General Partner, one selected by the transferee
and a third selected by the other two. The portion of the Withdrawing
General Partner's Interest designated to be transferred in accordance with
the provisions of this Section 7.4 shall be sufficient to ensure the
continued treatment of the Partnership as a partnership under the Code and as
a limited partnership under the Act, and, for the purposes of Article X,
shall be deemed to be effective as of the date of Withdrawal, but the
Partnership shall not make any distributions to the designated transferee
until the transfer shall have been made. Any holder of any portion of the
Interest of a Withdrawing General Partner which is not designated to be
transferred to the remaining or successor General Partners pursuant to the
provisions of this Section 7.4 shall become an Additional Limited Partner but
(i) with the same share of the profits, losses, tax credits, Cash Flow and
other distributions to which the holder of such Interest was entitled when
held as a General Partner Interest, and (ii) shall not participate in the
votes or Consents of the Investment Limited Partner hereunder. The admission
of any successor or additional General Partner shall be subject to the
consent of the Lenders and any Agency (if required) and the Consent of the
Investment Limited Partner.
7.5 Admission of Additional General Partner(s) under Certain
Circumstances
In the event that a General Partner violates any provision of this
Agreement, the Special Limited Partner, in its sole discretion, shall have
the option at any time thereafter to cause itself or its designee to be
admitted as an additional General Partner on the terms set forth herein
without any further action by any other Partner. Upon any such admission of
an additional General Partner and in consideration of the payment of $10, all
pre-existing General Partners shall be deemed to have transferred (ratably in
accordance with their respective Interests) to the additional General Partner
such portion of their respective General Partner interests so that the
additional General Partner shall receive not less than a one percent (1%)
interest in all profits, losses, tax credits and distributions of the
Partnership (such transfer notwithstanding, the Special Limited Partner shall
also retain its status as such, and its interest in the Partnership as the
Special Limited Partner shall not be affected). An additional General
Partner so admitted shall automatically become the Managing General Partner
and be irrevocably delegated all of the power and authority of all of the
other General Partners pursuant to Section 6.13. Any such additional General
Partner shall have the right to withdraw as a General Partner at any time,
leaving the pre-existing General Partners once again as the only General
Partners, the provisions of this Article VII notwithstanding. Each Partner
hereby grants to the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law and coupled with an interest, to
amend the Certificate and this Agreement and to do anything else which, in
the view of the Special Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 6.2(b) or to enable any additional
General Partner admitted pursuant to this Section 6.2(b) to manage the
business of the Partnership. The admission of an additional General Partner
shall not relieve any other General Partner of any of its obligations
hereunder, and each other General Partner shall fully indemnify and hold
harmless the additional General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in settlement of any claims
sustained in connection with its capacity as a General Partner.
ARTICLE VIII Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and
distribution), no Limited Partner may assign all or any part of its Interest
without the written consent of the General Partners, the giving or withholding
of which is exclusively within their discretion.
(b) An assignee of a Limited Partner who does not become a Substituted
Limited Partner shall have, and shall only have, the right to receive the
share of allocations and distributions of the Partnership to which the
assigning Limited Partner would have been entitled with respect to the
Interest (or portion thereof) so assigned if no such assignment had been made
by such Limited Partner. Any assigning Limited Partner whose permitted
assignee becomes a Substituted Limited Partner shall thereupon cease to be a
Limited Partner and shall no longer have any of the rights or privileges of a
Limited Partner. Where the assignee does not become a Substituted Limited
Partner, the Partnership shall recognize such assignment not later than the
last day of the calendar month following receipt of notice of assignment and
all documentation required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further assignment of its Interest shall be
subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an assignee as
Limited Partner in its place. Subject to Section 8.3, the General Partners
may, however, in their sole discretion, permit an assignee to become a
Substituted Limited Partner. The consent of the General Partners to an
assignment of a Limited Partner Interest under Section 8.1 shall not, in and
of itself, constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such instrument or
instruments as shall be required by the General Partners to signify the
agreement of such Substituted Limited Partner to be bound by all the
provisions of this Agreement and shall pay the Partnership's reasonable legal
fees and filing costs in connection with its substitution as a Limited
Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would violate
Section 13.1.
(b) In no event shall all or any part of a Limited Partner Interest be
Disposed of to a minor (other than to a descendant by reason of death) or to
an incompetent.
(c) The General Partners may, in addition to any other requirement
they may impose, require as a condition of any Disposition that the transferor
(i) assume all costs incurred by the Partnership in connection therewith and
(ii) furnish the Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition complies with
applicable Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition in contravention
of any of the provisions of this Section 8.3 shall be void and ineffectual and
shall not bind or be recognized by the Partnership.
ARTICLE IX Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement, including, but not limited to, the restrictions of Section 6.2, and
may be made from any source, including Partners and their Affiliates. Any
Partnership borrowings from any Partner shall be subject to the prior written
consent of the Special Limited Partner and any Lender or Agency (if required
under applicable Lender or Agency regulations or requirements). If any
Partner shall lend any monies to the Partnership, the amount of any such loan
shall not be an increase of such Partner's Capital Contribution. If any
Partner shall so lend monies, each such loan shall be an obligation of the
Partnership and (except for Subordinated Loans) shall be repayable to such
Partner on the same basis and with the same rate of interest as would be
applicable to a comparable loan to the Partnership from a third party. Funds
provided by the General Partners to the Partnership pursuant to Section 6.14
shall not constitute borrowings for the purposes of this Article IX or for any
other purposes.
ARTICLE X Profits, Losses, Tax Credits, Distributions and Capital
Accounts
10.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as set forth on
Schedule A. No interest shall be paid on any Capital Contribution. No
Partner shall have the right to withdraw its Capital Contribution or to demand
and receive property of the Partnership in return for its Capital
Contribution, except as may be specifically provided in this Agreement or
required by law.
(b) An individual Capital Account shall be established and maintained
on behalf of each Partner, including any additional or substituted Partner who
shall hereafter receive an interest in the Partnership. In accordance with
Treasury Regulation Section 1.704-1(b), the Capital Account of each Partner
shall consist of (i) the amount of cash such Partner has contributed to the
Partnership plus (ii) the fair market value of any property such Partner has
contributed to the Partnership net of any liabilities assumed by the
Partnership or to which such property is subject plus (iii) the amount of
profits or income (including tax-exempt income) allocated to such Partner less
(iv) the amount of losses and deductions allocated to such Partner less
(v) the amount of all cash distributed to such Partner less (vi) the fair
market value of any property distributed to such Partner net of any
liabilities assumed by such Partner or to which such property is subject less
(vii) such Partner's share of any other expenditures which are not deductible
by the Partnership for Federal income tax purposes or which are not allowable
as additions to the basis of Partnership property and shall be (viii) subject
to such other adjustments as may be required under the Code. The Capital
Account of a Partner shall not be affected by any adjustments to basis made
pursuant to Section 743 of the Code but shall be adjusted with respect to
adjustments to basis made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted Partner (as
hereinafter defined) shall be in the same amount as, and shall replace, the
Capital Account of the Partner which such Substituted Partner succeeds, and,
for the purposes of this Agreement, such Substituted Partner shall be deemed
to have made the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term "Substituted
Partner," as used in this paragraph, shall mean a Person who shall become
entitled to receive a share of the allocations and distributions of the
Partnership by reason of such Person succeeding to all or any part of the
Interest of a Partner by assignment of all or any part of a Partner's
Interest. To the extent a Substituted Partner receives less than 100% of the
Interest of a Partner he succeeds, the original Capital Account of such
transferee Substituted Partner and his Capital Contribution shall be in
proportion to the portion of the transferor Partner's Interest prior to the
transfer which the transferee receives, and the Capital Account of the
transferor Partner who retains a portion of his former Interest and his
Capital Contribution shall continue, and not be replaced, in proportion to the
portion of the transferor Partner's Interest prior to the transfer which the
transferor Partner retains. Nothing in this Section 10.1(b) shall affect the
limitations on transferability of Interests set forth in Article VII or
Article VIII.
10.2 Profits, Losses and Tax Credits
(a) Except as otherwise specifically provided in this Article, for
each Partnership fiscal year or portion thereof, all profits, tax-exempt
income, losses, non-deductible non-capitalizable expenditures and tax credits
incurred or accrued on or after the Commencement Date, other than those
arising from a Capital Transaction, shall be allocated 99% to the Investment
Limited Partner and 1% to the General Partners.
(b) Except as otherwise specifically provided in this Article, all
profits and losses arising from a Capital Transaction shall be allocated to
the Partners as follows:
As to profits:
First, an amount of profit equal to the aggregate negative
balances (if any) in the Capital Accounts of all Partners having
negative balance Capital Accounts shall be allocated to such Partners in
proportion to their negative Capital Account balances until all such
Capital Accounts shall have zero balances; and
Second, an amount of profits shall be allocated to each of the
Partners until the positive balance in the Capital Account of each
Partner equals, as nearly as possible, the amount of cash which would be
distributed to such Partner if the aggregate amount in the Capital
Accounts of all Partners were cash available to be distributed in
accordance with the provisions of Clauses Third, Sixth, Seventh, Eighth
and Ninth of Section 10.3(b).
As to losses:
First, an amount of losses equal to the aggregate positive
balances (if any) in the Capital Accounts of all Partners having
positive balance Capital Accounts shall be allocated to such Partners in
proportion to their positive Capital Account balances until all such
Capital Accounts shall have zero balances; provided, however, that if
the amount of losses so to be allocated is less than the sum of the
positive balances in the Capital Accounts of those Partners having
positive balances in their Capital Accounts, then such losses shall be
allocated to the Partners in such proportions and in such amounts so
that the Capital Account balances of each Partner shall equal, as nearly
as possible, the amount such Partner would receive if an amount equal to
the excess of (a) the sum of all Partners' balances in their Capital
Accounts computed prior to the allocation of losses under this clause
First over (b) the aggregate amount of losses to be allocated to the
Partners pursuant to this clause First were distributed to the Partners
in accordance with the provisions of Clauses Third, Sixth, Seventh,
Eighth and Ninth of Section 10.3(b); and
Second, the balance, if any, of such losses shall be allocated 1%
to the General Partners and 99% to the Investment Limited Partner.
(c) Notwithstanding the foregoing provisions of Sections 10.2(a) and
10.3(b), in no event shall any losses be allocated to the Investment Limited
Partner, the Special Limited Partner, or to any additional General Partner
admitted pursuant to any of Section 4.4(b), Section 5.2(e), Section 6.2(b),
Section 6.13, Section 7.1(a) or Section 7.5, if and to the extent that such
allocation would cause, as of the end of the Partnership taxable year, the
negative balance in such Partner's Capital Account to exceed such Partner's
obligation (actual or deemed under Treasury Regulation Section 1.704-
1(b)(2)(ii)(c)) to restore a deficit balance in such Partner's Capital Account
plus such Partner's share of Partnership Minimum Gain plus such Partner's
share of Partner Non-Recourse Debt Minimum Gain. Any losses which are not
allocated to a Partner by virtue of the application of this Section 10.2(c)
shall be allocated to the General Partners. For the purposes of this
Section 10.2(c), a Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.3 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required), Cash Flow for each
fiscal year or portion thereof of the Partnership shall be applied in the
following priority:
First, to the payment of the Asset Management Fee for such year and for
any previous year(s) as to which the Asset Management Fee shall not yet have
been paid in full;
Second, to the repayment of any Subordinated Loans;
Third, to the payment of the Partnership Management Fee attributable to
such year;
Fourth, to the payment of any deferred development fee as set forth in
Section 6.15(b);
Fifth, to the payment of the Incentive Management Fee of up to $2,125;
and
Sixth, any balance 50% to the Fiscal General Partner and 50% to the
Investment Limited Partner;
provided, however, that during such time as Agency regulations are applicable
to the Apartment Complex, the total amount of Cash Flow which may be so
distributed to the Partners in respect to any fiscal year shall not exceed
such amounts as Agency regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine from time
to time that cash is available for distribution from a Capital Transaction,
such cash shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the Partnership
incident to the Capital Transaction), excluding (i) debts and liabilities of
the Partnership to Partners or their Affiliates and (ii) all unpaid fees owing
to the General Partners or their Affiliates; and to the establishment of any
reserves which the General Partners and the Auditors shall deem reasonably
necessary for contingent, unmatured or unforeseen liabilities or obligations
of the Partnership;
Second, to the payment of any accrued and unpaid Asset Management Fees;
Third, to the payment to the Investment Limited Partner of the full
amount (including interest) of any Credit Recovery Loans;
Fourth, to the payment of any deferred development fee;
Fifth, to the repayment of any Subordinated Loans;
Sixth, to the repayment of any then-unpaid debts and liabilities owed to
Partners or Affiliates thereof by the Partnership for Partnership obligations
(exclusive of Credit Recovery Loans and Subordinated Loans) to any of them,
including, but not limited to, accrued and unpaid Annual Partnership
Management Fee for the fiscal year of the Capital Transaction; provided,
however, that any debts or obligations to be repaid to any Limited Partner or
Affiliate thereof pursuant to this Clause Sixth shall be repaid prior to the
repayment of any such debts or obligations to any General Partner or Affiliate
thereof;
Seventh, to the payment to the Investment Limited Partner of an amount
equal to its paid-in capital, less any prior distributions made to such
Investment Limited Partner under this Clause Seventh, but never an amount less
than zero;
Eighth, to the repayment to the General Partners of their paid-in
Capital Contributions minus any prior distributions made to them under this
Clause Eighth and under Section 10.1(b), but never an amount less than zero;
Ninth, to the payment of the Sales Disposition Fee; and
Tenth, any balance 75% to the Investment Limited Partner and 25% to the
Fiscal Partner.
10.4 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership, the remaining
assets of the Partnership shall be distributed to the Partners in accordance
with the positive balances in their Capital Accounts after taking into account
all Capital Account adjustments for the Partnership taxable year, including
adjustments to Capital Accounts pursuant to Sections 10.3(b) and 10.4(b). In
the event that a General Partner, other than a General Partner admitted
pursuant to any of Section 4.4(b), Section 5.2(e), Section 6.2(b),
Section 6.10, Section 7.1(a) or Section 7.5, or Additional Limited Partner has
a negative balance in its Capital Account following the liquidation of the
Partnership or such Partner's Interest, after taking into account all Capital
Account adjustments for the Partnership taxable year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount equal to
the negative balance in such Partner's Capital Account. Such payment shall be
made by the end of such taxable year (or, if later, within ninety (90) days
after the date of such liquidation) and shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or distributed
to other Partners in accordance with the positive balances in their Capital
Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Partnership immediately prior to the liquidation or
other distribution event; and (ii) such profits and losses shall be allocated
to the Partners in accordance with Section 10.3(b), and any property so
distributed shall be treated as a distribution of an amount in cash equal to
the excess of such fair market value over the outstanding principal balance of
and accrued interest on any debt by which the property is encumbered. For the
purposes of this Section 10.4(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market value of such
assets, taking into account the fair market value of the associated financing
(but subject to Section 7701(g) of the Code), and the Partnership's adjusted
basis for such assets as determined under Regulation Section 1.704-1(b). This
Section 10.4(b) is merely intended to provide a rule for allocating unrealized
gains and losses upon liquidation or other distribution event, and nothing
contained in this Section 10.4(b) or elsewhere herein is intended to treat or
cause such distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be selected by the
General Partners with the Consent of the Investment Limited Partner.
10.5 Special Provisions
(a) Except as otherwise provided in this Agreement, all profits, tax-
exempt income, losses, non-deductible non-capitalizable expenditures, tax
credits and cash distributions shared by a class of Partners shall be shared
by each Partner in such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of Partners of
which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Non-Recourse Debt (including, without limitation, Subordinated
Loans) or (b) the Partnership incurs losses from extraordinary events
which are not recovered from insurance or otherwise (collectively
"Recourse Obligations") in respect of any Partnership taxable year, then
the calculation and allocation of profits and losses shall be adjusted
as follows: first, an amount of deductions attributable to the Recourse
Obligations (consisting of deductions other than cost recovery
deductions) shall be allocated to the General Partners; and second, the
balance of deductions (including all cost recovery deductions) shall be
allocated as provided in Section 10.2(a). For purposes of this section,
extraordinary events include casualty losses, losses resulting from
liability to third parties for tortious injury, losses resulting from a
breach of legal duty by the Partnership or by the General Partners, and
losses resulting from other liabilities which are not incurred in the
ordinary course of business. Nothing in this Section 10.5(b)(i) shall
prevent the Partnership from recovering an extraordinary loss from a
General Partner who is liable therefor by law or under this Agreement.
(ii) If any Recourse Obligations shall be repaid from Cash Flow
generated in respect of any Partnership taxable year, then the
allocation of profits and losses under Section 10.2(a) for such year
shall be adjusted as follows: first, the General Partners shall be
allocated an amount of the gross income of the Partnership equal to the
lesser of (i) the amount of items of Loss previously allocated to the
General Partner under Section 10.5(b)(i) and not previously offset by
allocations of Profits or items thereof, and (ii) the amount of the
Excess Expenses repaid in such year.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the Apartment
Complex and such indebtedness is distributed to the Partners pursuant to
the provisions of Section 10.3(b) or Section 10.4, the distributions of
the cash portion of such purchase price and the principal amount of such
purchase money indebtedness hereunder shall be allocated among the
Partners in the following manner: On the basis of the sum of the
principal amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be calculated the
percentage of the total net proceeds distributable to each Partner based
on Section 10.3(b) or Section 10.4 as applicable, treating cash payments
and purchase money indebtedness principal interchangeably for this
purpose, and the respective Partners shall receive such respective
percentages of the net cash purchase price and purchase money principal.
Payments on such purchase money indebtedness retained by the Partnership
shall be distributed in accordance with the respective portions of
principal allocated to the respective Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness shall be
sold, the sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance with
Treasury Regulation Section 1.704-1(b) and its basis computed for
Federal income tax purposes shall be shared among the Partners so as to
take account of such variation in a manner consistent with the
principles of Section 704(c) of the Code and Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as determined
in accordance with the accounting methods followed by the Partnership
and computed in accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv). Profits and losses for federal income tax purposes shall
be computed and allocated in the same manner as set forth in this
Article X, except as provided in Section 10.5(b)(iv).
(vi) If there is a net decrease in Partnership Minimum Gain
during a Partnership taxable year, each Partner will be allocated items
of income and gain for such year (and, if necessary, subsequent years)
in proportion to, and to the extent of, an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain during
the year, before any other allocation of Partnership items for such
taxable year. A Partner shall not be subject to this mandatory
allocation of income or gain to the extent that any of the exceptions
provided in Treasury Regulation Section 1.704-2(f)(2)-(5) applies. All
allocations pursuant to this Section 10.5(b)(vi) shall be in accordance
with Treasury Regulation Section 1.704-2(f). This provision is a
"minimum gain chargeback" within the meaning of Treasury Regulation
Section 1.704-2(f) and shall be construed as such.
(vii) If there is a net decrease in Partner Non-Recourse Debt
Minimum Gain during a Partnership taxable year, then each Partner with a
share of the minimum gain attributable to such debt at the beginning of
such year will be allocated items of income and gain for such year (and,
if necessary, subsequent years) in an amount equal to such Partner's
share of the net decrease in Partner Non-Recourse Debt Minimum Gain
during the year. A Partner is not subject to this Partner Non-Recourse
Debt Minimum Gain chargeback to the extent that any of the exceptions
provided in Treasury Regulation Section 1.704-2(i)(4) applied
consistently with Treasury Regulation Section 1.704-2(f)(2)-(5) applies.
Such allocations shall be made in a manner consistent with the
requirements of Treasury Regulation Section 1.704-2(i)(4) under
Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in
Section 705(a)(2)(B) of the Code made (1) pursuant to Section 704(e)(2)
of the Code to a donee of an Interest, (2) pursuant to Section 706(d) of
the Code as the result of a change in any Partner's Interest, or
(3) pursuant to Regulation Section 1.751-1(b)(2)(ii) as a result of a
distribution by the Partnership of unrealized receivables or inventory
items or (b) a distribution, and such allocation and/or distribution
would cause the negative balance in such Partner's Capital Account to
exceed (i) such Partner's share of Partnership Minimum Gain plus
(ii) the amount of such Partner's obligation (actual or deemed), to
restore a negative balance in such Partner's Capital Account plus (iii)
such Partner's share of Partner Non-Recourse Debt Minimum Gain, then
such Partner shall be allocated items of income and gain in an amount
and manner sufficient to eliminate such negative balance as quickly as
possible. For purposes of this Section 10.5(b)(viii), a Partner's
Capital Account shall be treated as reduced by Qualified Income Offset
Items.
(ix) In the event that any fee payable to any General Partner or
any Affiliate thereof shall instead be determined to be a
non-deductible, non-capitalizable distribution from the Partnership to a
Partner for Federal income tax purposes, then there shall be allocated
to such General Partner in the year(s) of payment an amount of gross
income equal to the amount of such distribution in such year.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of priorities
shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.3(a).
(3) Capital Accounts shall be reduced by distributions
from Capital Transactions under Section 10.3(b).
(4) Capital Accounts shall be increased by any minimum
gain chargeback under Section 10.5(b)(vi) or Section 10.5(b)(vii).
(5) Capital Accounts shall be increased by any qualified
income offset under Section 10.5(b)(viii).
(6) Capital Accounts shall be increased by allocations of
profits under Section 10.2(a).
(7) Capital Accounts shall be reduced by allocations of
losses under Section 10.2(a).
(8) Capital Accounts shall be reduced by allocations of
losses under Section 10.2(b).
(9) Capital Accounts shall be increased by allocations of
profits under Section 10.2(b).
(xi) To the maximum extent permitted under the Code, allocations
of profits and losses shall be modified so that the Partners' Capital
Accounts reflect the amounts they would have reflected if adjustments
required by Sections 10.5(b)(vi), 10.5(b)(vii) and 10.5(b)(viii) had not
occurred.
10.6 Authority of the General Partners to Vary Allocations to Preserve
and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's distributive
share of profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) shall be determined and allocated
in accordance with this Agreement to the fullest extent permitted by Section
704(b) of the Code. In order to preserve and protect the determinations and
allocations provided for in this Agreement, the General Partners are hereby
authorized and directed to allocate profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items thereof)
arising in any year differently than otherwise provided for in this Agreement
to the extent that allocating profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item thereof) in
the manner provided for herein would cause the determinations and allocations
of each Partner's distributive share of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures or credits (or any item thereof)
not to be permitted by Section 704(b) of the Code. Any allocation made
pursuant to this Section 10.6 shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Agreement, and no amendment of
this Agreement or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under Sec-
tion 10.6(a), the General Partners are authorized to act only after having
been advised in writing by the Tax Accountants or the Special Limited Partner
that, under Section 704(b) of the Code, (i) the New Allocation is necessary,
and (ii) the New Allocation is the minimum modification of the allocations
otherwise provided for in this Agreement necessary in order to assure that,
either in the then-current year or in any preceding year, each Partner's
distributive share of profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures and credits (or any item thereof) is determined and
allocated in accordance with this Agreement to the fullest extent permitted by
Section 704(b) of the Code.
(c) If the General Partners are required by Section 10.6(a) to make
any New Allocation in a manner less favorable to the Limited Partners than is
otherwise provided for herein, then the General Partners are authorized and
directed, only after having been advised in writing by the Tax Accountants or
the Special Limited Partner that such an allocation is permitted by Section
704(b) of the Code, to allocate profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and any item thereof)
arising in later years in such manner so as to bring the allocations of
profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and each item thereof) to the Limited Partners as
nearly as possible to the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partners under Section 10.5(a)
and Section 10.5(c) in reliance upon the advice of the Tax Accountants shall
be deemed to be made pursuant to the fiduciary obligation of the General
Partners to the Partnership and the Limited Partners, and no such allocation
shall give rise to any claim or cause of action by any Limited Partner.
ARTICLE XI Management Agent
A. The General Partners shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement. The initial
Management Agent shall be Calhoun Property Management, Inc. The Management
Agent shall receive a Management Fee of those amounts payable from time to
time by the Partnership to the Management Agent for management services in
accordance with a management contract approved by each Agency (if such
approval is required) or, when the Apartment Complex is not subject to Agency
regulation, in accordance with a reasonable and competitive fee arrangement
and in no event in excess of 5% of gross rental income from the Apartment
Complex. From and after the Admission Date, the Partnership shall not enter
into any Management Agreement or modify or extend any Management Agreement
unless (i) the General Partners shall have obtained the prior written consent
of the Special Limited Partner to the identity of the Management Agent and the
terms of the Management Agreement or the modification or extension thereof and
(ii) such new Management Agreement or modified or extended Management
Agreement provides that it is terminable by the Partnership on thirty (30)
days' notice by the Partnership in the event of any change in the identity of
the General Partners.
B. No duplicate property management fees shall be paid to any Person.
C. If (i) the Management Agent is a General Partner or an Affiliate
of a General Partner, and (a) the Apartment Complex shall be subject to a
substantial building code violation which shall not have been cured within six
months after notice from the applicable governmental agency or department or
(b) the Partnership shall not have Cash Flow of at least $1,750 during any
year after 1997, or (ii) an Event of Bankruptcy shall occur with respect to
the Management Agent, or (iii) the Management Agent shall commit willful
misconduct or gross negligence in its conduct of its duties and obligations
under the Management Agreement or (iv) there is any change in the identity of
the General Partners, or (v) (subject to the last sentence of Article XI.C.)
the Management Agent is cited by any Agency, including the Credit Agency or
any other governmental agency, for a material violation or alleged material
violation of any applicable rules, regulations or requirements, including, but
not limited to, non-compliance with the Minimum Set-Aside Test, the Rent
Restriction Test or any other Tax Credit-related provision, then, upon request
by the Special Limited Partner and subject to Agency approval, if required,
the General Partners must cause the Partnership to promptly terminate the
Management Agreement with the Management Agent and appoint a new Management
Agent selected by the Special Limited Partner, which new Management Agent
shall not be an Affiliate of a General Partner. Each General Partner hereby
grants to the Special Limited Partner an irrevocable (to the extent permitted
by applicable law) power of attorney coupled with an interest to take any
action and to execute and deliver any and all documents and instruments on
behalf of such General Partner and the Partnership as the Special Limited
Partner may deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI.C. Subject to Agency approval, if required, the
Partnership shall not enter into any future management arrangement or renew or
extend any existing management arrangement unless such arrangement is
terminable without penalty upon the occurrence of the events described in this
Article XI. Notwithstanding the foregoing, with respect to any material
violation or alleged violation of clause (v) above, the General Partner shall
be given a period of 60 days after notice of any violation to cure the event
or condition cited by any such agency prior to any removal by the Special
Limited Partner.
D. The General Partners shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
E. The Partnership shall pay to the Managing General Partner an
annual non-cumulative Incentive Management Fee for its services in achieving
high operating efficiency of the Apartment Complex (such Fee to be treated as
a Partnership expense regardless of its treatment for Lender purposes), which
fee for each fiscal year shall in an amount equal to $2,125 and payable only
from and to the extent of Cash Flow after payment of all other obligations to
the Partnership, including the Asset Management Fee.
ARTICLE XII Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are required
under the Louisiana Civil Code by any governmental agency having jurisdiction
and may maintain such other books and records as the General Partners in their
discretion deem advisable. Every Limited Partner, or its duly authorized
representatives, shall at all times have access to the records of the
Partnership at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records. A list of the
names and addresses of all of the Limited Partners shall be maintained as part
of the books and records of the Partnership and shall be mailed to any Limited
Partner upon request. A reasonable charge for copy work may be charged by the
Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the Fiscal Partner
shall determine; provided, however, that no such account may be held in a bank
which is an Affiliate of any General Partner unless the prior written consent
of the Special Limited Partner shall have been received thereto. Withdrawals
shall be made only in the regular course of Partnership business on such
signature or signatures as the Fiscal Partner may determine. All deposits
(including security deposits and other funds required to be escrowed by the
Lenders) and other funds not needed in the operation of the business shall be
deposited, if required by applicable law and to the extent permitted by
applicable Agency or Mortgage requirements, in interest-bearing accounts or
invested in United States Government obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General Partners,
all tax returns of the Partnership. Prior to the filing of the Partnership
tax returns, and in no event later than February 1 of each year, the Auditors
shall deliver the tax returns for such year to the Tax Accountants for their
review and comment. If a dispute arises between the Auditors and the Tax
Accountants over the proper preparation of the tax returns and such dispute
cannot be resolved by the Auditors and the Tax Accountants by March 1 of such
year, then the Tax Accountants shall make the final decision on whether any
changes are necessary. The Partnership shall reimburse BCCLP for all costs
and expenses paid to the Tax Accountants for the aforementioned services.
(b) The Auditors shall audit and certify all annual financial reports
to the Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations under
Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time periods set
forth therein, at any time thereafter upon notice from the Special Limited
Partner that a change in the identity of the Auditors is desired, the Fiscal
Partner, on behalf of the Partnership, shall promptly terminate the
Partnership's engagement of the Auditors, and the prior written consent of the
Special Limited Partner must be received to the appointment of replacement
Auditors. If no such consent is received to the appointment of replacement
Auditors within thirty (30) days of the notice from the Special Limited
Partner to replace the Auditors, then the Special Limited Partner shall
appoint replacement Auditors of its own choosing, the cost of which shall be
borne by the Partnership as a Partnership expense. All Partners hereby grant
to the Special Limited Partner a special power of attorney, irrevocable to the
extent permitted by law, coupled with an interest, to so appoint replacement
Auditors and to do anything else which in the view of the Special Limited
Partner may be necessary or appropriate to accomplish the purposes of this
Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost recovery
deductions are permitted, the Partnership shall elect to use, so far as
permitted by the provisions of the Code, accelerated cost recovery methods.
However, the Partnership may change to another method of cost recovery if such
other method is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner and the limited partners thereof.
(b) Subject to the provisions of Section 12.5, all other elections
required or permitted to be made by the Partnership under the Code shall be
made by the General Partners in such manner as will, in the opinion of the
Auditors, be most advantageous to the Investment Limited Partner and the
limited partners thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of the
Investment Limited Partner or a transfer of all or any part of an interest of
a partner of the Investment Limited Partner, the Partnership shall elect, upon
the request of the Investment Limited Partner, pursuant to Section 754 of the
Code, to adjust the basis of the Partnership property. Any adjustments made
pursuant to said Section 754 shall affect only the successor in interest to
the transferring Partner or partner thereof. Each Partner will furnish the
Partnership all information necessary to give effect to such election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the calendar year.
The books of the Partnership shall be kept on an accrual basis.
12.7 Information to Partners
(a) The Fiscal 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) Within forty-five (45) days after the end of each fiscal
year of the Partnership, (A) a balance sheet as of the end of such
fiscal year, a statement of income, a statement of partners' equity, and
a statement of cash flows, each for the year then ended, all of which,
except the statement of cash flows, shall be prepared in accordance with
generally accepted accounting principles and accompanied by a report of
the Auditors containing an opinion of the Auditors, and (B) a report of
the activities of the Partnership during the period covered by the
report. With respect to any distribution to the Investment Limited
Partner, the report called for shall separately identify distributions
from (1) Cash Flow from operations during the period, (2) Cash Flow from
operations during a prior period which had been held as reserves,
(3) proceeds from disposition of property and investments, (4) lease
payments on net leases with builders and sellers, (5) reserves from the
gross proceeds of the Capital Contribution of the Investment Limited
Partner, (6) borrowed monies, and (7) transactions outside of the
ordinary course of business with a description thereof.
(ii) Within thirty (30) days after the end of each fiscal year of
the Partnership, all information relating to the Partnership and/or the
Apartment Complex which is necessary, in the view of the Tax
Accountants, for the preparation of the Limited Partners' Federal income
tax returns together with a draft of the Partnership's Federal income
tax return and, promptly following the filing thereof with the Service,
a final copy of such return as filed.
(iii) Within thirty (30) days after the end of each quarter of a
fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income and expenses for the quarter
then ended, which may be unaudited, in the form specified by
BCCLP;
(C) a statement of cash flows for the quarter then ended,
which may be unaudited;
(D) a certification of the Fiscal Partner that the
Apartment Complex and its tenants are in compliance with all
applicable federal, state and local requirements and regulations;
(E) a low-income housing tax credit monitoring form and an
Occupancy/Rental Report, all in the form specified by BCCLP;
(F) a copy of the rent roll for the Apartment Complex; and
(G) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities
during the quarter covered by the report.
(iv) Within forty five (45) days after the end of each fiscal
year of the Partnership a copy of the annual report or Form(s) 8609 to
be filed with the United States Department of the Treasury concerning
the status of the Apartment Complex as low-income housing and any
reports filed in connection with the compliance monitoring conducted by
the Credit Agency.
(b) Upon the written request of the Investment Limited Partner for
further information with respect to any matter covered in item (a) above, the
General Partners shall furnish such information within thirty (30) days of
receipt of such request.
(c) Within ninety (90) days after the end of each fiscal year of the
Partnership, the Fiscal Partner shall provide to the Limited Partners:
(i) a certification from the Fiscal Partner that (A) all
Construction and/or Permanent Mortgage payments and taxes and insurance
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 such default, a detailed 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 such violation, a detailed
description thereof; and
(ii) a descriptive statement of all transactions during the
fiscal year between the Partnership and General Partners or any
Affiliate thereof, including the nature of the transaction and the
payments involved.
(d) Within fifteen (15) days after the end of any calendar quarter
during which:
(i) there is a material default by the Partnership under any
Project Document or in the payment of any mortgage, taxes, interest or
other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by application of
funds therein for purposes materially different from those for which
such reserve was established,
(iii) any General Partner has received any notice of a material
fact which may substantially affect further distributions or Tax Credit
allocations to any Limited Partner, or
(iv) any Partner has pledged or collateralized its Interest in
the Partnership,
the Fiscal Partner shall send the Investment Limited Partner a detailed report
of such event.
(e) After the Admission Date, the Partnership shall send to the
Investment Limited Partner, on or before the tenth day of each month, the
monthly housing credit monitoring form in a form prescribed by BCCLP, as well
as copies of all applicable periodic reports covering the status of project
operations from the previous period, as may be required by the Credit Agency
or any other Agency.
(f) On or before ninety (90) days after the expiration of each fiscal
year of the Fiscal Partner, such Fiscal Partner shall send to the Investment
Limited Partner copies of the balance sheet and income statement of such
Fiscal Partner for such fiscal year, which financial statements shall be
reviewed by an independent certified public accountant.
(g) The Fiscal Partner shall cause the Partnership to send to the
Investment Limited Partner a copy of each Construction Mortgage draw
requisition and any notification or correspondence from the Construction
Lender indicating that any such draw will not be paid as requisitioned. Upon
receipt, the Partnership shall send to the Investment Limited Partner copies
of all documents evidencing any "carryover allocation" pursuant to Section
42(h)(1)(E) of the Code and the Form(s) 8609 evidencing the Tax Credit
allocation. Promptly after Permanent Mortgage Commencement, the Fiscal
Partner shall send to BCCLP a closing binder containing photocopies of the
fully-executed versions of all documents signed in connection with the
Permanent Mortgage. The General Partners hereby consent to any Agency's
providing BCCLP with copies of all material communications between any such
office and the General Partners and/or the Partnership, including, but not
limited to, any notices of default. From and after any date upon which the
Fiscal Partner receive notice from the Investment Limited Partner that the
Investment Limited Partner would like copies of the monthly rent rolls for the
Apartment Complex to be sent to BCCLP, the Fiscal Partner shall send copies of
the rent rolls to BCCLP no later than ten (10) days after the expiration of
each month.
(h) If either (A) the Completion Date or (B) the date upon which
tenants first occupied apartment units in the Apartment Complex shall have
occurred six months or more prior to the date upon which the Investment
Limited Partner acquired its Interest in the Partnership, then the Fiscal
Partner shall cause to be prepared and delivered to the Investment Limited
Partner within sixty (60) days of the Admission Date the following items:
(i) An unaudited statement of income of the Partnership for the
year (or such shorter period as there may be from the date of the most
recent audited statement of income of the Partnership) ended on the date
upon which the Investment Limited Partner acquired its Interest in the
Partnership; and
(ii) An audited statement of income of the Partnership for any
fiscal year of the Partnership ending between (A) the earlier of (1) the
Completion Date or (2) the date upon which tenants first occupied
apartment units in the Apartment Complex [after the rehabilitation of
such units] and (B) the date upon which the Investment Limited Partner
acquired its Interest in the Partnership.
(i) Within thirty (30) days of the Completion Date, the Fiscal Partner
shall prepare, or cause the Auditors to prepare, and deliver to each Limited
Partner a Tax Credit basis worksheet for each building in the Apartment
Complex, all in a form specified by BCCLP.
(j) Prior to October 15 of each year, the Partnership shall send to
the Investment Limited Partner an estimate of the Investment Limited Partner's
share of the tax credits, profits and losses of the Partnership for Federal
income tax purposes for the current fiscal year. Such estimate shall be
prepared by the General Partners and the Auditors and shall be in the form
specified by BCCLP.
(k) On or before January 31st of each Partnership fiscal year, the
Partnership shall send to the Investment Limited Partner copies of the
complete insurance policies satisfactory to the Investment Limited Partner so
that the Investment Limited Partner will be able to determine that insurance
policies required to be maintained on the Apartment Complex pursuant to
Section 6.5(c) are in force, accompanied by a certificate of the General
Partners stating that such insurance policies satisfy the requirements of
Section 6.5(c).
(l) If the Fiscal Partner does not cause the Partnership to fulfill
his obligations under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the
time periods set forth therein, the Fiscal Partner shall pay as damages the
sum of $100 per day to the Investment Limited Partner until such obligations
shall have been fulfilled. Such damages shall be paid forthwith by the Fiscal
Partner, and failure to so pay shall constitute a material default of the
General Partners hereunder. In addition, if the Fiscal Partner shall fail so
to pay, the General Partners and their Affiliates shall forthwith cease to be
entitled to the Partnership Management Fee and to the payment of any Cash Flow
or Capital Transaction proceeds to which they may otherwise be entitled
hereunder. Such payments of the Partnership Management Fee, Cash Flow and
Capital Transaction proceeds shall be restored only upon the payment of such
damages in full, and any amount of such damages not so paid shall be deducted
against payments of the Partnership Management Fee, Cash Flow and Capital
Transaction proceeds otherwise due to the General Partners or their
Affiliates.
12.8 Expenses of the Partnership
All expenses of the Partnership shall be billed directly to and paid by
the Partnership.
ARTICLE XIII General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be Disposed of,
when added to the total of all other Interests Disposed of within the period
of twelve consecutive months prior to the proposed date of the Disposition,
could, in the opinion of tax counsel to the Partnership, result in the
termination of the Partnership under Section 708 of the Code. This
Section 13.1 shall have no application to any required repurchase of the
Investment Limited Partner's Interest. Any Disposition in contravention of any
of the provisions of this Section 13.1 shall be void ab initio and ineffectual
and shall not bind or be recognized by the Partnership. Notwithstanding the
foregoing provisions of this Section 13.1, however, the Investment Limited
Partner may waive the provisions of this Section 13.1 at any time as to a
Disposition or series of Dispositions, and in the event of such a waiver, this
Section 13.1 shall have no force or effect upon such Disposition or series of
Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any Partnership
fiscal year in which the Investment Limited Partner shall have received any
distributions under Article X, the General Partners shall file an amendment to
the Certificate reducing by the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment Limited
Partner as stated in the last previous amendment to the Certificate. However,
Schedule A shall not be amended on account of any such distribution. The
Partnership shall amend the Certificate as necessary to effect the
substitution of substituted Limited Partners.
Notwithstanding the foregoing provisions of this Section 13.2, no such
amendments to the Certificate need be filed by the General Partners if the
Certificate is not required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing and shall
be deemed adequately given if actually delivered or if sent by registered or
certified mail, postage prepaid, to the party for whom such notice is intended
at such party's last address of record on the Partnership books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires. The singular shall
include the plural, and vice versa, and each gender (masculine, feminine and
neuter) shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers to the
corresponding Section or Article of this Agreement, unless specified
otherwise. References to Treasury Regulations (permanent or temporary) or
Revenue Procedures shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance with the
laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the same
counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each of the
provisions of this Agreement shall be subject to, and the General Partners
covenant to act in accordance with, the Project Documents; (b) the Project
Documents shall govern the rights and obligations of the Partners, their
heirs, executors, administrators, successors and assigns to the extent
expressly provided therein; (c) upon any dissolution of the Partnership or any
transfer of the Apartment Complex, no title or right to the possession and
control of the Apartment Complex and no right to collect the rent therefrom
shall pass to any Person who is not, or does not become, bound by the Project
Documents in a manner satisfactory to each Agency; (d) no amendment to any
provision of the Project Documents shall become effective without the prior
written consent of each Agency (if required); and (e) the affairs of the
Partnership shall be subject to Agency regulation, and no action shall be
taken which would require the consent or approval of any Agency unless the
prior consent or approval of such Agency shall have been obtained. No new
Partner shall be admitted to the Partnership, and no Partner shall withdraw
from the Partnership or be substituted for without the consent of each Agency
(if such consent is then required). No amendment to this Agreement relating
to matters governed by Agency regulations or requirements shall become
effective until the prior written consent of each Agency (if required) to such
amendment shall have been obtained.
Any conveyance or transfer of title to all or any portion of the
Apartment Complex required or permitted under this Agreement shall in all
respects be subject to all conditions, approvals and other requirements of
Agency rules and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable and
(a) if for any reason any provision is determined to be invalid, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid, and (b) if for any reason any provision would cause
the Investment Limited Partner to be bound by the obligations of the
Partnership (other than the rules and regulations of an Agency and the
requirements of any Lender), such provision or provisions shall be deemed void
and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any article
or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only with the
Consent of the Investment Limited Partner and the prior written consent of the
Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses
Any and all costs and expenses incurred by the Investment Limited
Partner and/or the Special Limited Partner in connection with exercising
rights and remedies against the General Partners with respect to this
Agreement, including without limitation, reasonable attorneys' fees, shall be
paid by the General Partners on demand. All amounts due to the Investment
Limited Partner and/or the Special Limited Partner pursuant to this provision
shall bear interest from demand at a rate of 9%.
If any General Partner breaches any provision of this Agreement, the
Investment Limited Partner and/or the Special Limited Partner may employ an
attorney or attorneys to protect its rights hereunder, and the General
Partners shall pay on demand the reasonable attorneys' fees and expenses
incurred by the Investment Limited Partner and/or the Special Limited Partner,
whether or not a legal action is actually commenced against any General
Partner by reason of such breach. All amounts due to the Investment Limited
Partner and/or the Special Limited Partner pursuant to this provision shall
bear interest from demand at a rate equal to 9%.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been admitted to
the Partnership as of the Commencement Date for all purposes of this
Agreement, including Article X; provided, however, that if regulations are
issued under the Code or an amendment to the Code is adopted which would
require, in the opinion of the Auditors, that the Investment Limited Partner
be deemed admitted on a date other than as of the Commencement Date, then the
Fiscal Partner General Partners shall select a permitted admission date which
is most favorable to the Investment Limited Partner.
WITNESS the execution hereof under seal as of the 1st day of February,
1997.
MANAGING GENERAL COMMUNITY SUPPORT PROGRAMS, INC.
PARTNER:
By: /s/ _______________________________
Its: President
FISCAL PARTNER: ___/s/ M. Riemer Calhoun, Jr._____
M. RIEMER CALHOUN, JR.
WITHDRAWING ORIGINAL T.F. MANAGEMENT, INC.
LIMITED PARTNER:
By: ___/s/ M. Riemer Calhoun, Jr.
M. Riemer Calhoun, Jr.
Its: President
INVESTMENT LIMITED
PARTNER: BOSTON CAPITAL
TAX CREDIT FUND IV, L.P.
a Delaware limited partnership
By: Boston Capital Associates IV, L.P.,
its general partner
By: C&M Associates d/b/a Boston
Capital Associates, its
general
partner
___/s/ Bonnie Kate
Fox__________
By: Bonnie Kate Fox,
Attorney-In-
Fact for John P. Manning, its
general partner
SPECIAL LIMITED PARTNER: BCTC 94, INC.
___/s/ Bonnie Kate Fox______
By: Bonnie Kate Fox, Attorney-In-Fact
for John P. Manning, its President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Article XI of the foregoing Second Amended and
Restated Articles of Partnership In Commendam notwithstanding any provision of
the Management Agreement to the contrary.
Management Agent:
CALHOUN PROPERTY
MANAGEMENT, Inc.
__/s/ M. Riemer Calhoun, Jr.
By: M. Riemer Calhoun, Jr.
Its: President
STATE OF ______________________ )
) SS.
COUNTY OF ___________________ )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named M. Riemer Calhoun, Jr., known to me
to be the person who executed the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein are true and that he did sign the
same as his free act and deed.
WITNESS my hand and official seal this _________ day of _______________,
1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: ____________
My County of Residence: ___________
STATE OF ______________________ )
) SS.
COUNTY OF ___________________ )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named ______________, known to me to be
the _________ of Community Support Programs, Inc., who, being duly sworn,
acknowledged that the statements therein are true and that [he] did sign the
foregoing instrument as [his] free act and deed and that the same is the duly
authorized free act and deed of Community Support Programs, Inc..
WITNESS my hand and official seal this ___________ day of _____, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: ____________
My County of Residence: ___________
STATE OF ______________________ )
) SS.
COUNTY OF ___________________ )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named M. Riemer Calhoun, Jr., known to me
to be the President of T.F. Management, Inc., who being duly sworn,
acknowledged that the statements therein are true and that he did sign the
foregoing instrument as his free act and deed and that the same is the duly
authorized free act and deed of T.F. Management, Inc..
WITNESS my hand and official seal this _________ day of _______________,
1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: ____________
My County of Residence: ___________
STATE OF ______________________ )
) SS.
COUNTY OF ___________________ )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named M. Riemer Calhoun, Jr., known to me
to be the President of Calhoun Property Management, Inc., who, being duly
sworn, acknowledged that the statements therein are true and that he did sign
the foregoing instrument as his free act and deed and that the same is the
duly authorized free act and deed of Calhoun Property Management, Inc..
WITNESS my hand and official seal this ___________ day of
______________, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: ____________
My County of Residence: ___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, known to me
to be (i) the attorney-in-fact for John P. Manning, the President of Boston
Capital Associates, which is the general partner of Boston Capital Associates
IV, L.P., which is the general partner of Boston Capital Tax Credit Fund IV,
L.P., who, being duly sworn, acknowledged that she did sign the foregoing
instrument, that the statements therein contained are true and that the same
is her free act and deed and the duly authorized free act and deed of said
John P. Manning and Boston Capital Tax Credit Fund IV, L.P.
WITNESS my hand and official seal this ________ day of ______________,
199__.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: ____________
My County of Residence: ___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, known to me
to be the attorney-in-fact for John P. Manning, the President of BCTC 94,
Inc., who, being duly sworn, acknowledged that she did sign the foregoing
instrument, that the statements therein contained are true and that the same
is her free act and deed and the duly authorized free act and deed of John P.
Manning and BCTC 94, Inc..
WITNESS my hand and seal this _____ day of ______________, 199_.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: ____________
My County of Residence: ___________
BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
SCHEDULE A
As of February 1, 1997
General Partners Capital Contribution
Community Support Programs,Inc.
3811 Gilbert Avenue
Shreveport, Louisiana 71104 $50.00
M. Riemer Calhoun, Jr.
907 Polk Street
P.O. Drawer 799
Mansfield, Louisiana 71052 $50.00
Special Limited Partner Capital Contribution
BCTC 94, Inc.
One Boston Place
Boston, MA 02108-4406 $10.00
Total Agreed-to Paid-In
Capital Contribution Capital Contribution*
Boston Capital
Tax Credit Fund IV, L.P. (Series 26)
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108-4406 $761,008 $418,554
*Paid-in Capital Contribution as of the date of this Schedule A. Future
Installments of Capital Contribution are subject to adjustment and are
due at the times and subject to the conditions set forth in the
Agreement to which this Schedule is attached.
BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of February 1, 1997 by and among
Brookhaven Apartments Partnership, A Louisiana Partnership In Commendam (the
"Operating Partnership"); Community Support Programs, Inc., a Louisiana non-
profit corporation (the "Managing General Partner"); M. Riemer Calhoun (the
"Fiscal Partner"); and T.F. Management, Inc. (the "Original Limited Partner")
for the benefit of Boston Capital Tax Credit Fund IV L.P., a Delaware limited
partnership (specifically Series 26 thereof) (the "Investment Partnership"),
BCTC 94, Inc., Peabody & Brown and certain other Persons described herein.
WHEREAS, the Operating Partnership proposes to admit the Investment
Partnership as a limited partner thereof pursuant to an the Second Amended and
Restated Articles of Partnership In Commendam of the Operating Partnership
dated as of February 1, 1997 (the "Operating Partnership Agreement"), in
accordance with which the Investment Partnership will make substantial capital
contributions to the Operating Partnership;
WHEREAS, the Investment Partnership and Investment General Partner have
relied upon certain information and representations described herein in
evaluating the merits of investment by the Investment Partnership in the
Operating Partnership; and
WHEREAS, Peabody & Brown, as counsel for the Investment Partnership,
will rely upon such information and representations in connection with its
delivery of certain opinions with respect to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Operating Partnership Agreement and become a limited partner of the Operating
Partnership, and for $1.00 and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Operating
Partnership, the Operating General Partners and the Original Limited Partner
hereby agree as follows for the benefit of the Investment Partnership,
Investment General Partner, Peabody & Brown and certain other persons
hereinafter described.
1. Representations, Warranties and Covenants of the Operating
Partnership, the Operating General Partners and the Original
Limited Partner
The Operating Partnership, the Operating General Partners and the
Original Limited Partner jointly and severally represent, warrant and certify
to the Investment Partnership, Investment General Partner and Peabody & Brown
that, with respect to the Operating Partnership, as of the date hereof:
A. 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 own its apartment complex (the "Apartment
Complex") and conduct its business; the Operating Partnership, the Operating
General Partners and the Original Limited Partner have the power and authority
to enter into and perform this Certification and Agreement; the execution and
delivery of this Certification and Agreement by the Operating Partnership, the
Operating General Partners and the Original Limited Partner have been duly and
validly authorized by all necessary action; the execution and delivery of this
Certification and Agreement, the fulfillment of 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 agree-
ment, indenture or instrument by which the Operating Partnership or any
Operating General Partner or Original Limited Partner is bound or any law,
regulation, judgment, decree or order applicable to the Operating Partnership
or any Operating General Partner or Original Limited Partner or any of their
respective properties; this Certification and Agreement constitutes the valid
and binding agreement of the Operating Partnership, the Operating General
Partners and the Original Limited Partner, enforceable against each of them in
accordance with its terms.
B. The Operating General Partners have delivered to the Investment
Partnership, Investment General Partner or their affiliates all documents and
information which would be material to a prudent investor in deciding whether
to invest in the Operating Partnership. All factual information, including
without limitation the information set forth in Exhibit A hereto, provided to
the Investment Partnership, Investment General Partner or their affiliates
either in writing or orally, did not, at the time given, and does not, on the
date hereof, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they are made. The financial statements for the Fiscal Partner and his
affiliates previously delivered fairly present the financial condition of such
parties as of the dates of said financial statements and since the date of
such financial statements there has been no material adverse change in the
financial position of any of the Fiscal Partner or such affiliates. The
estimates of occupancy rates, operating expenses, cash flow, depreciation and
tax credits set forth on Exhibit A are reasonable in light of the knowledge
and experience of the Operating General Partners.
C. As of the date hereof, each of the representations contained in
Exhibit B attached hereto is true, accurate and complete as to each of the
Operating Partnership, the Operating General Partners and the Original Limited
Partner and as to any of their affiliates, any of their predecessors and their
affiliates' predecessors, any of their directors, officers, 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.
D. Each of the representations and warranties contained in the
Operating Partnership Agreement is true and correct as of the date hereof.
E. Each of the covenants and agreements of the Operating Partnership
and the Operating General Partners contained in the Operating Partnership
Agreement has been duly performed to the extent that performance of any
covenant or agreement is required on or prior to the date hereof.
F. All conditions to admission of the Investment Partnership as the
investment limited partner of the Operating Partnership contained in the
Operating Partnership Agreement have been satisfied.
G. No default has occurred and is continuing under the Operating
Partnership Agreement or any of the Project Documents (as said term is defined
in the Operating Partnership Agreement) for the Operating Partnership.
H. No person or entity other than the Operating Partnership holds any
equity interest in the Apartment Complex.
I. The Operating Partnership has the sole responsibility to pay all
maintenance and operating costs, including all taxes levied and all insurance
costs, attributable to the Apartment Complex.
J. The Operating Partnership, except to the extent it is protected by
insurance and excluding any risk borne by lenders, bears the sole risk of loss
if the Apartment Complex is destroyed or condemned or there is a diminution in
the value of the Apartment Complex.
K. No person or entity except the Operating Partnership has the right
to any proceeds, after payment of all indebtedness, from the sale,
refinancing, or leasing of the Apartment Complex.
L. No Operating General Partner is related in any manner to the
Investment Partnership, nor is any Operating General Partner acting as an
agent of the Investment Partnership.
M. The Apartment Complex contains no substance known to be hazardous,
such as hazardous waste, lead-based paint, asbestos, methane gas, urea
formaldehyde insulation, oil, toxic substances, underground storage tanks,
polychlorinated biphenals (PCBs), and radon; the Apartment Complex is not
affected by the presence of oil, toxic substances, or other pollutants that
could be a detriment to the Apartment Complex nor is the Operating Partnership
in violation of any local, state, or federal law or regulation; and no
violation of the Clean Air Act, Clean Water Act, Resource Conservation and
Recovery Act, Toxic Substance Control Act, Safe Drinking Water Control Act,
Comprehensive Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing. Neither the
Operating Partnership nor any Operating General Partner or Original Limited
Partner has received any notice from any source whatsoever of the existence of
any such hazardous condition relating to the Apartment Complex or of any
violation of any local, state or federal law or regulation with respect to the
Apartment Complex.
N. The fair market value of the Apartment Complex exceeds the total
amount of indebtedness encumbering the Apartment Complex and is expected to
continue to do so throughout the term of such indebtedness.
O. The Apartment Complex is not in violation of any State or local
health or building code or regulation.
P. 1996 low-income housing tax credit authorization in the amount of
at least $123,983 per annum for the Property has been obtained by the
Partnership from the tax credit agency of the State of Louisiana and is in
full force and effect.
Q. The Partnership has validly elected under Section 42(b)(2)(A)(ii)
of the Code to lock in a credit percentage of 8.48% with respect to the
qualified basis of the Property.
R. All 35 dwelling units in the Property will be leased to persons
who satisfy the income restrictions under Section 42(g)(1) of the Code at
rents satisfying the rent restrictions of Section 42(g)(2) of the Code.
S. All qualified low income dwelling units in the Property will be
occupied by tenants under leases with terms of not less than six months.
T. All rental units in the Property are of equal quality with
comparable amenities available to low-income tenants on a comparable basis
without separate fees.
U. The Apartment Complex does not receive assistance under the HUD
Section 8 Moderate Rehabilitation Program.
V. The Operating General Partners agree to take all actions necessary
to claim the Projected Credit, including, without limitation, the filing of
Form(s) 8609 with the Internal Revenue Service.
W. As of December 31, 1996, the Operating Partnership owned the
Apartment Complex and had a basis in the Apartment Complex equal to at least
10% of its anticipated basis in the Apartment Complex as of December 31, 1998,
and all buildings in the Apartment Complex will be placed in service for
purposes of Section 42 of the Code not later than December 31, 1998.
X. The allocation of 1996 low income housing tax credit to the
Property was not made pursuant to the "nonprofit set aside" provisions of
Section 42 of the Code.
Y. A "qualified nonprofit organization" as defined in
Section 42(h)(5)(C) of the Code will own an interest in and materially
participate in the development and operation of the Project throughout the
compliance period for purposes of Section 42(h)(5) of the Code.
2. Indemnification
A. The Fiscal Partner (for purposes of this Section 2.A, the
"Indemnifying Party") agree to indemnify and hold harmless the Investment
Partnership, Investment General Partner (for purposes of this Section 2.A, the
"Indemnified Parties" or, individually, an "Indemnified Party") and each
officer, director, employee and person, if any, who controls any party 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, insofar as such Liabilities
or actions in respect thereof arise out of or are based upon (i) a breach by
the Indemnifying Party of any of his representations, warranties or covenants
to such Indemnified Party or any such of its officers, directors, employees or
controlling persons under this Certification and Agreement or (ii) liability
under any statute, regulation, ordinance, or other provision of federal,
state, or local law or any civil action pertaining to the protection of the
environment or otherwise pertaining to public health or employee health and
safety, including, without limitation, protection from hazardous waste, lead-
based paint, asbestos, methane gas, urea formaldehyde insulation, oil, toxic
substance, underground storage tanks, polychlorinated biphenals (PCBs), and
radon; 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.
B. No Indemnifying Party shall be liable under the indemnity
agreements contained in Section 2.A unless the Indemnified Party shall have
notified the Indemnifying Party in writing within forty-five (45) 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 an 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.A. 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 arrange-
ments satisfactory to any other Indemnifying Party or parties similarly noti-
fied, 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.
3. Miscellaneous
A. This Certification and Agreement is made solely for the benefit of
the Operating Partnership, the Operating General Partners, the Original
Limited Partner, Investment General Partner, Peabody & Brown and the
Investment Partnership (and, to the extent provided in Section 2, the
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.
B. This Certification and Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, all of which
together shall constitute one and the same instrument.
C. 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.
IN WITNESS WHEREOF, the undersigned have set their hands and seals as of
the date first above written.
OPERATING PARTNERSHIP: BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
By: Community Support Programs, Inc.
Its: Managing General Partner
By: ______________________
__/s/ M. Riemer Calhoun, Jr.___________
M. RIEMER CALHOUN, JR.
___________________________________________
MANAGING GENERAL COMMUNITY SUPPORT PROGRAMS, INC.
PARTNER:
By: ______________________
FISCAL PARTNER AND
INDEMNIFYING PARTY:
___/s/ M. Riemer Calhoun, Jr._____________
M. RIEMER CALHOUN, JR.
WITHDRAWING ORIGINAL T.F. MANAGEMENT, INC.
LIMITED PARTNER:
By:__/s/ M. Riemer Calhoun, Jr.____________
M. Riemer Calhoun, Jr.
Its: President
___________________________________________
Exhibit A
BROOKHAVEN APARTMENTS PARTNERSHIP,
A LOUISIANA PARTNERSHIP IN COMMENDAM
FACT SHEET
Sources and Uses
A. Sources:
Permanent First Mortgage $471,650
Permanent Second
Mortgage $535,650
LIHTC Equity $761,008
General Partner Equity $ 100
$1,768,408
======
B. Uses:
Total Construction Costs $1,200,000
Architectural Fees $ 40,000
Survey & Engineering $ 9,000
Financing Costs & Loan Fees $ 12,500
Interest During Construction $ 30,000
Legal/Accounting $ 11,000
Taxes during Construction $ 3,000
Land Cost or Value $ 53,000
Builder's Overhead $ 40,200
Performance Bond Premium $ 10,000
Construction Insurance $ 3,000
Operating Reserve $ 15,000
Title & Recording $ 15,000
Environmental & Appraisal $ 3,000
Rent-up Reserve $ 15,000
Taxes/Insurance Escrow $ 20,000
Construction and Development Fee$ 221,900
Developer's Overhead $ 66,808
$1,768,408
======
Construction Financing
A. Lender: Bank One Louisiana
B. Mortgage Amount: $1,091,650
i. Note Date: September 7, 1996
ii. Interest Rate: 8.25%
iii. Term: Due April 30, 1997
Permanent Financing
A. Lender (First Mortgage): Bank One Louisiana
B. Mortgage Amount: $471,650
i. Note Date: (not yet closed)
ii. Interest Rate: 8.25% (adjusted)
iii. Term: 15 years
iv. Amortization: 180 installments
A. Lender (Second Mortgage):City of Shreveport
B. Mortgage Amount: $535,650
i. Note Date: (not yet closed)
ii. Interest Rate: 4%
iii. Term: 15 years
Total Construction Costs: $1,200,000
Construction Commencement September 1996
Construction Completion February 1997
Eligible Basis $1,539,644
Qualified Basis $1,539,644
Capital Contribution
Managing General Partner: $50
Fiscal Partner: $50
Type of Credit: new construction
Rent-up Schedule: 100% occupancy by February 1997
Projected Credit to the
Investment Partnership (99%):$1,227,430
Total Projected Credit to the
Operating Partnership (100%):$1,239,830
Tax Credit Approval:
A. Application
i. Filing Date: 9/20/95
ii: Credit Amount
Requested: $121,566
B. Reservation
i. Date: 11/15/95
ii. Credit Amount
Reserved: $123,983
C. Carryover Allocation
i. Date: March 15, 1995
ii. Credit Amount
Allocated: $123,983
Apartment Complex
A. Name: Brookhaven Apartments
B. Address: Shreveport, Louisiana
C. Type of Project Family
Area Median Income: $32,400 (1996)
Type of Apartments:
Basic Rent Util. Allow Total Rent
12 one-bedroom $263 $40 $303
2 two-bedroom $315 $50 $365
18 two-bedroom $385 $50 $435
3 three-bedroom $430 $60 $490
Number of Units Receiving Rental Assistance: -0-
Annual Operating Expenses (1998): $68,245
Replace Reserve Account:
A. Annual: $7,000
B. Required Total Accumulation: $70,000
Operating Reserve Account: -0-
Amount of Annual Reporting Fee to
Boston Capital: $1,750
Amount of Annual Partnership
Management Fee: $1,750
Total Capital Contribution of
Investment Partnership: $761,008
Schedule of Capital Contributions:
A. $418,554 on the latest to occur of:
i. Tax Credit Set-Aside;
ii. Admission Date;
iii. Construction Loan Closing; and
iv. Permanent Mortgage Loan Commitment.
B. $190,252 on the latest to occur of:
i. Completion;
ii. State Designation;
iii. Cost Certification;
iv. Updated title policy;
v. Payoff letter from general contractor;
vi. Estoppel letter from Construction Lender; and
vii. Carryover Certification.
C. $114,151 on the latest to occur of:
i. the Initial 100% Occupancy Date;
ii. Permanent First Mortgage Commencement; and
iii. Rental Achievement.
D. $38,050 upon the receipt of the tax return and audited
financial statement for the year in which Breakeven occurs.
General Partners: M. Riemer Calhoun
Address: 907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
Telephone Number: (318) 872-0286
Community Support Programs, Inc.
Address: 3811 Gilbert Avenue
Shreveport, LA 71104
Ownership Interest
Normal Operations Capital Transaction
A. Managing G.P.: 00.50% 00.50%
B. Fiscal G.P.: 00.50% 00.50%
C. Investment L.P.: 99.00% 99.00%
Management Agent: Calhoun Property Management, Inc.
Address: 907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
Telephone Number: (318) 872-0286
Amount of Fee: $35 per occupied unit/per month
Builder: Calhoun Builders, Inc.
Address: 907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
Amount of Construction
Contract: $1,200,000
Builder's Overhead: $40,200
Architect: Gaudet & Tolson, Ltd.
Address: 361 South Main Street
Opelousas, LA 70570
Amount of Fee: $25,000
Auditor and Tax Return Preparer: Cole, Evans & Peterson
Contact Person: William J. Cole
Address: Fifth Floor, Travis Place
P.O.Drawer 1768
Shreveport, LA 71166-1768
Telephone Number: (318) 222-8367
Federal Taxpayer ID Number: 72-1312342
Operating Deficit Guaranty: M. Riemer Calhoun, Jr.
M. Riemer Calhoun, Jr., individually
and on behalf of the Operating
Partnership, shall be obligated to
make Subordinated Loans to the
Partnership to cover debt service,
operating expenses and the Replacement
Reserve Fund to the extent these exceed
available income.
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partners and Original
Limited Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partners and its
Original Limited Partner (as identified on the Certification and Agreement to
which this Certificate is attached as Exhibit B) hereby represent to you that
neither (i) the Operating Partnership, (ii) any predecessor of the Operating
Partnership, (iii) any of the Operating Partnership's affiliates ("affiliate"
meaning a person that controls or is controlled by, or is under common control
with, the Operating Partnership), (iv) any sponsor (meaning any person who
(1) is directly or indirectly instrumental in organizing the Operating
Partnership or (2) will directly or indirectly manage or participate in the
management of the Operating Partnership or (3) will regularly perform, or
select the person or entity who will regularly perform, the primary activities
of the Operating Partnership), (v) any officer, director, principal or general
partner of the Operating Partnership or of any sponsor, (vi) any officer,
director, principal, promoter or general partner of any Operating General
Partner, (vii) any beneficial owner of ten per cent or more of any class of
the equity securities of the Operating Partnership 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), (viii) any
promoter of the Operating Partnership (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 Operating Partnership or any person who, in connection with
the founding and organizing of the business or enterprise of the Operating
Partnership, 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 Operating Partnership or ten per cent or more of the
proceeds from the sale of any class of such securities; provided, however, a
person who receives such securities or proceeds either solely as underwriting
commissions or solely in consideration of property shall not be deemed a
promoter if such person does not otherwise take part in founding and
organizing the enterprise) presently connected with the Operating Partnership
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 juris-
diction, or which is the subject of a any refusal order or stop order there-
under entered within five years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere to a misde-
meanor 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 involv-
ing theft, conversion, misappropriation, fraud, breach of fiduciary duty,
deceit or intentional wrongdoing including, but not limited to, forgery, em-
bezzlement, obtaining money under false pretenses, larceny fraudulent con-
version or misappropriation of property or conspiracy to defraud, or which is
a crime involving moral turpitude, or within the last five years of a misde-
meanor or felony which is a criminal violation of statutes designed to protect
consumers against unlawful practices involving insurance, securities, commo-
dities, real estate, franchises, business opportunities, consumer goods or
other goods and services;
(3) Is subject to (a) any administrative order, judgment or
decree entered within five years prior to the date hereof entered or issued by
or procured from a state securities commission or administrator, the Securi-
ties and Exchange Commission ("SEC"), the Commodities Futures Trading Commis-
sion or the U.S. Postal Service, or to (b) any administrative order or judg-
ment, arising out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or involving
deceit, theft, fraud or fraudulent conduct, or breach of fiduciary duty, or
which is based upon a state banking, insurance, real estate or securities law
or (c) has been the subject of any administrative order, judgment or decree in
any state 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 SEC
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 of competent jurisdiction entered within five years prior
to the date hereof, 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 date hereof, or is subject to a tempo-
rary 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 asso-
ciation, or any self-regulatory organization registered pursuant to the Secu-
rities 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 SEC, 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 or associated person of any of the fore-
going, or prohibiting 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 SEC 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 circum-
stances under which it was made false or misleading with respect to any mate-
rial 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 circum-
stances 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 estab-
lished 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 date hereof 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 custo-
mer or is the subject of sanctions imposed by any state or federal securities
agency or self-regulatory agency;
(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 has been adjudged a
bankrupt or made a general assignment for the benefit of creditors; 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 Pennsyl-
vania Act.
(14) If the Operating Partnership is subject to the requirements
of Section 12, 14 or 15(d) of the Securities Exchange Act of 1934, then the
Operating Partnership has filed all reports required by those Sections to be
filed during the 12 calendar months preceding the date hereof (or for such
shorter period that the Operating Partnership was required to file such
reports).
