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 22, 1996
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 22, 1996, Boston Capital Tax Credit Fund IV L.P., a
Delaware limited partnership, specifically Series 25 thereof (the
"Partnership"), completed various agreements relating to Mokapoke Limited
Partnership, a Maryland limited partnership (the "Operating Partnership"),
including an Amended and Restated Agreement of Limited Partnership of the
Operating Partnership dated as of February 22, 1996 (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 renovated
apartment complex located on Linden Avenue in Pocomoke City, Maryland which
is known as Clarke Manor Apartments (the "Apartment Complex"). The Apartment
Complex consists of thirty 1-bedroom apartment units, including one unit
which is utilized by the on-site manager. Renovation of the Apartment
Complex was substantially completed by April 1996 and the Apartment Complex
is currently 100% occupied (as of December 31, 1996).
The Operating Partnership is receiving financing from the FmHA in the
aggregate amount of $1,232,276 (the "Permanent Loan") consisting of (i) a
mortgage loan in the original principal amount of $1,203,000 which was
assumed by the Operating Partnership and (ii) a mortgage loan in the amount
of $37,170 made directly by FmHA to the Operating Partnership. The Permanent
Loan has a subsidized interest rate of 1% and a term of 50 years.
100% of the apartment units (30 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").
The General Partner of the Operating Partnership is R.T.M. Limited
Partnership, a Maryland limited partnership of which R.T.M., Inc., a Maryland
corporation ("RTM") is the general partner. The principals of RTM are Tevis
Margolis and Robert Margolis, both of whom have extensive experience in the
development and operation of affordable housing projects. They have been
engaged in the real estate business for the past 25 years and have developed
over 2,500 units in 60 housing projects.
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 $461,322 which has been or will be payable to
the Operating Partnership in four (4) Installments as follows:
1. $306,551 on the latest to occur of (i) Tax Credit Set-Aside, (ii)
receipt by Boston Capital of approval by Reznick, Fedder &
Silverman of a compliance and a of a minimum of 20% of the leases
in the Apartment Complex, (iii) receipt by Boston Capital of an
acceptable commitment of the Permanent Lender regarding the
Permanent Loan, or (iv) the Admission Date (the "First
Installment");
2. $43,793 on the latest to occur of (i) Substantial Completion,
(ii) Cost Certification; (iii) receipt of an owner's title
insurance policy satisfactory to BCTC 94, (iv) receipt of an
estoppel letter and consent to syndication from the Permanent
Lender in a form acceptable to BCTC 94, (v) compliance with
reasonable due diligence recommendations, (vi) receipt of a
payoff letter, in a form acceptable to BCTC 94, 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, or (vii)
satisfaction of all of the conditions to the payment of the
First Installment (the "Second Installment");
3. $78,828 on the latest to occur of (i) State Designation, (ii)
Initial 100% Occupancy Date, (iii) Final Closing, (iv) Breakeven
Point, or (v) satisfaction of all of the conditions to the
payment of the First and Second Installments (the "Third
Installment"); and
4. $32,150 on the latest to occur of (i) Breakeven Confirmation or
(ii) satisfaction of all conditions to the payment of the First,
Second and Third Installments (the "Fourth Installment").
The total Capital Contribution of the Partnership to the Operating
Partnership is based on the Operating Partnership receiving $789,800 of Tax
Credits during the 10-year period commencing in 1996, of which $781,900 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
General Partner 1% 49% 90%
Partnership 99% 51% 10%
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 $1,000 commencing in
1996 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 XI of the Operating Partnership Agreement. To the extent Cash Flow
in any year is insufficient to pay the entire amount of the Asset Management
Fee, the General Partner shall make a Subordinated Loan to the Operating
Partnership in the amount of such deficiency. If the General Partner fails
to make the Subordinated Loan, the amount of such fee shall accrue and be
payable on a cumulative basis in the first year in which there is sufficient
Cash Flow available for the payment of such fee, or in the first year in
which proceeds of a Capital Transaction are available.
The Operating Partnership will pay a Development Fee to the Developer
for its service in connection with the construction and development of the
Apartment Complex in an amount equal to $294,259. The Development Fee will
be paid $43,793 from the proceeds of the Second Installment, $78,828 from the
proceeds of the Third Installment, $32,150 from the proceeds of the Fourth
Installment and the $139,488 balance shall be paid as a Deferred Development
Fee in accordance with the provisions of Article XI of the Operating
Partnership Agreement, but in no event later than December 31, 2011. The
Operating Partnership will pay to the General Partner an annual Incentive
Partnership Management Fee of $1,000 per annum commencing in 1996 for its
services in connection with managing the day-to-day business of the Operating
Partnership. The Incentive Partnership Management Fee for each fiscal year
will be payable from Cash Flow in the manner and priority set forth in
Article XI of the Operating Partnership Agreement.
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) Amended and Restated Agreement of Limited
Partnership of Mokapoke Limited Partnership
(2)(b) Certification and Agreement of Mokapoke Limited
Partnership
(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: March 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. 53110_1
MOKAPOKE LIMITED PARTNERSHIP
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
As of February ____, 1996
TABLE OF CONTENTS
ARTICLE I CONTINUATION OF PARTNERSHIP
1.01. Continuation
1.02. Name
1.03. Principal Executive Offices; Agent for
Service of Process
1.04. Term
1.05. Recording of Certificate
ARTICLE II DEFINED TERMS
ARTICLE III PURPOSE AND BUSINESS OF THE PARTNERSHIP
3.01. Purpose of the Partnership
3.02. Authority of the Partnership
ARTICLE IV REPRESENTATIONS, WARRANTIES AND
COVENANTS; DUTIES AND OBLIGATIONS
4.01. Representations, Warranties & Covenants
Relating to the Apartment Complex and the
Partnership
4.02. Duties and Obligations Relating to the
Apartment Complex and the Partnership
ARTICLE V PARTNERS, PARTNERSHIP INTERESTS AND
OBLIGATIONS OF THE PARTNERSHIP
5.01. Partners, Capital Contributions and
Partnership Interests
5.02. Return of Capital Contribution
5.03. Withholding of Capital Contributions
Upon Default...
5.04. Legal Opinions
5.05. Repurchase Obligation
ARTICLE VI CHANGES IN PARTNERS
6.01. Withdrawal of a General Partner
6.02. Admission of a Successor or Additional
General Partner
6.03. Effect of Bankruptcy, Death, Withdrawal,
Dissolution or Incompetence of a General
Partner...
ARTICLE VII ASSIGNMENT TO THE PARTNERSHIP
7.01. Assignment of Contracts, etc.
ARTICLE VIII RIGHTS, OBLIGATIONS AND POWERS OF THE
GENERAL PARTNER
8.01. Management of the Partnership
8.02. Limitations Upon the Authority of the
General Partner
8.03. Management Purposes
8.04. Delegation of Authority
8.05. General Partner or Affiliates Dealing
with Partnership
8.06. Other Activities
8.07. Liability for Acts and Omissions
8.08. Partnership Status..............................
8.09. Construction of the Apartment Complex,
Construction Cost Overruns, Operating
Deficits
8.10. Development Fee
8.11. Incentive Partnership Management Fee
8.11.1 Asset Management Fee
8.12. Withholding of Fee Payments
8.13. Removal of the General Partner
8.14. Selection of Management Agent
8.15. Removal of the Management Agent
8.16. Replacement of the Management Agent
8.17. Subordinated Loans to the Partnership
8.18. Reserve Account:
8.19. Guaranty of General Partner's Obligations
ARTICLE IX TRANSFERS OF, AND RESTRICTIONS ON
TRANSFERS OF INTERESTS OF LIMITED PARTNERS
9.01. Purchase for Investment
9.02. Restrictions on Transfer of Limited Partners' Interests
9.03. Admission of Substitute Limited Partners
9.04. Rights of Assignee of Partnership Interest....
ARTICLE X RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
10.01. Management of the Partnership
10.02. Limitation on Liability of Limited Partners
10.03. Other Activities
10.04. Ownership by Limited Partner of Corporate
General Partner or Affiliate
ARTICLE XI ALLOCATION OF TAXABLE INCOME, TAX LOSSES,
TAX CREDITS AND CASH DISTRIBUTIONS
11.01. Allocation of Taxable Income, Tax Losses
and Tax Credits
11.02. Allocation of Taxable Income and Tax
Losses from Capital Transactions
11.03. Distribution of Cash Flow
11.04. Distributions of Distributable Proceeds
from Capital Transactions and Distributable Proceeds from
Refinancings
11.05. Allocations Among Partners
11.06. Qualified Income Offset
11.07. Minimum Gain Allocation
11.08. Regulatory Allocations
11.09. Partners' Partnership Non-recourse
Liabilities
11.10. Tax Allocations: Code Section 704(c)
11.11. Tax Matters Partner
11.12. Capital Accounts
11.13. Authority of General Partner to Vary
Allocations to Preserve and Protect
Partner's Intent
ARTICLE XII SALE, DISSOLUTION AND LIQUIDATION
12.01. Dissolution of the Partnership
12.02. Winding Up and Distribution
ARTICLE XIII BOOKS AND RECORDS, ACCOUNTING TAX
ELECTIONS, ETC.
13.01. Books and Records
13.02. Bank Accounts
13.03. Accountants
13.04. Reports to Partners
13.05. Section 754 Elections
13.06. Fiscal Year and Accounting Method
ARTICLE XIV AMENDMENTS
14.01. Proposal and Adoption of Amendments
ARTICLE XV CONSENTS, VOTING AND MEETINGS
15.01. Method of Giving Consent
15.02. Submissions to Limited Partners
15.03. Meetings; Submissions of Matters for Voting
ARTICLE XVI GENERAL PROVISIONS
16.01. Burden and Benefit
16.02. Applicable Law
16.03. Counterparts
16.04. Separability of Provisions
16.05. Entire Agreement
16.06. Liability of the Investment Partnership
16.07 Environmental Protection
16.08. Notices to the Investment Partnership
16.09. Notices to the General Partner
MOKAPOKE LIMITED PARTNERSHIP
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
This Amended and Restated Agreement of Limited Partnership is made
and entered into as of the ____ day of __________, 1996, by and among the
undersigned parties.
WHEREAS, as of JULY 29, 1994, R.T.M. LIMITED PARTNERSHIP, as the
General Partner and Tevis Margolis and Robert Margolis, individual residents
of the State of Maryland as the Limited Partners (the "Withdrawing Limited
Partners"), executed a Limited Partnership Agreement of Mokapoke Limited
Partnership (the "1994 Agreement") for the formation of Mokapoke Limited
Partnership (the "Partnership"), pursuant to the Maryland [Revised Uniform
Limited Partnership Act] (the "Act"). A Certificate of Limited Partnership
was filed with the Maryland State Department of Assessments and Taxation on
August 1, 1994 (the "Certificate"); and
WHEREAS, the Partnership has been formed to acquire, rehabilitate,
own, maintain and operate a 30-unit multi-family apartment complex intended
for rental to elderly individuals 62 years of age or older and/or
handicapped individuals of low and moderate income, and one of which will be
utilized as the residence of the on-site manager of the Apartment Complex]
known as Clarke Manor Apartments, and located in Pocomoke City, Maryland
(the "Apartment Complex"); and
WHEREAS, the Partnership has acquired title to the Apartment Complex
subject to mortgages and other liens securing a permanent loan; and
WHEREAS, the parties hereto now desire to enter into this Amended
and Restated Agreement of Limited Partnership to (i) continue the
Partnership; (ii) admit Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, to the Partnership as a Limited Partner, and BCTC 94, a
Delaware corporation, to the Partnership as the Special Limited Partner;
(iii) withdraw the Withdrawing Limited Partners from the Partnership; (iv)
reassign Interests in the Partnership; and (v) set forth all of the
provisions governing the Partnership.
NOW, THEREFORE, in consideration of the foregoing, of mutual
promises of the parties hereto and of other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged, the parties
hereby agree to continue the Partnership pursuant to the Act, as set forth
in this Amended and Restated Agreement of Limited Partnership, which reads
in its entirety as follows:
ARTICLE I
CONTINUATION OF PARTNERSHIP
1.01. Continuation. The undersigned hereby continue the
Partnership as a limited partnership under the Act.
1.02. Name. The name of the Partnership is Mokapoke Limited
Partnership.
1.03. Principal Executive Offices; Agent for Service of Process.
The principal executive and record office of the Partnership and the
resident agent for service of process shall be William H. Holden, Jr., Esq.,
4400 East-West Highway, Bethesda, Maryland 20814. The Partnership may
change the location of its principal executive office to such other place or
places as may hereafter be determined by the General Partner. The General
Partner shall promptly notify all other Partners of any change in the
principal executive office. The Partnership may maintain such other offices
at such other place or places as the General Partner may from time to time
deem advisable.
1.04. Term. The term of the Partnership commenced as of July 29,
1994 and shall continue until December 31, 2046, unless the Partnership is
sooner dissolved in accordance with the provisions of this Agreement.
1.05. Recording. Upon the execution of this Amended and Restated
Agreement of Limited Partnership by the parties hereto, the General Partner
shall take all necessary action required by law to perfect and maintain the
Partnership as a limited partnership under the laws of the State and to
effectuate the admission of the Investment Partnership and BCTC 94, Inc. as
Limited Partners and the withdrawal of the Withdrawing Limited Partners
hereunder, and shall register the Partnership under any assumed or
fictitious name statute or similar law in force and effect in the State.
ARTICLE II
DEFINED TERMS
In addition to the abbreviations of the parties set forth in the
preamble to this Agreement, the following defined terms used in this
Agreement shall have the meanings specified below:
"Accountants" means such firm of independent certified public
accountants as may be engaged by the General Partner, with the Consent of
BCTC 94, Inc., to prepare the Partnership income tax returns and to be
responsible for the Partnership's audit and tax matters reporting
obligations under Section 13.04 hereof.
"Act" means the Revised Uniform Limited Partnership Act of the State
of Maryland, as amended from time to time during the term of the
Partnership.
"Actual Credit" means as of any point in time, the total amount of
the Tax Credits actually allocated by the Partnership to the Investment
Partnership, representing ninety-nine percent (99%) of the Tax Credits
actually claimed by the Partnership, as shown on the applicable tax return
of the Partnership.
"Admission Date" means the date upon which the Investment
Partnership is admitted to the Partnership.
"Affiliate" means any Person that directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with a General Partner, or with another designated Person, as the
context may require.
"Affiliated Limited Partnership" means any limited partnership,
other than the Partnership, in which the General Partner or an Affiliate of
a General Partner is a general partner and the Investment Partnership or an
Affiliate of the Investment Partnership is a limited partner.
"Agency" means the State of Maryland Department of Housing and
Community Development Administration in its capacity as the designated
agency of the State of Maryland to allocate Low-Income Housing Tax Credits,
acting through any authorized representative.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as amended from time to time.
"Apartment Complex" means the land owned by the Partnership located
on Linden Avenue in Pocomoke City, Maryland, and the 30-unit multi-family
rental housing development and other improvements constructed and
rehabilitated thereon, and owned and operated therein by the Partnership,
and known as, Clarke Manor Apartments.
"Applicable Percentage" has the meaning given to it in Section 42(b)
of the Code.
"Asset Management Fee" means the fee payable by the Partnership to
Boston Capital, or an Affiliate thereof, pursuant to Section 8.11.1.
"Bankruptcy" or "Bankrupt" as to any Person means (a) the entry of
an order for relief (or similar court order) against such Person which
authorizes a case brought under Chapter 7, 11 or 13 of Title 11 of the
United States Code to proceed; (b) the commencement of a federal, state or
foreign bankruptcy, insolvency, reorganization, arrangement or liquidation
proceeding by such Person; (c) the commencement of a federal, state or
foreign bankruptcy, insolvency, reorganization, arrangement or liquidation
proceeding against such Person if such proceeding is not dismissed within
sixty (60) days after the commencement thereof; (d) the entry of a court
decree or court order which remains unstayed and in effect for a period of
thirty (30) consecutive days: (i) adjudging such Person insolvent under any
federal, state or foreign law relating to bankruptcy, insolvency,
reorganization, arrangement, liquidation, receivership or the like; (ii)
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of, or in respect of, such Person or his
properties under any federal, state or foreign law relating to insolvency,
reorganization, arrangement, liquidation, receivership or the like; (iii)
appointing a receiver, liquidator, assignee, trustee, conservator, or
sequester (or other similar official) of such Person, or of all, or of a
substantial part, of such Person's properties; or (iv) ordering the winding
up, dissolution or liquidation of the affairs of such Person; (e) the
written consent by such Person to the institution against it of any
proceeding of the type described in subsection (a), (b), (c) and (d); (f)
the written consent by such Person to the appointment of a receiver,
liquidator, assignee, trustee, conservator or sequester (or other similar
official) of such Person, or of all, or of a substantial part, of its
properties; (g) the making by such Person of an assignment for the benefit
of creditors; (h) the admission in writing by such Person of its inability
to pay its debts generally as they come due; (i) the taking of any corporate
or other action by such Person in furtherance of any of the foregoing; or
(j) if such Person becomes insolvent by the making of any act or the making
of any transfer, or otherwise, as "insolvency" is or may be defined pursuant
to the Federal Bankruptcy Code, the Federal Bankruptcy Act, the Uniform
Fraudulent Conveyances Act, any state or federal act or the ruling of any
court.
"BCTC, 94" means BCTC 94, Inc., a Delaware corporation, which is the
Special Limited Partner of the Partnership.
"Book Depreciation" has the meaning set forth in Section 11.12C.
"Book Profits and Losses" means the Taxable Income or Tax Losses of
the Partnership, adjusted for purposes of determining and maintaining the
Partners' Capital Accounts as provided in Section 11.12.
"Boston Capital" means Boston Capital Partners, Inc., a
Massachusetts corporation.
"Boston Capital Loan" means that certain loan in the amount of
$306,551 made by the Investment Partnership to the Partnership as evidenced
by a Demand Promissory Note dated December 15, 1995 and the Loan and
Security Agreement dated as of December 15, 1995, between the Partnership
and the Investment Partnership and secured by that certain Guaranty dated as
of December 15, 1995, from Tevis Margolis and Robert Margolis in favor of
the Investment Partnership.
"Breakeven Confirmation" means the date upon which the Investment
Partnership receives a copy of the federal income tax return of the
Partnership for the Partnership fiscal year in which the Breakeven Point
shall have occurred.
"Breakeven Point" means the first time at which, as certified by the
General Partner to the Investment Partnership 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 operation occurring after the later to occur of (i) the
Admission Date or (ii) Final Closing during which the rental income
(including any government subsidies) of the Partnership actually received on
a cash basis (excluding prepaid rent) for each of such three (3) months
shall have exceeded all the Partnership's operating 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 the Permanent 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 General Partner)
of those seasonal expenses (such as utilities and maintenance expense) which
might reasonably be expected to be incurred on an unequal basis during a
full annual period of operation, and (iii) be adjusted, if necessary, so
that the expenses of real estate taxes and insurance are based on the
General Partner's estimate of the full value of the Apartment Complex after
completion of construction.
"Capital Account" means the capital account of a Partner as
described in Section 11.12.
"Capital Contribution" with respect to any Partner, means the total
amount of money and the initial Gross Asset Value of any property (other
than money) contributed or agreed to be contributed, as the context
requires, to the Partnership by each Partner pursuant to the terms of this
Agreement. Any reference to the Capital Contribution of a Partner shall
include the Capital Contribution made by a predecessor holder of the
Interest of such Partner.
"Capital Transaction" means the sale, exchange or disposition (other
than leasing in the ordinary course of business) of any Partnership property
that is not in the ordinary course of business, or casualty damage to or
condemnation of any Partnership property, or any substantial interest
therein or portion thereof.
"Carryover Certification" means the date upon which the Investment
Partnership shall have received, in a form and in substance satisfactory to
the Investment Partnership, the certification of the Accountants that as of
a date no later than December 31, 1995, the Partnership had incurred
capitalizable costs with respect to the Apartment Complex of at least ten
percent (10%) of the Partnership's reasonably expected basis in the
Apartment Complex as of December 31, 1997, 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 year or other applicable
period, (a) all Revenues received by the Partnership during such period,
plus (b) any amounts which the General Partner, with the Consent of BCTC 94,
and subject to the approval of the Lender, if required, releases from the
Reserve Account as being no longer necessary to hold as part of the Reserve
Account, less (i) all operating expenses and obligations of the Partnership
paid or payable (on a thirty-day current basis) during the applicable
period, including without limitation escrow deposits for taxes and
insurance, maintenance and repairs, (ii) all sums due or currently required
to be paid under the terms of the Permanent Loan or any other third-party
indebtedness of the Partnership, and (iii) all amounts from Revenues, if
any, added or required to be added to the Reserve Account during such
period. In no event will deductions in determining Cash Flow pursuant to
clauses (i) and (ii) above include payments made on account of: the Asset
Management Fee, amounts due on any Subordinated Loans, the Incentive
Partnership Management Fee, and/or the Deferred Development Fee.
Cash Flow shall be determined separately for each fiscal year and
shall not be cumulative.
"Certificate" means the Certificate of Limited Partnership dated
August 1, 1994 and filed with the Maryland State Department of Assessments
and Taxation on August 2, 1994, or any certificate of limited partnership or
any other instrument or document which is required under the law of the
State to be signed and sworn to by the Partners of the Partnership and filed
in the appropriate public offices within the State to perfect or maintain
the Partnership as a limited partnership under the laws of the State, to
effect the admission, withdrawal or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any corresponding provision or provisions of succeeding law.
"Compliance Period" has the meaning ascribed to such term in Section
42 of the Code.
"Consent" means the prior written consent or approval of BCTC 94
and/or the Investment Partnership and/or any other Partner, as the context
may require, to do the act or thing for which the consent is solicited.
"Contractor" means Unit Services, Inc., a Maryland corporation, in
its capacity as the general construction contractor for the Apartment
Complex.
"Construction Contract" means that certain Construction Contract
Agreement dated December 13, 1995 in the amount of $144,000.00 (including
all exhibits and attachments thereto) entered into between the Partnership
and the Contractor pursuant to which the Apartment Complex is being
rehabilitated.
"Cost Certification" means the date upon which each Limited Partner
shall have received the written certification of the Accountants, in a form
and in substance satisfactory to Boston Capital, as to the itemized amounts
of the construction and development costs of the Apartment Complex and the
Eligible Basis and Applicable Percentage (in each case, as defined in
Section 42(d) of the Code), pertaining to each building in the Apartment
Complex.
"Counsel" or "Counsel for the Partnership" shall mean Law Offices of
William H. Holden, Jr. or such other attorney or law firm upon which the
Investment Partnership and the General Partner shall agree; provided,
however, that if any section of this Agreement either (i) designates
particular counsel for the purpose described therein, or (ii) provides that
counsel for the purpose described therein shall be chosen by another method
or by another Person, then such designation or provision shall prevail over
this general definition.
"Credit Recovery Loans" has the meaning set forth in Section
5.01(d)(iii).
"Credit Shortfall" means the amount by which the Actual Credit is
less than the Projected Credit (or Revised Projected Credit) for any year or
portion thereof.
"Debt Service" means scheduled principal and interest payments on
indebtedness under the Permanent Loan.
"Developer" means R.T.M., Inc., a Maryland corporation.
"Deferred Development Fee" means any portion of the Development Fee
not actually paid to and received by the Developer from the Installments,
the payment of which is deferred and payable only in accordance with
Sections 5.01(a), 11.03(A)(b) and 11.04(A)(a) hereof.
"Development Fee" means the fee payable by the Partnership to the
Developer pursuant to Section 8.10 of this Agreement.
"Development Sources" means the aggregate of: (a) the proceeds of
the Permanent Loan; (b) the Capital Contributions of the General Partner, as
set forth in Section 5.01(a) of this Agreement; (c) not more than $306,561
of the Capital Contributions of the Investment Partnership to the
Partnership; and (d) any rental income of the Partnership for the period
prior to Final Closing.
"Distributable Proceeds from Capital Transactions" means the excess
of all cash receipts and other consideration arising from the sale or other
disposition of all or any portion of the Apartment Complex or any proceeds
realized from condemnation, casualty, or title defect, but excluding
proceeds, if any, from rental interruption insurance or a temporary
condemnation in the nature of a lease, over the sum of the following, to the
extent paid out of such cash receipts or other consideration: (i) the
amount of cash disbursed or to be disbursed in connection with or as an
expense of such sale or other disposition, (ii) the amount necessary for the
payment of all debts and obligations of the Partnership arising from or
otherwise related to such sale or other disposition or to which the
Apartment Complex is subject and which are otherwise then due (other than
debts and obligations owed to the Partners and their Affiliates, which shall
be satisfied in the order set forth in Section 11.04), and (iii) any amounts
set aside by the General Partner for reserves which the General Partner
deems reasonably necessary for contingent, unmatured or unforeseen
liabilities of the Partnership.
"Distributable Proceeds from Refinancings" means the excess of the
gross proceeds of any borrowing by the Partnership over the sum of the
following, to the extent paid out of such gross proceeds: (i) any amounts
disbursed to repay then existing loans of the Partnership and to pay and
provide for all debts and obligations of the Partnership then to be paid or
which are otherwise then due (other than debts and obligations owed to the
Partners and their Affiliates, which shall be satisfied in the order set
forth in Section 11.04), (ii) all reasonable expenses of such borrowings,
including, without limitation, all commitment fees, brokers' commissions,
and attorneys' fees, (iii) all amounts paid to improve the Apartment Complex
or for any other purpose in order to satisfy conditions to or established in
connection with such borrowings, and (iv) any amounts used to meet the
operating expenses of the Apartment Complex or set aside by the General
Partner for reserves which the General Partner deems reasonably necessary
for contingent, unmatured, or unforeseen liabilities of the Partnership.
"Eligible Basis" has the meaning given to it in Section 42(b) of the
Code.
"Excess Development Costs" means all funds in excess of the
Development Sources which are required to (i) complete rehabilitation of the
Apartment Complex, including paying any final cost overruns and the cost of
any change orders which have been approved by the Permanent Lender and which
are not funded from Development Sources, (ii) achieve Substantial
Completion, (iii) achieve Final Closing and satisfy any escrow deposit
requirements which are conditions to the Final Closing, including without
limitation, any amounts necessary for local taxes, utilities, insurance
premiums and other amounts which are required (provided, however, that if
any such deposits are made by the General Partner and the funds, or any
portion thereof, subsequently are released from such deposit, the funds so
released shall be paid to the General Partner), (iv) pay any applicable loan
assessment fees, discounts or other costs and expenses incurred by the
Partnership as a result of the occurrence of the Final Closing, (v) make
the required deposit of $12,408 (less any withdrawals authorized by FmHA)
into the Reserve Account for Replacements, and (vi) pay any Operating
Deficits incurred by the Partnership prior to the occurrence of Breakeven
Point.
"Extended Use Agreement" means the Declaration of Land Use
Restrictive Covenants, which is intended to meet the definition of a "long
term commitment to low-income housing" as required by Section 42(h)(b) of
the Code and the requirements of the Agency's Low-Income Housing Tax Credit
Program.
"FmHA means the United States of America, acting through the Farmers
Home Administration, now known as Rural Economic and Community Development
acting on behalf of the Rural Housing Services, as maker of the Permanent
Loan.
"Final Closing" means the occurrence of the funding and closing of a
Permanent Loan .
"40-60 Set-Aside Test" means the Minimum Set-Aside Test whereby at
least 40% of the units in the Apartment Complex must be occupied by
individuals, with incomes of 60% or less of area median income, as adjusted
for family size.
"General Partner" means R.T.M. Limited Partnership a Maryland
limited partnership, and any other Person or entity admitted as a general
partner pursuant to this Agreement, and their respective successors pursuant
to this Agreement, including particularly the provisions of Section 6.03 and
8.13.
"General Partner's Special Capital Contribution" has the meaning
ascribed to such term in Section 5.01 of this Agreement.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as adjusted pursuant
to Section 11.12B.
"Incentive Partnership Management Fee" means the fee payable by the
Partnership to the General Partner pursuant to Section 8.11 of this
Agreement.
"Initial 100% Occupancy Date" means the first date, after the
completion of construction, upon which 100% of the apartment units in the
Apartment Complex shall have been leased to, and occupied by, qualified
tenants under executed Agency and/or FmHA approved leases, if any such
approval is applicable.
"Installment" means an Installment of the Investment Partnership's
Capital Contribution paid or payable to the Partnership pursuant to Section
5.01.
"Interest" or "Partnership Interest" means the ownership interest of
a Partner in the Partnership at any particular time, including the right of
such Partner to any and all benefits to which such Partner may be entitled
as provided in this Agreement and in the Act, together with the obligations
of such Partner to comply with all the terms and provisions of this
Agreement and of said Act. Such Interest of each Partner shall, except as
otherwise specifically provided herein, be that percentage of the aggregate
of such benefit or obligation specified by Section 5.01 as such Partner's
Percentage Interest.
"Invested Amount" means (i) as to the Investment Partnership, an
amount equal to the paid-in Capital Contribution of the Investment
Partnership divided by .73 and (ii) as to any other Partner, an amount equal
to its paid-in Capital Contribution.
"Investment Partnership" means Boston Capital Tax Credit Fund IV
L.P. (Series 25) a Delaware limited partnership, which is a Limited Partner
of the Partnership.
"Land" means that certain 2.88 acre parcel of land located on Linden
Avenue in Pocomoke City, Worcester County, Maryland, and more fully
described in the Permanent Mortgage, upon which the Apartment Complex is
located.
"Limited Partner(s)" means the Investment Partnership and/or BCTC
94, or any other Limited Partner in such Person's capacity as a limited
partner of the Partnership.
"Liquidator" means the General Partner or, if there are none at the
time in question, such other Person who may be appointed in accordance with
applicable law and who shall be responsible for taking all action necessary
or appropriate to wind up the affairs of, and distribute the assets of, the
Partnership upon its dissolution.
"Low-Income Housing Tax Credit" means the low-income housing tax
credit allowed for low-income housing projects pursuant to Section 42 of the
Code.
"Management Agent" means HAI Management, Inc., or such other
property management company acceptable to BCTC 94.
"Management Agreement" means the agreement between the Partnership
and the Management Agent providing for the management of the Apartment
Complex.
"Minimum Gain" means the amount determined by computing, with
respect to each non-recourse liability of the Partnership, the amount of
Taxable Income, 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 thereof, and by then aggregating the amounts
so computed, in accordance with Treasury Regulation 1.704-2(d). For
purposes of determining the amount of such Taxable Income with respect to a
liability, the adjusted basis, for federal income tax purposes, of the asset
subject to the liability shall be allocated among all the liabilities that
the asset secures in the manner set forth in Treasury Regulation 1.704-
2(d)(2) (or successor provisions). If Partnership property subject to one
or more non-recourse liabilities of the Partnership is, under Treasury
Regulation 1.704-1(b)(2)(iv)(d),(f), or (r), properly reflected on the books
of the Partnership at a book value that differs from the adjusted tax basis
of such property, then the determination of Minimum Gain shall be made with
reference to such book value.
"Minimum Set-Aside Test" means the set-aside test selected by the
Partnership pursuant to Section 42(g) of the Code with respect to the
percentage of units in its Apartment Complex to be occupied by tenants with
incomes equal to no more than a certain percentage of area median income.
The Partnership has selected or will select the 40-60 Set-Aside Test as the
Minimum Set-Aside Test.
"Net Capital Contribution" means an amount equal to a Partner's
paid-in Capital Contribution, less the aggregate amount of cash
distributions, if any, made to such Partner hereunder.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(c) of the Treasury Regulations. The amount of Nonrecourse
Deductions for a Fiscal Year of the Partnership equals the net increase, if
any, in the amount of Minimum Gain during that Fiscal Year, determined
according to the provisions of Treasury Regulation Section 1.704-2(c).
"Notice" means a writing containing the information required by this
Agreement to be communicated to a Partner and sent by registered or
certified mail, postage prepaid, return receipt requested, to such Partner
at the last known address of such Partner, the date of registry thereof or
the date of the certification receipt therefor being deemed the date of such
Notice; provided, however, that any written communication containing such
information sent to such Partner actually received by such Partner shall
constitute Notice for all purposes of this agreement.
"Operating Deficit" means the amount by which the income of the
Partnership from rental payments made by tenants of the Apartment Complex
and all other income of the Partnership, including unrestricted earnings on
reserve or escrow funds (other than proceeds of any loans to the Partnership
and investment earnings on funds on deposit in the Reserve Account for a
particular period of time, is exceeded by the sum of all the operating
expenses, including all Debt Service payments, operating and maintenance
expenses, deposits into the Reserve Account, the Permanent Lender's fee
payments, and all other Partnership obligations or expenditures, excluding
payments for rehabilitation of the Apartment Complex and fees and other
expenses and obligations of the Partnership to be paid from the Capital
Contributions of the Investment Partnership to the Partnership pursuant to
this Agreement, during the same period of time, but excluding any fees
payable from Cash Flow.
"Operating Deficit Loan" means a loan made pursuant to Section
8.09(b).
"Partner" means any General Partner or any Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning attributed
to "partner loan nonrecourse debt minimum gain" in Treasury Regulation
1.704-2(i)(3).
"Partner Loan Nonrecourse Deductions" means any deductions of the
Partnership that are attributable to a nonrecourse liability for which a
Partner bears the risk of loss within the meaning of Treasury Regulation
Section 1.704-2(i).
"Partnership" means Mokapoke Limited Partnership.
"Partnership Agreement" means this Amended and Restated Agreement of
Limited Partnership, as amended from time to time.
"Percentage Interest" means the percentage Interest of each Partner
as set forth in Section 5.01.
"Permanent Lender" means FmHA
"Permanent Loan Documents" means those certain documents evidencing
the Permanent Loan including, but not limited to, the Assumption Agreement
dated December 14, 1995, pursuant to which the Partnership assumed the
Promissory Note in the principal amount of $1,203,600 dated December 10,
1986 from Pocomoke City Limited Partnership ("Pocomoke") to the Permanent
Lender and the Real Estate Mortgage from Pocomoke to the Permanent Lender
dated December 10, 1986; the two (2) Loan Agreements dated September 7, 1995
between the Partnership and the Permanent Lender; the Promissory Note in the
principal amount of $37,150 dated December 14, 1995 from the Partnership to
the Permanent Lender; and two (2) Interest credit and Rental Assistance
Agreements dated December 14, 1995 between the Partnership and the Permanent
Lender.
"Permanent Mortgage" means collectively (i) that certain Real Estate
Mortgage dated December 10, 1986 executed and delivered by Pocomoke to the
Permanent Lender and recorded in the Land Records, Worcester County,
Maryland in Book 1266, Volume 297 and assumed by the Partnership pursuant to
the Assumption Agreement between the Partnership and the Permanent Lender at
the Final Closing and (ii) that certain Partnership Real Estate Mortgage for
Maryland dated December 14, 1995, executed and delivered by the Partnership
to the Permanent Lender at the Final Closing and recorded in the Land
Records, Worcester County, Maryland, constituting a first lien on the
Apartment Complex and securing the Permanent Loan.
"Permanent Mortgage Amount" means the principal amount of the
Permanent Loan outstanding at the Final Closing, before any reduction
resulting from repayment(s) of principal thereof.
"Permanent Loan" means that certain permanent mortgage loan made by
the Permanent Lender to the Partnership in the aggregate amount of
$1,232,276 consisting of (i) the permanent mortgage loan in the principal
amount of $1,203,000 made by the Permanent Lender to Pocomoke on December
10, 1986, and assumed by the Partnership on December 14, 1995, and (ii) the
permanent mortgage loan in the principal amount of $37,170 made by the
Permanent Lender to the Partnership on December 14, 1995.
"Person" means any individual, partnership, corporation, trust or
other entity.
"Project Documents" means and includes the Permanent Loan Documents,
the Regulatory Agreement, if any, Extended Use Agreement, the Management
Agreement, the Rental Assistance Agreement, and all other instruments
delivered to (or required by) the Permanent Lender or the Agency and all
other documents relating to the Apartment Complex and by which the
Partnership is bound, as amended or supplemented from time to time.
"Projected Credit" means Low-Income Housing Tax Credits in the
amount of $58,643 for 1996, $78,190 per year for each of the years 1997
through 2005, and $19,548 for 2006, which the General Partner has projected
to be the total amount of the Tax Credits which will be allocated to the
Investment Partnership by the Partnership, constituting ninety-nine percent
(99%) of the Tax Credits which are projected to be available to the
Partnership; provided, however, that if the Actual Credit for 1996 is
greater than (or less than) $58,643, the Projected Credit for the year 2006
shall be reduced (increased) by an amount equal to the amount by which the
Actual Credit for 1996 exceeds (or is less than) $58,643.
"Regulatory Agreement" means the Regulatory Agreement, if any, to be
entered into between the Partnership and the Agency setting forth certain
terms and conditions under which the Apartment Complex is to be operated.
"Rent Restriction Test" means the test pursuant to Section 42 of the
Code whereby the gross rent charged to tenants of the low-income units in
the Apartment Complex cannot exceed 30% of the qualifying income levels of
those units.
"Rental Assistance Agreement" means the Rental Assistance Agreement
entered into be and between the Partnership and the Permanent Lender
effective as of December 1, 1995, as it may be amended from time to time and
any successor agreement.
"Reserve Account" means the reserve fund for replacements with
respect to the Apartment Complex as established pursuant to the provisions
of Section 5(a) of the Loan Agreement between the Partnership and the
Permanent Lender and Section 8.18(a) of this Agreement.
"Revenues" means all cash receipts of the Partnership during any
period except for Capital Contributions, proceeds from the liquidation, sale
or refinancing of Partnership property or of a Capital Transaction, or the
proceeds of any loan to the Partnership.
"Revised Projected Credit" has the meaning set forth in Section
5.01(d)(i).
"Share of Minimum Gain" means for each Partner, the excess of (1)
the sum of (a) the aggregate Non-Recourse Deductions allocated to such
Partner (and such Partner's predecessors in interest) up to that time and
(b) the aggregate distributions to such Partner (and such Partner's
predecessors in interest) up to that time of proceeds of a non-recourse
liability that are allocable to an increase in Partnership Minimum Gain over
(2) the sum of (a) such Partner's (and such Partner's predecessors' in
interest) aggregate share of the net decrease in Partnership Minimum Gain up
to that time and (b) such Partner's (and such Partner's predecessors' in
interest) aggregate share of the decreases up to that time in Partnership
Minimum Gain resulting from revaluations of Partnership Property subject to
one or more non-recourse liabilities of the Partnership, as more fully set
forth in Treasury Regulation 1.704-2(g).
"State" means the State of Maryland.
"State Designation" means, with respect to the Apartment Complex,
the final allocation by the Agency of Low-Income Housing Tax Credits, as
evidenced by the receipt by the Partnership of IRS Form 8609 executed by the
Agency as to all buildings in the Apartment Complex. In the event that
State Designation is anticipated to occur more than 60 days after the
Agency's receipt of Cost Certification, then, for purposes of Section
5.01(c) hereof, State Designation shall mean evidence of the Agency's
receipt of Cost Certification, provided that the Partnership has received a
valid Carryover Allocation of 1995 Tax Credits which remains in full force
and effect.
"Subordinated Loan" means any loan made by the General Partner to
the Partnership pursuant to Section 8.17.
"Substantial Completion" means the date upon which the
rehabilitation of the Apartment Complex has been completed as evidenced by
the approval of the State Architect from the Permanent Lender and the
receipt by the Partnership of all necessary certificates of occupancy from
the applicable governmental jurisdiction(s) or authority(ies) for one
hundred percent (100%) of the single family dwelling units in the Apartment
Complex; provided, however, that Substantial Completion shall not be deemed
to have occurred if on such date any liens or other encumbrances as to title
to the Land and the Apartment Complex exist, other than those securing the
Permanent Loan and/or those Consented to by the Investment Partnership.
"Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03.
"Syndication Expenses" means all expenditures classified as
syndication expenses pursuant to Treasury Regulation Section 1.709-2(B).
Syndication Expenses shall be taken into account in determining and
maintaining Capital Accounts pursuant to Section 11.12 of this Agreement at
the time they would be taken into account under the Partnership's method of
accounting if they were deductible expenses.
"Taxable Income" and "Tax Losses" means the Partnership's taxable
income or tax losses, respectively, for each fiscal year (or part thereof)
as determined for federal income tax purposes, including, where the context
requires, all items of income, gain, loss, deduction and credit which enter
into the computation thereof.
"Tax Credit" means the Low-Income Housing Tax Credit.
"Tax Credit Set Aside" means the date upon which the Partnership
received a carryover allocation of Tax Credits for a year no earlier than
1995, meeting the requirements of Section 42(b)(1)(E) of the Code and
Treasury Regulations for an allocation of Tax Credit for the building(s)
constituting the Apartment Complex in an annual dollar amount of not less
than $78,980, which carryover allocation shall not have been revoked prior
to the date on which the First Installment is paid. The Tax Credit Set
Aside for the Partnership was issued by the Agency through a Carryover
Allocation Agreement between the Agency and the Partnership dated December
21, 1995.
ARTICLE III
PURPOSE AND BUSINESS OF THE PARTNERSHIP
3.01. Purpose of the Partnership. The Partnership has been
organized principally to acquire, finance, rehabilitate, own, maintain,
operate and sell or otherwise dispose of the Apartment Complex, in order to
obtain long-term appreciation, cash income, Tax Credits and tax losses.
3.02. Authority of the Partnership. In order to carry out its
purpose, the Partnership is empowered and authorized to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of its purpose, and for
the protection and benefit of the Partnership, including but not limited to
the following:
(a) acquire ownership of the Land and the Apartment Complex
thereon;
(b) rehabilitate, operate, maintain, improve, buy, own, sell,
convey, assign, mortgage, rent or lease any real estate and any personal
property necessary to the operation of the Apartment Complex;
(c) provide housing, subject to the Minimum Set-Aside Test and
the Rent Restriction Test and consistent with the requirements of the
Project Documents so long as any Project Documents remain(s) in force;
(d) enter into any kind of activity, and perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to,
the accomplishment of the purposes of the Partnership;
(e) borrow money and issue evidences of indebtedness in
furtherance of the Partnership business and secure any such indebtedness by
mortgage, pledge, or other lien;
(f) maintain and operate the Apartment Complex, including hiring
the Management Agent (which Management Agent may be any of the Partners or
an Affiliate thereof) and entering into any agreement for the management of
the Apartment Complex during its rent-up and after its rent-up period;
(g) subject to the approval of the Agency and/or the Permanent
Lender, if required, and to other limitations expressly set forth elsewhere
in this Agreement, negotiate for and conclude agreements for the sale,
exchange, lease or other disposition of all or substantially all of the
property of the Partnership, or for the refinancing of any mortgage loan on
the property of the Partnership;
(h) enter into the Permanent Loan Documents with the Lender and
grant the Permanent Mortgage, enter into the Permanent Loan and all other
documents required by the Permanent Lender with respect to the Permanent
Loan, and the [Regulatory Agreement] with the Agency, providing for
regulations with respect to rents, profits, dividends and the disposition of
the Apartment Complex and the long-term use of the Apartment Complex for
low-income housing;
(i) rent dwelling units in the Apartment Complex from time to time,
in accordance with the provisions of the Code applicable to Low-Income
Housing Tax Credits and in accordance with applicable federal, state and
local regulations and the requirements of the Rental Assistant Agreement,
collecting the rents therefrom, paying the expenses incurred in connection
with the Apartment Complex, and distributing the net proceeds to the
Partners, subject to any requirements which may be imposed by the
[Regulatory Agreement] and the Permanent Loan Documents; and
(j) do any and all other acts and things necessary or proper in
furtherance of the Partnership business.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS;
DUTIES AND OBLIGATIONS
4.01. Representations, Warranties and Covenants Relating to the
Apartment Complex and the Partnership. As of the date hereof, the General
Partner hereby represents, warrants and covenants to the Partnership and to
the Partners that:
(a) the rehabilitation of the Apartment Complex has begun and
shall be completed in a timely and workmanlike manner in accordance with (i)
all applicable requirements of the Construction Contract and the Project
Documents, (ii) all applicable requirements of the Permanent Lender and all
appropriate governmental entities, and (iii) the scope of the rehabilitation
work for the Apartment Complex that have been or shall be hereafter approved
by the Permanent Lender and any applicable governmental entities, as such
Scope of Work may be changed from time to time with the approval of the
Permanent Lender and any applicable governmental entities, if such approval
shall be required;
(b) at the Final Closing and as of the date hereof, the Land was,
and is properly zoned for the Apartment Complex, all consents, permissions
and licenses required by all applicable governmental entities have been
obtained, and the Apartment Complex conformed and conforms to all applicable
federal, state and local land use, zoning, subdivision, environmental and
other governmental laws and regulations;
(c) all appropriate public utilities, including sanitary and
storm sewers, water, gas and electricity, are currently available to the
Land and located at the boundaries of the Land in public ways and are
operating properly for all units in the Apartment Complex and all roads
necessary for the full utilization of the Apartment Complex for its intended
purposes have been completed and the necessary rights of way thereof have
been acquired by the appropriate governmental authority exercising
jurisdiction thereon or have been dedicated to public use and accepted by
such governmental authority;
(d) at Final Closing and as of the date hereof, good and
marketable fee simple title to the Apartment Complex was and is held by the
Partnership, and an owner's and lender's title insurance policy (1992 ALTA
Form Loan Policy and 1992 ALTA Form Owner Policy, respectively) of a
financially responsible institution acceptable to the Permanent Lender and
to BCTC 94 were issued to the Partnership and the Permanent Lender,
respectively, insuring their respective interests as owner and lender, and,
(i) in the case of the Partnership, in the amount of the replacement cost of
the Apartment Complex, which amount shall not be less than the aggregate of
the Capital Contributions of the General Partner and the Investment
Partnership and (ii) in the case of the Permanent Lender, in the original
principal amount of its Permanent Loan, which title policies shall remain in
full force and effect, shall contain such affirmative coverage and
endorsements as BCTC 94 and the Permanent Lender shall reasonably require,
including without limitation, a non-imputation endorsement in favor of the
Investment Partnership and BCTC 94 shall have deleted therefrom the standard
exceptions for surveys and mechanics' liens, and shall be subject only to
the Permanent Mortgage and such easements, covenants, restrictions and such
other matters as are acceptable to BCTC 94 and the Permanent Lender;
(e) the General Partner is not aware of any default under any
agreement, contract, lease, or other commitment, or of any claim, demand,
litigation, proceedings or governmental investigation pending or threatened
against it, the Apartment Complex or the Partnership, or related to the
business or assets of the Partnership or of the Apartment Complex, which
claim, demand, litigation, proceeding or governmental investigation could
result in any judgment, order, decree, or settlement which would materially
and adversely affect the business or assets of the Partnership, the General
Partner, or of the Apartment Complex;
(f) except for the commitment fees paid to the Permanent Lender,
neither the General Partner nor any Affiliate of the General Partner or the
Partnership, has entered, or shall enter, into any agreement or contract for
the payment of any Permanent Loan discounts, additional interest, yield
maintenance or other interest charges or financing fees or any agreement
providing for the guarantee of payment of any such interest charges or
financing fees relating to the Permanent Loan;
(g) the execution of this Agreement, the incurrence of the
obligations set forth in this Agreement, and the consummation of the
transactions contemplated by this Agreement do not violate any provision of
law, any order, judgment or decree of any court binding on the Partnership,
the General Partner or either of them or their Affiliates, any provision of
any indenture, agreement, or other instrument to which the Partnership or
they or either of them is a party or by which the Partnership or the
Apartment Complex is affected, and is not in conflict with, and will not
result in a breach of or constitute a default under any such indenture,
agreement, or other instrument or result in creating or imposing any lien,
charge, or encumbrance of any nature whatsoever upon the Apartment Complex;
(h) the Construction Contract has been entered into between the
Partnership and the Contractor; no other consideration or fee shall be paid
to the Contractor, in its capacity as the Contractor, other than the amounts
set forth in the Construction Contract or as evidenced by change orders
approved by the Permanent Lender or as otherwise disclosed in writing to and
approved by the Investment Partnership; and all change orders that have been
submitted to date have been paid in full;
(i) neither the General Partner nor the Partnership has incurred any
financial responsibility with respect to the Apartment Complex prior to the
date of execution of this Agreement, other than that disclosed to the
Investment Partnership;
(j) at the time of Final Closing, at the time of execution of this
Agreement, and at Substantial Completion, the Partnership was, is and will
continue to be a valid limited partnership, duly organized under the laws of
the State, had, has and shall continue to have full power and authority to
acquire the Land and to construct, develop, operate and maintain the
Apartment Complex in accordance with the terms of this Agreement, and has
taken and shall continue to take all action under the laws of the State and
any other applicable jurisdiction that is necessary to protect the limited
liability of the Limited Partners and to enable the Partnership to engage in
its business;
(k) no restrictions on the sale or refinancing of the Apartment
Complex, other than the restrictions set forth in the the Permanent Loan
Documents, in the Regulatory Agreement, Extended Use Agreement, and as set
forth in this Agreement, exist as of the date hereof, and no such
restrictions shall, at any time while the Investment Partnership is a
Limited Partner, be placed upon the sale or refinancing of the Apartment
Complex;
(l) the Apartment Complex is being developed in a manner which
satisfies, and shall continue to satisfy, all restrictions, including tenant
income and rent restrictions, applicable to projects generating Low-Income
Housing Tax Credits under Section 42 of the Code;
(m) the Projected Credits are $58,643 for 1996 and $78,190 per
year of Low-Income Housing Tax Credits for each of the years 1997 through
2005 and $19,548 for 2006; provided, however, that if the Actual Credit for
1996 is greater than (or less than) $58,643 the Projected Credit for the
year 2006 shall be reduced (increased) by an amount equal to the amount by
which the Actual Credit for 1996 exceeds (or is less than) $58,643;
(n) the General Partner has obtained from the Agency, dated
December 21, 1995, a duly authorized, valid and binding carryover allocation
of Low-Income Housing Tax Credits as to the Apartment Complex in an amount
not less than $78,980 per year;
(o) the Partnership will satisfy all conditions to the Agency's
allocation of Tax Credits set forth in the Carryover Allocation dated
December 21, 1995 and all exhibits thereto and all other documents entered
into with the Agency, within the time periods specified and in each case to
the extent required to be satisfied as of the date hereof, and is in full
compliance with the Agency's requirements;
(p) after due inquiry, at the time of the execution of this
Agreement, the General Partner has fully complied with all applicable
material provisions and requirements of any and all purchase and/or lease
agreements, loan agreements, Project Documents and other agreements with
respect to the acquisition, development, financing, construction and
operation of the Apartment Complex; it shall take, and/or cause the
Partnership to take, all actions as shall be necessary to achieve and
maintain continued compliance with the provisions, and fulfill all
applicable requirements, of such agreements;
(q) the obligations of the General Partner will be guaranteed by
Tevis Margolis.
(r) the Partnership has received from the Internal Revenue
Service a waiver of the ten year hold requirement pursuant to Section
42(d)(b)(A) of the Code;
(s) The Partnership has received approval from the U.S.
Department of Housing and Urban Development and any state or local agency
(if required) for the transfer of physical assets from Pocomoke to the
Partnership;
(t) the General Partner shall cause the Partnership to incur within
a 24-month period, expenditures equal to at least the greater of (i) $3,000
per residential unit or (ii) 10% of the unadjusted basis of the buildings in
the Apartment Complex.
(u) the Partnership has received subsidy layering approval, if
required, from the U.S. Department of Housing and Urban Development or the
Agency.
4.02. Duties and Obligations Relating to the Apartment Complex and
the Partnership. The General Partner shall have the following duties and
obligations with respect to the Apartment Complex and the Partnership:
(a) all requirements shall be met which are necessary to obtain
or achieve (i) compliance with the Minimum Set-Aside Test, the Rent
Restriction Test, and any other requirements necessary for the Apartment
Complex to initially qualify, and to continue to qualify, for Tax Credits,
including all requirements set forth in the [Regulatory Agreement], the
Extended Use Agreement, (ii) issuance of all necessary certificates of
occupancy, including all governmental approvals required to permit occupancy
of all of the apartment units in the Apartment Complex, (iii) Substantial
Completion and Final Closing, and (iv) compliance with all provisions of the
Project Documents;
(b) while conducting the business of the Partnership, the General
Partner shall not act in any manner which it knows or should have known
after due inquiry will (i) cause the termination of the Partnership for
federal income tax purposes without the Consent of the Investment
Partnership, or (ii) cause the Partnership to be treated for federal income
tax purposes as an association taxable as a corporation;
(c) the Apartment Complex shall be managed upon Substantial
Completion so that (i) no less than eighty per cent (80%) of the gross
income from the Apartment Complex in every year is rental income from
dwelling units in the Apartment Complex used to provide living
accommodations not on a transient basis, (ii) the rental of all units in the
Apartment Complex (except for the property manager's unit) complies with the
tenant income limitations and other restrictions under the Rent Restriction
Test, the Rental Assistance Agreement and as set forth in the Regulatory
Agreement and the Extended Use Agreement and all applicable documents
entered into in connection with the Permanent Loan, and (iii) one hundred
percent (100%) of the units in the Apartment Complex (except for the
property manager's unit) are occupied or held for occupancy by individuals
with incomes of sixty percent (60%) or less of area median income, as
adjusted for family size;
(d) the General Partner shall exercise good faith in all
activities relating to the conduct of the business of the Partnership,
including the development, operation and maintenance of the Apartment
Complex, and shall take no action with respect to the business and property
of the Partnership which is not reasonably related to the achievement of the
purpose of the Partnership;
(e) all of (i) the fixtures, maintenance supplies, tools,
equipment and the like now and to be owned by the Partnership or to be
appurtenant to, or to be used in the operation of the Apartment Complex, as
well as (ii) the rents, revenues and profits earned from the operation of
the Apartment Complex, will be free and clear of all security interests and
encumbrances except for the Permanent Loan and the Permanent Mortgage, and
any additional security agreements executed in connection therewith;
(f) the General Partner will execute on behalf of the Partnership
all documents necessary to elect, pursuant to Sections 732, 743 and 754 of
the Code, to adjust the basis of the Partnership's property upon the request
of the Investment Partnership, if, in the sole opinion of the Investment
Partnership, such election would be advantageous to the Investment
Partnership and any such elections (including elections made at the
direction or with the consent of the Investment Partnership) shall not
reduce the obligations of the General Partner pursuant to Section 5.01(d);
(g) the General Partner guarantees the repayment by the
Partnership of any Credit Recovery Loan from the Investment Partnership to
the Partnership made pursuant to Section 5.01(d)(iii), and payment by the
Partnership of the Development Fee pursuant to Section 8.10;
(h) the General Partner shall comply and cause the Partnership to
comply with the provisions of all applicable governmental and contractual
obligations;
(i) the General Partner shall be responsible for the payment of
any fines or penalties imposed by the Agency or the Permanent Lender
pursuant to the Project Documents and any documents executed in connection
with obtaining Tax Credits (other than with respect to payments of principal
or interest under the Permanent Loan from and after Final Closing) which are
attributable to any action or inaction of it or its affiliates;
(j) the General Partner shall promptly notify the Investment
Partnership of any written or oral notice of (i) any default or failure of
compliance with respect to the Permanent Loan or any other financial,
contractual or governmental obligation of the Partnership or the General
Partner (in the case of the General Partner, if such default or failure of
compliance may have a material adverse impact on the Partnership or its
operations), or (ii) any IRS proceeding regarding the Apartment Complex or
the Partnership;
(k) the General Partner shall, during and after the period in
which it is a Partner, provide the Partnership with such information and
sign such documents as are necessary for the Partnership to make timely,
accurate and complete submissions of federal and state income tax returns;
(l) within thirty (30) days following the Admission Date, the
General Partner shall submit to Boston Capital evidence of the Partnership's
engagement of Accountants, who have been approved by BCTC 94, to be
responsible for the Partnership's audit and tax matter reporting obligations
under Section 13.04 hereof.
(m) the General Partner shall provide to BCTC 94, for its
approval and Consent, prior to execution, a copy of the Extended Use
Agreement to be entered into between the Partnership and the Agency, and the
General Partner shall cause the Partnership to enter into and shall record
the Extended Use Agreement no later than the end of the first taxable year
in which the Tax Credit is claimed by the Investment Partnership.
(n) the General Partner shall cause the Partnership to obtain and
keep in force, during the term of the Partnership, comprehensive casualty
insurance, including, but not limited to, fire 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 Permanent
Lender and any Agency, or, if the Apartment Complex is no longer subject to
Permanent 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 similar to 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 Partnership and/or BCTC 94
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
$6,000,000. Through Substantial Completion, or such later date as may be
required by the Permanent Lender or any Agency, the General 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 Permanent Lender.
Throughout the term of the Partnership, the General Partner shall provide
copies of all such policies (or binders) to the Investment Partnership
promptly after the General Partner's receipt thereof or upon request but no
less frequently than annually. Upon the request of the Investment
Partnership to the General Partner, the General Partner shall cause the
applicable insurer to name the Investment Partnership as an "additional
insured" on each Partnership insurance policy.
(o) on or before the Admission Date, the General Partner shall
provide to the Investment Partnership either (i) an appraisal of the
Apartment Complex prepared by a competent independent appraiser or (ii)
completed FmHA 1924-13 (estimate and certificate of actual cost) and 1930-7
(statement of budget, income and expense), or any successor FmHA form, any
comparable form of a state or other governmental agency, including any
applicable Tax Credit allocation agency, setting forth estimates with
respect to rehabilitation and mortgage financing costs and initial rental
income and operating expense figures for the Apartment Complex.
(p) the General Partner shall cause the Partnership to elect
promptly, to the extent permitted and in the manner prescribed by Permanent
Lender, that all debt service payments made by the Partnership to Permanent
Lender shall be applied first to interest determined at the stated rate set
forth in the promissory note to Permanent Lender, all as provided under FmHA
regulations and then to principal due under the Permanent Loan.
(q) the General Partner shall promptly request the Permanent
Lender in writing that the Permanent Lender cause the Investment Partnership
to be named as an "interested party" in the Permanent Loan Documents, so
that the Permanent Lender will notify the Investment Partnership of any
default or other problem under the Loan.
ARTICLE V
PARTNERS, PARTNERSHIP INTERESTS
AND OBLIGATIONS OF THE PARTNERSHIP
5.01. Partners, Capital Contributions and Partnership
Interests.
(a) The General Partner, its principal addresses or places of
business, its Capital Contribution and Percentage Interest is as follows:
R.T.M. Limited Partnership $69,904 1.0%
In the event that the Partnership has not paid all or part of the
Deferred Development Fee from the proceeds of Cash Flow or a Capital
Transaction in accordance with Sections 11.03A(b) and 11.04A(a) herein, when
the final payment is due pursuant to the Development Agreement and Section
8.10 hereof, the General Partner shall contribute to the Partnership an
amount equal to any such remaining principal balance (the "General Partner's
Special Capital Contribution") and the Partnership shall thereupon make a
payment in an equal amount to pay off the principal balance due under the
Development Agreement.
(b)(i) The Investment Partnership, its principal office or place of
business, its Capital Contribution and its Percentage Interest is as
follows:
Boston Capital Tax 98.99%
Credit Fund IV L.P. $461,322 as more
specifically set forth
c/o Boston Capital in subparagraph (c)
Partners, Inc. immediately below
One Boston Place
Boston, MA 02108
(ii) The Special Limited Partner, its principal office or
place of business, its Capital Contribution and its Percentage Interest is
as follows:
BCTC 94 $ 10.00 0.01%
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, MA 02108
(c) Subject to the provisions of this Agreement, including without
limitation, the provisions of Sections 5.01(d) and 5.03, the Investment
Partnership shall be obligated to make Capital Contributions to the
Partnership in the aggregate amount of $437,934 in four (4) installments
(the "Installments"), which Installments shall be due and payable in cash by
the Investment Partnership, solely from capital contributions of its
investor limited partners to the Investment Partnership, within twenty-one
(21) days after the Investment Partnership shall have received evidence,
reasonably satisfactory to it, of the occurrence of each of the conditions
set forth below as to the applicable Installment, as follows:
(i) $306,551 on the latest to occur of (A) Tax Credit Set Aside,
(B) receipt by Boston Capital of approval by Reznick, Fedder
& Silverman of a compliance and of a minimum of 20% of the
leases in the Project, (C) receipt by Boston Capital of an
acceptable commitment of the Permanent Lender regarding the
Permanent Loan, or (D) the Admission Date (the "First
Installment");
(ii) $43,793 on the latest to occur of (A) Substantial Completion,
(B) Cost Certification, (C) receipt of an owner's title
insurance policy satisfactory to BCTC 94, (D) receipt of an
estoppel letter and consent to syndication from the Permanent
Lender in a form acceptable to BCTC 94, (E) compliance with
reasonable due diligence recommendations, (F) receipt of
payoff letter, in a form acceptable to BCTC 94, from the
Contractor stating that all amounts payable to the Contractor
have been paid in full and that the Partnership is not in
default under the Construction Contract, (G) satisfaction of
all of the conditions to the payment of the First Installment
(the "Second Installment");
(iii) $78,828 on the latest to occur of (A) State Designation, (B)
Initial 100% Occupancy Date, (C) Final Closing, (D) Breakeven
Point, or (E) satisfaction of all of the conditions to the
payment of the First and Second Installments (the "Third
Installment"); and
(iv) $8,757 on the later to occur of (A) Breakeven Confirmation or
(B) satisfaction of all conditions to the payment of the
First, Second and Third Installments (the "Fourth
Installment").
As a condition precedent to each payment set forth above other than the
First Installment, the General Partner shall give the Investment Partnership
Notice in the form of a written certification that: (A) all conditions
precedent to such Installment have been satisfied, (B) the representations,
warranties and covenants given by the General Partner in Section 4.01(a) are
valid and accurate, where still applicable, with respect to the General
Partner, the Partnership and/or the Apartment Complex, as of the date of
such certificate, and (C) to the best of its knowledge, after due inquiry,
no condition exists which would, pursuant to Section 5.03, entitle the
Investment Partnership to withhold the payment of such Installment. Based
upon the giving of such Notice, such Installment shall be made on the due
date therefor, or if such Notice is not timely given, then within ten (10)
days after receipt of such Notice.
The proceeds from the First and Second Installments, as necessary,
shall be used by the Partnership to repay the outstanding balance on the
Boston Capital Loan. The payment of the Second Installment shall be subject
to the further conditions that the Boston Capital Loan shall have been
funded and the General Partner shall have provided evidence satisfactory to
the Investment Partnership that the full principal amount of the Boston
Capital Loan, together with all accrued interest thereon, have been paid in
full.
(d) (i) Upon the occurrence of Cost Certification and State
Designation, if ninety-nine percent (99%) of the aggregate amount of Tax
Credits: (A) for which the Partnership would be eligible with respect to the
Apartment Complex based upon the Cost Certification, and/or (B) allocated by
the Agency with respect to the Apartment Complex, is less than the aggregate
amount of the Projected Credit (the "Allocation Differential"), then the
Capital Contribution of the Investment Partnership shall be reduced by the
Allocation Differential. Any such reduction in Capital Contribution shall
be applied to reduce the Second Installment and if, and to the extent
necessary, the Third Installment and if, and to the extent necessary, the
Fourth Installment. If no further Installments are due to be paid, then the
entire amount of such reduction shall be repaid by the Partnership to the
Investment Partnership promptly after demand is made therefor. The General
Partner is obligated to provide such funds to the Partnership as shall be
necessary to cause the aforesaid payment to be made by the Partnership to
the Investment Partnership. In the event that there is a reduction in
Capital Contributions equal to the Allocation Differential, then the amount
of the Projected Credit shall be reduced to so reflect, and thereafter shall
be referred to as the "Revised Projected Credit".
(ii) If at any time the Accountants determine that, for any
fiscal year or portion thereof during the Partnership's operation, ending on
the date five (5) years from and after the date of Substantial Completion
(the "Reduction Period"), the Actual Credit for such fiscal year or portion
thereof is less than the Projected Credit (or Revised Projected Credit)
applicable to such fiscal year or portion thereof, then the Capital
Contribution of the Investment Partnership shall be reduced by the Reduction
Amount. The "Reduction Amount" shall be equal to the sum of (A) the Credit
Shortfall multiplied by seventy percent (70%), and (B) the amount of any
recapture, interest or penalty payable by the limited partners of the
Investment Partnership (assuming pass through of all such liability in the
year incurred and a tax rate equal to the maximum individual rate applicable
in such year) as a result of the Credit Shortfall for such year. Any
reduction in Capital Contribution shall first be applied to reduce the
Installment next due to be paid by the Investment Partnership, and any
portion of such reduction in excess of such Installment shall be applied to
reduce succeeding Installments. If no further Installments are due to be
paid, then the entire amount of such reduction shall be repaid by the
Partnership to the Investment Partnership promptly after demand is made
therefor. The General Partner is obligated to provide such funds to the
Partnership as shall be necessary to cause the aforesaid payment to be made
by the Partnership to the Investment Partnership.
(iii) In the event that, for any reason, at any time after
the Reduction Period, there is a Credit Shortfall with respect to any fiscal
year during the Partnership's operation, the Investment Partnership shall be
treated as having made a constructive advance to the Partnership with
respect to such year (a "Credit Recovery Loan"), which shall be deemed to
have been made on January 1 of such year, in an amount equal to the sum of
(A) the Credit Shortfall for such year, plus (B) the amount of any
recapture, interest or penalty payable by the limited partners of the
Investment Partnership (assuming pass-through of all such liability in the
year incurred and a tax rate equal to the maximum individual rate applicable
in such year) as a result of the Credit Shortfall for such year. Credit
Recovery Loans shall be deemed to bear simple (not compounded) interest,
from the respective dates on which such principal advances are deemed to
have been made under this Section 5.01(d) (iii) at 9% per annum. Credit
Recovery Loans shall be repayable by the Partnership as provided in Section
11.04(A)(b).
(f) Without the Consent of all of the Partners, no additional
Persons may be admitted as additional Limited Partners and Capital
Contributions may be accepted only as and to the extent expressly provided
for in this Article V.
5.02. Return of Capital Contribution. Except as provided in this
Agreement, no Partner shall be entitled to demand or receive the return of
his Capital Contribution.
5.03. Withholding of Capital Contribution Upon Default. In the
event that: (a) the General Partner, or any successor General Partner shall
not have substantially complied with any material provisions under this
Agreement or the partnership agreement as to an Affiliated Limited
Partnership, after Notice from the Investment Partnership of such
noncompliance and failure to cure such noncompliance within a period of
thirty (30) days from and after the date of such Notice, or (b) the
Permanent Lender shall have declared the Partnership to be in default under
the Permanent Loan or under any of the mortgage loans as to an Affiliated
Partnership, or (c) foreclosure proceedings shall have been commenced
against the Apartment Complex or against the apartment complex owned by an
Affiliated Limited Partnership, then the Partnership and the Investment
Partnership, at its sole election, may cause the withholding of payment of
any Installment otherwise payable to the Partnership.
All amounts so withheld by the Investment Partnership under this
Section 5.03 shall be promptly released to the Partnership only after the
General Partners or the Partnership has cured the default justifying the
withholding, as demonstrated by evidence reasonably acceptable to the
Investment Partnership.
5.04. Legal Opinions. (a) As a condition precedent to payment of
the First Installment, the Investment Partnership shall have received the
opinions of William H. Holden, Jr., Esq., counsel to the Partnership and to
the General Partner, which opinions shall be in form and substance
satisfactory to the Investment Partnership and shall explicitly state that
Hinckley, Allen & Snyder, of Boston, Massachusetts, counsel to the
Investment Partnership, may explicitly rely upon them.
5.05. Repurchase Obligation.
(a) If (i) Substantial Completion has not occurred and/or the
Apartment Complex is not placed in service by December 31, 1996; (ii) the
Partnership has not received State Designation by December 31, 1996; (iii)
Breakeven Point does not occur within 12 months from and after the
occurrence of Substantial Completion; (iv) the Partnership fails to meet the
Minimum Set-Aside Test and the Rent Restriction Test within 12 months of the
date that the Apartment Complex is placed in service; (v) the Partnership
fails to meet the Minimum Set-Aside Test and the Rent Restriction Test at
any time within 60 months after initial achievement of the Minimum Set-Aside
Test and the Rent Restriction Test; (vi) Final Closing has not occurred by
June 30, 1996; (vii) an event of default described in Section 5.03(a), (b)
and/or (c) shall exist and shall not have been cured within 30 days after
the occurrence of such default; (viii) the buildings comprising the
Apartment Complex are not placed in service prior to December 31, 1996; (ix)
the General Partner fails to make Subordinated Loans as required by this
Agreement; then the General Partner shall, within 30 days of the occurrence
thereof, send to the Investment Partnership Notice of such event and of its
obligation to purchase the Interest of the Investment Partnership hereunder
and pay to the Investment Partnership the Invested Amount in the event the
Investment Partnership in its sole discretion requires such purchase of its
Interest. Thereafter, the General Partner, within 30 days of the mailing
date of Notice by the Investment Partnership of such election, shall acquire
the entire Interest of the Investment Partnership in the Partnership by
making payment to the Investment Partnership, in cash, of an amount equal to
the Invested Amount.
(b) If the Permanent Lender and/or the Agency shall disapprove the
Investment Partnership as a Partner hereunder within 180 days of its
admission to the Partnership, then the Investment Partnership shall,
effective as of such time (or such other time as may be specified by the
Permanent Lender and/or the Agency in its disapproval), cease to be a
Limited Partner. The General Partner shall, within 10 days of the effective
date of such termination, purchase the Interest of the Investment
Partnership in the Partnership and pay to the Investment Partnership an
amount equal to its Net Capital Contribution.
(c) Upon receipt by the Investment Partnership of any such payment
of its Net Capital Contribution or the Invested Amount, as applicable, the
Interest of the Investment Partnership shall terminate, the Investment
Partnership shall execute, acknowledge and deliver such documents of
assignment as the General Partner shall require and effectuate the
termination or transfer of its Interest, and the General Partner shall
indemnify and hold harmless the Investment Partnership from any losses,
damages, and/or liabilities to which the Investment Partnership (as a result
of its participation hereunder) may be subject, except as and to the extent
of any losses, damages and/or liabilities arising from the Investment
Partnership's own negligence, misconduct or fraud.
ARTICLE VI
CHANGES IN PARTNERS
6.01. Withdrawal of a General Partner.
(a) A General Partner may withdraw from the Partnership or sell,
transfer or assign its Interest as a General Partner only with the prior
Consent of BCTC 94, and of the Permanent Lender, if required, and only after
being given written approval by the necessary parties as provided in Section
6.02, and by the Permanent Lender, if required, of the General Partner to be
substituted for it or to receive all or part of its Interest as General
Partner.
(b) In the event that a General Partner withdraws from the
Partnership or sells, transfers or assigns its entire Interest pursuant to
Section 6.01(a), it shall be and shall remain liable for all obligations and
liabilities incurred by him or it as General Partner before such withdrawal,
sale, transfer or assignment shall have become effective, but shall be free
of any obligation or liability incurred on account of the activities of the
Partnership from and after the time such withdrawal, sale, transfer or
assignment shall have become effective.
6.02. Admission of a Successor or Additional General Partner. A
Person shall be admitted as a General Partner of the Partnership only if the
following terms and conditions are satisfied:
(a) the withdrawal of any withdrawing General Partner and the
admission of such Person shall have been Consented to by the remaining
General Partner or its successors and the Investment Partnership, and
Consented to, if required, by the Permanent Lender;
(b) the successor or additional General Partner shall have accepted
and agreed to be bound by (i) all the terms and provisions of this
Agreement, by executing a counterpart hereof, and (ii) all the terms and
provisions of the Permanent Loan Documents, by executing a counterpart
thereof, and (iii) all the terms and provisions of such other documents or
instruments as may be required or appropriate in order to effect the
admission of such Person as a General Partner, and an amendment to this
Agreement and/or the Certificate, as applicable, evidencing the admission of
such Person as a General Partner shall have been filed and all other actions
required by Section 1.05 in connection with such admission shall have been
performed;
(c) if the successor or additional Person is a corporation or a
limited liability company, it shall have provided the Partnership with
evidence satisfactory to counsel for the Partnership of its authority to
become a General Partner, to do business in the State and to be bound by the
terms and provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion that
the admission of the successor or additional General Partner is in
conformity with the Act and that none of the actions taken in connection
with the admission of the successor General Partner will cause the
termination or dissolution of the Partnership or will cause it to be
classified other than as a partnership for federal income tax purposes.
6.03. Effect of Bankruptcy, Death, Withdrawal, Dissolution
or Incompetence of a General Partner.
(a) In the event of the Bankruptcy of a General Partner or the
withdrawal, death or dissolution of a General Partner or an adjudication
that a General Partner is incompetent (which term shall include, but not be
limited to, insanity) the business of the Partnership shall be continued by
the other General Partner, if any, (and the other General Partner, by
execution of this Agreement, expressly so agrees to continue the business of
the Partnership); provided, however, that if the withdrawn, Bankrupt,
deceased, dissolved or incompetent General Partner is then the sole General
Partner, unless the Investment Partnership within ninety (90) days after
receiving Notice of such Bankruptcy, withdrawal, death, dissolution or
adjudication of incompetence elects to designate a successor General Partner
and continue the Partnership upon the admission of such successor General
Partner to the Partnership, the Partnership shall be terminated.
(b) Upon the Bankruptcy, death, dissolution or adjudication of
incompetence of a General Partner, such General Partner shall immediately
cease to be a General Partner and his or its Interest shall without further
action be converted to a Limited Partner Interest; provided, however, that
if such Bankrupt, dissolved, incompetent or deceased General Partner is the
sole remaining General Partner, such General Partner shall cease to be a
General Partner only upon the expiration of ninety (90) days after Notice to
the Investment Partnership of the Bankruptcy, death, dissolution or
declaration of incompetence of such General Partner; and provided further
that if such Bankrupt, dissolved, incompetent or deceased General Partner is
the sole remaining General Partner, the converted Partnership Interest of
such replaced General Partner shall be ratably reduced to the extent
necessary to insure that the substitute General Partner holds a 1%
Percentage Interest (as set forth in Section 5.01) and will receive half of
the General Partner's distribution pursuant to Section 11.04A(i); such
replaced General Partner whose Interest has been converted to that of a
Limited Partner shall remain entitled to his or its proportionate share of
the remainder of the distribution pursuant to Section 11.04A(e).
Except as set forth above, such conversion of a General Partner
Interest to a Limited Partner Interest shall not affect any rights,
obligations or liabilities (including without limitation, any of the General
Partner's obligations under Section 8.09 herein) of the Bankrupt, deceased,
dissolved or incompetent General Partner existing prior to the Bankruptcy,
death, dissolution or incompetence of such person as a General Partner
(whether or not such rights, obligations or liabilities were known or had
matured).
(c) If, at the time of the withdrawal, Bankruptcy, death,
dissolution or adjudication of incompetence of a General Partner, the
Bankrupt, deceased, dissolved or incompetent General Partner was not the
sole General Partner of the Partnership, the remaining General Partner or
General Partners shall immediately (i) give Notice to the Limited Partners
of such Bankruptcy, death, dissolution or adjudication of incompetence, and
(ii) make such amendments to this Agreement and execute and file such
amendments or documents or other instruments as are necessary to reflect the
conversion of the Interest of the Bankrupt, deceased, dissolved or
incompetent General Partner and his having ceased to be a General Partner.
The remaining General Partner or General Partners are hereby granted an
irrevocable power of attorney to execute any or all documents on behalf of
the Partners and the Partnership and to file such documents as may be
required to effectuate the provisions of this Section 6.03.
ARTICLE VII
ASSIGNMENT TO THE PARTNERSHIP
7.01 Assignment or Contracts, etc. The General Partner hereby
transfers and assigns to the Partnership all of its right, title and
interest in and to the Apartment Complex, including the following:
(i) all contracts with architects, engineers, contractors and
supervising architects with respect to the development or rehabilitation of
the Apartment Complex;
(ii) all plans, specifications and working drawings, heretofore
prepared or obtained in connection with the Apartment Complex and all
governmental approvals obtained, including planning, zoning, subdivision and
building permits;
(iii) any and all commitments with respect to the Permanent Loan; and
(iv) any other work product related to the Apartment Complex.
ARTICLE VIII
RIGHTS, OBLIGATIONS AND POWERS
OF THE GENERAL PARTNERS
8.01. Management of the Partnership.
(a) Except as otherwise set forth in this Agreement, the General
Partner, within the authority granted to it under this Agreement, shall have
full, complete and exclusive discretion to manage and control the business
of the Partnership for the purposes stated in Article III, shall make all
decisions affecting the business of the Partnership and shall manage and
control the affairs of the Partnership to the best of its ability and use
its best efforts to carry out the purpose of the Partnership. In so doing,
the General Partner shall take all actions necessary or appropriate to
protect the interests of the Limited Partners and of the Partnership. The
General Partner shall devote such of its time as is necessary to the affairs
of the Partnership.
(b) Except as otherwise set forth in this Agreement and subject to the
Permanent Lender's rules and regulations and the provisions of the Project
Documents, the General Partner (acting for and on behalf of the
Partnership), in extension and not in limitation of the rights and powers
given by law or by the other provisions of this Agreement, shall, in its
sole discretion, have the full and entire right, power and authority in the
management of the Partnership business to do any and all acts and things
necessary, proper, convenient or advisable to effectuate the purpose of the
Partnership. In furtherance and not in limitation of the foregoing
provisions, the General Partner is specifically authorized and empowered to
execute and deliver, on behalf of the Partnership, the Project Documents and
to execute any and all other instruments and documents, and amendments
thereto, as shall be required in connection with the Permanent Loan,
including, but not limited to, executing any mortgage, note, contract,
building loan agreement, bank resolution and signature card, release,
discharge, or any other document or instrument in any way related thereto or
necessary or appropriate in connection therewith; provided, however, (i) the
General Partner shall not enter into the Permanent Loan without first
obtaining the written Consent of BCTC94 as to all of the terms and
conditions of the Permanent Loan, including without limitation, approval of
the amount, term and interest rate and (ii) that copies of all applications
for advances of any Permanent Loan proceeds which occur after the Admission
Date, including any releases from the escrow account in the original amount
of $144,000 for rehabilitation expenses, shall be provided to the Investment
Partnership prior to the disbursement of any funds pursuant thereto. All
decisions made for and on behalf of the Partnership by the General Partner
shall be binding upon the Partnership. No person dealing with the General
Partner shall be required to determine its authority to make any undertaking
on behalf of the Partnership, nor to determine any facts or circumstances
bearing upon the existence of such authority. The Investment Partnership
hereby consents to all of the terms and conditions of the Permanent Loan.
8.02. Limitations Upon the Authority of the General Partner.
(a) The General Partner shall not have any authority to:
(i) perform any act in violation of any applicable law or
regulation thereunder;
(ii) perform any act in violation of the provisions of the
Regulatory Agreement, if any, Extended Use Agreement, the Permanent Loan
Documents, the Rental Assistance Agreement, or any other Project Documents;
(iii) do any act required to be approved or ratified in writing by
all Limited Partners under the Act unless the right to do so is expressly
otherwise given in this Agreement;
(iv) rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Rent Restriction
Test or Minimum Set-Aside Test, the Rental Assistance Agreement, or to any
individuals where income exceeds 60% of area median income, as adjusted for
family size; or
(v) borrow from the Partnership or commingle Partnership funds
with funds of any other Person.
(b) The General Partner shall not, without the Consent of BCTC94, have
any authority to:
(i) sell or otherwise dispose of, at any time, all or
substantially all of the assets of the Partnership;
(ii) borrow in excess of $10,000 in the aggregate at any one time
outstanding on the general credit of the Partnership, except borrowings
constituting Subordinated Loans or Credit Recovery Loans;
(iii) following Substantial Completion, 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;
(iv) acquire any real property in addition to the Apartment
Complex; or
(v) refinance the Permanent Loan;
8.03. Management Purposes. In conducting the business of the
Partnership, the General Partner shall be bound by the Partnership's
purposes set forth in Article III.
8.04. Delegation of Authority. Subject to Section 8.05 hereof, the
General Partner may employ, contract, or otherwise deal with any Person in
connection with the performance of their management responsibilities
hereunder, provided such Person acts only under the supervision of the
General Partner.
8.05. General Partner or Affiliates Dealing with Partnership.
(a) The General Partner or any Affiliate may act as Management
Agent on such terms and conditions permitted by applicable regulations of
the Permanent Lender and the Agency, and may receive compensation at the
rates approved and permitted by the Permanent Lender or the Agency at any
time; provided, however, that in the event the management of the Apartment
Complex is no longer subject to Agency and/or Permanent Lender regulation,
the Management Agent may receive compensation in accordance with a
reasonable and competitive fee arrangement provided that the Investment
Partnership shall have provided its Consent to such fee arrangement.
(b) The General Partner or any Affiliates thereof shall have
the right to contract or otherwise deal with the Partnership for the sale of
goods or services to the Partnership in addition to those set forth herein,
if (A) compensation paid or promised for such goods or services is
reasonable (i.e., at fair market value) and is paid only for goods or
services actually furnished to the Partnership, (B) the goods or services to
be furnished shall be reasonable for and necessary to the Partnership, (C)
the fees, terms and conditions of such transaction are at least as favorable
to the Partnership as would be obtainable in an arm's-length transaction,
(D) no agent, attorney, accountant or other independent consultant or
contractor who also is employed on a full-time basis by the General Partner
or any Affiliate shall be compensated by the Partnership for his services.
Any contract covering such transactions shall be in writing and shall
be terminable without penalty on sixty (60) days Notice. Any payment made
to the General Partner or any Affiliate for such goods or services shall be
fully disclosed to all Limited Partners in the reports required under
Section 13.04. Neither the General Partner nor any Affiliate shall, by the
making of lump-sum payments to any other Person for disbursement by such
other Person, circumvent the provisions of this Section 8.05(b)
8.06. Other Activities. The General Partner and any Affiliates
thereof may engage in or possess interests in other business ventures of
every kind and description for their own account, including, without
limitation, serving as general partner of other partnerships which own,
either directly or through interests in other partnerships, government-
assisted housing projects similar to the Apartment Complex. Neither the
Partnership nor any of the Partners shall have any rights by virtue of this
Agreement in or to such other business ventures or to the income or profits
derived therefrom.
8.07. Liability for Acts and Omissions. No General Partner shall be
liable, responsible or accountable in damages or otherwise to any of the
Partners for any act or omission performed or omitted by him or it, in good
faith on behalf of the Partnership and in a manner reasonably believed by
him or it to be within the scope of the authority granted to him or it or
any of them by this Agreement and in the best interest of the Partnership,
except for gross negligence, willful misconduct, fraud or any material
breach of his or its fiduciary duty as General Partner with respect to such
acts or omissions. Any loss or damage incurred by any General Partner by
reason of any act or omission performed or omitted by him or it in good
faith on behalf of the Partnership and in a manner reasonably believed by
him or it or any of them to be within the scope of the authority granted to
him or it by this Agreement and in the best interests of the Partnership
(but not, in any event, any loss or damage incurred by any General Partner
by reason of gross negligence, willful misconduct, fraud or any material
breach of his or its or their fiduciary duty as General Partner with respect
to such acts or omissions) shall be paid from Partnership assets to the
extent available (but the Limited Partners shall not have any personal
liability to the General Partner under any circumstances on account of any
such loss or damage incurred by the General Partner or on account of the
payment thereof).
8.08. Partnership Status. In the event that any General Partner is a
corporation, such General Partner shall satisfy at least the requirements
set forth in the last sentence of Section 4.07 of Internal Revenue Service
Procedure 89-12, as the same may be modified from time to time, which
requirements are prerequisites to the issuance by the Internal Revenue
Service of an advance ruling that the Partnership will be taxed as a
partnership, and not as an association taxable as a corporation, for federal
income tax purposes.
8.09. Construction of the Apartment Complex, Construction Cost
Overruns, Operating Deficits.
(a) (i) The Partnership has entered into the Construction Contract.
The General Partner shall be responsible for:
(A) achieving completion of rehabilitation of the Apartment
Complex on a timely basis in accordance with FmHA Form 1924-13, the
Scope of Work filed with FmHA, and any other FmHA requirements; this
Agreement and the Project Documents;
(B) meeting all requirements for obtaining all necessary
approvals by FmHA and all necessary permanent, unconditional
certificates of occupancy for all the apartment units in the
Apartment Complex;
(C) fulfilling all actions required of the Partnership to
assure that the Apartment Complex satisfies the Minimum Set-Aside
Test and the Rent Restriction Test; and
(D) causing the making of the Permanent Loan by the
Permanent
Lender and the achievement of Final Closing and Substantial
Completion.
(ii) The General Partner hereby is obligated to pay all Excess
Development Costs; the Partnership shall have no obligation to pay any
Excess Development Costs.
(iii) In the event that the General Partner shall fail to pay any
such Excess Development Costs as required in this Section 8.09(a), an amount
not in excess of the next installment of the Development Fee due to the
Developer shall be applied by the Partnership as an offset against such
obligations of the General Partner.
Any such direction and application of funds otherwise payable to the
Developer as aforesaid shall constitute a set off against the Partnership's
obligation to pay the Development Fee, and the Partnership's obligation to
pay the Development Fee, and the Partnership's obligation to make such
installment payments to the Developer pursuant to Section 8.10(a), as well
as the Investment Partnership's obligation to make future Installments,
shall be reduced correspondingly, and the obligations of the General Partner
pursuant to Sections 8.09(a) (i) or 8.09(a) (ii) shall be deemed satisfied
to the extent of the funds applied.
(b) In the event that, at any time during the period from the date of
Final Closing until a date 60 months from and after Breakeven Point, an
Operating Deficit shall exist, the General Partner shall provide such funds
to the Partnership as shall be necessary to pay such Operating Deficit(s) in
the form of a loan to the Partnership (the "Operating Deficit Loan(s)"). An
Operating Deficit Loan shall be a Subordinated Loan payable in accordance
with the provisions of Section 8.17; Operating Deficit Loans shall bear no
interest.
In the event that the General Partner shall fail to make any such
Operating Deficit Loan as aforesaid, the Partnership shall utilize amounts
otherwise payable to the Developer as installments of the Development Fee
pursuant to Section 8.10 of this Agreement to meet the obligations of the
General Partner pursuant to this Section 8.09(b). Amounts so utilized shall
also constitute the payment and satisfaction of installments of the
Development Fee payable to the Developer under the aforesaid section of this
Agreement, and the obligation of the Partnership to make such installment
payments to the Developer, pursuant to such section, as well as the
Investment Partnership's obligation to make future installments, shall be
reduced correspondingly. For the purposes of this Section 8.09(b), all
expenses shall be paid on a sixty (60) day current basis.
8.10. Development Fee. (i) The Partnership has entered into a
Development Agreement of even date herewith with the Developer for its
services in connection with the development and construction of the
Apartment Complex. In consideration for such services, a Development Fee in
the total amount of $294,259 shall be payable by the Partnership to the
Developer, solely from the Capital Contributions by the Investment
Partnership except as provided in Sections 4.02(g), 5.01(a), 11.03A(b) and
11.04(A)(a).
The Development Fee shall be due and payable as follows:
(a) $43,793 (less any interest due on the Boston Capital Loan) upon
receipt by the Partnership of the Second Installment;
(b) $78,828 upon receipt by the Partnership of the Third Installment;
(c) $32,150 upon receipt by the Partnership of the Fourth Installment;
and
(d) the Deferred Development Fee shall be payable only in accordance
with Sections 11.03A(b) and 11.04A(a) or, if not sooner paid, on December
31, 2011.
8.11. Incentive Partnership Management Fee. The Partnership has
entered into a Partnership Management Services Agreement with the General
Partner of even date herewith for its services in managing the business of
the Partnership for the period from the date hereof throughout the term of
the Partnership. Such agreement includes provisions to the effect that in
return for its services in administering and directing the business of the
Partnership, maintaining appropriate books and records relating to all
financial affairs of the Partnership, and reporting periodically to the
Partners, the Permanent Lender and the Agency with respect to the financial
and administrative affairs of the Partnership and the Apartment Complex, the
Partnership shall pay to the General Partner, solely from the Cash Flow of
the Partnership available for distribution and in accordance with Section
11.03A(d), an annual Incentive Partnership Management Fee.
Such fee shall be payable in accordance with the provisions of any
applicable regulations of the Permanent Lender or the Agency and of the
Project Documents and shall be in an amount equal to $1,000 per year,
commencing in 1996.
8.11.1 Asset Management Fee. The Partnership shall pay to Boston
Capital, or an Affiliate thereof, an annual Asset Management Fee in the
amount of $1,000 per annum, commencing in 1996, for its services in
assisting with the preparation of the reports required pursuant to Section
13.04. The Asset Management Fee shall be payable solely from Cash Flow and
as provided in Section 11.03A(a); provided, however, that if in any Fiscal
Year, Cash Flow is insufficient to pay the Asset Management Fee, the General
Partner shall make a Subordinated Loan to the Partnership in an amount
sufficient to pay such fee. If the General Partner fails to make such
Subordinated Loans, any unpaid portion of said Asset Management Fee shall
accrue, without interest, and shall be payable on a cumulative basis in the
first year in which there is sufficient Cash Flow available for the payment
of such fee, or, in the first year in which proceeds of a Capital
Transaction are available.
8.12. Withholding of Fee Payments. In the event that (a) the General
Partner, any successor General Partner or the general partner of any
Affiliated Limited Partnership shall not have substantially complied with
any material provisions under this Agreement or the applicable limited
partnership agreement, within fifteen (15) days after written notice from
the Investment Partnership or (b) any financing commitment of any lender, or
any agreement entered into by the Partnership for financing related to the
Apartment Complex or the property of any Affiliated Limited Partnership
shall have terminated prior to their respective termination date(s), or (c)
foreclosure proceedings shall have been commenced against the Apartment
Complex or the property of such Affiliated Limited Partnership, then (i) the
General Partner shall be in default of this Agreement, and the Partnership
shall withhold payment of any installment of fees payable pursuant to
Sections 8.10 and 8.11, and (ii) the General Partner shall be liable for the
Partnership's payment of any and all installments of the Development Fee
payable pursuant to Section 8.10, to the extent that the Investment
Partnership has withheld any Installment(s) pursuant to Section 5.03 as a
result of the above-described default.
All amounts so withheld by the Partnership under this Section 8.12
shall be promptly released only after the General Partner has cured the
default justifying the withholding, as demonstrated by evidence reasonably
acceptable to the Investment Partnership.
8.13. Removal of the General Partner.
(a) BCTC 94, acting on behalf of the Investment Partnership, so long
as the Investment Partnership is a Partner, shall have the right to remove
any General Partner (i) for any intentional misconduct or gross negligence
in the discharge of its duties and obligations as General Partner (provided
that such misconduct or failure results in, or is likely to result in, a
material detriment to or an impairment of the Apartment Complex or assets of
the Partnership), or (ii) upon the occurrence of any of the following:
(A) the General Partner shall have violated any of the
material provisions of the Regulatory Agreement, Extended Use Agreement, the
Rental Assistance Agreement, the Permanent Loan Documents, or any provisions
of any other Project Document or other document required in connection with
the Permanent Loan, or any provisions of the Agency regulations applicable
to the Apartment Complex except, with respect to any violation of any
document entered into with FmHA, to the extent that the Partnership, with
the Consent of the Investment Partnership, has entered into a "workout"
agreement with FmHA;
(B) the General Partner shall have violated any material provision
of this Agreement or any provision of applicable law, which violations shall
include, without limitation (i) withdrawal of the General Partner without
the Consent of the Investment Partnership pursuant to the Section 6.01(a),
(ii) the failure of the General Partner to make Subordinated Loans required
under this Agreement or (iii) the failure of a sole General Partner which is
a corporation to satisfy the requirements of Section 8.08;
(C) the General Partner shall have caused the Permanent Loan
to go into default; or
(D) the General Partner shall have conducted its own affairs
or the affairs of the Partnership in such manner as would: (1) cause the
termination of the Partnership for federal income tax purposes; or (2) cause
the Partnership to be treated for federal income tax purposes as an
association, taxable as a corporation.
(b) BCTC 94 shall give Notice to all Partners of its determination
that the General Partner shall be removed. The General Partner shall have
thirty (30) days after receipt of such Notice to cure any default. If, at
the end of such 30-day period the General Partner has not cured any default
or other reason for such removal, (i) without any further action by any
Partner, BCTC 94 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
Partnership shall determine is the minimum appropriate interest in order to
assure the continued status of the Partnership as a partnership under the
Code and under the Act, (ii) the remaining portion of the economic Interest
of the removed General Partner shall automatically be converted to an equal
economic Interest as an Additional Limited Partner, (iii) the economic
Interest of BCTC 94 as the Special Limited Partner shall continue unaffected
by the new status of BCTC 94 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 Partner hereunder.
(c) BCTC 94 or any successor General Partner proposed by the Special
Limited Partner shall have the option, exercisable in its sole discretion,
to acquire the Additional Limited Partner Interest, or any portion thereof,
of any removed General Partner upon payment of the agreed or then present
fair market value of such Interest or portion thereof. Any dispute as to
the value of the Interest or portion thereof to be acquired pursuant to the
immediately preceding sentence shall be submitted to a committee composed of
three qualified real estate appraisers, one chosen by the removed General
Partner, one chosen by the successor General Partner, and the third chosen
by the two so chosen. The proceedings of such committee shall conform to
the rules of the American Arbitration Association, as far as appropriate,
and its decision shall be final and binding. The expense of arbitration
shall be born equally by the removed General Partner and the Partnership.
The method of payment will be deemed presumptively fair where it provides
for a promissory note bearing simple interest at eight percent (8%) per
annum coming due in no less than five (5) years with equal installments each
year.
(d)(i) Upon removal, no General Partner or any Affiliate thereof shall
be entitled to receive any fee, compensation or other remuneration from the
Partnership, other than the above-described payment for the Interest, or
portion thereof, of the Removed General Partner. 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 BCTC 94 shall have
been obtained to such particular arrangement. The Partnership may offset
against any payments to a General Partner removed under this Section 4.5 any
reasonable 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, but shall be
and remain liable for all obligations and liabilities incurred by it as
General Partner before such removal became effective, including, but not
limited to, its obligations set forth in Section 8.09 hereof.
(e) The General Partner hereby grants to each of the Investment
Partnership and BCTC 94 an irrevocable power of attorney, coupled with an
interest, to execute any and all documents on behalf of the Partners and the
Partnership as shall be legally necessary and sufficient to effect all of
the foregoing provisions of this Section 8.13. The election by the
Investment Partnership to remove a General Partner under this Section shall
not limit or restrict the availability and use of any other remedy which the
Investment Partnership or any other Partner might have with respect to the
General Partner in connection with their undertakings and responsibilities
under this Agreement.
8.14. Selection of Management Agent. The Partnership, with the
approval of the Permanent Lender and the Agency, if required, shall engage
such person, firm or company as the General Partner may select, and as the
Investment Partnership may approve, which approval shall not be unreasonably
withheld (hereinafter referred to as "Management Agent") to manage the
operation of the Apartment Complex during the rent-up period and following
Substantial Completion. The Management Agent shall be paid a management fee
subject to the approval of the Permanent Lender and the Agency, if required.
The contract between the Partnership and the Management Agent and the
management plan for the Apartment Complex shall be in a form acceptable to
the Permanent Lender and the Agency, if required. HAI Management, Inc.
hereby is approved by the parties hereto as the initial Management Agent,
and the parties acknowledge that HAI, Inc. and the Permanent Lender have
entered into that certain Management Agreement dated January 1, 1996. The
Management Agent hereunder shall file all necessary reports required by the
Permanent Lender pursuant to the Management Agreement referred to above (or
any subsequent management agreement approved by the Permanent Lender) and
all reports required by any Agency and simultaneously shall send to the
Investment Partnership a copy of any such report.
8.15. Removal of the Management Agent. The General Partner (i) may,
upon receiving any required approval of the Permanent Lender and the Agency,
dismiss the Management Agent as the entity responsible for the Apartment
Complex under the terms of the contract between the Partnership and the
Management Agent, and (ii) at the request of the Investment Partnership,
shall remove the Management Agent in the event that (A) the Investment
Partnership, in its reasonable discretion, determines that the Management
Agent is performing at a substandard level to properly manage the Apartment
Complex or (B) the Management Agent is declared Bankrupt, is dissolved, or
makes an assignment for the benefit of its creditors, or for any intentional
misconduct by the Management Agent or gross negligence in the discharge of
its duties and obligations as Management Agent, including, without
limitation, for any action or failure to take any action which:
(1) violates in any material respect any provision of the
Management Agreement entered into with the Partnership and approved by
the Permanent Lender, and/or any provision of the Regulatory
Agreement, and/or any provision of the Rental Assistance Agreement,
and/or the Permanent Loan Documents applicable to the Apartment
Complex, or the Permanent Lender's approved management plan for the
Apartment Complex, or
(2) violates in any material respect any provision of
this Agreement or provision of applicable law.
8.16. Replacement of the Management Agent. Upon the removal of the
Management Agent as the entity responsible for the management of the
Apartment Complex, a substitute Management Agent, which may be an Affiliate
of any General Partner, shall be named by the General Partner, subject to
the approval of the Permanent Lender, if required, and the approval of BCTC
94.
8.17. Subordinated Loans to the Partnership. In the event that
additional funds are required by the Partnership for any purpose relating to
the business of the Partnership or for any of its obligations, expenses,
costs or expenditures, the Partnership may borrow such funds as are needed
from any Partner or other Person or organization, including the General
Partner, for such period of time and on such terms as the General Partner,
the Investment Partnership and the Permanent Lender, if so required, may
agree and at the rate of interest then prevailing for comparable loans
(except for Operating Deficit Loans made pursuant to Section 8.09(b), which
shall bear interest only as provided in Section 8.09(b)); provided however,
that no such additional loans shall be secured by any mortgage or other
encumbrance on the property of the Partnership without the prior approval of
the Investment Partnership and the approval of the Permanent Lender, if
required; except that such approvals shall not be required in the case of
the hypothecation of personal property purchased by the Partnership and not
included in the security agreements executed by the Partnership at the time
of Final Closing. Loans made under this Section shall be repaid as set
forth in Section 11.03A(c) of this Agreement, but any amount of any such
loan that is outstanding at the time of the occurrence of any of the events
described in Sections 11.04 or 12.01 shall be repaid as provided in Section
11.04A(d).
8.18. Reserve Account.
The Partnership shall establish a Reserve Account with respect to the
Apartment Complex, as required by the Permanent Lender. The Partnership
shall make deposits into the Reserve Permanent Account equal to $12,408
annually (the "Required Deposit") or such greater amount as shall be
required by the Permanent Lender; such deposits may be suspended only as
approved by the Permanent Lender. The Partnership shall make such annual
payments until the Reserve Account reaches the minimum amount of $124,075
(the "Minimum Reserve Fund Balance") or such higher amounts later agreed to
with the Permanent Lender, whereupon further deposits into the Reserve
Account shall be as required by the Permanent Lender; provided, however, the
amount in the Reserve Fund shall not fall below the Minimum Reserve Account
Balance unless approved by the Permanent Lender. Funds in the Reserve
Account are intended to be employed for the replacement as needed of
fixtures, equipment, structural elements and other components of the
Apartment Complex of a capital nature. All interest earnings on funds on
deposit in the Reserve Account shall be retained therein for the aforesaid
purposes. Withdrawals from the Reserve Account shall be made only with the
prior written consent, or upon the direction, of the Permanent Lender;
provided, however, (i) if such prior written consent of the Permanent Lender
is not required, such withdrawals may be made only with the Consent, or upon
the direction, of BCTC 94 and (ii) the Consent of BCTC 94 shall not be
required in connection with the withdrawal for any one such project repair
or series of related repairs that is $1,000 or less.
8.19. Guaranty of General Partner's Obligations. The General
Partner's obligations under this Agreement shall be guaranteed by Tevis
Margolis, pursuant to a Guaranty of even date herewith.
ARTICLE IX
TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS
OF INTERESTS OF LIMITED PARTNERS
9.01. Purchase for Investment.
(a) The Investment Partnership hereby represents and warrants
to the General Partner and to the Partnership that the acquisition of its
Interest is made as principal for its account for investment purposes only
and not with a view to the resale or distribution of such Interest, except
insofar as the Securities Act of 1933 and any applicable securities law of
any state or other jurisdiction permit such acquisitions to be made for the
account of others or with a view to the resale or distribution of such
Interest without requiring that such Interest, or the acquisition, resale or
distribution thereof, be registered under the Securities Act of 1933 or any
applicable securities law of any state or other jurisdiction.
(b) The Investment Partnership agrees that it will not sell,
assign or otherwise transfer its Interest or any fraction thereof to any
Person who does not similarly represent and warrant and similarly agree not
to sell, assign or transfer such Interest or fraction thereof to any Person
who does not similarly represent and warrant and agree.
(c) The Investment Partnership shall not sell, assign or
otherwise transfer its Interest or any fraction thereof to any Person until
the Investment Partnership has provided the Partnership with a legal
opinion, reasonably satisfactory to the General Partner, that such sale,
assignment or other transfer does not violate any state or federal
securities laws or require the Interest to be registered under any such
laws.
9.02. Restrictions on Transfer of Limited Partner's
Interests.
(a) Under no circumstances will any offer, sale, transfer,
assignment, hypothecation or pledge of any Limited Partner Interest be
permitted unless the General Partner, in its sole discretion, shall have
Consented.
(b) The Limited Partner whose interest is being transferred
shall pay such reasonable expenses as may be incurred by the Partnership in
connection with such transfer.
9.03. Admission of Substitute Limited Partners.
(a) Subject to the other provisions of this Article IX, an
assignee of the Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee, or other recipient of any
disposition of such Interest) shall be admitted as a Substitute Limited
Partner of the Partnership only upon the satisfactory completion of the
following:
(i) Consent of the General Partner (which may be
withheld in its sole discretion) and the consent of the
Permanent Lender, if required, shall have been given, which
Consent of the General Partner may be evidenced by the execution
by the General Partner of an amended Agreement and/or
Certificate evidencing the admission of such Person as a Limited
Partner pursuant to the requirements to the Act;
(ii) the assignee shall have accepted and agreed to be
bound by the terms and provisions of this Agreement by executing
a counterpart thereof or an appropriate amendment hereto, and
such other documents or instruments as the General Partner may
require in order to effect the admission of such Person as a
Limited Partner;
(iii) an amended Agreement and/or Certificate evidencing
the admission of such Person as a Limited Partner shall have
been filed for recording pursuant to the requirements of the Act
to the extent required in order to effectuate the admission of
such Person as a Limited Partner;
(iv) the assignee shall have represented and agreed in
writing as required by Section 9.01;
(v) if the assignee is a corporation, the assignee shall
have provided the General Partner with evidence satisfactory to
counsel for the Partnership of its authority to become a Limited
Partner under the terms and provisions of this Agreement; and
(vi) the assignee or the assignor shall have reimbursed the
Partnership for all reasonable expenses, including all
reasonable legal fees and recording charges, incurred by the
Partnership in connection with such assignment.
(b) For the purpose of allocation of profits, losses and
credits, and for the purpose of distributing cash of the Partnership, a
Substitute Limited Partner shall be treated as having become, and as
appearing in, the records of the Partnership as a Partner upon his signing
of an amendment to this Agreement, agreeing to be bound hereby.
(c) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the
documentation required by this Section and making all official filings and
publications. The Partnership shall take all such action, including the
filing of any amended Agreement and/or Certificate evidencing the admission
of any Person as a Limited Partner, and the making of any other official
filings and publications, as promptly as practicable after the satisfaction
by the assignee of the Interest of a Limited Partner of the conditions
contained in this Article IX to the admission of such Person as a Limited
Partner of the Partnership. Any cost or expense incurred in connection with
such admission shall be borne by the Partnership to the extent of available
Partnership assets, and otherwise by such assignee.
9.04. Rights of Assignee of Partnership Interest.
(a) Except as provided in this Article and as required by
operation of law, the Partnership shall not be obligated for any purpose
whatsoever to recognize the assignment by any Limited Partner of his (its)
Interest until the Partnership has received actual Notice thereof.
(b) Any Person who is the assignee of all or any portion of a
Limited Partner's Interest, but does not become a Substitute Limited Partner
and desires to make a further assignment of such Interest, shall be subject
to all the provisions of this Article IX to the same extent and in the same
manner as any Limited Partner desiring to make an assignment of his (its)
Interest.
ARTICLE X
RIGHTS AND OBLIGATIONS
OF LIMITED PARTNERS
10.01. Management of the Partnership. No Limited Partner shall take
part in the management or control of the business of the Partnership nor
transact any business in the name of the Partnership. Except as otherwise
expressly provided in this
Agreement, no Limited Partner shall have the power or authority to bind the
partnership or to sign any agreement or document in the name of the
Partnership. No Limited Partner shall have any power or authority with
respect to the Partnership except insofar as the consent of any Limited
Partner shall be expressly required and except as otherwise expressly
provided in this Agreement.
10.02. Limitation on Liability of Limited Partners. The liability of
each Limited Partner shall be limited to its Capital Contribution as and
when payable under the provisions of this Agreement. No Limited Partner
shall have any other liability to contribute money to, or in respect of the
liabilities or obligations of, the Partnership, nor shall any Limited
Partner be personally liable for any obligations of the Partnership. No
Limited Partner shall be obligated to make loans to the Partnership.
10.03. Other Activities. Any Limited Partner may engage in or
possess interests in other business ventures of every kind and description
for its own account, including without limitation, serving as general or
limited partner of other partnerships which own, either directly or through
interests in other partnerships, government-assisted housing projects
similar to the Apartment Complex. Neither the Partnership nor any of the
Partners shall have any right by virtue of this Agreement in or to such
other business ventures to the income or profits derived therefrom.
10.04. Ownership by Limited Partner of Corporate General Partner or
Affiliate. No Limited Partner shall, at any time, either directly or
indirectly, own any stock or other interest in any corporate General Partner
if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of Hinckley,
Allen & Snyder or other tax counsel to the Investment Partnership,
jeopardize the classification of the Partnership as a partnership for
federal income tax purposes. In the event of any violation of the
provisions of this Section by any one or more Limited Partners, such Limited
Partner or Limited Partners shall either dispose of their Interests in the
Partnership (subject to and in compliance with the provisions of Article IX)
or of their stock or other interest in the corporate General Partner or
Affiliates to the extent necessary so that, in the opinion of counsel for
the Partnership, the classification of the Partnership as a partnership for
federal income tax purposes is no longer in jeopardy. The obligation of any
such disposition required of more than one Limited Partner shall be shared
among them on an equitable basis. Notwithstanding the foregoing, neither
the General Partner nor any Limited Partner shall be liable in damages to
the Partnership or to any Partner by reason of any violation of this
Section, except for damages arising (a) out of any material
misrepresentation by any Limited Partner relating to the ownership of stock
or other interest in a corporate General Partner or any affiliate by him or
by any member of his family (within the meaning of the attribution rules set
forth in Section 318 of the Code), or (b) out of any failure by any Limited
Partner to dispose of his Interest in the Partnership or of his stock or
other interest in a corporate General Partner or Affiliate within a
reasonable time after Notice to such Limited Partner by the Partnership of
the obligations to make such disposition.
ARTICLE XI
ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX CREDITS
AND CASH DISTRIBUTIONS
Section 11.01. Allocation of Taxable Income, Tax Losses and Tax
Credits.
A. General. Subject to the special allocations set forth in this
Article XI, Taxable Income, Tax Credits and Tax Losses for each fiscal year
of the Partnership (or part thereof) other than those to be allocated
pursuant to Section 11.01B or Section 11.02 hereof, shall be allocated: (a)
first, Taxable Income shall be allocated among the Partners in amounts equal
to Cash Flow distributed or distributable to such Partners for such fiscal
year pursuant to Section 11.03A(e); (b) any balance of Taxable Income, and
all Tax Credits and Tax Losses for such fiscal year, shall be allocated 99%
to the Investment Partnership, and 1% to the General Partners.
B. Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other period shall be specially allocated 99% to the Investment
Partnership and 1% to the General Partners.
C. Partner Loan Nonrecourse Deductions. Any Partner Loan
Nonrecourse Deductions for any Fiscal Year or other period shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the loan to which such Partner Loan Nonrecourse Deductions are
attributable in accordance with Treasury Regulations Section 1.704-2(i).
Section 11.02. Allocation of Taxable Income and Tax Losses from
Capital Transactions. Subject to the special allocations set forth in this
Article XI, Taxable Income and Tax Losses from Capital Transactions shall be
allocated to the Partners as follows:
(i) Taxable Income from Capital Transactions shall be allocated:
(a) first, to the Partners with negative Capital Accounts pro
rata in such amounts as will result in the elimination of the negative
Capital Accounts of such Partners; provided, however, that if Taxable Income
to be allocated pursuant to this Section 11.02(i)(a) is insufficient to
eliminate all negative Capital Accounts, such Taxable Income will be
allocated to Partners with negative Capital Accounts in the proportion that
each such Partner's negative Capital Account bears to the total of all such
Negative Capital Accounts;
(b) second, in the amount and to the extent necessary to
increase the Partners' respective Capital Accounts to equal the amounts
distributable under Sections 11.04A(f),(g),(h) and (i);
(c) then, the balance, if any, of such Taxable Income shall be
allocated 50% to the General Partners and 50% to the Investment Partnership.
(ii) Tax Losses from Capital Transactions shall be allocated:
(a) first, to the extent of the respective positive balances in
the Partners' Capital Accounts; and
(b) any balance, 99% to the Limited Partner and 1% to the
General Partners.
(iii) Notwithstanding the foregoing provisions, if Taxable Income to
be allocated includes income treated as ordinary income for federal income
tax purposes because such Taxable Income is attributable to the recapture of
depreciation under Section 1245 or 1250 of the Code, such Taxable Income, to
the extent treated as ordinary income, shall be allocated to and reported by
the Partners in proportion to their accumulated depreciation allocations.
The Partnership shall keep records of such allocations of depreciation to
the Partners. In determining the accumulated depreciation allocations of
the Partners, depreciation deductions for each taxable year shall be deemed
allocated to the Partners in the same proportion as the Taxable Income or
Tax Losses in that particular taxable year were allocated to the Partners.
11.03 Distribution of Cash Flow.
A. Subject to the Permanent Lender approval, if required, and
regulations, if any, Cash Flow shall be determined for each fiscal year and
shall be applied or distributed at such time or time as the General Partner
deems appropriate, but in no event less than once in each fiscal year, in
the following order of priority:
(a) First, to payment of the Asset Management Fee currently
due, together with any accrued but unpaid Asset Management Fees;
(b) Second, to payment to the Developer of the Deferred
Development Fee;
(c) Third, to repayment of any amounts due with respect to any
Subordinated Loans (including, without limitation, Operating Deficit Loans
made under Section 8.09(b));
(d) Fourth, to payment of the Incentive Partnership Management
Fee in the amount of $1,000, if available, out of Cash Flow after the
payment of the items listed in Section 11.03(a) - (c) above; and
(e) Any balance, 90% to the General Partners and 10% to the
Investment Partnership.
Section 11.04 Distributions of Distributable Proceeds from Capital
Transactions and Distributable Proceeds from Refinancings.
A. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings (other than liquidating
distributions pursuant to Section 12.02) shall be distributed in the
following order of priority:
(a) First, to the Developer, an amount equal to the Deferred
Development Fee;
(b) Second, to payment of all debts and liabilities of the
Partnership excluding those owed to partners, and to the establishment of
any required reserves;
(c) Third, to payment of the Asset Management Fees currently
due, if any, together with any accrued and unpaid Asset Management Fees;
(d) Fourth, to repayment to the Investment Partnership of any
Credit Recovery Loans, together with any interest thereon;
(e) Fifth, to repayment to the General Partner of any
Subordinated Loans;
(f) Sixth, to the payment of any debts and liabilities owed to
the Partners; provided, however, that all such other debts and liabilities
owed to the Investment Partnership shall be paid prior to any such debts and
liabilities owed to the General Partner;
(g) Seventh, to the Investment Partnership in an amount equal
to its Invested Amount;
(h) Eighth, to the General Partner in an amount equal to its
Invested Amount;
(i) Ninth, except in the case of a refinancing, to each Partner
in an amount equal to the positive balance in such Partner's Capital
Account, after adjustments pursuant to Section 11.04A (a) - (h);
(j) the balance, 49% to the General Partner and 51% to the
Investment Partnership.
B. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings shall be distributed within 90 days
after the end of the fiscal quarter in which such Capital Transaction or
Refinancing occurs. Distributions of Distributable Proceeds from Capital
Transactions and Distributable Proceeds from Refinancings to the Partners
shall be made only after Capital Accounts have been adjusted to reflect all
previous allocations of Taxable Income and Tax losses to the Partners, for
distributions of Cash Flow, and for any other distributions of Distributable
Proceeds form Capital Transactions or Distributable Proceeds from
Refinancings.
Section 11.05 Allocations Among Partners.
A. For purposes of determining the Taxable Income (or Tax Losses)
or any other items allocable to any period, Taxable Income (or Tax Losses)
and any such other items shall be determined on a daily, monthly, or other
basis, as determined by the General Partners using any permissible method
under Code Section 706 and the Treasury Regulations thereunder.
B. Taxable Income, Tax Losses, and Tax Credits for all purposes of
this Agreement shall be determined in accordance with the accrual accounting
method. Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, and any other allocations,
including allocation of Book Profits and Losses, shall be divided among the
Partners in the same proportions as they share Taxable Income, Tax Credits,
and Taxable Losses, as the case may be, for such fiscal year.
C. In any year in which a Partner sells, assigns or transfers all or
any portion of an Interest to any Person who during such year is admitted as
a substitute Partner, the share of all Taxable Income, Tax Losses, and Tax
Credits, allocated to and of all Cash Flow and all cash proceeds
distributable under Section 11.04 distributed to, all Partners which is
attributable to the Interest sold, assigned or transferred shall be divided
between the assignor and the assignee using any one of the following methods
as determined by agreement between the assignor and assignee: (i) ratably on
the basis of the number of days in such year before, and the number of days
on and after, the execution by the assignee of this Agreement, or (ii) by
dividing the Partnership fiscal year into two segments, the first segment
being the time period in such year before the execution by the assignee of
this Agreement and the second segment being the time period in such year
beginning on the date of execution of this Agreement, and allocating Taxable
Income, Tax Losses, Tax Credits, Cash Flow, and all cash proceeds
distributable in each such segment among the persons who were Partners
during that segment, or (iii) using such other method as provided by the
Code or regulations thereunder.
D. In the event that there is a determination that there is any
original issue discount or imputed interest attributable to the Capital
Contribution of any Partner, or any loan between a Partner and the
Partnership, any income or deduction of the Partnership attributable to such
imputed interest or original issue discount on such Capital Contribution or
loan (whether stated or unstated) shall be allocated solely to such Partner.
E. In the event that the deduction of all or a portion of any fee paid
or incurred by the Partnership to a Partner or an Affiliate of a Partner is
disallowed for federal income tax purposes by the Internal Revenue Service
with respect to a taxable year of the Partnership, the Partnership shall
then allocate to such Partner an amount of gross income of the Partnership
for such year equal to the amount of such fee as to which the deduction is
disallowed.
F. If any Partner's Interest in the Partnership are reduced but not
eliminated because of the admission of new Partners or otherwise, or if any
Partner is treated as receiving any items of property described in Section
751(a) of the Code, the Partner's Interest in such items of Section 751(a)
property that was property of the Partnership while such Person was a
Partner shall not be reduced, but shall be retained by the Partner so long
as the Partner has an Interest in the Partnership and so long as the
Partnership has an Interest in such property.
G. The Partners are aware of the income tax consequences of the
allocations made by this Article XI and hereby agree to be bound by the
provisions of this Article XI in reporting their shares of Partnership
income and loss for income tax purposes.
Section 11.06 Qualified Income Offset.
(i) Notwithstanding any other provision of this Article XI, in
the event any Partner unexpectedly receives (a) an adjustment to the Capital
Account balance of such Partner as described in Section 1.704-
1(b)(2)(ii)(d)(4) of the Treasury Regulations, (b) an allocation to such
Partner of loss or deduction of the type described in Section 1.704-
1(b)(2)(ii)(d)(5) of the Treasury Regulations, or (c) a distribution to such
Partner in excess of any offsetting increase in the Partner's Capital
Account balance during or prior to the year of distribution, items of
Partnership Taxable Income and of income that constitute a credit to such
Partner's Capital Account shall be specially allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations under Code Section 704(b), the Qualified Income Offset
Amount (defined in Section 11.06(ii)) created by such adjustments,
allocations, or distributions as quickly as possible, provided that an
allocation pursuant to this Section 11.06(i) shall be made only if and to
the extent that such Partner would have a Qualified Income Offset Amount
after all other allocations provided for in this Article have been
tentatively made as if this Section 11.06(i) were not in this Agreement.
(ii) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Tax Losses of the Partnership be allocated to a
Partner if such allocation would result in such Partner having a Qualified
Income Offset Amount" (as defined below). As used herein, the term
"Qualified Income Offset Amount" for a Partner means the deficit balance, if
any, in such Partner's Capital Account as of the end of the relevant fiscal
year after giving effect to the following adjustments: (i) credit to such
Capital Account an amount equal to (a) the Partner's Share of Minimum Gain
immediately prior to the allocation or distribution and (b) the sum of such
Partner's allocable share of any recourse indebtedness of the Partnership as
determined under Section 752 of the Code and any unconditional obligation of
such Partner to contribute additional amounts to the capital of the
Partnership in the future (to the extent not previously taken into account
in determining such Partner's share of recourse liabilities of the
Partnership) and (ii) debit to such Capital Account the allocations or
distributions described in Section 11.06(i) that, as of the end of the
taxable year, are reasonably expected to be made to such Partner. All Tax
Losses in excess of the limitation set forth in this Section 11.06(ii) shall
be allocated to the General Partners.
Section 11.07. Minimum Gain Allocations. A.Notwithstanding any other
provisions of this Article XI, if in any year there is a net decrease in the
amount of the Partnership's Minimum Gain, each Partner will be allocated
items of Taxable Income and gain for such year equal to that Partner's share
of the net decrease in Minimum Gain, within the meaning of Treasury
Regulation 1.704-2(g)(2), and subject to the exceptions set forth in
Treasury Regulation 1.704-2(f).
Allocations of Taxable Income and gain (hereinafter referred to as a
"Minimum Gain Chargeback") required pursuant to this Section 11.07 shall
consist first of gains recognized from the disposition of items of
Partnership property subject to one or more nonrecourse liabilities of the
Partnership to the extent of the decrease in Minimum Gain attributable to
the disposition of such items of property (or if such gains exceed the
amount of the Minimum Gain Chargeback required for such taxable year, the
Minimum Gain Chargeback shall consist of a proportionate share of each such
gain), and the remainder of such Minimum Gain Chargeback shall consist of a
pro-rata portion of the other items of Taxable Income and gain of the
Partnership for that year. If the amount of the Minimum Gain Chargeback
requirement exceeds the Partnership's Taxable Income and gains for the
taxable year, the excess shall carry over to subsequent years.
B. If in any year there is a net decrease (within the meaning of
Treasury Regulations Section 1.704-2(i)(3) in Partner Nonrecourse Debt
Minimum Gain, any Partner with a share of that Member Nonrecourse Debt
Minimum Gain [(determined under Treasury Regulation 1.704-2(i)(5))] as of
the beginning of the year shall be allocated items of profits and gains for
that year (and if necessary, subsequent years) equal to that Partner's share
of the net decrease in Member Nonrecourse Debt Minimum Gain in accordance
with Treasury Regulation Section 1.704-2(i)(4).
Section 11.08 Regulatory Allocations. The allocations set forth in
Sections 11.01B, 11.01C, 11.06 and 11.07 (the "Regulatory Allocations") are
intended to comply with certain requirements of Treasury Regulation Section
1.704-1(b). It is the intent of the Partners that, to the extent possible,
all Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Taxable Income,
Tax Losses and items of income, gain, loss, or deduction pursuant to this
Section 11.08. Therefore, notwithstanding any other provision of this
Article (other than the Regulatory Allocations), the General Partners shall
make such offsetting special allocations of Taxable Income, Tax Losses, and
items of income, gain, loss, or deduction in whatever manner they determine
appropriate so that, after such offsetting allocations are made, each
Capital Account balance is, to the extent possible, equal to the Capital
Account balance such Partner would have had if the Regulatory Allocations
were not part of the Agreement and all items were allocated pursuant to
Sections 11.01A and 11.02. In exercising its discretion under this Section
11.08, the General Partners shall take into account future Regulatory
Allocations under Section 11.07 that, although not yet made, are likely to
offset other Regulatory Allocations previously made under Sections 11.01B
and 11.01C.
Section 11.09 Partners' Partnership Non-recourse Liabilities. For
purposes of Code Section 752, each Partner's share of Partnership non-
recourse liabilities shall be determined in accordance with Treasury
Regulation 1.752-3(a) or successor regulation. In this connection, for
purposes of determining each Partner's proportionate share of the excess
non-recourse liabilities of the Partnership pursuant to Treasury Regulation
1.752-3(a), the Investment Partnership shall have a 99% interest in
Partnership Taxable Income or profits and the General Partners shall have a
1% interest in Partnership Taxable Income or profits.
Section 11.10 Tax Allocations: Code Section 704(c). In accordance
with Code Section 704(c) and the Treasury Regulations thereunder, income,
gain, loss, and deduction with respect to any property contributed to the
capital of the Partnership shall be allocated among the Partners so as to
take account of any variation between the adjusted basis of such property to
the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 11.12 hereof).
In the event the Gross Asset Value of any Partnership properties is
adjusted pursuant to Section 11.12 hereof, subsequent allocations of income,
gain, loss, and deduction with respect to such asset shall take into account
any variation between the adjusted basis of such asset for federal income
tax purposes and its Gross Asset Value in the same manner as under Code
Section 704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the General Partners with the Consent of the Limited Partner, in any
manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into
account in computing, any Partner's Capital Account or share of Book Profits
and Losses, other items, or distributions pursuant to any provision of this
Agreement.
11.11. Tax Matters Partner.
A. The General Partner hereby is designated as Tax Matters Partner
of the Partnership, and shall engage in such undertakings as are required of
the Tax Matters Partner of the Partnership, as provided in regulations
pursuant to Section 6231 of the Code. Each Partner, by its execution of this
Agreement, Consents to such designation of the Tax Matters Partner and
agrees to execute, certify, acknowledge, deliver, swear to, file and record
at the appropriate public offices such documents as may be necessary or
appropriate to evidence such Consent.
B. The Tax Matters Partner is hereby authorized, but not required:
(a) to enter into any settlement with the Internal Revenue
Service or the Secretary with respect to any tax audit or judicial review,
in which agreement the Tax Matters Partner may expressly state that such
agreement shall bind the other Partners, except that such settlement
agreement shall not bind any Partner who (within the time prescribed
pursuant to the Code and regulations thereunder) files a statement with the
Secretary providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner;
(b) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to
the Tax Matters Partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court, the
District Court of the United States for the district in which the
Partnership's principal place of business is located, or the United States
Claims Court;
(c) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the
Internal Revenue Service at any time and, if any part of such request is not
allowed by the Internal Revenue Service, to file a petition for judicial
review with respect to such request;
(e) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax which is attributable to
any item required to be taken into account by a Partner for tax purposes, or
an item affected by such item; and
(f) to take any other action on behalf of the Partners or the
Partnership in connection with any administrative or judicial tax proceeding
to the extent permitted by applicable law or regulations.
C. The Partnership shall indemnify and reimburse the Tax Matters
Partner for all expenses, including legal and accounting fees, claims,
liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax liability of
the Partners. The payment of all such expenses (including any reimbursement
of the Tax Matters Partner for expenses that it may incur under the
following sentence) shall be made before any distributions are made from
Cash Flow or any discretionary reserves are set aside by the General
Partner. The General Partner shall have the obligation to provide funds for
such purpose. The taking of any action and the incurring of any expense by
the Tax Matters Partner in connection with any such proceeding, except to
the extent required by law, is a matter in the sole discretion of the Tax
Matters Partner and the provisions on limitations of liability of the
General Partner and indemnification set forth in Section 8.07 of this
Agreement shall be fully applicable to the Tax Matters Partner in its
capacity as such.
11.12 Capital Accounts
A. A Capital Account shall be maintained on the books of the
Partnership for each Partner, which shall be (i) credited with its Capital
Contributions and the amount of any Partnership liabilities that are assumed
by such Partner or that are secured by any Partnership property distributed
to such Partner; (ii) credited with its distributive share of Taxable Income
and any income of the Partnership that is exempt from federal income tax and
not otherwise taken into account in computing Taxable Income; (iii) charged
with its distributive share of Tax Losses and any nondeductible expenditures
of the Partnership (including Syndication Expenses) described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account under this Section 11.12; and (iv) charged with
any distributions to it and with the amount of any liabilities of such
Partner that are assumed by the Partnership or that are secured by any
property contributed by such Partner to the Partnership.
In the case of property other than cash contributed to the Partnership
or distributed to a Partner, each Partner's Capital Account will be credited
with the Gross Asset Value of property contributed to the Partnership (net
of liabilities assumed by the Partnership and liabilities to which such
contributed property is subject) and shall be debited with the cash and the
Gross Asset Value of property distributed to it (net of liabilities assumed
by such Partner and liabilities to which such distributed property is
subject). In the event the Gross Asset Values of Partnership assets are
adjusted pursuant to Section 11.12B hereof, the Capital Accounts of all
Partners shall be adjusted simultaneously to reflect the aggregate net
adjustment as if the Partnership recognized gain or loss equal to the amount
of such aggregate net adjustment.
Upon the sale, exchange or other transfer of an Interest, or the
assignment of such Interest to a new Partner, the Capital Account of the
transferor Partner shall carry over to the transferee Partner.
B. For purposes of determining and maintaining the Partners' Capital
Accounts, the Gross Asset Value of Partnership assets shall be adjusted as
follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined
by the General Partners, as of the following times: (a) the acquisition of
an additional Interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (b) upon
liquidation of the Partnership, or upon the distribution by the Partnership
to a Partner of more than a de minimis amount of money or other Partnership
property to a retiring or continuing Partner as consideration for an
Interest in the Partnership or (c) under generally accepted industry
accounting practices, provided substantially all of the Partnership's
property (excluding money) consists of stock, securities, commodities,
options, warrants, futures, or similar instruments that are readily
tradeable on an established securities market; and
(iii) If the Gross Asset Value of an asset has been determined
or adjusted pursuant to subsection (i) or (ii) of this Section 11.12B, such
Gross Asset Value shall thereafter be adjusted by the Book Depreciation
taken into account with respect to such asset for purposes of computing Book
Profits and Losses, as set forth in Section 11.12B.
C. For purposes of determining and maintaining the Partners' Capital
Accounts and the computation of Book Profits and Losses only, the following
adjustments shall be made to the calculation of Taxable Income and Tax
Losses reflected in the Partners' Capital Accounts:
(i) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value; and
(ii) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such Taxable Income or
Tax Losses, there shall be taken into account Book Depreciation for such
fiscal year or other period, computed as hereinafter set forth.
(iii) For this purpose, "Book Depreciation" means, for each
fiscal year or other period, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to an
asset for such year or other period, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such year or other period, Book Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery
deductions for such year or other period bears to such beginning adjusted
tax basis.
(iv) Allocations of Book Profits and Losses among the Partners
shall be made in accordance with the provisions of this Article XI
respecting allocations of Taxable Income and Tax Losses among the Partners.
11.13. Authority of General Partner to Vary Allocations to Preserve
and Protect Partner's Intent.
(a) It is the intent of the Partners that each Partner's
distributive share of income, gain, loss, deduction, or credit (or item
thereof) shall be determined and allocated in accordance with this Article
XI to the fullest extent permitted by Section 704(b) of the Code. In order
to preserve and protect the determinations and allocations provided for in
this Article XI, the General Partners hereby are authorized and directed to
allocate income, gain, loss, deduction, or credit (or item thereof) arising
in any year differently than otherwise provided for in this Article XI to
the extent that allocating income, gain, loss, deduction or credit (or item
thereof) in the manner provided for in Article XI would cause the
determinations and allocations of each Partner's distributive share of
income, gain, loss, deduction, or credit (or item thereof) not to be
permitted by Section 704 (b) of the Code and Treasury Regulations
promulgated thereunder. Any allocation made pursuant to this Section 11.13
shall be deemed to be a complete substitute for any allocation otherwise
provided for in this Article XI and no amendment of this Agreement or
approval of any Partner shall be required.
(b) In making any allocation (the "new allocation") under
Section 11.13(a), the General Partner is authorized to act only after having
been advised by the Accountants that, under Section 704(b) of the Code and
the Treasury Regulations thereunder, (i) the new allocation is necessary,
and (ii) the new allocation is the minimum modification of the allocations
otherwise provided for in this Article XI necessary in order to assure that,
either in the then current year or in any preceding year, each Partner's
distributive share of income, gain, loss, deduction, or credit (or item
thereof) is determined and allocated in accordance with this Article XI to
the fullest extent permitted by Section 704(b) of the Code and the Treasury
Regulations thereunder.
(c) If the General Partner is required by Section 11.13(a) to
make any new allocation in a manner less favorable to any Partner than is
otherwise provided for in this Article XI, then the General Partner is
authorized and directed, only after having been advised by the Accountants
that they are permitted by Section 704(b) of the Code, to allocate income,
gain, loss, deduction, or credit (or item thereof) arising in later years in
such manner so as to bring the allocations of income, gain, loss, deduction,
or credit (or item thereof) to such Partner as nearly as possible to the
allocations thereof otherwise contemplated by this Article XI.
(d) New allocations made by the General Partner under Section
11.13(a) and Section 11.13(c) in reliance upon the advice of the Accountants
shall be deemed to be made pursuant to the fiduciary obligation of the
General Partner to the Partnership and the Limited Partners, and no such
allocation shall give rise to any claim or cause of action by any Limited
Partner.
ARTICLE XII
SALE, DISSOLUTION AND LIQUIDATION
12.01. Dissolution of the Partnership. The Partnership shall be
dissolved upon the earlier of the expiration of the term of the Partnership,
or upon:
(a) subject to Section 6.03, the withdrawal, Bankruptcy, death,
dissolution or adjudication of incompetency of a General Partner who
is at that time the sole General Partner;
(b) the sale or other disposition of all or substantially all of
the assets of the Partnership;
(c) the election by the General Partner, with the Consent of BCTC
94; or
(d) the election by BCTC 94, with the Consent of the General
Partner which Consent shall not be unreasonably withheld or delayed
and shall take into account the investment objectives of the
Investment Partnership and BCTC 94, provided, however, the Consent of
the General Partner shall not be required if the General Partner is in
default under this Agreement, any Project Document, any Permanent Loan
Document, and/or any other loan from the Partnership to a lender; or
(e) any other event causing the dissolution of the Partnership
under the laws of the State.
12.02. Winding Up and Distribution.
(a) In the event of dissolution and termination of the Partnership,
a full accounting of the assets and liabilities shall be taken, and the
assets shall be distributed in accordance with this Section 12.02 as
follows, after taking into account all other allocations and distributions
under this Agreement for the Fiscal Year, including, without limitation, the
allocations under Article XI hereof;
(A) To the payment of all debts and liabilities of the
Partnership then due (including fees and loans payable to Partners);
(B) To the setting up of any reserves that the Liquidator may
deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership;
(C) To the Partners, in an amount equal to the positive
balances in their Capital Accounts.
If any General Partner has a negative Capital Account balance
following the liquidation of the Partnership or of the General Partner's
Interest in the Partnership within the meaning of Treasury Regulation
Section 1.704-1(b)(ii)(g), excluding from such General Partner's negative
Capital Account balance, (a) such General Partner's Share of Minimum Gain,
and (b) any other amount that such General Partner is deemed to be obligated
to restore to the Partnership under Treasury Regulation Section 1.704-
1(b)(2)(ii)(c) or otherwise under the Treasury Regulations promulgated under
Code Section 704(b), and after taking into account all Capital Account
adjustments (including adjustments arising from the liquidation) for the
Partnership taxable year during which such liquidation occurs, other than
those made pursuant to this Section, such General Partner shall be
unconditionally obligated to restore the amount of such negative Capital
Account balance to the Partnership by the end of such taxable year (or, if
later, within 90 days after the date of liquidation). Amounts contributed
to the Partnership in respect of such General Partner's obligation to
restore negative Capital Account balances shall be paid to creditors of the
Partnership or distributed to the other Partners in accordance with their
positive Capital Account balances, if any, as of the date of liquidation.
(b) The Liquidator shall file all certificates and notices of
the dissolution of the Partnership required by law. The Liquidator shall
proceed without any unnecessary delay to sell and otherwise liquidate the
Partnership's property and assets; provided, however, that if the Liquidator
shall determine that an immediate sale of part or all of the Partnership
property would cause undue loss to the Partners, then in order to avoid such
loss, the Liquidator may, except to the extent provided by the Act, defer
the liquidation as may be necessary to satisfy the debts and liabilities of
the Partnership to Persons other than the Partners. Upon the complete
liquidation and distribution of the Partnership assets, the Partners shall
cease to be Partners of the Partnership, and the Liquidator shall execute,
acknowledge and cause to be filed all certificates and notices required by
the law to terminate the Partnership.
(c) Upon the dissolution of the Partnership pursuant to Section
12.01, the Accountants shall promptly prepare, and the Liquidator shall
furnish to each Partner, a statement setting forth the assets and
liabilities of the Partnership upon its dissolution. Promptly following the
complete liquidation and distribution of the Partnership property and
assets, the Accountants shall prepare, and the Liquidator shall furnish to
each Partner, a statement showing the manner in which the Partnership assets
were liquidated and distributed.
ARTICLE XIII
BOOKS AND RECORDS, ACCOUNTING
TAX ELECTIONS, ETC.
13.01. Books and Records. The books and records of the Partnership
shall be maintained on an accrual basis in accordance with sound federal
income tax accounting principles. These and all other records of the
Partnership, including information relating to the status of the Apartment
Complex, information with respect to the sale by the General Partner or any
Affiliate of goods or services to the Partnership, and any information
required to be maintained by the Act or any governmental agencies having
jurisdiction, shall be kept at the principal office of the Partnership and
shall be available for examination there by any Partner, or his duly
authorized representative, at any and all reasonable times. Any Partner, or
his duly authorized representative, upon paying the costs of collection,
duplication and mailing, shall be entitled to a copy of the list of names
and addresses of the Limited Partners and of any of the books and records of
the Partnership.
13.02. Bank Accounts. All funds of the Partnership not otherwise
invested shall be deposited in one or more accounts maintained in such
banking institutions as the General Partner shall determine, and withdrawals
shall be made only in the regular course of Partnership business on such
signature or signatures as the General Partner may, from time to time,
determine. No funds of the Partnership shall be deposited in any financial
institution in which any Partner is an officer, director or holder of any
proprietary interest.
13.03. Accountants. The Accountants shall annually prepare for
execution by the General Partner all tax returns of the Partnership, shall
annually audit the books of the Partnership, and shall certify, in
accordance with generally accepted accounting principles, a balance sheet, a
profit and loss statement, and a cash flow statement. With respect to each
fiscal year during the Partnership's operations, at such time as the
Accountants shall have prepared the proposed tax return for such year, the
Accountants shall provide copies of such proposed tax return to the
Investment Partnership and to its accountants, Reznick, Fedder & Silverman,
of Bethesda, Maryland, for their review and comment, or to such other
accounting firm as BCTC 94 shall direct. Any comments and/or changes in
such proposed tax return reasonably recommended by the Investment
Partnership's accountants shall be taken into account and made by the
Accountants prior to the completion of such tax return for execution by the
General Partner. The Partnership shall reimburse Boston Capital
Communications Limited Partnership, an affiliate of the Investment
Partnership, for its expenses incurred in causing the Partnership's proposed
tax return to be reviewed by the Investment Partnership's accountants, if
and to the extent that such review results in modifications to such proposed
tax return. A full detailed statement shall be furnished to all Partners,
showing such assets, properties, and net worth and the profits and losses of
the Partnership for the preceding fiscal year. All Partners shall have the
right and power to examine and copy, at any and all reasonable times, the
books, records and accounts of the Partnership. The Accountants shall
timely file all reports required by the Permanent Lender and/or the Agency
and simultaneously shall send a copy of any such report to the Investment
Partnership.
13.04. Reports to Partners.
(a) The General Partner shall cause to be prepared and
distributed to all persons who were Partners at any time during a fiscal
year of the Partnership:
(i) By February 15 of the year after the end of each
fiscal year of the Partnership, (A) a balance sheet as of the
end of such fiscal year and statements of income, Partners'
equity, and changes in financial position and a Cash Flow
statement, for the year then ended, all of which, except the
Cash Flow statement, shall be prepared in accordance with
generally accepted accounting principles and accompanied by an
auditor's report containing an opinion of the Accountants, and
(B) a report of the activities of the Partnership during the
period covered by the report. Such report shall set forth
distributions to Limited Partners for the period covered thereby
and shall separately identify distributions from: (1) Cash Flow
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 the Apartment Complex or any other
investments of the Partnership, (4) lease payments on net leases
with builders and sellers, and (5) reserves. With respect to
any distribution to the Investment Partnership, the report
called for shall separately identify distributions from (A) Cash
Flow from operations during the period, (B) Cash Flow from
operations during a prior period which had been held as
reserves, (C) proceeds from disposition of property and
investments, (D) lease payments on net leases with builders and
sellers, (E) reserves from the gross proceeds of the offering
originally obtained from the Investment Partnership, (F)
borrowed monies, (G) loans or contributions from the Investment
Partnership, and (H) transactions outside of the ordinary course
of business with a description thereof. If the Completion Date
had not yet occurred as of December 31 in the year which is the
subject of the report, then this Section 13.04(a)(i) shall
require only the balance sheet for the year then ended.
(ii) By February 1 of the year after the end of each
fiscal year of the Partnership, all information necessary for
the preparation of the Limited Partners' federal income tax
returns, together with a draft of the Partnership's federal
income tax return for such fiscal year.
(iii) Within thirty (30) days after the end of each quarter
of a fiscal year of the Partnership, a report containing:
(A) A balance sheet, which may be unaudited;
and
(B) a statement of income for the quarter then
ended, which may be unaudited; and
(C) A Low Income Housing Credit Monitoring
form, Rent Rolls, Statement of Income and Expenses, Operating
Statement and Occupancy Rental Report, all in the form specified
by Boston Capital; and
(D) A certification that the Apartment Complex
and its tenants are in compliance with all applicable federal
and state laws and regulation; and
(E) other pertinent information regarding the
Partnership and its activities during the quarter covered by the
report.
(b) Within ninety (90) days after the end of each fiscal year of
the Partnership the General Partner shall provide to the Investment
Partnership:
(i) the information specified in Section 13.04(c)
and
(ii) to the extent not previously disclosed in a report
required hereunder a descriptive statement of all
transactions during the fiscal year between the Partnership
and the General Partner and/or any Affiliate, including the
nature of the transaction and the payments involved
(including accrued cash or other payments);
(c) Upon the written request of the Investment Partnership for
further information with respect to any matter covered in items (a) or (b)
above, the General Partner shall utilize its best efforts to furnish such
information within 30 days of receipt of such request.
(d) The General Partner shall notify the Investment Partnership
within fifteen days after the occurrence of any of the following events:
(i) there is a material default by the Partnership
under the Project Documents or in payment of any mortgage,
taxes, interest or other obligation on secured or unsecured
debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was established,
(iii) the General Partner has received any notice of a
material fact which may substantially affect further
distributions, or
(iv) any Partner has pledged or collateralized his
Interest in the Partnership, the General Partner shall send
the Investment Partnership a detailed report of such event.
(e) On or before the Admission Date, the General Partner, on
behalf of the Partnership, shall send to the Investment Partnership a copy
of all requests for disbursements, including disbursements from the escrow
account for rehabilitation expenses, or other extensions of credit under the
Permanent Loan which have been submitted to the Permanent Lender prior to
the Admission Date. After the Admission Date, the General Partner, on
behalf of the Partnership, shall send to the Investment Partnership, on or
before the tenth day of each month, a copy of each request for a
disbursement or other extensions of credit under the Permanent Loan
submitted to the Permanent Lender during the previous month. In addition,
within sixty (60) days after the occurrence of Substantial Completion, the
General Partner, on behalf of the Partnership, shall prepare and send to the
Investment Partnership a Credit Basis Worksheet for each building within the
Apartment Complex, in the format provided by Boston Capital. The General
Partner shall provide to the Investment Partnership such other reports from
time to time as may be reasonably required by the Investment Partnership
with the reasonable consent of the General Partner or by federal or state
agencies having jurisdiction.
(f) (i) In the event that the reports or information provided for
in Sections 13.04 (a)(i) and/or 13.04(a)(ii) above are, at any time, not
provided within the time period(s) specified in such Sections, the General
Partner shall be obligated to pay to the Investment Partnership the sum of
$100 per day, as liquidated damages, for each day from the date upon which
such reports or information is(are) due pursuant to the provisions of the
aforesaid Sections until the date upon which such reports or information is
(are) provided.
(ii) In the event that the reporting requirements set forth
in any of the above provisions of this Section 13.04 are not met, the
Investment Partnership, in its reasonable discretion, may direct the General
Partner to dismiss the Accountants, and to designate successor Accountants,
subject to the approval of the Investment Partnership; provided, however,
that if the General Partner and the Investment Partnership cannot agree on
the designation of successor Accountants, the successor Accountants shall be
designated by the Investment Partnership in its sole discretion, and the
fees of such successor Accountants shall be paid by the General Partner.
These costs shall not exceed the average of three bids from qualified
Accountants obtained by the General Partner. The Investment Partnership
shall give the General Partner at least 60 days' Notice of any material
change in the reporting requirements set forth herein.
13.05. Section 754 Elections. In the event of a transfer of all or
any part of the Interest of a General Partner or of a Limited Partner, the
Partnership may elect, pursuant to Sections 743 and 754 of the Code (or any
corresponding provision of succeeding law), to adjust the basis of the
Partnership property if, in the opinion of the Investment Partnership, based
upon the advice of the Accountants, such election would be most advantageous
to the Investment Partnership. Each Partner agrees to furnish the
Partnership with all information necessary to give effect to such election.
13.06. Fiscal Year and Accounting Method. The fiscal year of the
Partnership shall be the calendar year. All Partnership accounts shall be
determined on the accrual basis.
ARTICLE XIV
AMENDMENTS
14.01. Proposal and Adoption of Amendments. This Agreement may be
amended, after giving 20 days' Notice to the Partners hereunder (a) by the
General Partner with the Consent of the Investment Partnership, which
Consent (except in the case of any proposed amendment which the Investment
Partnership reasonably determines to be adverse to its interests as a
Partner) shall not be unreasonably withheld or (b) by the Investment
Partnership with the consent of the General Partner which Consent (except in
the case of any proposed amendment which the General Partner reasonably
determines to be adverse to its interests as a Partner) shall not be
unreasonably withheld. In determining whether or not to give its Consent to
an amendment prepared by the Investment Partnership, the General Partner
agrees to take into account the investment objectives of the Investment
Partnership.
ARTICLE XV
CONSENTS, VOTING AND MEETINGS
15.01. Method of Giving Consent. Any Consent required by this
Agreement may be given by a written Consent given by the consenting Partner
and received by the General Partner at or prior to the doing of the act or
thing for which the Consent is solicited.
15.02. Submissions to Limited Partners. The General Partner shall
give the Limited Partners Notice of any proposal or other matter required by
any provision of this Agreement or by law to be submitted for consideration
and approval of the Limited Partners. Such Notice shall include any
information required by the relevant provision or by law.
15.03. Meetings; Submission of Matter for Voting. Subject to the
provisions of Section 10.01, a majority in Interest of the Limited Partners
shall have the authority to convene meetings of the Partnership and to
submit matters to a vote of the Partners.
ARTICLE XVI
GENERAL PROVISIONS
16.01. Burden and Benefit. The covenants and agreements contained
herein shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the respective parties
hereto.
16.02. Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State.
16.03. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all
of which together shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties shall not have signed the same
counterpart.
16.04. Separability of Provisions. Each provision of this Agreement
shall be considered separable and if for any reason any provision which is
not essential to the effectuation of the basic purposes of this Agreement is
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those provisions of
this Agreement which are valid.
16.05. Entire Agreement. This Agreement sets forth all (and is
intended by all parties to be an integration of all) of the representations,
promises, agreements and understandings among the parties hereto with
respect to the Partnership, the Partnership business and the property of the
Partnership, and there are no representations, promises, agreements or
understandings, oral or written, express or implied, among them other than
as set forth or incorporated herein.
16.06. Liability of the Investment Partnership. Notwithstanding
anything to the contrary contained herein, neither the Investment
Partnership nor any of its partners, general or limited, shall have any
personal liability to any of the parties to this Agreement with regard to
the representations and covenants extended, or the obligations undertaken,
by the Investment Partnership under this Agreement. In the event that the
Investment Partnership shall be in default under any of the terms of this
Agreement, the sole recourse of any party hereto for any indebtedness due
hereunder, or for any damages resulting from any such default by the
Investment Partnership, shall be against the capital contributions of the
investor limited partners of the Investment Partnership allocated to, and
remaining for investment in, the Partnership; provided however, that under
no circumstances shall the liability of the Investment Partnership for any
such default be in excess of the aggregate of: (a) the amount of Capital
Contribution payable by the Investment Partnership to the Partnership, under
the terms of this Agreement, at the time of such default, and (b) an amount
equal to reasonable attorneys' fees reasonably and necessarily incurred by
the General Partners in obtaining payment of any Installment(s) not made by
the Investment Partnership when due and payable pursuant to the provisions
of this Agreement.
16.07. Environmental Protection.
(a) The General Partner represents and warrants that (i) it has
no actual knowledge of any deposit, storage, disposal, burial, discharge,
spillage, uncontrolled loss, seepage or filtration of any Hazardous
Substances at, upon, under or within the Land or any contiguous real estate,
and (ii) it has not caused or permitted to occur, and shall not knowingly
permit to exist, any condition which may cause a discharge of any Hazardous
Substances at, upon, under or within the Land or on any contiguous real
estate.
(b) The General Partner further represents and warrants that
neither it nor any of its Affiliates (i) has been, or will be involved in
operations at or, pursuant to its best efforts, near the Land, which
operations could lead to (A) the imposition of liability under the Hazardous
Waste Laws on the Partnership or on any other subsequent or former owner of
the Land or (B) the creation of a lien on the Land under the Hazardous Waste
Laws or under any similar laws or regulations; and (ii) has permitted, or
will permit, any tenant or occupant of the Apartment Complex to engage in
any activity that could impose liability under the Hazardous Waste Laws on
such tenant or occupant, on the Land or on any other owner of the Apartment
Complex.
(c) The General Partner shall comply strictly and in all
respects with the requirements of the Hazardous Waste Laws and related
regulations and with all similar laws and regulations.
(d) The General Partner, jointly and severally, shall at all
times indemnify and hold harmless the Investment Partnership against and
from any and all claims, suits, actions, debts, damages, costs, charges,
losses, obligations, judgments, and expenses, of any nature whatsoever,
suffered or incurred by the Investment Partnership, under or on account of
the Hazardous Waste Laws or any similar laws or regulations, including the
assertion of any lien thereunder (collectively, "Environmental Liability")
provided that the Limited Partners do not engage in any act or conduct which
would render the Limited Partners liable under the laws of the State and
which act or conduct directly caused such Environmental Liability hereunder.
Any loss incurred by the Partnership under or on account of the Hazardous
Waste Laws or any similar laws or regulations shall not give rise to the
indemnification hereunder if such Environmental Liability (i) is not imposed
directly on the Limited Partners and (ii) does not adversely affect the
benefits of the Limited Partners under this Agreement, including, without
limitation, cash distributions to which the Limited Partners otherwise would
be entitled and (iii) does not adversely affect the value or salability of
the Apartment Complex.
(e) For purposes of this Section 16.07, "Hazardous Substances"
means oil, petroleum or chemical liquids or solids, liquid or gaseous
products or any hazardous wastes or hazardous substances, as those terms are
used in the Hazardous Waste Laws; and "Hazardous Waste Laws" means the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, and any other federal, state or local law governing Hazardous
Substances, as such laws may be amended from time to time.
16.08. Notices to the Investment Partnership. Any Notice required
by the provisions of this Agreement to be given to the Investment
Partnership shall be addressed as follows:
Boston Capital Tax Credit Fund IV L.P.
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
Attention: Scott Arrighi
And a copy to:
Hinckley, Allen & Snyder
One Financial Center
Suite 4600
Boston, MA 02111-2625
Attention: Kristin A. DeKuiper, Esq.
16.09. Notices to the General Partner. Any Notice required by the
provisions of this Agreement to be given to the General Partners shall be
addressed as follows:
Mokapoke Limited Partnership
4400 East-West Highway
Bethesda, Maryland 02814
Attention: Robert Margolis
And a copy to: William H. Holden, Jr., Esq.
4400 East-West Highway,
Suite 126
Bethesda, MD 20814
IN WITNESS WHEREOF, the parties have affixed their signatures and
seals to this Amended and Restated Agreement of Limited Partnership of
Mokapoke Limited Partnership, as of the date first written above.
GENERAL PARTNER:
R.T.M. LIMITED PARTNERSHIP, General Partner
By: R.T.M., Inc., General Partner
By: /s/Tevis Margolis
Name: Tevis Margolis
Its: President
WITNESS:
_________________________
LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
By:Boston Capital Associates IV Limited
Partnership, its general partner
By: C&M Associates d/b/a Boston Capital
Associates, its general partner
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-
in-Fact of John P. Manning,
Partner
WITNESS:
_________________________
SPECIAL LIMITED PARTNER:
BCTC 94
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, Attorney-
in-Fact for John P. Manning,
President
ATTEST:
____________________________
WITHDRAWING LIMITED PARTNERS:
/s/Tevis Margolis
Tevis Margolis
/s/Robert Margolis
Robert Margolis
ATTEST:
____________________________
____________________________
DEVELOPER:
R.T.M., Inc.
By: Robert Margolis
Its: V.P.
ATTEST: ________________
COUNTY OF SUFFOLK )
ss
COMMONWEALTH OF MASSACHUSETTS )
Before me, the undersigned Notary Public in and for the aforesaid
County and State, personally appeared Bonnie Kate Fox, in her capacities as
(i) Attorney-in-Fact of John P. Manning, in his capacity as a general
partner of C&M Associates d/b/a Boston Capital Associates which is a general
partner of Boston Capital Tax Credit Fund IV L.P. as a Limited Partner of
Mokapoke Limited Partnership, and (ii) Attorney-in-Fact for John P. Manning
of BCTC 94, as a Special Limited Partner of Mokapoke Limited Partnership,
known to me as the person who executed the foregoing instrument and being
duly sworn, acknowledged that the statements therein contained are true and
the execution of the same is her free act and deed and the duly authorized
free act and deed of Boston Capital Tax Credit Fund IV L.P. and BCTC 94,
Inc..
Witness my hand and notarial seal this 22nd day of February, 1996.
______________________
Notary Public
My Commission Expires:
COUNTY OF Montgomery )
ss
STATE OF Maryland )
Before me, the undersigned Notary Public in and for the aforesaid
County and State, personally appeared Tevis Margolis in his capacity as a
Withdrawing Initial Limited Partner of Mokapoke Limited Partnership known to
me as the person executing the foregoing instrument and being duly sworn,
acknowledged the execution of the foregoing Amended and Restated Agreement
of Limited Partnership is his free act and deed.
Witness my hand and notarial seal this 16th day of
February, 1996.
_______________________
Notary Public
My Commission Expires:
COUNTY OF Montgomery )
ss
STATE OF Maryland )
Before me, the undersigned Notary Public in and for the aforesaid County and
State, personally appeared Tevis Margolis, in his capacity as the President
of R.T.M., Inc., in its capacity of General Partner of R.T.M. Limited
Partnership, the General Partner of Mokapoke Limited Partnership and the
Developer of the Apartment Complex, known to me as the person who executed
the foregoing instrument and being duly sworn, acknowledged that the
statements therein contained are true and the execution of the same is his
free act and deed and the duly authorized free act and deed of R.T.M., Inc.
Witness my hand and notarial seal this 16th day of February, 1996.
______________________
Notary Public
My Commission Expires:
COUNTY OF Montgomery )
ss
STATE OF Maryland )
Before me, the undersigned Notary Public in and for the aforesaid
County and State, personally appeared Robert Margolis in his capacity as a
Withdrawing Initial Limited Partner of Mokapoke Limited Partnership known to
me as the person executing the foregoing instrument and being duly sworn,
acknowledged the execution of the foregoing Amended and Restated Agreement
of Limited Partnership is his free act and deed.
Witness my hand and notarial seal this 16th day of
February, 1996.
_______________________
Notary Public
My Commission Expires:
COUNTY OF Montgomery )
ss
STATE OF Maryland )
Before me, the undersigned Notary Public in and for the aforesaid County and
State, personally appeared ____________, in his capacity as the President of
HAI Management, Inc., known to me as the person who executed the foregoing
instrument and being duly sworn, acknowledged that the execution of the same
is his free act and deed and the duly authorized free act and deed of HAI
Management, Inc.
Witness my hand and notarial seal this 16th day of February, 1996.
______________________
Notary Public
My Commission Expires:
Consent and Agreement
The undersigned hereby executes the foregoing Amended and Restated
Agreement of Limited Partnership of Mokapoke Limited Partnership (the
"Agreement") for the sole purpose of agreeing to the provisions of Sections
8.14, 8.15 and 8.16 of the Agreement of Limited Partnership notwithstanding
any provision of the Management Agreement to the contrary.
ATTEST: _____________
HAI MANAGEMENT, INC.
By:
Its: Vice President
#24318v1
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
_______________________________________
CERTIFICATION AND AGREEMENT
for
MOKAPOKE LIMITED PARTNERSHIP,
A MARYLAND LIMITED PARTNERSHIP
_______________________________________
CERTIFICATION AND AGREEMENT made as of __________ ___, 1996, by
MOKAPOKE LIMITED PARTNERSHIP, a Maryland Limited Partnership (the
"Operating Partnership") and R.T.M. LIMITED PARTNERSHIP, a Maryland
limited partnership, the "Operating General Partner") for the benefit
of BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited
partnership (the "Investment Partnership"), BCTC 94, INC., a Delaware
corporation (the "Special Limited Partner") and Hinckley, Allen &
Snyder and certain other persons or entities described herein. The
Investment Partnership and the Special Limited Partner shall
hereinafter be referred to as the "Limited Partners."
WHEREAS, the Operating Partnership proposes to admit Limited
Partners as the additional limited partners thereof pursuant to the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership dated as of _________, 1996 (the "Operating Partnership
Agreement"), in accordance with which the Special Limited Partner will
make a capital contribution of $10 to the Operating Partnership and
the Investment Partnership will make certain capital contributions to
the Operating Partnership.
WHEREAS, the Limited Partners have relied upon certain
information and representations described herein in evaluating the
merits of investment by the Limited Partners in the Operating
Partnership;
WHEREAS, Hinckley, Allen & Snyder, as counsel for the Limited
Partners will rely upon such information and representations in
connection with its delivery of certain opinions with respect to this
transaction; and
WHEREAS, William H. Holden, Jr., Esq., as counsel for the
Operating Partnership and the Operating General Partner, will rely
upon such information and representations in connection with its
delivery of certain opinions with respect to this transaction; and
NOW, THEREFORE, to induce the Limited Partners to enter into the
Operating Partnership Agreement and become the limited partners 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 and the Operating General
Partners hereby agree as follows for the benefit of the Limited
Partners and Hinckley, Allen & Snyder, William H. Holden, Jr., Esq.,
and certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership and the Operating General
Partner
The Operating Partnership and the Operating General Partners
jointly and severally represent, warrant and certify to the Limited
Partners and Hinckley, Allen & Snyder and William H. Holden, Jr.,
Esq., that, with respect to the Operating Partnership, as of the date
hereof:
1.01 The Operating Partnership is duly organized and in
good standing as a limited partnership pursuant to the laws of the
State with full power and authority to own the thirty (30) unit rental
housing project intended for rental to elderly and handicapped
individuals located in Pocomoke City, Maryland known as Clarke Manor
Apartments (the "Apartment Complex") and conduct its business; the
Operating Partnership and the Operating General 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 and the Operating General
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 agreement, indenture or instrument by which the
Operating Partnership or the Operating General Partner is bound or any
law, regulation, judgment, decree or order applicable to the Operating
Partnership or the Operating General Partner or any of their
respective properties; this Certification and Agreement constitutes
the valid and binding agreement of the Operating Partnership and the
Operating General Partner, enforceable against each of them in
accordance with its terms.
1.02 All factual information, including without
limitation the information set forth in Exhibit A hereto, provided to
the Limited Partners 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 Operating General Partner has also delivered to the
Limited Partners or their affiliates all documents and other
information which has been requested by such parties. Since the date
of the financial statements for the Operating General Partner
previously delivered, there has been no material adverse change in the
financial position of the Operating General Partner. The estimates of
occupancy rates, operating expenses and tax credits set forth on
Exhibit A are reasonable in light of the knowledge and experience of
the Operating General Partner.
1.03 As of the date hereof, each of the representations
contained in Exhibit B attached hereto is true, accurate and complete
as to both the Operating Partnership and the Operating General 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.
1.04 Each of the representations and warranties con-
tained in the Operating Partnership Agreement is true and correct as
of the date hereof.
1.05 Each of the covenants and agreements of the
Operating Partnership and the Operating General Partner contained in
the Operating Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required on or
prior to the date hereof.
1.06 All conditions to admission of the Limited Part-
ners as limited partners of the Operating Partnership contained in the
Operating Partnership Agreement have been satisfied.
1.07 No default has occurred and is continuing under
the Operating Partnership Agreement or any of the Project Documents
(as such term is defined in the Operating Partnership Agreement) for
the Operating Partnership.
1.08 The Operating General Partner agrees to take all
actions necessary to claim the Projected Credit, including, without
limitation, the filing of Forms 8609 with the Internal Revenue
Service.
1.09 No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
1.10 The Operating Partnership has the sole responsi-
bility to pay all maintenance and operating costs, including all taxes
levied and all insurance costs, attributable to the Apartment Complex.
1.11 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.
1.12 No person or entity except the Operating Part-
nership has the right to any proceeds, after payment of all
indebtedness, from the sale, refinancing, or leasing of the Apartment
Complex.
1.13 The Operating General Partner is not related in
any manner to either of the Limited Partners, nor is the Operating
General Partner acting as an agent of the Limited Partners.
1.14 To the best of the undersigned's knowledge after
due inquiry, the Apartment Complex does not contain in a level above
that deemed safe by all applicable governmental agencies, any
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 the Operating
General 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.
1.15 To the best of the undersigned's knowledge, based
on that certain real estate appraisal prepared by Farmer's Home
Administration dated January 6, 1995, and based upon the level of
permanent debt financing for the Project, there is a reasonable
expectation that the fair market value of the Operating Partnership's
building(s) at the end of each year will be greater than the total
amount of the Operating Partnership's liabilities, including accrued
interest on such liabilities.
1.16 None of the partners of the Operating Partnership
is a tax-exempt entity.
1.17 If any shareholder or other affiliate of the
Operating General Partner is a tax-exempt entity and the Operating
General Partner is a "controlled entity" in relation to such tax-
exempt entity, a timely election will be made under Code Section
168(h)(6)(F) so that no portion of the Apartment Complex will be
treated as "tax exempt use property" as defined in Code Section
168(h).
1.18 All representations made by the Operating General
Partner in the Operating Partnership Agreement are incorporated herein
by reference and are confirmed.
1.19 There is a reasonable expectation that the
Operating Partnership will be able to repay, as due, the principal and
interest on the projected loans to the Operating Partnership based on
the projected value of the Operating Partnership's property and
building(s).
1.20 An Extended Use Agreement (as defined in the
Operating Partnership Agreement) within the meaning of Code Section
42(h)(6) is or shall be in effect and recorded in the appropriate land
evidence records with respect to the building(s) not later than the
end of the taxable year in which any credit is taken with respect to
any building. If not in effect as of the date hereof, the Operating
General Partner agrees to deliver a valid and binding Extended Use
Agreement and evidence that it has been recorded no later than the end
of the first taxable year in which any Tax Credit is taken with
regarding to any building.
1.21 The Operating Partnership expects to incur, within
a 24-month period, expenditures equal to at least the great of (i)
$3,000 per residential unit or (ii) 10% of the unadjusted basis of the
building(s).
1.22 The amounts payable in development and property
management fees to HAI Management, Inc. and R.T.M., Inc. are fair in
light of the value and magnitude of the services rendered in
consideration for such fees, and the services performed in
consideration for the development fees relate solely to the
acquisition and rehabilitation of the Apartment Complex.
1.23 For any building(s) not placed in service prior to
December 31, 1995, (i) the Operating Partnership's basis in such
building as of the close of 1995 was more than 10% of the Operating
Partnership's reasonably expected basis in such building as of the
close of calender year 1995 and (ii) the Operating Partnership entered
into a Carryover Allocation agreement with the State of Maryland,
Department of Housing and Community Development, Community Development
Administration no later than December 31, 1995.
1.24 Each of the representations made by the Operating
Partnership in the Low-Income Housing Credit Application dated August
31, 1995 (the "Credit Application") in the Reservation of Federal Low-
Income Housing Tax Credit between the Authority and the Operating
Partnership dated November 21, 1995 (the "Credit Reservation
Agreement") and in the Carryover Allocation Contract between the
Authority and the Operating Partnership dated December 21, 1995 (the
"Carryover Allocation Agreement") is true and correct as of the date
hereof.
1.25 Each of the covenants, agreements, and conditions
contained in the Credit Reservation Contract and the Carryover
Allocation Agreement has been duly performed or satisfied by the
Operating Partnership or its Operating General Partners, as
applicable, to the extent that performance of any such covenant or
agreement or satisfaction of any condition is required on or prior to
the date hereof, and the Operating General Partners have no reason to
believe that covenants, agreements, and conditions required to be
performed or satisfied after the date hereof will not be performed or
satisfied in a timely manner.
1.26 The Operating General Partner has received from
the Agency no notice of default or of withdrawal or cancellation of
the Tax Credit reservation or allocation to the Operating Partnership
as described in the Credit Reservation Contract or the Carryover
Allocation Agreement.
1.27 The Operating Partnership has irrevocably elected
pursuant to Code Section 42 to lock in the applicable Tax Credit rate
prior to placement in service of each building pursuant to the Binding
Agreement and Election Statement dated December 21, 1995, between the
Agency and the Operating Partnership.
1.28 The Operating General Partner will not reduce its
aggregate interest, as Operating General Partners, in the Partnership
below 1% of all material items of the Partnership income, gain, loss,
deduction, and credit. The 1% interest will be calculated without
regard to any limited partner interest or interests in the Partnership
that the Operating General Partner has or may obtain.
1.29 The Operating General Partner, is on the accrual
method of accounting for tax purposes. Any entity that is related to
the Operating General Partner or to the Operating Partnership, that
will receive a fee from the Operating Partnership, directly or
indirectly, is on the cash method of accounting for tax purposes. If
any fee received by the Operating General Partner is treated as a
guaranteed payment under Section 707(c) of the Code, the Operating
General Partner will recognize such fee as income at the time such fee
is accrued by the Operating Partnership.
1.30 The Operating General Partner will be actively
involved in the management and operation of the Operating Partnership,
will devote substantial and continuing attention to the activities of
the Operating Partnership, and will provide substantial services to
the Operating Partnership.
1.31 The development and leasing activity in which the
Operating Partnership will engage will not contain personal or
recreational benefit for the partners of the Operating Partnership.
1.32 The Operating Partnership will keep active records
and carry out the proposed activity in a manner consistent with
profitable businesses in the same activity.
1.33 The Operating Partnership will have an objective
to carry on businesses for profit and divide the gains therefrom.
1.34 The Operating Partnership may earn a profit,
including profit from appreciation in the value of the Apartment
Complex.
1.35 The Permanent Loan and all other debt financing of
the Apartment Complex require the noncontingent repayment of principal
on or before a fixed maturity date, and will be considered and treated
as a loan by lender.
1.36 None of the Operating Partnership's lenders is a
party from whom the Operating Partnership acquired any portion of the
Apartment Complex, and none of the financing was issued in exchange
for any portion of the Apartment Complex. None of the Operating
Partnership's lenders will receive a fee with respect to the Operating
Partnership's investment in the Apartment.
1.37 Following is a description of any and all existing
or proposed financing of the Apartment Complex that involves any
direct or indirect grant or federal subsidy (including without
limitation federal grants, below-market interest rate loans, and tax-
exempt bonds): Loan with FmHA having an original principal amount of
$1,232.276.50, bearing interest at 7.5% per annum, which rate,
pursuant to the Rental Assistance Agreement is subsidized to 1% per
annum.
1.38 The Project will not receive moderate
rehabilitation assistance under Section 8(e)(2) of the United States
Housing Act of 1937 (unless pursuant to the Stewart B. McKinney
Homeless Assistance Act of 1988).
1.39 If the Apartment Complex is a scattered site
project within the meaning of Code Section 42, 100% of the rental
units in the Apartment Complex will be rent-restricted within the
meaning of Code Section 42.
1.40 All Units in the Apartment Complex are to be of
equal quality and all Apartment Complex amenities are to be made
available to all tenants on a comparable basis without separate fees
except for one unit in which the on-site manager shall reside.
1.41 There will be no direct or indirect personal
liability of the Operating Partnership or of any of the Partners for
the repayment of the principal of and payment of interest on the
Permanent Loan from and after commencement of the Permanent Loan Term,
and the sole recourse of the Lender under the Permanent Loan from and
after commencement of the Permanent Loan Term, with respect to the
principal thereof and interest thereon, shall be to the property
securing the indebtedness.
1.42 In connection with the Operating Partnership's
acquisition of the Apartment Complex, the Operating Partnership
assumed an existing loan to the Permanent Lender in the principal
amount of $1,203,600 (the "Assumed Loan") which loan may constitute a
below market federal loan under Section 42 of the Code. None of the
proceeds of the Assumed Loan was used to fund any of the
rehabilitation expenditures of the Apartment Complex.
1.43 In addition, in order to help finance the
acquisition of the Apartment Complex, the Permanent Lender made a new
loan in the amount of $37,150 to the Operating Partnership (the "New
Loan"), which New Loan may constitute a below market federal loan
under Section 42 of the Code. Pursuant to the requirements of the
Loan Agreement with the Permanent Lender, the proceeds of the New Loan
were used to pay a portion of the purchase price for the Apartment
Complex. None of the proceeds of the New Loan was used to fund any of
the rehabilitation expenditures of the Apartment Complex.
2. Indemnification
2.01 The Operating General Partner (for purposes of
this Section 2.01, an Indemnifying Party") agrees to indemnify and
hold harmless the Limited Partners (for purposes of this Section 2.01,
the "Indemnified Parties" or, individually, an "Indemnified Party")
and each officer, director, employee and person, if any, who controls
any Indemnified 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 such Indemnifying Party of any of its representations, warranties
or covenants to such Indemnified Party or any such of its officers,
directors, employees or controlling persons under this Certification
and Agreement or (ii) liability in connection with the Land and/or the
Apartment Complex, as each term is defined in the Operating
Partnership Agreement, 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,
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
defending against any such Liability or action; provided, however,
that the Indemnifying Party shall not be required to indemnify any
Indemnified Party or any such officer, director, employee or
controlling person for any payment made to any claimant in settlement
of any Liability or action unless such payment is approved by the
Indemnifying Party or by a court having jurisdiction of the
controversy. This indemnity agreement shall remain in full force and
effect notwithstanding any investigation made by any party hereto,
shall survive the termination of any agreement which refers to this
indemnity and shall be in addition to any liability which the
Indemnifying Party may otherwise have.
2.02 No Indemnifying Party shall be liable under the
indemnity agreements contained in Section 2.01 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 2.01. In case any action is brought against any
Indemnified Party or any such of its officers, directors, employees or
controlling persons upon any such claim, and it notifies the
Indemnifying Party of the commencement thereof as aforesaid, the
Indemnifying Party shall be entitled to participate at its own expense
in the defense, or, if it so elects, in accordance with arrangements
satisfactory to any other Indemnifying Party or parties similarly
notified, to assume the defense thereof, with counsel who shall be
reasonably 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.
3. Miscellaneous
3.01 This Certification and Agreement is made solely
for the benefit of the Operating Partnership, the Operating General
Partners, Hinckley, Allen & Snyder, William H. Holden, jr., Esq., and
the Limited Partners (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.
3.02 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.
3.03 Terms defined in the Operating Partnership
Agreement but not otherwise defined herein shall have the meanings
given 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:
MOKAPOKE LIMITED PARTNERSHIP
By: R.T.M. Limited Partnership, its
General Partner
By: R.T.M., Inc., its General Partner
By: /s/Robert Margolis
Name: Robert Margolis
Title: VP
OPERATING GENERAL PARTNER:
R.T.M. Limited Partnership
By: R.T.M., Inc., its General Partner
By: /s/Robert Margolis
Name: Robert Margolis
Title: VP
EXHIBIT A
MOKAPOKE LIMITED PARTNERSHIP
FACT SHEET
1.Sources and Uses of Funds
Sources of Funds
1. Perm. Mort. Loan - FmHA $1,232,276
2. Perm. Junior Mort. Loan $ N/A
3. Grant $ N/A
4. General Partners Capital Contributions $69,904
5. Investment Partnership Capital
Contribution $461,322
6. Deferred Development Fee $139,488
$1,902,990
Application of Funds
Total Construction Cost $ 144,000
Soft Costs $1,404,731
Land $ 60,000
Development Fee $ 294,259
$1,902,990
2.Construction and Permanent Financing
A. Construction Financing: N/A
B. Permanent Financing
1. Lender: FmHA
2. Mortgage Amount: $1,232,276
3. Interest Rate: 7.5% Subsidized to 1%
4. Term: 50 years
3. Permanent Junior Financing: N/A
4. Eligible Basis: $1,894,426
5. Qualified Basis: $1,894,426
6. GP Capital Contribution: $69,904
7. Type of Credit: New Construction/Rehabilitation (9%)
Acquisition (3%)
8. Rent-up Schedule:
100% by April, 1996
9. Projected Credit to the
Investment Partnership (99%):
A. $58,643 for 1996,
B. $78,190 per annum for each of the years 1996 through 2005, and
C. $19,548 for 2006.
10. Total Projected Credit to
the Operating Partnership
(100%):
A. $59,235 for 1996,
B. $78,980 per annum for each of the years 1997 through 2005,
and
C. $19,745 for 2006.
11. Tax Credit Approval:
A. Application:
1. Date: August 31, 1995
2. Credit Amount Requested: $78,972
B. Credit Reservation:
1. Date: November 21, 1995
2. Credit Amount Reserved: $78,980
C. Carryover Allocation:
1. Date: December 21, 1995
2. Credit Amount Allocated: $78,980
D. Credit Rate Lock-in Agreement
1. Date:
2. Rate locked-in:
E. Form 8609
1. Date: To be Determined
2. Credit Amount Allocated: To be Determined
12. Apartment Complex:
A. Name: Clarke Manor Apartments
B. Address: Linden Avenue, Pocomoke City, Maryland
C. County: Worcester
D. Type of Project: 5 Buildings containing 30 low-income
units (one of which is the on-site manager's unit)
13. 1994 Area Median Income: $38,200
14. Type of Units:
Unit Basic Utility
Number Square Ft. Rent Allowance
1-Bedroom 30 627 $375 $55
2-Bedroom 0 _____ $_____ $_____
3-Bedroom 0 _____ $_____ $_____
4-Bedroom 0 _____ $_____ $_____
15. Difference between rents allowed
by FmHA and rents allowed under
the Rent Restriction Test: N/A
16. Rental Assistance: 29 units
17. Annual Operating Expenses: $63,304 (1996)
18. Replacement Reserve Account
A. Annual: $124,075
B. Total: $ 12,408
19. Operating Reserve Account: N/A
(from proceeds of Second Installment)
20. Amount of Annual Reporting Fee
to Boston Capital Communications
Limited Partnership: $1,000
21. Amount of Annual Partnership
Management Fee: $1,000
22. Amount of Total Depreciable
Basis Allocated to Personal
Property: $48,262
23. Completion Date: April, 1996
24. Total Capital Contribution of
Investment Partnership: $
$461,322
25. Schedule of Capital Contributions:
A. $306,551 upon the latest to occur of:
(i) Admission Date,
(ii) Tax Credit Set Aside,
(iii) Receipt by Boston Capital of approval by Reznick,
Fedder & Silverman of a compliance of a minimum
of 20% of the leases in the Apartment Complex,
(iv) Permanent Mortgage Loan Commitment, or
(v) Receipt of an estoppel certificate and consent to
Syndication from the Permanent Lender in a form
acceptable to BCTC 94
B. $43,793* upon the latest to occur of:
(i) Substantial Completion,
(ii) Cost Certification,
(iii) Receipt of Satisfactory Title Policy,
(iv) Compliance with due diligence requirements,
(v) Receipt of release of liens from the Contractor,
(vi) Satisfaction of conditions of First Installment
*less any interest due on the Boston Capital Loan
C. $78,828 upon the latest to occur of
(i) State Designation
(ii) Initial 100% Occupancy Date,
(iii) Final Closing,
(iv) Breakeven Point, or
(v) Satisfaction of conditions of First and Second
Installments
D. $32,150 upon later of (i) Breakeven Confirmation or (ii)
Satisfaction of conditions of First, Second and Third
Installments
26. Fees, Special Distributions and Other Items to be paid from
Capital Contributions
A. Development Fee: $294,259*
*of which app. $139,488 is
deferred
B. Special Return of GP Capital
27. Consulting Fee to Boston CapitalN/A
Partners, Inc.
28. Operating General Partner:
R.T.M. Limited Partnership
4400 East-West Highway, Suite 718
Bethesda, Maryland 20814
(301) 656-0290
29. Developer: R.T.M., Inc.
Address: See above
Telephone Number: ( )
30. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
Operating General
Partner: 1% 49.00% 90.00%
Investment Partnership: 99% 51.00% 10.00%
Special Limited Partner: 0% 0.00% 0.00%
31. Management Agent:HAI Management, Inc.
Contact Person: Robert Udoff
Address: 1 2301 Old Columbia Pike
Silver Spring, Maryland 20904
Telephone Number: (301) 680-4343
Amount of Fee: No more than 10% of base rent collected
32. Builder: Unit Services, Inc.
Address: 12301 Old Columbia Pike
Silver Spring, Maryland 20904
Telephone Number: (301) 680-4334
Amount of Compensation: $144,000
Builder's Profit: $10,676
33. Subcontractor: N/A
Address:
34. Architect: N/A
Address:
Amount of Fee:
35. Auditor:Reznick, Fedder & Silverman
Contact Person: Karen Donahue
Address: 4520 East West Highway, Suite 300
Bethesda, Maryland 20814
Telephone Number: (301)652-9100
36. Tax Return Preparer: Same as Number 36
Contact Persons:
Address:
Telephone Number:
37. Federal Taxpayer ID Number: 52-1885884
38. State Housing Credit Agency: State of Maryland, Department of
Housing and Community Development, Community Development
Administration
39. State Housing Agency LIHTC Number:192
40. Operating Deficit Guaranty The General Partner shall be
obligated to make Subordinated Loans to the Partnership to cover
debtservice, operating expenses and the Replacement Reserve Fund to
the extent these exceed available operating income.
41. Guarantor(s): Tevis Margolis
cc: Boston Capital Communications Limited Partnership Accounting
Department
Exhibit B
Certificate of Operating Partnership and
Operating General Partner Re: Lack of Disqualifications
The Operating Partnership and its Operating General Partner (as
identified on the Amended and Restated 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) the officer, director,
principal, promoter or general partner of any Operating General Partners,
(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 jurisdiction, or which is the subject of a any refusal order
or stop order thereunder entered within five years prior to the date
hereof;
(2) Has been convicted of or pleaded nolo contendere to
a misdemeanor or felony or, within the last ten years, been held liable
in a civil action by final judgment of a court based upon conduct showing
moral turpitude in connection with the offer, purchase or sale of any
security, franchise or commodity (which term, for the purposes of this
Certificate shall hereinafter include commodity futures contracts) or any
other aspect of the securities or commodities business, or involving
racketeering, the making of a false filing or a violation of Sections
1341, 1342 or 1343 of Title 18 of the United States Code or arising out
of the conduct of the business of an issuer, underwriter, broker, dealer,
municipal securities dealer, or investment adviser, or involving theft,
conversion, misappropriation, fraud, breach of fiduciary duty, deceit or
intentional wrongdoing including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny fraudulent
conversion or misappropriation of property or conspiracy to defraud, or
which is a crime involving moral turpitude, or within the last five years
of a misdemeanor or felony which is a criminal violation of statutes
designed to protect consumers against unlawful practices involving
insurance, securities, commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order, judgment
or decree entered within five years prior to the date hereof entered or
issued by or procured from a state securities commission or
administrator, the Securities and Exchange Commission ("SEC"), the
Commodities Futures Trading Commission or the U.S. Postal Service, or to
(b) any administrative order or judgment, arising out of the conduct of
the business of an underwriter, broker, dealer, municipal securities
dealer, or investment adviser, or involving 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 en joins 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 temporary restraining order or preliminary injunction with respect
to conduct alleged to have violated Section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an exchange
registered as a national securities exchange, an association registered
as a national securities association, or any self-regulatory organization
registered pursuant to the Securities Exchange Act of 1934, or a Canadian
securities exchange, or association or self-regulatory organization
operating under the authority of the Commodity Futures Trading
Commission, or is subject to any currently effective order or order
entered within the past five years of the SEC, the Commodity Futures
Trading Commission or any state securities administrator denying regis-
tration 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 foregoing, 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 circumstances under which it was made false or misleading
with respect to any material fact, or has willfully omitted to state in
any such application, report or proceeding any material fact which is
required to be stated therein or necessary in order to make the
statements made, in the light of the circumstances under which they are
made, not misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or statement in
a timely manner;
(8) Has willfully violated any provision of the
Securities Act of 1933, the Securities Exchange Act of 1934, the Trust
Indenture Act of 1939, the Investment Advisers Act of 1940, the
Investment Company Act of 1940, the Commodity Exchange Act of 1974 or the
securities laws of any state, or any predecessor law, or of any rule or
regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any of the
statutes or rules or regulations referred to in subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if he
is a broker-dealer, or his employees, if he is an investment adviser, but
no person shall be deemed to have failed in such supervision if there
have been established procedures, and a system for applying such
procedures, which would reasonably be expected to prevent and detect,
insofar as practicable, any violation of statutes, rules or orders
described in subsection (8) and if such person has reasonably discharged
the duties and obligations incumbent upon him by reason of such
procedures and system without reasonable cause to believe that such
procedures and system were not being complied with;
(11) Is subject to a currently effective state admini-
strative 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 customer 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 Maryland Securities Act of 1972, as
amended (the "Maryland Act") or for any broker-dealer or issuer with
knowledge that such broker-dealer or issuer had not or has not complied
with the Maryland Act.
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).
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