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) October 31, 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
(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 October 31, 1996, Boston Capital Tax Credit Fund IV L.P., a
Delaware
limited partnership, specifically Series 25 thereof (the "Partnership"),
completed various agreements relating to 352 Lenox Associates, L.P., a
New
York limited partnership (the "Operating Partnership"), including an
Agreement
of Limited Partnership of the Operating Partnership dated as of October
31,
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 an existing apartment
complex located at 352-354 Lenox Avenue in the Borough of Manhattan,
City of
New York, New York (the "Apartment Complex"). The Apartment Complex
consists
of 1 two-bedroom unit and 17 three-bedroom units. The Apartment Complex
is
currently fully occupied.
Rehabilitation financing in the amount of $499,999 was provided by
Chase
Community Development Corporation. Permanent mortgage financing in the
amount
of $550,000 (the "Mortgage Loan") is being provided by Chase Community
Development Corporation. The Mortgage Loan is expected to have a 20-
year term
with repayment based on a 20-year amortization schedule. The interest
rate on
the Mortgage Loan is expected to be 9.62%.
100% of the apartment units (18 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 is 70 W 128 Corp. of Port Chester, New York.
Alan
B. Weissman, the principal of the General Partner, has significant
previous
experience in the real estate industry.
POKO Management Corporation serves as the management agent for the
Apartment Complex (the "Management Agent"). The Management Agent will
receive
a monthly fee from the Operating Partnership equal to 5% of gross
revenues
received during the previous month.
The Partnership acquired its interest in the Operating Partnership
directly from the Operating Partnership in consideration of an agreement
to
make a Capital Contribution of $1,034,631 which has been or will be
payable to
the Operating Partnership in four (4) Installments as follows:
1. $569,043 on the latest of (i) the Admission Date, (ii) Tax Credit
Set
Aside, (iii) Construction Mortgage Closing, (iv) Permanent Mortgage
Commitment
or (v) Construction Permitting Date;
2. $258,660 on the latest of (i) the Completion Date, (ii) Cost
Certification, (iii) compliance with Due Diligence Recommendations, (iv)
receipt of an updated title insurance policy satisfactory to the Special
Limited Partner, (v) receipt of the Contractor Payoff Letter, (vi)
receipt of
Lender Estoppel Letter or (vii) satisfaction of all conditions to
payment of
the First Installment;
3. $155,196 on the latest of (i) Rental Achievement, (ii) Permanent
Mortgage
Commencement, (iii) Initial 100% Occupancy Date, (iv) State Designation,
(v)
receipt of a Permanent Certificate of Occupancy for the Project or (iv)
satisfaction of all conditions of the First and Second Installments; and
4. $51,732 on the later of (i) the date on which the Partnership
receives the
Operating Partnership's tax return and audited financial statements for
the
year in which the Rental Achievement occurred or (ii) satisfaction of
all
conditions of the payment of the First, Second and Third Installments.
The total Capital Contribution of the Partnership to the Operating
Partnership is based on the Operating Partnership receiving $1,741,820
of Tax
Credits during the 10-year period commencing in 1997, of which
$1,724,400 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% 50% 90%
Partnership 99% 49.999% 10%
Special Limited 0% 0.001% 0%
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.
The Special Limited Partner, or an affiliate thereof, will receive
an
annual Asset Management Fee commencing in 1997 from the Operating
Partnership
for services in connection with the Operating Partnership's accounting
matters
and the preparation of tax returns and reports to the Partnership. The
Asset
Management Fee will be in an annual amount equal to the lesser of (i)
$1,500
or (ii) one-half of one per cent (0.5%) of the Aggregate Cost of the
Apartment
Complex. The Asset Management Fee for each fiscal year will be payable
from
Cash Flow in the manner and priority set forth in Article X of the
Operating
Partnership Agreement. To the extent Cash Flow in any year is
insufficient to
pay the entire amount of the Asset Management Fee, the amount of such
deficiency shall be paid directly by the General Partner to BCP as an
Affiliate thereof from its own funds.
The Operating Partnership will pay a Development Fee to the
General
Partner (or its designee) for its service in connection with the
rehabilitation and development of the Apartment Complex in accordance
with the
Development Agreement. The Operating Partnership will pay to the
General
Partner an Annual Partnership Management Fee commencing in 1997 for its
services in connection with managing the day-to-day business of the
Operating
Partnership in an amount equal to the lesser of (i) $1,500 per annum or
(ii)
the excess of (A) one-half of one percent (0.5%) of the Aggregate Cost
of the
Apartment Complex over (B) the amount of the Asset Management Fee
attributable
to such year. The Annual Partnership Management Fee for each fiscal
year will
be payable from Cash Flow in the manner and priority set forth in
Article X of
the Operating Partnership Agreement.
Item 7. Exhibits.
(a) and (b) There is no meaningful current or historic financial
information is available at this time.
(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)
(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. 33-99602 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 21, 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
BOS2:53585_1
17537/1229
352 LENOX ASSOCIATES, LP
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of October 31, 1996
TABLE OF CONTENTS
Preliminary Statement......................................... 1
ARTICLE I..................................................... 1
Defined Terms................................................. 1
ARTICLE II.................................................... 20
Name and Business............................................. 20
2.1 Name; Continuation.................................. 20
2.2 Office and Resident Agent........................... 20
2.3 Purpose............................................. 20
2.4 Term and Dissolution................................ 20
ARTICLE III................................................... 21
Mortgage, Refinancing and Disposition of Property............. 21
3.1 Personal Liability.................................. 21
3.2 Refinancings........................................ 22
3.3 Sale of Assets...................................... 22
3.4 Real Estate Commissions............................. 22
ARTICLE IV.................................................... 22
Partners; Capital............................................. 22
4.1 Capital and Capital Accounts........................ 22
4.2 General Partner..................................... 23
4.3 Investment Limited Partner, Special Limited Partner and Original
Limited Partner.......................................................
24
4.4 Liability of the Limited Partners................... 24
4.5 Special Rights of the Special Limited Partner....... 24
4.6 Meetings............................................ 26
ARTICLE V..................................................... 26
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner............................... 26
5.1 Payments............................................ 26
5.2 Return of Capital Contributions..................... 31
ARTICLE VI.................................................... 34
Rights, Powers and Duties of General Partner.................. 34
6.1 Authorized Acts..................................... 34
6.2 Restrictions on Authority........................... 35
6.3 Personal Services; Other Business Ventures.......... 38
6.4 Business Management and Control..................... 38
6.5 Duties and Obligations.............................. 39
6.6 Representations and Warranties...................... 42
6.7 Liability on Mortgages.............................. 46
6.8 Indemnification of the General Partner.............. 46
6.9 Indemnification of the Partnership and the Limited Partners 47
6.10 Operating Deficits.................................. 47
6.11 Obligation to Complete the Construction of the Apartment Complex
48
6.12 Certain Payments to the General Partner and Others.. 49
6.13 Delegation of General Partner Authority............. 49
6.14 Assignment to Partnership........................... 50
6.15 Contracts with Affiliates........................... 50
6.16 Tax Matters Partner................................. 51
ARTICLE VII................................................... 52
Withdrawal of a General Partner; New General Partners......... 52
7.1 Voluntary Withdrawal................................ 52
7.2 Reconstitution...................................... 53
7.3 Successor General Partner........................... 53
7.4 Interest of Predecessor General Partner............. 54
7.5 Amendment of Certificate; Approval of Certain Events 55
7.6 Valuation and Sale of Interest of Former General Partner 55
7.7 Designation of New General Partners................. 56
ARTICLE VIII.................................................. 57
Transferability of Limited Partner Interests.................. 57
8.1 Assignments......................................... 57
8.2 Substituted Limited Partner......................... 57
8.3 Restrictions........................................ 58
ARTICLE IX.................................................... 58
Borrowings.................................................... 58
ARTICLE X..................................................... 59
Profits, Losses, Tax Credits, Distributions and Capital Accounts 59
10.1 Profits, Losses and Tax Credits..................... 59
10.2 Cash Distributions Prior to Dissolution............. 60
10.3 Distributions Upon Dissolution...................... 61
10.4 Special Provisions.................................. 62
10.5 Authority of the General Partner to Vary Allocations to Preserve
and Protect the Partners' Intent.................................. 66
10.6 Recapture Amount.................................... 67
ARTICLE XI.................................................... 68
Management Agent.............................................. 68
11.1 General............................................. 68
11.2 Fees................................................ 69
11.3 Removal and Replacement............................. 69
11.4 Lack of Management Agent............................ 70
ARTICLE XII................................................... 70
Books and Records, Accounting, Tax Elections, Etc............. 70
12.1 Books and Records................................... 70
12.2 Bank Accounts....................................... 70
12.3 Auditors............................................ 70
12.4 Cost Recovery and Elections......................... 71
12.5 Special Basis Adjustments........................... 71
12.6 Fiscal Year......................................... 72
12.7 Information to Partners............................. 72
12.8 Expenses of the Partnership......................... 75
ARTICLE XIII.................................................. 76
General Provisions............................................ 76
13.1 Restrictions by Reason of Section 708 of the Code... 76
13.2 Amendments to Certificates.......................... 76
13.3 Notices............................................. 76
13.4 Word Meanings....................................... 77
13.5 Binding Effect...................................... 77
13.6 Applicable Law...................................... 77
13.7 Counterparts........................................ 77
13.8 Financing Regulations............................... 77
13.9 Separability of Provisions.......................... 78
13.10 Paragraph Titles.................................... 78
13.11 Amendment Procedure................................. 78
13.12 Extraordinary Partner Expenses...................... 78
13.13 Time of Admission................................... 79
SCHEDULE A
EXHIBITS:
EXHIBIT A Legal Description
EXHIBIT B Projected Rents
EXHIBIT C Due Diligence Recommendations
352 LENOX ASSOCIATES, LP
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
352 Lenox Associates, LP (the "Partnership") was formed as a New
York limited partnership pursuant to a Certificate of Limited
Partnership (the "Certificate") filed in the Filing Office on April 8,
1996 by and between 70 W 128 Corp., a New York corporation
("70 W 128"), as general partner owning 1% of the Partnership (the
"General Partner") and Alan B. Weissman, an individual ("Weissman"),
as the limited partner owning 99% of the Partnership (the "Original
Limited Partner").
The parties desire to (i) provide for the withdrawal from the
Partnership of the Original Limited Partner, (ii) provide for the
admission of BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware
limited partnership ("BCTCF"), as the Investment Limited Partner,
(iii) provide for the admission of BCTC 94, INC., a Delaware
corporation as the Special Limited Partner, and (iv) more fully set
forth the rights and obligations of the Partners.
In consideration of the mutual agreements set forth herein, it
is agreed and certified, and the Original Agreement is hereby amended
and restated in its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the meanings
specified below:
"Act" means the Revised Uniform Limited Partnership Act as in
effect in the State.
"Actual Credit" means, with respect to a particular Fiscal Year,
the total amount of Tax Credit properly allocable by the Partnership
to the Investment Limited Partner for such Fiscal Year. The Actual
Credit shall be retroactively revised if the amount of Tax Credit
properly allocable to the Investment Limited Partner is revised as the
result of an audit or is recaptured.
"Additional Limited Partner" means any holder of an Interest
designated as an Additional Limited Partner pursuant to the provisions
of Section 4.5(b) or Section 7.4.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, 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 any amounts
which such Partner is obligated to restore pursuant to any
provisions of this Agreement or is deemed to be obligated
to restore pursuant to the penultimate sentences of
Treasury Regulations Sections 1.704-2(g)(i) and 1.704-
2(i)(5), respectively; and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the
Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit and the
application of such term in the manner provided in this Agreement is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations and shall be interpreted consistently
therewith.
"Admission Date" means the first date on which all parties
hereto shall have executed this Agreement.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses and fees,
including court costs and reasonable attorneys' fees and expenses.
"Affiliate" means as to a specified Person, (i) such Person;
(ii) each member of the Immediate Family of such Person; (iii) each
legal representative, successor or assignee of any Person referred to
in the preceding clauses (i) or (ii); (iv) each trustee of a trust for
the benefit of any Person referred to in the preceding clauses (i) or
(ii); or (v) any other Person (a) who directly or indirectly controls,
is controlled by, or is under common control with such Person, (b)
who is an officer of, director of, partner in or trustee of, or serves
in a similar capacity with respect to, such Person or of which such
Person is an officer, director, partner or trustee, or with respect to
which such Person serves in a similar capacity, (c) who, directly or
indirectly, is the beneficial owner of ten percent (10%) or more of
any class of equity securities of such Person or of which such Person
is directly or indirectly the owner of ten percent (10%) or more of
any class of equity securities, (d) who is an officer, director,
general partner, trustee or holder of ten percent (10%) or more of
the voting securities or beneficial interests of any Person referred
to in the foregoing clauses (v) (b) or (v) (c), or (e) who, whatever
such Person's title, performs functions for such Person or any
Affiliate of such Person similar to a Chairman or member of the Board
of Directors, or executive officer such as the President, Executive
Vice President or Senior Vice President, Corporate Secretary, or
Treasurer, or any Person holding a five percent (5%) or more equity
interest in such Person, or any Person having the power to direct or
cause the direction of such Person whether through the ownership of
voting securities, by contract or otherwise. An Affiliate of any
Investment Limited Partner or of any Investment General Partner does
not include a Person who is a partner in a Partnership or joint
venture with any Investment Limited Partner or any other Affiliate of
any Investment Limited Partner if such Person is not otherwise an
Affiliate of any Investment Limited Partner or any Investment General
Partner. For purposes of this definition, the term Affiliate shall
not be deemed to include any law firm (or member or associate thereof)
providing legal services to any Investment Limited Partner, any
Investment General Partner, the General Partner or any Affiliate of
any of them.
"AFR" means the "applicable federal rate" as defined and
determined in the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency or any other Governmental
Authority with jurisdiction over the Apartment Complex, or the
business and operations of the Partnership.
"Agreement" means this Agreement of Limited Partnership,
including Schedule A, as amended from time to time.
"Allocation Regulations" means the Treasury Regulations issued
under Sections 704(b) and 752 of the Code, as the same may be modified
or amended from time to time. In the event that the Allocation
Regulations are revised or amended subsequent to the date of this
Agreement, references herein to sections or paragraphs of the
Allocation Regulations shall be deemed to be references to the
applicable sections or paragraphs of the Allocation Regulations as
then in effect.
"Apartment Complex" means the real property located in the
Borough of Manhattan, City of New York, New York County, New York, as
more fully described in Exhibit A attached hereto, together with (i)
all buildings and other improvements constructed or to be constructed
thereon and (ii) all furnishings, equipment and personal property
located thereon or otherwise covered by the Mortgages.
"Applicable Percentage" has the meaning set forth in Section
42(b) of the Code.
"Applied Amounts" shall have the meaning set forth in
Section 6.10.
"Asset Management Fee" means the fee payable to BCTCF or an
Affiliate thereof pursuant to the provisions of Section 6.12(b).
"Assignee" shall have the meaning set forth in Section 4.1(c).
"Auditors" means Reznick, Fedder & Silverman of Bethesda,
Maryland, or such other firm of independent certified public
accountants as may be engaged by the General Partner with the Consent
of the Special Limited Partner for the purposes of preparing the
Partnership's income tax returns, auditing the books and records of
the Partnership and certifying financial reports of the Partnership.
"BCTC '94" means BCTC '94, Inc., a Delaware corporation, and its
successors.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, and its successors.
"Best Knowledge" shall mean and include, in the case of a
specified Person, (i) actual current knowledge and (ii) that knowledge
which a prudent businessperson (including, in the case of an Entity,
the general or managing partners, officers and directors of such
Entity) should have obtained in the management of his or her business
affairs after making due inquiry and exercising due diligence with
respect thereto. In connection therewith, the knowledge (both actual
and constructive) of any general or managing partner, director or
officer of an Entity shall be deemed to be the knowledge of the
Entity.
"Capital Account" has the meaning set forth in Section 4.1(b).
"Capital Contribution" means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each
Partner, as set forth in Schedule A. Any reference in this Agreement
to the Capital Contribution of a then Partner shall include a Capital
Contribution previously made by any prior Partner for the Interest of
such then Partner.
"Capital Proceeds" means the proceeds of a Capital Transaction.
"Capital Transaction" means a refinancing of any Partnership
indebtedness or a sale, exchange, eminent domain taking, damage or
destruction (whether insured or uninsured), insured title defect or
other disposition of all or any portion of the Apartment Complex
(other than an event generating proceeds of any business or rental
interruption insurance), but excluding the payment of Capital
Contributions.
"Carryover Certification" means the date on which the Investment
Limited Partner shall have received, in a form and in substance
satisfactory to the Investment Limited Partner, the certification of
the Auditors that, with respect to the carryover allocation of 1995
Tax Credits, 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 per cent (10%) of the Partnership's
reasonably expected basis in the Apartment Complex as of December 31,
1995, 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 Available for Debt Service Requirements" for any period,
means the excess of (i) all cash actually received by the Partnership
on a cash basis from normal operations during such period, but
specifically excluding the proceeds of insurance (other than business
or rental interruption insurance), loans, Capital Transactions or
Capital Contributions over (ii) all cash requirements of the
Partnership properly allocable to such period of time on an accrual
basis (not including distributions to Partners out of Cash Flow of the
Partnership or fees payable from Cash Flow) and, on an annualized
basis, all projected expenditures, including those of a seasonal
nature, which might reasonably be expected to be incurred on an
unequal basis during a full annual period of operation as determined
by the Auditors but specifically excluding Debt Service Requirements.
For purposes of this definition, (i) cash requirements of the
Partnership shall include to the extent not otherwise covered above,
full funding of reserves (including, without limitation, funding of
the Replacement Reserve), normal repairs, real estate taxes at fully
assessed levels assuming a fully improved property and necessary
capital improvements and (ii) if free rent or other rental concessions
shall have been granted to tenants, the calculation of rental revenues
under clause (i) of 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.
"Cash Expenditures" means all disbursements of cash during a
specified Fiscal Year (other than distributions to Partners),
including, without limitation, payment of operating expenses, payment
of principal and interest on any Partnership indebtedness (other than
payments of principal and interest on any Subordinated Loans or
Voluntary Loans), the cost of repairs to the Apartment Complex,
amounts allocated to reserves by the General Partner and the payment
of any fees other than the Asset Management Fee, the Partnership
Management Fee and the Development Fee. In addition, the net increase
during such Fiscal Year in any escrow account or reserve maintained by
or for the Partnership shall be considered a Cash Expenditure during
such Fiscal Year. The term Cash Expenditures shall not include
Development Costs. Cash Expenditures payable to Partners or
Affiliates of Partners shall be paid after Cash Expenditures payable
to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash
Expenditures. Cash Flow shall be determined separately for each
Fiscal Year or portion thereof.
"Cash Receipts" means all cash receipts of the Partnership from
whatever source derived other than from a Capital Transaction,
including, without limitation, rental revenues, government subsidy
payments. In addition, the net reduction in any Fiscal Year in the
amounts of any escrow account or reserve maintained by or for the
Partnership (including, without limitation, the Operating Reserve and
the Replacement Reserve) shall be considered a cash receipt of the
Partnership for such Fiscal Year. Notwithstanding the foregoing, at
the election of the General Partner, Cash Receipts received near the
end of a Fiscal Year and intended for use in meeting the Partnership's
obligations (including the cost of acquiring assets or paying debts or
expenses) in the subsequent Fiscal Year shall not be deemed to be
received until such following Fiscal Year.
"Certificate" shall have the meaning set forth in the
Preliminary Statement.
"Class Contribution" means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the General
Partner, the Investment Limited Partner, the Special Limited Partner
or any Additional Limited Partner).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations (permanent and temporary) issued
thereunder. References herein to any Code section shall include any
successor provisions.
"Commencement Date" means the first day of the month in which
the Admission Date occurs.
"Competitive Real Estate Commission" means that real estate or
brokerage commission paid for the purchase or sale of the Apartment
Complex or other Partnership property which is reasonable, customary
and competitive in light of the size, type and location of the
Apartment Complex or other property.
"Completion Date" means the later of: (i) the date the
Investment Limited Partner shall have received copies of all requisite
certificates or permits permitting occupancy of 100% of the apartments
units in the Apartment Complex as issued by each Agency having
jurisdiction; provided, however, that if such certificates or permits
are of a temporary nature, the Completion Date shall not be deemed to
have occurred unless the General Partner certifies to the Investment
Limited Partner that any work remaining to be completed is for so-
called "punch list items" and the General Partner knows of no reason
why permanent certificates of occupancy will not be issued upon
completion of such "punch list items"; or (ii) the date as of which
the Inspecting Consultant certifies that the work to be performed by
the Contractor under the Construction Contract is substantially
complete. Any representation by the General Partner under this
Agreement that the Completion Date has occurred shall be subject to
confirmation by the Special Limited Partner pursuant to a physical
inspection of the Apartment Complex; provided, however, that in the
event that the Special Limited Partner does not make such physical
inspection of the Apartment Complex within ten (10) business days
after having received a written representation of the General Partner
that the Completion Date has occurred, then the Special Limited
Partner will be deemed to have waived the physical inspection
requirement; provided, however, that such 10-day period shall not be
included in any calculation as to when the Completion Date shall have
occurred.
"Compliance Period" means the fifteen (15)-year period
commencing with the first year of the Credit Period.
"Consent of the Investment Limited Partner" means the prior
written consent or approval of the Investment Limited Partner which,
unless otherwise specifically provided herein, may be given or
withheld in its sole discretion. The Consent of the Investment
Limited Partner shall be exercised by and through the Investment
General Partner, acting in the name and on behalf of the Investment
Limited Partner. If at any time, the Investment Limited Partner
interest is held by more than one Person, such Consent shall require
majority approval of such Persons.
"Consent of the Special Limited Partner" means the prior written
consent or approval of the Special Limited Partner which, unless
otherwise specifically provided herein, may be given or withheld in
its sole discretion.
"Construction Contract" means the construction contract dated as
of January 1, 1994, by and between the Contractor and the Partnership,
as amended.
"Construction Lender" means Chase Community Development
Corporation or any other Lender providing construction financing for
the Apartment Complex.
"Construction Loan" means the construction loan, in the amount
of $499,999 to be provided by the Construction Lender to the
Partnership pursuant to the terms of the Construction Loan Documents.
"Construction Loan Agreement" means the Loan Agreement dated
July 17, 1996 by and between the Construction Lender and the
Partnership, as amended.
"Construction Loan Documents" means the Construction Note, the
Construction Mortgage, the Construction Loan Agreement, the
Construction Assignment and Security Agreement] and all other
documents executed and/or delivered in connection with the
Construction Loan.
"Construction Mortgage" means the Mortgage securing the
Partnership's obligations under the Construction Note.
"Construction Note" means the promissory note executed by the
Partnership to evidence its obligations with respect to the
Construction Loan, which note is or shall be secured by the
Construction Mortgage.
"Construction Permitting Date" means the first date upon which
the Partnership shall have received the Requisite Approvals for the
commencement of the rehabilitation and operation of the Apartment
Complex in accordance with the Plans and Specifications therefor.
"Contractor" means 352 Lenox Corp., a New York corporation, and
its successors.
"Contractor Payoff Letter" means a letter to be issued by the
Contractor to the Partnership at the time of the Completion Date
stating that all amounts payable to the Contractor in connection with
the Project have been paid in full and that there are no pending or,
to the Contractor's Best Knowledge, threatened, defaults under the
Construction Contract.
"Controlling Person" has the meaning set forth in Section 15 of
the Securities Act of 1933, as amended.
"Cost Certification" means the date upon which each Limited
Partner shall have received the written certification of the Auditors,
in a form and in substance satisfactory to the Special Limited
Partner, as to the itemized amounts of the construction and
development costs of the Apartment Complex and the Actual Credit
pertaining to each building in the Apartment Complex.
"Credit Agency" means the New York State Division of Housing and
Community Renewal, and its successors.
"Credit Period" has the meaning set forth in Section 42(f)(1) of
the Code.
"Credit Recovery Loan" means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully described in
Section 5.1(g). Credit Recovery Loans and interest thereon shall not
be treated as loans or interest, respectively, for accounting, tax or
liability purposes or for the purposes of Section 6.2(a)(i). For the
purposes of Article X, the term Credit Recovery Loan shall not include
any portion of such a deemed advance which shall have theretofore been
paid to the Investment Limited Partner.
"Credit Shortfall" shall have the meaning set forth in Section
5.1(g).
"Debt Service Coverage Ratio" means, for any period with each
month considered individually, a fraction, the numerator of which is
the Cash Available for Debt Service Requirements with respect to such
period and the denominator of which is the Debt Service Requirements
for such period. The achievement by the Partnership of a specified
Debt Service Coverage Ratio shall be confirmed by the Auditors and
shall be subject to the approval of the Special Limited Partner, which
shall not be unreasonably withheld, provided, however, that no
objection by the Special Limited Partner to the determination of the
Auditors shall be valid unless the General Partner is notified of such
objection, and the specific reasons therefor, within seven (7)
business days following the receipt by the Special Limited Partner of
the Auditor's determination letter and in the event that the Special
Limited Partner does not so notify the General Partner within such
seven business day period, the Special Limited Partner will be deemed
to have waived its right to object to such determination.
"Debt Service Requirements" means for any period, all debt
service, reserve, mortgage insurance premium, tax and insurance
escrows and/or other cash requirements imposed with respect to the
Mortgage or any other indebtedness (except for the Subordinated Loans
and Voluntary Loans) properly allocable to such period of time on an
annualized accrual basis as determined by the Auditors. To the extent
the relevant period includes any period prior to Permanent Mortgage
Commencement, Debt Service Requirements for such period shall be
computed by adding to the foregoing amounts the amount (if any) by
which the debt service on such Permanent Loan for such period
beginning after principal amortization has commenced exceeds the
actual debt service on such Permanent Loan (and any previous Mortgage
Loan which may have then been in place) for the relevant period.
"Designated Net Worth Requirements" means as of the date of
determination, such standards or criteria (relating to net worth or
other characteristics) as may be (i) set forth in Revenue Procedure
89-12 or any other regulations, memoranda, published ruling or revenue
procedure of the Service for classification of the Partnership for
federal income tax purposes as a partnership rather than an
association taxable as a corporation, or (ii) sufficient to support
the issuance by tax counsel approved by each Investment Limited
Partner of an opinion to the same effect.
"Developer" means Harrows Housing, Inc., a New York corporation,
and its successors.
"Development Agreement" means the Development Agreement, dated
as of November 1, 1995, by and between the Developer and the
Partnership.
"Development Costs" means any and all costs and expenses
necessary to (i) cause the construction of the Apartment Complex to be
completed, in a good and workmanlike manner, free and clear of all
mechanics', materialmen's or similar liens, in accordance with the
Plans and Specifications, (ii) equip the Apartment Complex with all
fixtures as shown on the Plans and Specifications, equipment and
articles of personal property (including, without limitation,
refrigerators and ranges), (iii) obtain all required certificates of
occupancy for the apartment units and other space in the Apartment
Complex, (iv) pay the Development Fee, (v) finance the construction of
the Apartment Complex and achieve Permanent Mortgage Commencement in
accordance with the provisions of the Project Documents, (vi)
discharge all Partnership liabilities and obligations arising out of
any casualty generating insurance proceeds for the Partnership, (vii)
fund any Partnership reserves required (a) hereunder or (b) under any
of the Project Documents which must be funded prior to the Completion
Date, (viii) repay and discharge the Construction Loan, and (ix) pay
any other costs or expenses necessary to achieve the Completion Date
and Permanent Mortgage Commencement.
"Development Fee" means the fees payable by the Partnership to
the Developer pursuant to the terms of the Development Agreement for
its services in connection with the development and rehabilitation of
the Apartment Complex.
"Disposition" (including the forms Dispose and Disposing) means,
as to a specified Partner, the assignment, sale, transfer, exchange or
other disposition of all or any part of its Interest.
"Disposition Agreement" means the Disposition and Development
Agreement, dated as of ___________________ __, 19__, by and between
the Credit Agency and the Partnership, as may be amended from time to
time.
"Disposition Fee" means the fees payable pursuant to the terms
of the Disposition Agreement.
"Due Diligence Recommendations" means Exhibit C attached hereto
and made a part hereof.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section 42(d) of
the Code.
"Entity" means any Person, general partnership, limited
partnership, limited liability company, corporation, joint venture,
trust, business trust, cooperative or association.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person in an
involuntary case under the federal bankruptcy laws, as now
or hereafter constituted, or any other applicable federal
or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of his property, or ordering
the winding-up or liquidation of his affairs and the
continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days;
(ii) the commencement by such Person of a voluntary case under
the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or the
consent by him to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of such Person or for
any substantial part of his property, or the making by him
of any assignment for the benefit of creditors, or the
taking of corporate action by the Person in furtherance of
any of the foregoing; or
(iii) the commencement against such Person of an involuntary
case under the federal bankruptcy laws, as now constituted
or hereafter amended, which has not been vacated,
discharged or bonded within sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in
Section 5.1(h).
"Extended Use Agreement" means the extended use housing
commitment to be executed by the Partnership in accordance with the
requirements of the Credit Agency and the provisions of
Section 42(h)(6)(A) of the Code.
"Filing Office" means the Office of the Secretary of State of
the State of New York.
"Fiscal Year" means the twelve (12)-month period which begins on
the first day of January and ends on the thirty-first day of December
of each calendar year (or ends on the date of final dissolution for
the year in which the Partnership is wound up or dissolved) including,
without limitation, such partial year as may be applicable.
"General Partner" means 70 W 128 Corp., a New York corporation,
and any Person who becomes a General Partner as provided herein, in
its capacity as a general partner of the Partnership. At any and all
times where there is more than one General Partner, the term General
Partner shall mean such General Partners.
"Governmental Authority" means the Credit Agency or any other
federal, state or local governmental authority having jurisdiction
over the particular matter to which reference is being made.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except 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 Partner, 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) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership
property as consideration for an interest in the
Partnership; and (c) the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Allocation Regulations; provided, however, that the
adjustments pursuant to clauses (a) and (b) above shall be
made only if the General Partner reasonably determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in
the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed
to any Partner shall be the gross fair market value of
such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section
734(b) or Code Section 743(b), but only to the extent that
such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m)
of the Allocation Regulations and Section 4.1 hereof;
provided, however, that Gross Asset Values shall not be
adjusted pursuant to this clause (iv) to the extent that
the General Partner determines that an adjustment pursuant
to clause (ii) hereof is necessary or appropriate in
connection with a transaction that would otherwise result
in an adjustment pursuant to this clause (iv).
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Section (i), (ii) or (iv) hereof, such Gross
Asset Value shall thereafter be adjusted by the depreciation taken
into account with respect to such asset for purposes of computing
Profits or Losses.
"Guarantor" means Alan B. Weissman, and his successors.
"Guaranty" means the Guaranty, dated as of October __, 1996, of
the Guarantor of certain of the obligations of the General Partner
hereunder and of the Developer as set forth in the Development
Agreement, as amended.
"Hazardous Material" has the collective meanings given to the
terms "hazardous material", "hazardous substances", "hazardous
wastes", toxic substances" and analogous terms, in the Federal
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the term
"radioactive materials" in the context of the Atomic Energy Act, 28
U.S.C. Sec. 2344, and also includes any meanings given to such terms
in any similar state or local statutes, ordinances, regulations or by-
laws.
"Immediate Family" means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law, children,
children-in-law, grandchildren and grandchildren-in-law.
"Includable Items" shall have the meaning set forth in
Section 6.11.
"Initial Adjustment Date" shall have the meaning set forth in
Section 5.1(e).
"Initial 100% Occupancy Date" means the first date on which not
less than 100% of the 18 apartment units in the Apartment Complex
shall have been leased to, and not less than 100% of such apartments
units shall be physically occupied by tenants on such date meeting the
terms of the Minimum Set-Aside Test under executed leases at rentals
meeting the requirements of the Rent Restriction Test.
"Initial Operating Period" means the period commencing on
Completion Date and ending on the last day of the sixtieth (60th)
month following such date.
"Inspecting Consultant" means the consultant retained by any
Lender (including, without limitation, the Construction Lender) to
monitor the progress of the rehabilitation of the Apartment Complex
and to certify as to the completion of such construction.
"Installment" means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
"Interest" means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled
hereunder and the obligation of such Partner to comply with the terms
of this Agreement.
"Invested Amount" means (i) as to the Investment Limited
Partner, an amount equal to the Capital Contribution of the Investment
Limited Partner divided by .73 and (ii) as to any other Partner, an
amount equal to its paid-in Capital Contribution.
"Investment General Partner" means Boston Capital Associates IV
L.P., a Delaware limited partnership, in its capacity as the general
partners of the Investment Limited Partner, and any other Person who
may become a successor or additional general partner of the Investment
Limited Partner.
"Investment Limited Partner" means BCTCF and any Person or
Persons who replace it as Substituted Limited Partner, but shall not
include any Additional Limited Partner.
"Investment Partnership Agreement" means the Agreement of
Limited Partnership of the Investment Limited Partner, as amended from
time to time.
"Lender" means any Person (other than the General Partner or its
Affiliates) who makes a loan to the Partnership, whether or not such
loan is secured by a Mortgage, or the successors and assigns of such
Person in such capacity.
"Lender Estoppel Letter" means a letter to be issued to the
Partnership by each Lender to the Project at the time of payment of
the Second Installment stating that all a mounts currently due and
owing to such Lender by the Partnership have been paid in full and
that there are no existing defaults in connection with such debt
obligations which have been noticed.
"Limited Partners" means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
"Liquidating Event" shall have the meaning set forth in Section
2.4.
"Managing General Partner" means any Person designated as such
pursuant to the provisions of Section 6.4.
"Management Agent" means POKO Management Corp., a New York
corporation in its capacity as the initial management and rental agent
for the Apartment Complex, and any successor management and rental
agent designated or appointed at any time.
"Management Agreement" means the agreement between the
Partnership and the Management Agent providing for the management of
the Apartment Complex.
"Management Fee" means the Management Fee to which reference is
made in Section 11.1.
"Material Agreement" means any agreement to which the
Partnership is a party or to which the Apartment Complex is subject,
the termination of which would have a material adverse impact on the
Apartment Complex or the business and operations of the Partnership.
"Material Event" means the occurrence of any of the following
events:
(i) a material breach by a General Partner (or any
of its Affiliates) in the performance of any of its
obligations under this Agreement, or any of the Material
Agreements after delivery of written notice thereof to the
General Partner which shall have 30 days from the date of
delivery to cure and provided the General Partner is
diligently pursuing a cure, such additional period as may
be reasonably necessary to effect a cure but in no event
to exceed 180 days;
(ii) a Terminating Event as to any General Partner
or an Event of Bankruptcy as to the Partnership;
(iii) a material violation by any General Partner of
its fiduciary duties as a General Partner of the
Partnership;
(iv) a violation by any General Partner of any law,
regulation or order applicable to the General Partner or
the Partnership which has or may have a material adverse
effect on the Partnership or the Apartment Complex;
(v) a material breach by the Partnership or any
General Partner (or any of their respective Affiliates)
under any Project Document or other material agreement or
document affecting the Partnership or the Apartment
Complex after delivery of written notice thereof to the
General Partner which shall have 30 days from the date of
delivery to cure and provided the General Partner is
diligently pursuing a cure, such additional period as may
be reasonably necessary to effect a cure but in no event
to exceed 180 days;
(vi) the failure to achieve the Completion Date by
December 31, 1997;
(vii) the failure to begin the Credit Period by
January 1, 1998;
(viii) the commencement of foreclosure
proceedings with respect to any Mortgage, which have not
been withdrawn or dismissed within one hundred twenty
(120) days after the date of such commencement;
(ix) the failure of the General Partner to make any
payment required to be made to the Investment Limited
Partner pursuant to the provisions of Section 5.1(e) or
(f) after delivery of written notice thereof to the
General Partner which shall have 30 days from the date of
delivery to cure and provided the General Partner is
diligently pursuing a cure, such additional period as may
be reasonably necessary to effect a cure but in no event
to exceed 180 days; or
(x) the fraud, bad faith, gross negligence, or
willful misconduct by a General Partner.
"Minimum Set-Aside Test" means the set aside test selected by
the Partnership pursuant to Section 42(g) of the Code whereby at least
40% of the units in the Apartment Complex must be occupied by
individuals with incomes equal to 60% or less of area median income,
as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the Partnership
evidenced by any Note and secured by any mortgage on the Apartment
Complex from the Partnership to any Lender; and, where the context
admits, the term "Mortgage" shall mean and include any of the
mortgages securing said indebtedness and any other documents
pertaining to said indebtedness which were required by the Lender as a
condition to making such Mortgage Loan. In case any Mortgage is
replaced by any subsequent mortgage or mortgages, such term shall
refer to any such subsequent mortgage or mortgages. The term
"mortgage" means any mortgage, mortgage deed, deed of trust, deed to
secure debt or any similar security instrument, and "foreclose" and
words of like import include the exercise of a power of sale under a
mortgage or comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by any
Lender and secured by a Mortgage.
"Mortgage Loan Documents" means the Construction Loan Documents
and/or the Permanent Loan Documents, as the context may require.
"Nonrecourse Debt" or "Nonrecourse Liability" means any
indebtedness for which none of the Partners has any Economic Risk of
Loss other than through his or its interest in the Partnership
Property securing such indebtedness, as defined in Section 1.752-
1(a)(2) of the Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to a
Lender evidencing a Mortgage Loan, and shall also mean and include any
Note supplemental to said original Note issued to a Lender or any Note
issued to a Lender in substitution for any such original Note.
"Operating Deficit" means, for any specified period of time, the
amount by which the Cash Receipts of the Partnership are less than the
amount necessary to pay all Cash Expenditures of the Partnership.
"Operating Profits or Losses" means, with respect to any Fiscal
Year, the Profits or Losses of the Partnership for such Fiscal Year
other than Profits or Losses from a Capital Transaction.
"Operating Reserve" shall have the meaning set forth in Section
6.5(e)(ii).
"Original Limited Partner" has the meaning set forth in the
Preliminary Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Sections 1.704-2(i)(2) and (3) of the Allocation Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued pursuant
to this Agreement.
"Partnership Management Fee" shall have the meaning set forth in
Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in Section
1.704-2(d) of the Allocation Regulations.
"Percentage Interests" means the interests of the Partners in
Profits and Losses, tax-exempt income, non-deductible, non-
capitalizable expenditures and Tax Credits, as set forth in
Schedule A.
"Permanent Certificate of Occupancy" means
_______________________________.
"Permanent Lender" means Chase Community Development Corporation
or any other Lender providing permanent financing for the Apartment
Complex who has been approved by the Special Limited Partner and the
General Partner, except as otherwise provided in Section 3.2.
"Permanent Loan" means any permanent loan provided by the
Permanent Lender to the Partnership pursuant to the terms of the
Permanent Loan Documents.
"Permanent Loan Conditions" means, with respect to a proposed
Permanent Loan, that (a) such Permanent Loan (i) has a term of not
less than 30 years, (ii) has an amortization schedule not longer than
30 years, (iii) is in a principal amount of not more than $550,000 and
(b) when such Permanent Loan is in place, the Debt Service Coverage
Ratio of the Partnership is projected to be not less than 1.15 to
1.00.
"Permanent Loan Documents" means the Permanent Note, the
Permanent Mortgage and all other documents executed and/or delivered
in connection with the Permanent Loan.
"Permanent Mortgage" means the Mortgage securing the
Partnership's obligations under the Permanent Note.
"Permanent Mortgage Commencement" means the payment and
discharge of the Construction Loan and the execution and delivery of
the Permanent Loan Documents.
"Permanent Note" means the Promissory Note to be executed by the
Partnership to evidence its obligations with respect to the Permanent
Loan, which Note shall be secured by the Permanent Mortgage.
"Person" means any individual or Entity.
"Plans and Specifications" means the plans and specifications
for the rehabilitation of the Apartment Complex, including, without
limitation, specifications for materials, and all amendments and
modifications thereof which are approved in accordance with the
Project Documents.
"Prime Rate" means the rate of interest announced from time to
time by the Wall Street Journal as its prime rate.
"Profits or Losses" shall have the meaning set forth in Section
10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan
Documents, this Agreement, the Development Agreement, the Extended Use
Agreement, the Guaranty, the Disposition Agreement, the Management
Agreement, all other instruments executed by the Partnership, the
General Partner or an Affiliate of the General Partner and delivered
to (or required by) any Lender and all other documents relating to the
Apartment Complex and by which the Partnership is bound, as amended or
supplemented from time to time.
"Projected Credit" means $174,182 per annum for each of the
Fiscal Years 1997 through 2006 (inclusive), provided further that
upon the occurrence of any of the events described in Section 5.1(e),
the Projected Credit shall thereafter be the Revised Projected Credit.
"Projected Rents" means the rents described in Exhibit B
attached hereto and made a part hereof.
"Qualified Basis" has the meaning set forth in Section 42(c) of
the Code.
"Qualified Income Offset Item" means (1) an allocation of loss
or deduction that, as of the end of each year, reasonably is expected
to be made (a) pursuant to Section 704(e)(2) of the Code to a donee of
an interest in the Partnership, (b) pursuant to Section 706(d) of the
Code as the result of a change in any Partner's Interest, or
(c) pursuant to Treasury Regulation Section 1.751-1(b)(2)(ii) as the
result of a distribution by the Partnership of unrealized receivables
or inventory items and (2) a distribution that, as of the end of such
year, reasonably is expected to be made to a Partner to the extent it
exceeds offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the Partnership
taxable year in which such distribution reasonably is expected to
occur.
"Reconstitution Period" shall have the meaning set forth in
Section 7.2(b).
"Reduction Amount" shall have the meaning set forth in
Section 5.1(f).
"Reduction Year" shall have the meaning set forth in
Section 5.1(f).
"Regulations" means the rules and regulations applicable to the
Apartment Complex or the Partnership of the Credit Agency, the City of
New York and any other Governmental Authority having jurisdiction over
the Partnership and/or the Apartment Complex.
"Related Person" means a Person related to a Partner within the
meaning of Treasury Regulation Section 1.752-4(b).
"Rental Achievement" means the first time following three (3)
consecutive full calendar months of operations after the Permanent
Mortgage Commencement (with each month considered individually) that
the Apartment Complex generates a 1.15 to 1.00 Debt Service Coverage
Ratio.
"Rent Restriction Test" means the test pursuant to Section 42 of
the Code whereby the gross rent charged to tenants of the low-income
units in the Apartment Complex may not exceed thirty percent (30%) of
the qualifying income levels.
"Replacement Reserve" shall have the meaning set forth in
Section 6.5(e).
"Repurchase Amount" shall have the meaning set forth in
Section 5.2(a).
"Requisite Approvals" means any required approvals of each
Lender and Agency to an action proposed to be taken by the
Partnership.
"Revised Projected Credit" has the meaning set forth in Section
5.1(e).
"Schedule A" means Schedule A to this Agreement, as amended from
time to time.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means, for each
Partner an amount equal to his or its "share of partner nonrecourse
debt minimum gain" as determined in accordance with Section 1.704-
2(i)(5) of the Allocation Regulations.
"Share of Partnership Minimum Gain" means for each Partner, an
amount equal to his or its "share of partnership minimum gain" as
determined in accordance with Section 1.704-2(g) of the Allocation
Regulations.
"Site" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and shall also include any
meaning given to it in any similar state or local statutes,
ordinances, regulations or by-laws.
"Special Limited Partner" means BCTC '94, and any Person who
becomes a Special Limited Partner as provided herein, in its capacity
as a special limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage
Loans, (ii) the net rental income, if any, generated by the Apartment
Complex prior to Permanent Mortgage Commencement which is permitted by
the Lenders to be applied to the payment of Development Costs, (iii)
the Capital Contributions of the Investment Limited Partner, (iv) the
Capital Contributions of the General Partner in the amounts set forth
in Schedule A as of the Admission Date, and (v) any insurance proceeds
arising out of casualties occurring prior to Permanent Mortgage
Commencement.
"State" means the State of New York.
"State Designation" means the date on which the Partnership
receives an allocation in proper form pursuant to Section 42 of the
Code from the Credit Agency of 1995 Tax Credits, as evidenced by the
execution by or on behalf of the Credit Agency of one or more Form(s)
8609. For the purposes of determining State Designation, each
building in the Apartment Complex shall be treated as having received
an allocation of Tax Credit in an amount equal to the lesser of
(i) the amount of Tax Credit carryover allocation received from the
Credit Agency as to such building or (ii) the amount of Tax Credits
set forth on the Form 8609 as to such building.
"Subordinated Loan" means any loan made by the General Partner
to the Partnership pursuant to Section 6.5(e) or Section 6.10.
"Subordinated Loan Period" shall have the meaning set forth in
Section 6.5(e).
"Substituted Limited Partner" means any Person who is admitted
to the Partnership as Limited Partner under Section 8.2 or acquires
the Interest of a Limited Partner pursuant to Section 5.2.
"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 under this
Agreement at the time they would be taken into account under the
Partnership's method of accounting if they were deductible expenses.
"Tax Accountants" means Reznick, Fedder & Silverman of Bethesda,
Maryland or such other firms of independent certified public
accountants as may be engaged by the Special Limited Partner to review
the Partnership income tax returns.
"Tax Credit" means the low-income housing tax credit described
in Section 42 of the Code.
"Tax Credit Set-Aside" means the date on which the Partnership
received a carryover allocation of 1995 Tax Credits from the Credit
Agency in an annual dollar amount of not less than $174,182.
"Tax Liability" means cash sufficient to enable a Partner to
pay, on an after-tax basis after any taxes imposed or any distribution
in connection therewith, the taxes projected by such Partner to be
imposed on it as a result of any relevant Capital Transaction.
"Terminating Event" means the death or permanent disability of,
or a Final Determination of insanity or incompetence as to, an
individual General Partner (unless the Consent of the Special Limited
Partner to a substitute General Partner is received, and such
substitute General Partner is admitted to the Partnership by the first
to occur of (i) the sixtieth day following such event or (ii) such
earlier date as is necessary to prevent a dissolution of the
Partnership under the Act), the bankruptcy or dissolution of a General
Partner, the transfer of all of its Partnership Interest by a General
Partner, or the voluntary or involuntary withdrawal of the General
Partner from the Partnership. For purposes of the foregoing, an
individual General Partner shall be deemed to be permanently disabled
if he or she becomes disabled during the term of this Agreement
through any illness, injury, accident or condition of either a
physical or psychological nature and, as a result, is unable to
perform substantially all of his or her duties and responsibilities
hereunder for one hundred twenty (120) days during any period of three
hundred sixty-five (365) consecutive calendar days. Involuntary
withdrawal shall occur whenever a General Partner may no longer
continue as a General Partner by law or pursuant to any terms of this
Agreement. In the case of a General Partner which is an Entity, a
transfer of a majority of the voting stock (or other beneficial
interest) of the General Partner to a Person who is not an Affiliate
of the General Partner or any Entity constituting the General Partner
shall be deemed to be a transfer by the General Partner of its
Partnership Interest.
"Title Policy" means the owner's title insurance policy, or at
the option of the Special Limited Partner an endorsement to a pre-
existing owner's policy in favor of the Partnership, with an effective
date on or after the Admission Date, in the amount of not less than
the Invested Amount plus the outstanding Partnership indebtedness
issued by Commonwealth Land Title Insurance Company to the
Partnership, evidencing the Partnership's ownership of the Apartment
Complex subject only to such exclusions, exceptions, conditions and
stipulations as may be approved by the Special Limited Partner in its
sole discretion and endorsed with a Fairway endorsement and a non-
imputation endorsement.
"Vessel" has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall also
include any meaning given to it in any similar state or local
statutes, ordinances, regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in
Article IX.
"Withdrawal" (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy,
dissolution, liquidation, or voluntary or involuntary withdrawal or
retirement from the Partnership for any reason, including whenever a
General Partner may no longer continue as a General Partner by law or
pursuant to any terms of this Agreement. Withdrawal also shall mean
the sale, assignment, transfer or encumbrance by a General Partner of
its interest as a General Partner other than a pledge of assignment by
a General Partner of its Interest required pursuant to the terms of
the Construction Loan Documents and as approved in writing by the
Special Limited Partner. A General Partner which is a corporation,
limited liability company or partnership shall be deemed to have sold,
assigned, transferred or encumbered its interest as a General Partner
in the event (as a result of one or more transactions) of any sale,
assignment or other transfer (but specifically excluding any transfer
occurring pursuant to the laws of descent and distribution) or
encumbrance of a controlling interest in a corporate or limited
liability company General Partner or of a general partner interest in
a General Partner which is a partnership to a Person who is not an
Affiliate of the General Partner. For purposes of this definition of
Withdrawal, the term "controlling interest" shall mean the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is 352 Lenox Associates, LP. The
Partners agree to continue the Partnership which was formed pursuant
to the provisions of the Act.
2.2 Office and Resident Agent
The principal office of the Partnership is c/o Weissman
Management Corp., 225 Westchester Avenue, Suite 305, Port Chester, NY
10573, at which office there shall be maintained those records
required by the Act to be kept by the Partnership. The Partnership
may have such other or additional offices as the General Partner shall
deem desirable. The General Partner may at any time change the
location of the principal office and shall give due notice thereof to
the Limited Partners, provided that doing so shall not adversely
affect the Investment Limited Partner for tax purposes.
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
secure financing for, construct, rehabilitate, develop, improve,
maintain, operate, lease and otherwise deal with the Apartment
Complex. The Partnership shall operate the Apartment Complex in
accordance with any applicable Regulations. The Partnership shall not
engage in any other business or activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and effect
until December 31, 2046, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon the first
to occur of the following events ("Liquidating Events"):
(i) The sale or other disposition of all or
substantially all of the assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless the
Partnership is continued as provided in Section 7.2(a);
(iii) The election to dissolve the Partnership made in
writing by the General Partner with the Consent of the
Investment Limited Partner and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not
reconstituted pursuant to the provisions of Section 7.2 or
Section 7.3.
(b) Upon the dissolution of the Partnership, the General
Partner (or for purposes of this paragraph, its trustees, receivers or
successors) shall cause the cancellation of the Certificate and shall
liquidate the Partnership assets and apply and distribute the proceeds
thereof in accordance with the provisions of Section 10.3, unless the
Investment Limited Partner elects to reconstitute the Partnership and
continue its business as provided in Section 7.2 or 7.3, in which case
the Partnership assets shall be transferred to the new Partnership as
provided in such Section. Notwithstanding the foregoing, if, during
liquidation, the General Partner shall determine that an immediate
sale of part or all of the Partnership's assets would be
impermissible, impractical or cause undue loss to the Partners, the
General Partner may defer liquidation of, and withhold from
distribution for a reasonable time, any assets of the Partnership
except those necessary to satisfy Partnership debts and obligations
(other than Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The Partnership hereby ratifies and confirms that (i) the
General Partner was authorized to obtain the Construction Loan to
finance the acquisition, development and construction of the Apartment
Complex and to secure the Construction Loan by the Construction
Mortgage and (ii) the General Partner and its Affiliates, jointly and
severally, were authorized to incur personal liability for the
repayment of funds advanced by the Construction Lender (and interest
thereon) pursuant to the Construction Loan Documents. However, from
and after the date of Permanent Mortgage Commencement, neither the
General Partner nor any Related Person shall at any time bear, nor
shall the General Partner permit any other Partner or any Related
Person to bear, the Economic Risk of Loss for the payment of any
portion of any Mortgage Loan unless, prior to the effectiveness of the
transaction in which such Economic Risk of Loss is created or assumed,
the General Partner shall have obtained, at the expense of the
Partnership, an opinion from reputable tax counsel, in form and
substance reasonably satisfactory to the Special Limited Partner, to
the effect that such Economic Risk of Loss will not result in the
reallocation of Tax Credits or Losses from the Investment Limited
Partner and the Special Limited Partner to the General Partner. The
General Partner shall cause the Partnership to elect promptly, to the
extent permitted and in the manner prescribed by any Agency or Lender
having jurisdiction, that all debt service payments made by the
Partnership to the holder of the Permanent Mortgage shall be applied
first to interest determined at the stated rate set forth in the
Permanent Note, and then to principal due with respect to the
Permanent Note.
3.2 Refinancings
The Partnership may decrease, increase or refinance any Mortgage
Loan and may make any required transfer or conveyance of Partnership
assets for security or mortgage purposes, provided, however, any such
decrease, increase or refinancing of any Mortgage (except for the
discharge of the Construction Loan in accordance with the Construction
Loan Documents and the borrowing of the original principal amount of
the Permanent Loan) may be made by the General Partner only with the
Consent of the Special Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise transfer
or convey all or substantially all the assets of the Partnership only
with the Consent of the Special Limited Partner. Notwithstanding the
foregoing and except as set forth in Section 6.2(a)(vi), no Consent of
the Special Limited Partner shall be required for the execution and
delivery of the Construction Loan Documents, the leasing of apartments
to tenants in the normal course of operations or the leasing of all or
substantially all the apartments to a public housing authority at
rents satisfactory to any Agency or Lender as expressed in writing,
provided (subject to the Rent Restriction Test) that such rents are
not less than the Projected Rents.
3.4 Real Estate Commissions
The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real Estate
Commission, which in no event shall exceed six percent (6%) of the
contract price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the aggregate
amount of the cash and the Gross Asset Value of property contributed
by the General Partner and by the Limited Partners as set forth in
Schedule A. No interest shall be paid by the Partnership on any
Capital Contribution to the Partnership. Schedule A shall be amended
from time to time to reflect the withdrawal or admission of Partners,
any changes in the Partnership Interests held by a Partner arising
from the transfer of an Interest to or by such Partner and any change
in the amounts to be contributed or agreed to be contributed by any
Partner. No Partner shall have the right to withdraw or receive a
return of any of its Capital Contributions except as set forth in this
Agreement. Further, no Partner shall have any right of partition.
(b) An individual Capital Account shall be established and
maintained for each Partner, including any additional or substituted
Partner who shall hereafter receive an interest in the Partnership.
The Capital Account of each Partner shall be maintained in accordance
with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's
distributive share of Profits, and any items in the nature of
income or gain that are specially allocated pursuant to Section
10.4 hereof, 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) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any
Partnership Property distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share
of Losses, and any items in the nature of expenses or losses
that are specially allocated pursuant to Section 10.4 hereof,
and 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 event that the Gross Asset Values of Partnership
assets are adjusted pursuant to this Agreement, 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.
(c) The original Capital Account established for any Assignee
(as hereinafter defined) shall be in the same amount as, and shall
replace, the adjusted Capital Account of the Partner which such
Assignee succeeds, and, for the purpose of the Agreement, such
Assignee shall be deemed to have made the Capital Contribution, to the
extent actually paid in, of the Partner which such Assignee succeeds.
The term "Assignee," as used in this paragraph, shall mean a Person
who shall become entitled to receive a share of the Profits, Losses,
Tax Credits and distributions of the Partnership by reason of such
Person succeeding to the Interest of a Partner by assignment of all or
any part of an Interest. To the extent an Assignee receives less than
100% of the Interest of a Partner, such Assignee's Capital Account and
Capital Contribution shall be in proportion to the Partnership
Interest such Assignee receives, and the Capital Account and Capital
Contribution of the Partner who retains a partial interest in the
Partnership shall continue, and not be replaced, in proportion to the
Partnership Interest such Partner retains.
(d) The foregoing provisions and other provisions of this
Agreement relating to the maintenance of the Capital Accounts are
intended to comply with the Allocation Regulations, and shall be
interpreted and applied in a manner consistent with such Allocation
Regulations.
4.2 General Partner
(a) The name, address and Capital Contribution of the General
Partner are as set forth on Schedule A.
(b) The General Partner has contributed or will contribute
contemporaneously with the execution hereof $100 to the capital of the
Partnership.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
(a) The Original Limited Partner hereby withdraws as a limited
partner of the Partnership and acknowledges that it no longer has any
Interest in, or rights or claims against, the Partnership as a Partner
as of the Admission Date.
(b) Each of the Special Limited Partner and the Investment
Limited Partner is hereby admitted to the Partnership as a Limited
Partner in substitution for the Original Limited Partner as of the
Admission Date and agrees to be bound by the terms and provisions of
the Project Documents and this Agreement. The name and address of the
Investment Limited Partner and the Special Limited Partner are as set
forth on Schedule A.
(c) Except as otherwise specifically set forth in Sections 4.5
or 7.4, the General Partner shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partner.
4.4 Liability of the Limited Partners
Except as provided under the Act, neither the Investment Limited
Partner, the Special Limited Partner nor any Person who becomes an
Additional Limited Partner shall be liable for any debts, liabilities,
contracts or obligations of the Partnership; such Persons shall be
liable only to pay their respective Capital Contributions as and when
the same are due hereunder and under the Act. After its Capital
Contribution shall be fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further capital
contributions or payments or lend any funds to the Partnership.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other than
Section 13.8), to the extent the law of the State is not inconsistent,
the Special Limited Partner shall have the right, subject to any
Requisite Approvals, to:
(i) amend this Agreement provided, however, that no such
amendment affect the rights (including, without limitation, the
right to receive any fees, allocable share of Cash Flow or other
distributions, or Profits or Losses and Tax Credits hereunder)
or increase any of the liabilities or obligations of any General
Partner without its prior written consent, including, without
limitation, the Special Limited Partner shall not have the right
to amend this Agreement so as to decrease the amount of any
Installment or the aggregate Capital Contribution without the
prior written consent of the Construction Lender or Permanent
Lender, as applicable;
(ii) dissolve the Partnership provided, however, that
such dissolution shall not be caused by the Special Limited
Partner unless the General Partner has violated a material
provision of any Project Document, which violation has not been
cured within any applicable cure period specified or within 30
days if no cure period is specified, to be extended up to no
more than 120 days if such cure is being diligently pursued and
cannot be effected within such applicable (or 30-day) cure
period;
(iii) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of
such General Partner's obligations constituting fraud, bad
faith, gross negligence, wilful misconduct or intentional breach
of fiduciary duty, or (B) upon the occurrence of a Material
Event.
(iv) continue the business of the Partnership with a
substitute General Partner, provided that the General Partner
has been removed pursuant to Section 4.5(a)(iii) above; and
(v) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner for cause pursuant
to Section 4.5(a)(iii),
(i) without any further action by any Partner, the
Special Limited Partner shall cause an Affiliate
automatically to become a General Partner (the "Substitute
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 Special Limited
Partnership shall determine is the minimum appropriate
interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the
Act,
(ii) the remaining portion of the economic Interest
of the removed General Partner shall automatically be
forfeited to the Partnership, not as a penalty but as
liquidated damages to compensate the Partnership for the
action of such General Partner leading to its removal, or
for the fact of its violation of the terms of this
Agreement, and
(iii) the Substitute General Partner shall
automatically be irrevocably delegated all of the powers
and duties of the General Partners pursuant to Section
6.13. A General Partner so removed will not be liable as
a general partner for any obligations of the Partnership
incurred after the effective date of its removal. Each
General Partner hereby grants to the Special Limited
Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest
to execute and deliver any and all documents and
instruments on behalf of such General Partner and the
Partnership as the Special Limited Partner may deem to be
necessary or appropriate in order to effect the provisions
of this Section 4.5 and to enable the new General Partner
to manage the business of the Partnership.
(c) The General Partner is hereby required, within ten (10)
days after its receipt of any offer to purchase the Apartment Complex
or all of the Interests in the Partnership, to send a copy of such
offer (or a written description of any such oral offer) to each of the
Limited Partners. In connection with any proposed sale of the
Apartment Complex, the Special Limited Partner (or its designee) shall
have the right to (i) receive and review copies of all documents
relating to the proposed sale, (ii) participate in the negotiations of
the terms and conditions of the proposed sale, (iii) meet with the
proposed purchaser, (iv) solicit proposals for alternative offers for
the Apartment Complex, and (v) provide such other services in
connection with the proposed sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten
percent (10%) of the then outstanding Limited Partner Interests may
call meetings of the Partnership for any matters for which the Limited
Partners may vote as set forth in this Agreement. A list of the names
and addresses of all Limited Partners shall be maintained as part of
the books and records of the Partnership and shall be made available
upon request to any Limited Partner or his representative at his cost.
Upon receipt of a written request either in person or by certified
mail stating the purpose(s) of the meeting, the General Partner shall
provide all Limited Partners within ten (10) days after receipt of
said request, written notice of a meeting and the purpose of such
meeting to be held on a date not less than fifteen (15) nor more than
sixty (60) days after receipt of said request, at a time convenient to
the Limited Partners. All meetings shall be held at the principal
office of the Partnership or such other location as is reasonably
designated by the General Partner.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10
shall be paid in full in cash on the Admission Date. The Investment
Limited Partner's Capital Contribution shall be paid in cash
installments (the "Installments"), as follows:
(i) $569,043 (the "First Installment") on the latest of
(A) the Admission Date, (B) the closing of the Construction
Loan, (C) the Permanent Loan Commitment Date, (D) Tax Credit
Set-Aside or (E) the Construction Permitting Date;
(ii) $258,660 (the "Second Installment"), on the latest
of (A) the Completion Date, (B) Cost Certification,
(C) compliance with Due Diligence Recommendations, (D) receipt
of an updated Title Policy with dollar amount coverage
satisfying the Title Policy definition and in form and substance
substantially the same as that attached hereto as Exhibit D
reasonably satisfactory to the Special Limited Partner,
(E) receipt of the Contractor Payoff Letter, (F) receipt of
Lender Estoppel Letter, or (G) satisfaction of all the
conditions to the payment of the First Installment;
(iii) $155,196 (the "Third Installment") on the latest of
(A) the Initial 100% Occupancy Date, (B) Permanent Mortgage
Commencement, (C) State Designation, (D) Rental Achievement,
(E) receipt by the Partnership of a Permanent Certificate of
Occupancy for the Project, or (F) satisfaction of all of the
conditions of the First and Second Installments;
(iv) $51,732 ("Fourth Installment") on the latest of
(A) receipt by the Investor Limited Partner of a tax return and
audited financial statement for the year in which Rental
Achievement occurred, or (B) satisfaction of all of the
conditions of the payment of the First, Second and Third
Installments.
provided, however, that (x) the General Partner shall give the
Investment Limited Partner not less than twenty-one (21) days' written
notice prior to the due date of each Installment subsequent to the
First Installment, and (y) no Installment shall be due unless and
until all conditions to the payment of all prior Installments have
been satisfied.
(b) The obligation of the Investment Limited Partner to pay
each Installment is conditioned upon delivery by the General Partner
to the Investment Limited Partner of a written certificate (the
"Payment Certificate") stating that as of the date of such certificate
(i) all the conditions to the payment of such Installment have been
satisfied, (ii) all representations and warranties of the General
Partner contained in this Agreement are true and correct and (iii) no
event has occurred which suspends or terminates the obligations of the
Investment Limited Partner to pay Installments under this Agreement
which has not been cured as herein provided, (iv) no event has
occurred which, with the giving of notice, would oblige the General
Partner to repurchase the Interests of the Investment Limited Partner
pursuant to Section 5.2(a). Except as provided in the final sentence
of this Section 5.1(b), acceptance by the Partnership of any
Installment shall constitute a confirmation that, as of the date of
payment, all such conditions are satisfied and all such
representations and warranties are true and correct. The obligation
of the Investment Limited Partner to pay the First Installment is also
conditioned upon delivery by the General Partner to the Investment
Limited Partner of (x) a legal opinion of independent counsel to the
Partnership, the General Partner, the Developer and the Guarantor,
which opinion(s) must be satisfactory to the Investment Limited
Partner as to form, content and identity of counsel and (y) a
photocopy of a binding commitment, in form and substance satisfactory
to the Special Limited Partner, to issue the Title Policy and
endorsements thereto in form and substance satisfactory to the Special
Limited Partner insuring against all zoning defects of the Apartment
Complex, a Fairway endorsement and a non-imputation endorsement. In
no event shall any Installment become due until all of the conditions
for all of the Installments listed prior to the Installment in
question in Section 5.1(a) shall have been satisfied and all of such
prior Installments shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an
Installment becomes due and payable, the Partnership has an Operating
Deficit which the General Partner would be required to fund pursuant
to Section 6.10, then the Investment Limited Partner may, at its
option, waive the requirement of the delivery of the Payment
Certificate or any other condition with respect to part or all of such
Installment and pay such part or all of such Installment, provided
that the proceeds of the amount so paid are used by the Partnership to
fully fund such Operating Deficit; provided, however, that if the
proceeds of such amount so paid are designated in Section 6.12 to be
used to pay fee(s), then such proceeds shall be utilized to pay such
fee(s) and the recipient(s) thereof shall be required to, and hereby
agree to, utilize the proceeds of such fee(s) to fund such Operating
Deficit, in which case the Investment Limited Partner is hereby
authorized to directly fund such Operating Deficit, with the funds so
applied being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be
dated and delivered not less than ten (10) nor more than thirty (30)
days prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise be
due, any statement required to be made in the Payment Certificate for
such Installment cannot be truthfully made, the General Partner shall
notify the Investment Limited Partner of the reason why such statement
would be untrue if made, and the Investment Limited Partner shall not
be required to pay such Installment; provided, however, that if
(i) any such statement can subsequently be truthfully made and
(ii) the Investment Limited Partner shall not have irrevocably lost,
in the good faith judgment of the Investment General Partner, any
material tax or other benefits hereunder (other than tax benefits for
which the Investment Limited Partner has been fully compensated
pursuant to the provisions of paragraphs (e), (f) and (g) of this
Section 5.1), then the Investment Limited Partner shall pay such
Installment to the Partnership thirty (30) days after delivery by the
General Partner to the Investment Limited Partner of the Payment
Certificate together with an explanation of the manner in which each
such statement had become true.
(e) In the event that on or at any time prior to the
Completion Date (the "Initial Adjustment Date"), the Investment
Limited Partner shall receive a written certification of the Auditors
indicating that the aggregate Actual Credit during the Credit Period
will be less than the aggregate Projected Credit during the Credit
Period, then (i) the next succeeding Installments of the Capital
Contributions of the Investment Limited Partner shall be reduced by an
amount equal to the product of (X) the difference between (1) the
aggregate Projected Credit during the Credit period and (2) the
aggregate Actual Credit during the Credit Period and (Y) 0.687, and
(ii) the Projected Credit for each Fiscal Year shall thereafter be
redefined to mean the Actual Credit, as so determined (the "Revised
Projected Credit"). Any such reduction pursuant to this Section
5.1(e) shall be made first to the Installment, if any, next due to be
paid by the Investment Limited Partner, and any balance of such amount
payable by the General Partner in excess of the amount of such
Installment shall be applied to succeeding Installments, if any,
provided that if the amount of any such reductions exceeds the sum of
the remaining Installments, if any, then an amount equal to the amount
of such excess shall be paid by the General Partner to the Investment
Limited Partner promptly after demand is made therefor, as a payment
of damages for breach of warranty, regardless of the reason for the
occurrence of such event (unless such reduction was caused by an act
or omission of the Investment Limited Partner or its Affiliates, in
which event no such reduction or payment shall be required). No
reduction of any Installment or any payment by the General Partner
pursuant to this Section 5.1(e) shall be deemed to be a Capital
Contribution by the General Partner to the Partnership, nor shall any
such payment constitute a return of capital to the Investment Limited
Partner.
(f) If with respect to any Fiscal Year all or a portion of
which occurs during the Initial Operating Period, the Actual Credit is
or was less than the Projected Credit (or the Revised Projected
Credit, if applicable) for such Fiscal Year (a "Reduction Year"), then
the General Partner shall pay to the Investment Limited Partner the
Reduction Amount. The Reduction Amount shall be equal to the sum of
(A) the excess of the Projected Credit (or the Revised Projected
Credit, if applicable) for such Fiscal Year over the Actual Credit for
such Fiscal Year multiplied by 0.814 plus (B) the Recapture Amount as
determined pursuant to Section 10.6 and, to the extent not already
accounted for, any interest or penalties payable by the limited
partners and/or holders of beneficial assignee certificates of the
Investment Limited Partner as a result of such shortfall or Recapture
Event, assuming that each limited partner and/or holder of a
beneficial assignee certificate in the Investment Limited Partner used
all of the Tax Credits allocated to it in the Fiscal Year of
allocation. The Auditors shall make their determination of the amount
of the Actual Credit with respect to each Reduction Year within thirty
(30) days following the end of such Fiscal Year. The Investment
Limited Partner shall be eligible to be paid a Reduction Amount as
hereinabove described with respect to each Reduction Year. Any
Reduction Amount shall first be applied to the Installment next due to
be paid by the Investment Limited Partner, with any portion of such
Reduction Amount in excess of the amount of such Installment then
being applied to succeeding Installments, provided that if no further
Installments remain to be paid or if the Reduction Amount shall exceed
the sum of the amounts of the remaining Installments, then the entire
Reduction Amount or the balance of the Reduction Amount, as the case
may be, shall be paid by the General Partner to the Investment Limited
Partner promptly after demand is made therefor, as a payment of
damages for breach of warranty, regardless of the reason for the
occurrence of such event (unless such reduction was caused by an act
or omission of the Investment Limited Partner or its Affiliates, in
which event no Reduction Amount shall be payable). No payment by the
General Partner pursuant to this Section 5.1(f) shall be deemed to be
a Capital Contribution to the Partnership nor shall any such payment
constitute a return of capital to the Investment Limited Partner.
(g) In the event that, for any reason, at any time after the
end of the Initial Operating Period, the amount of the Actual Credit
shall be less than the Projected Credit (or the Revised Projected
Credit, if applicable) with respect to any Fiscal Year of the
Partnership (such difference being hereinafter referred to as a
"Credit Shortfall"), the Investment Limited Partner shall be treated
as having made a constructive advance to the Partnership with respect
to such Fiscal Year (a "Credit Recovery Loan"), which shall be deemed
to have been made on January 1 of such Fiscal Year in an amount equal
to the sum of (A) the Credit Shortfall for such Fiscal Year plus
(B) the Recapture Amount as determined pursuant to Section 10.6 and,
to the extent not already accounted for, any interest or penalties
payable by the limited partners and/or the holders of beneficial
assignee certificates of the Investment Limited Partner as a result of
the Credit Shortfall for such Fiscal Year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the
Investment Partnership used all of the Tax Credits allocated to him in
the Fiscal Year of allocation. Credit Recovery Loans shall be deemed
to bear simple (not compounded) interest from the respective dates on
which such principal advances shall have been deemed to have been made
under this Section 5.1(g) at a rate of nine percent (9%) per annum.
Credit Recovery Loans shall be payable by the Partnership as provided
in Section 10.2(b), Clause Fourth. Credit Recovery Loans and interest
thereon shall not be treated as loans or interest, respectively, for
accounting, tax or liability purposes or for the purposes of Section
6.2(a)(i). For the purposes of Article X, the term Credit Recovery
Loan shall not include any portion of such a deemed advance which
shall have theretofore been paid to the Investment Limited Partner.
(h) The Investment Limited Partner shall grant to the
Partnership a security interest in the Investment Limited Partner's
Interest as collateral security for the payment, when due in
accordance with the terms of this Agreement, of the Capital
Contributions of the Investment Limited Partner. Except as
hereinafter provided in Section 5.1(i), upon any default by the
Investment Limited Partner in the payment of its Capital Contributions
as and when they are due and payable (an "Event of Default"), which
Event of Default has not been cured within ten (10) business days
following notice thereof by the Partnership to the Investment Limited
Partner, the Partnership or its assignee shall have all the rights and
remedies, with respect to the security interest hereby granted by such
Investment Limited Partner, of a secured party under Article 9 of the
Uniform Commercial Code as in effect in the State. The Investment
Limited Partner will execute a UCC-1 financing statement evidencing
the security interest granted hereby and will deliver such statement
to the Partnership.
(i) Notwithstanding the provisions of Section 5.1(h) above, in
the event of a dispute regarding the existence of an Event of Default,
such dispute shall be resolved by binding arbitration and until the
issuance of a final arbitration award confirming the existence of an
Event of Default, the Partnership shall not be entitled to exercise
any of its rights or remedies under Section 5.1(h) above. The
Partnership and the Investment Limited Partner shall be the parties to
such arbitration. Notwithstanding the provisions of Section 13.3, any
notices, consents, approvals, demands and requests given with respect
to any such arbitration shall be given in accordance with this
Agreement. The parties shall request that the arbitrator appointed
pursuant to this Section and, if applicable, the AAA (as defined
hereinafter) observe the provisions of the preceding sentence. Within
three (3) business days after the giving of any such demand for
arbitration, the parties shall in good faith seek to find a mutually
acceptable arbitrator who shall be authorized solely to issue a
determination that an Event of Default did or did not occur. If
agreement as to a mutually acceptable arbitrator is not reached within
such three (3) business day period, then either party may, within
three (3) business days thereafter submit such dispute for arbitration
before one (1) arbitrator under the Expedited Procedures provisions of
the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). Such arbitration shall be conducted in
accordance with the Rules of Commercial Arbitration of the American
Arbitration Association ("AAA") by a single arbitrator appointed
pursuant to those rules (presently Rules 53 through 57 and, to the
extent applicable, Section 19); provided, however, that with respect
to any such arbitration: (i) the list of arbitrators referred to in
Rule 54 shall be returned within three (3) business days from the date
of receipt; (ii) the parties shall notify the AAA by telephone, within
two (2) business days after receipt of notice of the arbitrator
designated by the AAA of any objections to the arbitrator appointed;
(iii) the Notice of Hearing referred to in Rule 55 shall be given at
least four (4) business days in advance of the hearing; (iv) the
hearing shall be held within two (2) business days after the initial
hearing; and (v) the decision and award of the arbitrator shall be
made within two (2) business days of completion of the arbitration and
shall be final and conclusive on the parties. The arbitration shall
take place in the City of Boston, Massachusetts. The scope of the
arbitrator's award shall be solely limited to a determination of
whether an Event of Default has occurred. If the arbitrator
determines that an Event of Default has occurred, then if requested by
the Investment Limited Partner within twenty (20) days following
receipt of the award, the arbitrator shall provide the parties with a
written explanation of the facts underlying the determination, which
shall become part of the award. The prevailing party shall be awarded
the costs of such arbitration, provided, however, that each party
shall bear the costs of its own attorneys and witnesses.
(j) In the event that the Partnership shall receive a written
certification of the Auditors and a Form 8609, each indicating that
the aggregate Actual Credit during the Credit Period will be greater
than the aggregate Projected Credit during the Credit Period, then
(i) copies of such certification and Form 8609 shall be delivered to
the Investment Limited Partner and (ii) the Fourth Installment of the
Investment Limited Partner's Capital Contribution shall be increased
by an amount equal to the product of (x) the difference between
(1) the aggregate Actual Credit during the Credit Period and (2) the
aggregate Projected Credit during the Credit Period and (y) 0.594, up
to a maximum additional Capital Contribution of $51,700. Such
increased Capital Contribution shall be payable upon the satisfaction
of the conditions to the Fourth Installment as set forth in
Section 5.1(a). In the event of an upward adjustment as set forth in
this Section 5.1(j), the terms Projected Credit and Revised Projected
Credit as used in Sections 5.1(e), (f) and (g) shall be adjusted to
reflect such upward adjustment.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or LIHTC Benchmarks and
Standards. Upon the occurrence of any of the events (a "Repurchase
Event") listed below in this Section 5.2(a), within five (5) days of
the occurrence thereof, the General Partner shall send to the
Investment Limited Partner and the Investment Limited Partner notice
of such event and of the General Partner's obligation to repurchase
the Interests of the Investment Limited Partner by paying to the
Investment Limited Partner an amount in cash (the "Repurchase Amount")
equal to each such Partner's Invested Amount minus the portion, if
any, of such Partner's Capital Contribution which shall not yet have
been paid (or deemed to have been paid) to the Partnership plus the
amount of any third-party costs, including, without limitation,
attorney's fees incurred by or on behalf of such Partner in
implementing this Section 5.2(a) in the event the Investment Limited
Partner requires such a repurchase plus interest thereon at the AFR
commencing on the fifth day after delivery of the notice referred to
in the next sentence. If the Investment Limited Partner elects to
require a repurchase of its Interest and the payment to it of an
amount equal to its Repurchase Amount, it shall send notice thereof to
the Partnership within thirty (30) days after the mailing date of the
General Partner's notice, or at any time after the occurrence of any
of the foregoing if the General Partner shall not have sent a notice
thereof, and the General Partner shall within thirty (30) days after
the Partnership receives any such notice from a Partner requesting the
purchase of its Interest repurchase the Interest of such Partner by
paying to such Partner an amount equal to its Repurchase Amount. If,
following receipt of the General Partner's notice, the Investment
Limited Partner fails to send notice to the General Partner by the end
of such 30-day period requesting the General Partner to purchase its
Interest, the Investment Limited Partner, as the case may be, shall be
deemed to have waived its right to cause the General Partner to
purchase its Interest as a result of the event described in the
General Partner's notice. No such waiver, however, shall affect the
right of the Investment Limited Partner to cause the General Partner
to purchase its Interest upon the occurrence of any other event
described in this Section 5.2(a), or upon any subsequent occurrence of
the event described in the General Partner's notice. The Repurchase
Events are as follows:
(i) all 18 apartment units in the Apartment
Complex shall not have been placed in service by
December 31, 1997 (for purposes of satisfying the
requirements of Section 42(h)(1)(E)(i) of the Code with
respect to the 1995 LIHTC allocation); or
(ii) by December 31, 1998, fewer than 18 of the
apartment units in the Apartment Complex shall have been
occupied by tenants meeting the terms of the Minimum Set-
Aside Test under executed leases which shall have received
any Requisite Approvals at rental levels meeting the
requirements of the Rent Restriction Test; or
(iii) construction or operation of the Apartment
Complex shall have been enjoined by a final order (from
which no further appeals are possible) of a court having
jurisdiction and such injunction shall continue for a
period of ninety (90) days; or
(iv) the Construction Loan shall not have been
repaid in full prior to December 31, 1997 (or any later
date fixed by the General Partner with the Consent of the
Investment Limited Partner); or
(v) if by December 31, 1995 (or any later date
fixed by the General Partner with the Consent of the
Investment Limited Partner), the Investment Limited
Partner shall not have received, in form and substance
satisfactory to the Investment Limited Partner, a
Carryover Certification; or
(vi) if at any time it shall be determined by the
Service or by the Tax Accountants that a Carryover
Certification could not be issued or was issued in error;
or
(vii) State Designation shall not have occurred by
June 30, 1997 (or any later date fixed by the General
Partner with the Consent of the Investment Limited
Partner) and by said date the General Partner shall not
have made any payment as described in the next to last
sentence of Section 5.1(e) or, if the Investment Limited
Partner shall have elected to have all or a portion of any
payment under Section 5.1(e) applied toward future
Installment obligations of the Investment Limited Partner,
amendments to this Agreement shall not have been adopted
and filed in the Filing Office, reflecting such event; or
(viii) if by the date which is twelve (12)
months following the Completion Date, Rental Achievement
shall not have been achieved; or
(ix) the Partnership shall fail to meet the Minimum
Set-Aside Test or the Rent Restriction Test by the close
of the first year of the Credit Period and/or fails to
continue to meet either of such tests at any time during
the sixty (60)-month period commencing on the Initial 100%
Occupancy Date; or
(x) (A) foreclosure proceedings shall have
commenced under any Mortgage and such proceedings shall
not have been dismissed within thirty (30) days, (B) any
of the commitments of a Lender to provide a Mortgage Loan
and/or any subsidy financing shall be terminated or
withdrawn and not reinstated or replaced within sixty (60)
days with terms at least as favorable to the Partnership
or terms for which the Consent of the Investment Limited
Partner and any Requisite Approvals shall have been
obtained, or (C) the Construction Lender, acting in good
faith and in accordance with the provisions of the
Construction Loan Documents, shall have irrevocably
refused to make any further advances under the
Construction Loan Documents and such decision shall not
have been reversed or the Construction Lender replaced
within thirty (30) days; or
(xi) at any time the General Partner fails to
advance Subordinated Capital and such failure continues
for ten (10) days; or
(xii) any action is commenced to foreclose any
mechanics, or any other lien (other than the lien of a
Mortgage) against the Apartment Complex and such action
has not within thirty (30) days been either bonded against
in such a manner as to preclude the holder of such lien
from having any recourse to the Apartment Complex or to
the Partnership for payment of any debt secured thereby,
or affirmatively insured against by the title insurance
policy or an endorsement thereto issued to the Partnership
by a reputable title insurance company (which insurance
company will not have indemnity from or recourse against
Partnership assets by reason of any loss it may suffer by
reason of such insurance) in an amount satisfactory to the
Investment Limited Partner; or
(xiii) the Completion Date has not occurred by
March 31, 1997; or
(xiv) a casualty occurs resulting in substantial
destruction of all or a portion of the Apartment Complex, and
the insurance proceeds (if any) are insufficient to restore the
Apartment Complex or the Apartment Complex is not so restored
within twenty-four (24) months following such casualty.
(b) Lender Disapproval. If any Agency or Lender shall
disapprove, or fail to give any required approval of, the Investment
Limited Partner and/or the Special Limited Partner as a Limited
Partner hereunder within one hundred eighty (180) days of the
Admission Date, then the Partner being disapproved or not approved
shall, effective as of such time or such later time as may be elected
by the Partner being disapproved or not approved as may be specified
by such Agency or Lender in its disapproval, at the option of the
Partner being disapproved or not approved (if not directed by such
Agency or Lender to withdraw), cease to be a Limited Partner. The
General Partner shall, within ten (10) days of the effective date of
such cessation, pay to the Partner being disapproved or not approved
an amount equal to its Invested Amount minus the amount, if any, of
such Partner's Capital Contribution which shall not yet have been paid
(or deemed to have been paid) to the Partnership plus the amount of
any third party costs, including, but not limited to attorney's fees,
incurred by or on behalf of such Partner in implementing this Section
5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner of the
amount due to it pursuant to either Section 5.2(a) or Section 5.2(b),
the Interest of such Partner shall terminate, and the General Partner
shall indemnify and hold harmless such Partner from and against any
Adverse Consequences to which such Partner (as a result of its
participation hereunder) may be subject, provided that such Adverse
Consequences do not result from such Partner's acts or omissions.
(d) Waiver of Repurchase Right. Each of the Investment
Limited Partner and the Special Limited Partner shall have the right
to irrevocably waive its right to have its Interest repurchased
pursuant to any clause or clauses of Section 5.2(a), or any portion
thereof, at any time during which any of such rights shall be in
effect. Such a waiver shall be exercised by delivery to the General
Partner of a written notice stating that the rights being waived
pursuant to any specified clause or clauses of Section 5.2(a), or any
specified portion thereof, are thereby waived for a specified period
of time.
(e) Additional General Partner. If the General Partner shall
fail to make on the due date therefor any payment required under
Section 5.2(a) or Section 5.2(b), time being of the essence, at any
time thereafter the Special Limited Partner shall have the option,
exercisable in its sole discretion, to cause itself or its designee to
be admitted as an additional General Partner, receiving from the
existing General Partner, in consideration of the payment of ten
dollars ($10.00), a one per cent (1%) interest in the Profits, Losses,
Tax Credits and distributions of the Partnership, with the Special
Limited Partner retaining its status as such and its economic interest
in the Partnership as the Special Limited Partner (or its designee as
an additional General Partner). If the Special Limited Partner
exercises the option described in this Section 5.2(e), each of the
other General Partner hereby agrees that all of its rights and powers
hereunder as a General Partner shall automatically be irrevocably
delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each
Partner hereby grants to the Special Limited Partner an irrevocable
(to the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute, deliver and file
or record any and all documents and instruments on behalf of such
Partner and the Partnership as the Special Limited Partner may deem
necessary or appropriate in order to effectuate the provisions of this
Section 5.2(e) and to allow the additional General Partner to manage
the business of the Partnership. The admission of the Special Limited
Partner or its designee as an additional General Partner shall not
relieve any other General Partner of any of its economic obligations
hereunder, and each other General Partner shall fully indemnify and
hold harmless the additional General Partner on an after-tax basis
from and against any and all Adverse Consequences sustained by such
additional General Partner in connection with its status as a General
Partner (other than Adverse Consequences arising solely from the gross
negligence or willful misconduct of such additional General Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3,
Section 6.15 and all other provisions of this Agreement, the General
Partner for, in the name and on behalf of the Partnership, is hereby
authorized, in furtherance of the purposes of the Partnership:
(i) to acquire by purchase, lease, exchange or otherwise
any real or personal property;
(ii) to construct, rehabilitate, operate, maintain,
finance and improve, and to own, sell, convey, assign, mortgage
or lease any real estate and any personal property;
(iii) to borrow money and issue evidences of indebtedness
and to secure the same by mortgage, pledge or other lien on the
Apartment Complex or any other assets of the Partnership;
(iv) to execute the Mortgage Loan Documents and the other
Project Documents and all such other documents as the General
Partner deems to be necessary or appropriate in connection with
the acquisition, development, construction and financing of the
Apartment Complex;
(v) subject to Section 3.2, to prepay in whole or in
part, refinance or modify any Mortgage Loan or other financing
affecting the Apartment Complex;
(vi) to employ the Management Agent (which may be an
Affiliate of the General Partner) and, subject to the provisions
of Article XI, to pay reasonable compensation for its services;
(vii) to employ its Affiliates to perform services for, or
sell goods to, the Partnership provided that (except with
respect to any contract specifically authorized by this
Agreement) the terms of any such transaction with an Affiliate
shall not be less favorable to the Partnership than would be
arrived at by unaffiliated parties dealing at arms' length;
(viii) to execute contracts with any Agency, the
State or any subdivision or agency thereof or any other
Governmental Authority to make apartments or tenants in the
Apartment Complex eligible for any public-subsidy program;
(ix) to execute leases of some or all of the apartment
units of the Apartment Complex to individuals and/or to a public
housing authority and/or to a non-profit corporation,
cooperative or other non-profit Entity;
(x) to employ or engage such engineers, architects,
technicians, accountants, attorneys and other Persons, as may be
necessary, convenient or incidental to the accomplishment of the
purposes of the Partnership; and
(xi) to enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and document which may be required under the laws
of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partner shall have no authority to perform any act in
violation of any applicable law, Agency or other government
regulations, the requirements of any Lender, or the Project Documents.
In the event of any conflict between the terms of this Agreement and
any applicable Regulations or requirements of any Lender, the terms of
such Regulations or the requirements of such Lender, as the case may
be, shall govern. Subject to the provisions of Section 6.2(b), the
General Partner, acting in its capacity as General Partner, shall not
have the authority, without the Consent of the Special Limited
Partner:
(i) to have unsecured borrowings in excess of ten
thousand dollars ($10,000.00) in the aggregate at any one time
outstanding, except borrowings constituting Subordinated Loans
or Credit Recovery Loans;
(ii) to borrow from the Partnership or commingle
Partnership funds with the funds of any other Person;
(iii) following the Completion Date, to construct any new
or replacement capital improvements on the Apartment Complex
which substantially alter the character or use of the Apartment
Complex or which cost in excess of ten thousand dollars
($10,000.00) in a single Fiscal Year, except (x) replacements
and remodeling in the ordinary course of business or under
emergency conditions or (y) construction paid for from insurance
proceeds;
(iv) to acquire any real property in addition to the
Apartment Complex;
(v) following Permanent Mortgage Commencement, and
except as otherwise specifically provided in Section 3.2, to
increase, decrease or modify the terms of or refinance any
Mortgage Loan;
(vi) to rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements of
the Minimum Set-Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect to
the Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state
bankruptcy, insolvency or similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Partnership or for any other
substantial part of the Partnership's business or property, or
to cause the Partnership to consent to any such decree, relief,
order or appointment initiated by any Person other than the
Partnership;
(x) to execute contracts with any Agency, the State or
any subdivision or agency thereof or any other Governmental
Authority to make apartments or tenants in the Apartment Complex
eligible for any public-subsidy program;
(xi) to amend any construction or rehabilitation
contract;
(xii) to pledge or assign any of the Capital Contributions
of the Investment Limited Partner or the proceeds thereof
(except to the extent required by the terms of the Construction
Loan Documents and agreed to in writing by the Special Limited
Partner);
(xiii) to amend any Project Document, or to
permit any party thereunder to waive any provision
thereof, to the extent that the effect of such amendment
or waiver would be to eliminate, diminish or defer any
obligation or undertaking of the Partnership, the General
Partner or its Affiliates which accrues, directly or
indirectly, to the benefit of, or provides additional
security or protection to, the Investment Limited Partner
(notwithstanding that the Investment Limited Partner is
neither a party to nor express beneficiary of such
provision or was not a partner when such provision became
effective);
(xiv) to approve any changes to the plans and
specifications for the Apartment Complex which would
result, either individually or in the aggregate, in an
overall development cost increase or decrease in excess of
$50,000;
(xv) to permit the merger, termination or
dissolution of the Partnership; or
(xvi) to do any act required to be approved or ratified by
all limited partners under the Act.
(b) In the event that any General Partner violates any
provision of Section 6.2(a), the Special Limited Partner in its sole
discretion and without prejudice to its rights under Sections 4.5(b)
and 7.6(a), may cause itself or its designee to be admitted as an
additional General Partner without any further action by any other
Partner. Upon any such admission of an additional General Partner,
each existing General Partner shall be deemed to have assigned
proportionally to the additional General Partner, automatically and
without further action, such portion of its General Partnership
Interest so that the additional General Partner shall receive not less
than a one percent (1%) interest in the Profits, Losses, Tax Credits
and distributions of the Partnership in consideration of one dollar
($1.00) and any other consideration which may be agreed upon. An
additional General Partner so admitted shall automatically become the
Managing General Partner and shall be irrevocably delegated all of the
power and authority of all of the General Partner pursuant to Section
6.13. Any such additional General Partner shall have the right to
withdraw as a General Partner at any time, leaving the prior General
Partner once again as the only General Partner, the provisions of
Article VII notwithstanding. Each Partner hereby grants to the
Special Limited Partner a special power of attorney, irrevocable to
the extent permitted by law and coupled with an interest, to amend
this Agreement and to do anything else which, in view of the Special
Limited Partner, may be necessary or appropriate to accomplish the
purposes of this Section 6.2(b) or to enable any additional General
Partner admitted pursuant to this Section 6.2(b) to manage the
business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner on an
after-tax basis shall fully indemnify and hold harmless the additional
General Partner from and against any and all Adverse Consequences
sustained by the additional General Partner in connection with its
status as a General Partner (other than Adverse Consequences arising
solely from the gross negligence or wilful misconduct of such
additional General Partner).
(c) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive any salary
or other direct or indirect compensation for any services or goods
provided in connection with the Partnership or the Apartment Complex,
except as may be specifically provided in Section 6.12, Section 6.15
and Article XI or as to which the Consent of the Special Limited
Partner shall have been obtained to the precise terms thereof prior to
the commencement of such services or the provision of such goods. Any
Partner may engage independently or with others in other business
ventures of every nature and description, including the ownership,
operation, management, syndication and development of real estate;
neither the Partnership nor any other Partner shall have any rights in
and to such independent ventures or the income or profits derived
therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the General
Partner shall have the exclusive right to control the business of the
Partnership. If at any time there is more than one General Partner,
the powers and duties of the General Partners hereunder shall be
exercised in the first instance by a Managing General Partner who,
subject to the terms and provisions of this Agreement, shall manage
the business and affairs of the Partnership. The Managing General
Partner may bind the Partnership by executing and delivering, in the
name and on behalf of the Partnership, any documents which this
Agreement authorizes the General Partners to execute hereunder without
the requirement that any other General Partner execute such documents.
The initial Managing General Partner shall be 70 W 128 Corp.; if it is
unwilling or unable to serve in such capacity or shall cease to be a
General Partner, the remaining General Partners may from time to time
designate a new Managing General Partner. If for any reason no
designation is in effect, the powers of the Managing General Partner
shall be exercised by a majority in interest of the General Partners.
Any action required or permitted to be taken by a corporate General
Partner hereunder may be taken by such of its proper officers or
agents as it shall validly designate for such purpose.
(b) The Managing General Partner shall have control over the
business of the Partnership and shall have all rights, powers and
authority conferred by law as necessary, advisable or consistent in
connection therewith. Without limiting the generality of the
foregoing, the Managing General Partner shall have the right, power
and authority to execute any documents relating to the acquisition,
financing, rehabilitation, operation and sale of all or any portion of
the Apartment Complex with the prior approval of the other General
Partners, if any. The Managing General Partner shall be responsible
for administering any construction loan draw requests for the
development of the Apartment Complex.
(c) Neither the Investment Limited Partner nor the Special
Limited Partner shall have any right to take part in the management or
control of the business of the Partnership or to transact any business
in the name of the partnership. No provision of this Agreement which
makes the Consent of the Investment Limited Partner or the Consent of
the Special Limited Partner a condition for the effectiveness of an
action taken by the General Partner is intended, and no such
provisions shall be construed, to give the Investment Limited Partner
or the Special Limited Partner, as the case may be, any participation
in the control of the Partnership business. Each of the Special
Limited Partner and the Investment Limited Partner hereby consents to
the exercise by the General Partner of the powers conferred on it by
law and this Agreement, and the General Partner agrees to exercise
control of the business of the Partnership only in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, in no
event may the provisions of this Section 6.4 be invoked by any General
Partner or by any other Person as a defense against or as an
impediment to the ability of either the Investment Limited Partner or
the Special Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of the
Partnership using commercially reasonable efforts to carry out the
purpose of the Partnership, and shall devote to the Partnership such
time as may be reasonably necessary for the proper performance of its
duties and the business of the Partnership. The General Partner shall
promptly take all action which may be necessary or appropriate for the
proper development, construction, maintenance and operation of the
Apartment Complex in accordance with the provisions of this Agreement,
the Project Documents and any applicable laws and Regulations. The
General Partner is responsible for the management and operation of the
Partnership, including the oversight of the rent-up and operational
stages of the Apartment Complex.
(b) Subject to the provisions of Section 6.5(g), the General
Partner shall use its diligent good faith efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at
the maximum realizable level in view of (i) any applicable
Regulations, (ii) the Minimum Set-Aside Test, (iii) the Rent
Restriction Test and (iv) the Projected Rents, and, if necessary, the
General Partner also shall use its best efforts to obtain approvals
and implementation of appropriate adjustments in the rental schedule
of the Apartment Complex.
(c) The General Partner shall cause the Partnership to obtain
and keep in force, during the term of the Partnership, insurance
policies in accordance with the Insurance Requirements set forth on
Exhibit C hereto. Throughout the term of the Partnership, the General
Partner shall provide copies of all such policies (or binders) to the
Investment Limited Partner within 30 days after their receipt thereof.
The General Partner shall cause the applicable insurer to name the
Investment Limited Partner as an "additional insured" on each
Partnership insurance policy. Each Partnership insurance policy shall
include a provision requiring the insurance company to notify the
Investment Limited Partner in writing no less than thirty (30) days
prior to any cancellation, non-renewal or material change in the terms
and conditions of coverage. The General Partner shall review
regularly all of the Partnership and Apartment Complex insurance
coverage to insure that it is adequate and continuing. In particular,
the General Partner shall review at least annually the insurance
coverage required by this Section 6.5(c) to insure that it is in an
amount at least equal to the then current full replacement value of
the Apartment Complex.
Without limitation of the foregoing, the General Partner shall
deliver to the Investment Limited Partner on or before the Admission
Date one or more certificates or memoranda of insurance, in form
reasonably acceptable to the Investment Limited Partner, evidencing,
(i) the existence of the insurance policies and coverages specified on
Exhibit C, (ii) that the Partnership and its Partners (including the
Investment Limited Partner) are named insured on such policies, and
(iii) that such insurance policies will not be cancelled by the
insurers except within thirty (30) days' written notice to the
Investment Limited Partner. From time to time following the Admission
Date, the General Partner shall deliver to the Investment Limited
Partner such further certificates or memoranda of insurance as the
Investment Limited Partner may reasonably require to confirm that such
insurance and notice provisions with respect to insurance under this
Agreement have been complied with.
(d) If at any time there is more than one General Partner, the
obligations of the General Partners hereunder shall be the joint and
several obligations of each General Partner. Except as otherwise
provided in Sections 4.5(b) and 7.1, such obligations shall survive
any Withdrawal of a General Partner from the Partnership.
(e) (i) The General Partner shall establish and maintain
reasonable reserves (the "Replacement Reserve") to provide for working
capital needs, improvements, replacements and any other contingencies
of the Partnership. At a minimum, the General Partner shall cause the
Partnership to annually deposit $4,928 from Cash Flow into the
Replacement Reserve; to the extent that Cash Flow (as determined
before deduction of such reserve deposit) for any Fiscal Year shall be
insufficient to make such deposit in full, the General Partner shall
fund such shortfall from its own funds as a Subordinated Loan; and
(ii) In addition to the requirements of Section
6.5(e)(i), in order to fund Cash Expenditures of the Partnership which
exceed Cash Receipts available for the payment thereof, on or prior to
the Admission Date, the General Partner (or its designee), shall
deposit $36,000 into a segregated reserve account (the "Operating
Reserve") funded (A) from Cash Receipts or (B) from the General
Partner's own funds to secure the General Partner's obligation to fund
operating expenses from the Completion Date until sixty (60) months
following Rental Achievement (the "Subordinated Loan Period"),
provided, however, that the General Partner's obligation shall not
exceed $275,000. Funds held in the Operating Reserve may be released
to pay operating expenses with the approval of the Special Limited
Partner. After the Subordinated Loan Period has terminated, the
funds, if any, remaining in the Operating Reserve shall be returned to
the General Partner (or its designee) if funded by the General Partner
under subclause (B) in the immediately preceding sentence and in
accordance with the provisions of Section 10.2. Any funds utilized
from the Operating Reserve to pay Partnership operating expenses shall
constitute Subordinated Loans. Upon the utilization of such funds
from the Operating Reserve, the General Partner shall use its best
good faith efforts to redeposit Partnership funds in the Operating
Reserve in an amount sufficient to maintain the minimum balances
required herein.
(f) Each General Partner shall be bound by the provisions of
the Project Documents, and no additional General Partner shall be
admitted if he, she or it has not first agreed to be bound by this
Agreement (and assume the obligations of a General Partner hereunder)
and by the Project Documents to the same extent and under the same
terms as each of the other General Partners.
(g) The General Partner shall take all actions appropriate to
ensure that the Investment Limited Partner receives the full amount of
the Projected Credit, including, without limitation, the rental of
apartments to appropriate tenants and the filing of annual
certifications as may be required. In this regard, the General
Partner shall, inter alia, cause (i) the Partnership to satisfy the
Minimum Set-Aside Test, the Rent Restriction Test and all other
requirements imposed from time to time under the Code with respect to
rental levels and occupancy by qualified tenants by the close of the
first year of the Credit Period and throughout the Compliance Period
so as to permit the Partnership to be entitled to the maximum
available Tax Credit (ii) the Partnership to comply with all State Tax
Credit monitoring procedures, (iii) all dwelling units in the
Apartment Complex to be leased for initial periods of not less than
six months to individuals satisfying the Rent Restriction Test, (iv)
the Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex to
be of equal quality with comparable amenities available to low-income
tenants on a comparable basis without separate fees.
(h) On or before the Admission Date, the General Partner shall
provide to the Special Limited Partner either (i) an appraisal of the
Apartment Complex prepared by a competent independent appraiser or
(ii) completed FmHA Forms 1924-13 (estimate and certificate of actual
cost) and 1930-7 (statement of budget, income and expense) or HUD
project cost and budget analysis on Form 2264, or any successor FmHA
or HUD form, any comparable form of a state or other Governmental
Authority, including any applicable Credit Agency, setting forth
estimates with respect to construction, rehabilitation and mortgage
financing costs and initial rental income and operating expense
figures for the Apartment Complex.
(i) The General Partner shall (i) not store or dispose of
(except in compliance with all laws, ordinances, and regulations
pertaining thereto) any Hazardous Material at the Apartment Complex,
or at or on any other Site or Vessel owned, occupied, or operated
either by any General Partner, any Affiliate of a General Partner, or
any Person for whose conduct any General Partner is or was
responsible; (ii) neither directly nor indirectly transport or arrange
for the transport of any Hazardous Material (except in compliance with
all laws, ordinances, and regulations pertaining thereto); (iii)
provide the Investment Limited Partner with written notice (x) upon
any General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or from
the Apartment Complex or any other Site or Vessel owned, occupied, or
operated by any General Partner, any Affiliate of a General Partner or
any Person for whose conduct any General Partner is or was responsible
or whose liability may result in a lien on the Apartment Complex; (y)
upon any General Partner's receipt of any notice to such effect from
any federal, state, or other Governmental Authority; and (z) upon any
General Partner's obtaining knowledge of any incurrence of any expense
or loss by any such government authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for which
expense or loss a lien may be imposed on the Apartment Complex.
(j) The General Partner shall promptly request in writing of
the Permanent Lender that the Permanent Lender cause the Special
Limited Partner to be named as an "interested party" in the Permanent
Mortgage Loan Documents, so that the Permanent Lender will notify the
Special Limited Partner of any default under the Permanent Mortgage or
the General Partner shall itself notify the Special Limited Partner of
any such default.
(k) The General Partner shall provide the Special Limited
Partner with a true and accurate copy of each Construction Loan
requisition and any supporting documents and information which has
been submitted for approval by the Construction Lender (whether
submitted before or after the Admission Date).
(l) The General Partner shall have a fiduciary responsibility
for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its immediate possession or control.
The General Partner shall not employ, or permit another to employ,
such funds or assets in any manner except for the exclusive benefit of
the Partnership. No General Partner shall contract away the fiduciary
duty owed at common law to the Limited Partners.
6.6 Representations and Warranties
I. The General Partner represents and warrants to the
Investment Limited Partner and the Special Limited Partner as follows:
(a) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State and
has complied with all filing requirements necessary for its existence
and to preserve the limited liability of the Investment Limited
Partner and the Special Limited Partner.
(b) No event or proceeding has occurred or is pending or, is
to the Best Knowledge of the General Partner, has been threatened
within the last 90 days which would (i) materially adversely affect
the Partnership or its properties, or (ii) materially adversely affect
the ability of the General Partner or any of its Affiliates to perform
their respective obligations hereunder or under any other agreement
with respect to the Apartment Complex, other than legal proceedings
which have been bonded against without recourse to Partnership assets
in such manner as to stay the effect of the proceedings or otherwise
have been adequately provided for. This subparagraph shall be deemed
to include, without limitation, the following: (x) legal actions or
proceedings before any court, commission, administrative body or other
Governmental Authority having jurisdiction over the zoning applicable
to the Apartment Complex; (y) labor disputes; and (z) acts of any
Governmental Authority.
(c) To the Best Knowledge of the General Partner, no default
(or event which, with the giving of notice or the passage of time or
both, would constitute a default) has occurred and is continuing under
this Agreement or under any material provision of the Project
Documents, and the Project Documents are in full force and effect.
(d) Except as specifically permitted under Section 3.1, no
Partner or Related Person bears (or will bear) the Economic Risk of
Loss with respect to the Permanent Mortgage Loan. No General Partner
has, either on its own behalf or on behalf of the Partnership,
incurred any financial obligation with respect to the Partnership
prior to the Admission Date, other than as disclosed in writing to the
Special Limited Partner prior to the Admission Date.
(e) The Apartment Complex will be, is being or has been
constructed in a timely manner in conformity with the Project
Documents. There is no violation by the Partnership or the General
Partner of any zoning, environmental or similar regulation applicable
to the Apartment Complex which could have a material adverse effect
thereon, and the Partnership has complied and will comply with all
applicable municipal and other laws, ordinances and regulations
relating to such construction and use of the Apartment Complex. All
appropriate public utilities, including, but not limited to, water,
electricity, gas (if called for in the Plans and Specifications), and
sanitary and storm sewers, are or will be available and operating
properly for each unit in the Apartment Complex at the time of the
initial occupancy of such unit.
(f) To the Best Knowledge of the General Partner, the
Partnership owns good and marketable fee simple title to the Apartment
Complex, subject to no material liens, charges or encumbrances other
than those which (i) are both permitted by the Project Documents and
are noted or excepted in the Title Policy, (ii) do not materially
interfere with use of the Apartment Complex (or any part thereof) for
its intended purpose or, other than the permitted Mortgages, have a
material adverse effect on the value of the Apartment Complex, or
(iii) have been bonded or insured against in such a manner as to
preclude the holder of such lien or such surety or insurer from having
any recourse to the Property or the Partnership for payment of any
debt secured thereby, which bond(s) or insurance have been approved by
the Lenders.
(g) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or limited
liability company have been or will be duly authorized by all
necessary corporate or other actions, and the consummation of any such
transactions with or on behalf of the Partnership will not constitute
a breach or violation of, or a default under, the charter or by-laws
of such Affiliate or any agreement by which such Affiliate or any of
its properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(h) Any General Partner (or partner or member of a General
Partner) which is a corporation or limited liability company (a
"Corporation/LLC") has been duly organized, is validly existing and in
good standing under the laws of its state of organization and has all
requisite corporate and other power to be a General Partner and to
perform its duties and obligations as contemplated by this Agreement
and the Project Documents. Neither the execution and delivery by any
Corporation/LLC of this Agreement nor the performance of any of the
actions of any Corporation/LLC contemplated hereby has constituted or
will constitute a violation of (a) the articles of incorporation,
operating agreement, by-laws and any other organizational documents of
such Corporation/LLC, (b) any agreement by which such Corporation/LLC
is bound or to which any of its property or assets is subject, or (c)
any law, administrative regulation or court decree.
(i) No Event of Bankruptcy has occurred with respect to the
Partnership, any General Partner or the Developer.
(j) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by any Agency or Lender.
(k) If the only General Partner(s) are one or more
corporation(s) or limited liability company(ies), then the General
Partner(s) have a combined net worth which satisfies the Designated
Net Worth Requirements.
(l) All anticipated payments and expenses required to be made
or incurred in order to complete the construction of the Apartment
Complex in conformity with the Project Documents, to fund any reserves
hereunder or under any other Project Document required to be funded at
or prior to the later of the Admission Date or Permanent Mortgage
Commencement, to satisfy all requirements under the Project Documents
and to pay the Development Fee and all other fees, have been or will
be paid or provided for utilizing only (i) the funds available from
the Construction Loan, (ii) the Capital Contributions of the
Investment Limited Partner, (iii) the Capital Contributions of the
General Partner in the amounts set forth on Schedule A as of the
Admission Date, (iv) the available net rental income, if any, earned
by the Partnership prior to Permanent Mortgage Commencement (to the
extent that it is permitted to be used for such purposes by any Agency
or Lender), (v) any Cash Flow generated subsequent to Permanent
Mortgage Commencement (to the extent provided in Section 10.2(a)),
(vi) any insurance proceeds and (vii) any funds furnished by the
General Partner pursuant to Sections 6.5(e) and 6.11(a).
(m) The aggregate amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is
$174,182 per annum for each of the years 1997 through 2006
(inclusive), provided, however, that the General Partner shall have no
liability to the Investment Limited Partner or the Special Limited
Partner for any breach of the representation contained in this
paragraph (m) if (but only to the extent that) the adjuster provisions
set forth in Sections 5.1(e), (f) and (g) have become operative and
all required payments or adjustments have been made thereunder in
accordance with the terms thereof.
(n) The Apartment Complex will be, is being or has been
constructed and operated in a manner which satisfies Section 42 of the
Code and shall continue to satisfy all existing and anticipated
restrictions applicable to projects generating Tax Credits.
(o) No General Partner, Affiliate of a General Partner or
Person for whose conduct any General Partner is or was responsible has
ever: (i) owned, occupied, or operated a Site or Vessel on which any
Hazardous Material was or is stored, transported, or disposed of,
except if such storage, transport or disposition was and is at all
times in compliance with all laws, ordinances, and regulations
pertaining thereto; (ii) directly or indirectly transported, or
arranged for transport, of any Hazardous Material (except if such
transport was and is at all times in compliance with all laws,
ordinances and regulations pertaining thereto); (iii) caused or was
legally responsible for any release or threat of release of any
Hazardous Material; (iv) received notification from any federal, state
or other Governmental Authority of (x) any potential, known, or threat
of release of any Hazardous Material from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General
Partner, by any Affiliate of a General Partner, or by any Person for
whose conduct any General Partner is or was responsible or whose
liability may result in a lien on the Apartment Complex; or (y) the
incurrence of any expense or loss by any such Governmental Authority
or by any other Person in connection with the assessment, containment,
or removal of any release or threat of release of any Hazardous
Material from the Apartment Complex or any such Site or Vessel.
(p) To the Best Knowledge of the General Partner, no Hazardous
Material was ever or is now stored on, transported, or disposed of on
the land comprising the Apartment Complex, except to the extent any
such storage, transport or disposition was at all times in compliance
with all laws, ordinances, and regulations pertaining thereto.
(q) The General Partner has fulfilled and will continue to
fulfill all of its duties and obligations under Section 6.5.
(r) The Partnership's basis in the Apartment Complex as of
December 31, 1995 was greater than 10% of the Partnership's reasonably
expected basis in the Apartment Complex as of December 31, 1995 and
all conditions set forth in Section 42 of the Code, the Treasury
Regulations, IRS notices, rulings or releases and any other
authorities to the validity of the allocation of LIHTC have been or
will be satisfied in a timely manner.
II. Each of the Investment Limited Partner and Special Limited
Partner represents and warrants to the General Partner as follows:
(a) Each of the Investment Limited Partner and Special
Limited Partner is a duly organized limited partnership or
corporation, as the case may be, validly existing and in good standing
under the laws of the State of Delaware, has complied with all filing
requirements necessary for its existence and has all requisite
corporate and other power to be a Partner and to perform its duties
and obligations as contemplated by this Agreement. The execution and
delivery by any of the Investment Limited Partner and/or Special
Limited Partner of this Agreement nor the performance of any of the
actions of the Investment Limited Partner and/or Special Limited
Partner contemplated hereby has been or will be duly authorized by all
necessary corporate, partnership or other actions, as the case may be,
and does not constitute a violation of (a) the certificate of
incorporation, operating agreement, by-laws, partnership agreement and
any other organizational documents of such Investment Limited Partner
or Special Limited Partner, (b) any agreement by which such Investment
Limited Partner or Special Limited Partner is bound or to which any of
its respective property or assets is subject, or (c) any law,
administrative regulation or court decree.
(b) To the best knowledge of the Investment Limited
Partner and Special Limited Partner , respectively, no default (or
event which, with the giving of notice or the passage of time or both,
would constitute a default) has occurred and is continuing under this
Agreement or under any material provision of the Project Documents,
and the Project Documents are in full force and effect.
(c) No Event of Bankruptcy has occurred with respect to
the Investment Limited Partner.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall at any
time bear the Economic Risk of Loss for the payment of any portion of
any Mortgage Loan, and the General Partner shall not permit any other
Partner or any Related Person to bear the Economic Risk of Loss for
the payment of any portion of any Mortgage Loan, except as may be
expressly permitted pursuant to the provisions of Article III with the
Consent of the Special Limited Partner.
6.8 Indemnification of the General Partner
(a) Except as provided by Article V, no General Partner or any
Affiliate thereof shall have liability to the Partnership or to any
Limited Partner for any loss suffered by the Partnership which arises
out of any action or inaction of any General Partner or Affiliate
thereof if such General Partner or Affiliate thereof in good faith
determined that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute gross
negligence or willful misconduct of such General Partner or Affiliate
thereof.
(b) A General Partner or any Affiliate thereof shall be
indemnified by the Partnership from and against any Adverse
Consequences sustained in connection with the business and operations
of the Partnership, provided that all of the following conditions are
met: (i) such General Partner has determined, in good faith, that the
course of conduct which caused the loss, judgment, liability, expense
or amount paid in settlement was in the best interests of the
Partnership; and (ii) such Adverse Consequences were not the result of
gross negligence or willful misconduct on the part of such General
Partner or Affiliate thereof; and (iii) such indemnification or
agreement to hold harmless is recoverable only out of the assets of
the Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer
shall be indemnified for any Adverse Consequences arising from or out
of an alleged violation of federal or state securities laws unless
there has been a successful adjudication on the merits of each count
involving securities laws violations as to the particular indemnitee
and the court finds that indemnification of the settlement and related
costs should be made; provided, however, that the Partnership is
authorized to advance in the form of a loan to such Partner reasonably
necessary funds for defense of any such claim pending final
adjudication which may have been brought against a Partner or
Affiliate thereof performing services for the Partnership. In any
claim for indemnification for federal or state securities law
violations, the party seeking indemnification shall, prior to seeking
court approval for such indemnification, place before the court the
positions of the Securities and Exchange Commission, the Massachusetts
Securities Division and any other applicable state securities
administrator with respect to the issue of indemnification for
securities law violations.
(d) The Partnership shall not incur the cost of the portion of
any insurance, other than public liability insurance or course of
construction insurance, which insures any party against any liability
as to which such party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves an activity
in which such Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on behalf of the
Partnership who (i) directly or indirectly controls, is controlled by
or is under common control with a General Partner; (ii) owns or
controls ten percent (10%) or more of the outstanding voting
securities of a General Partner; (iii) is an officer, director,
partner or trustee of a General Partner; or (iv) if a General Partner
is an officer, director, partner or trustee, in any company for which
such General Partner acts in any such capacity. For purposes of this
Section 6.8 only, the term "controls" and any form of such term shall
mean the power to direct the management and policies of a Person,
directly or indirectly, whether through ownership of voting
securities, by contract or otherwise.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partner will indemnify and hold the
Partnership and the Limited Partners harmless from and against any and
all Adverse Consequences which the Partnership or any Limited Partner
may incur by reason of (i) the past, present or future actions or
omissions of the General Partner or any of its Affiliates constituting
gross negligence or willful misconduct, or (ii) any liabilities to
which either the Partnership or the Apartment Complex is subject other
than (x) any Mortgage or (y) any payables or necessary contractual
obligations incurred pursuant to the requirements of any Agency or
Lender in connection with the operation of the Apartment Complex in
the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission
for which the Partnership is required to indemnify such General
Partner under Section 6.8, except as provided by Article V.
(c) The General Partner shall indemnify, defend, and hold the
Limited Partners harmless on an after-tax basis from and against any
Adverse Consequences related to or arising out of the presence of any
Hazardous Material at the Apartment Complex (other than any Adverse
Consequences resulting from the acts or omissions of the Limited
Partners). Any claim or loss described in the immediately preceding
sentence may be defended, compromised, settled, or pursued by the
Limited Partners with counsel of the Limited Partners' selection, but
at the expense of General Partner. Notwithstanding anything else set
forth herein, this indemnification shall survive the withdrawal of any
General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner shall be
obligated during the Subordinated Loan Period, to promptly advance
funds to eliminate any Operating Deficit, provided however, that the
General Partner shall not be obligated to advance in excess of
$275,000. In any case in which the General Partner otherwise would be
required to advance funds under this Section 6.10, any amounts then
held in the Operating Reserve may be released and disbursed for the
purpose of eliminating the Operating Deficit before the General
Partner shall be required to advance their own funds. In the event
that the General Partner shall fail to make any such advance as
aforesaid, (a) the Partnership shall utilize amounts (the "Applied
Amounts") otherwise payable to the General Partner or its Affiliates
under Section 6.12 and/or Article X to meet the obligations of the
General Partner pursuant to this Section 6.10, with such utilization
of Applied Amounts constituting payment and satisfaction of the
corresponding amounts payable to the General Partner or its Affiliates
under Section 6.12 and/or Article X, with the proceeds thereof being
applied to such obligations, and with the obligation of the
Partnership to make such payments to the General Partner or its
Affiliates pursuant to Section 6.12 and/or Article X being deemed to
have been satisfied to the extent thereof and (b) the Special Limited
Partner shall have the option, exercisable in its sole discretion, to
cause it or one or more of its designees to be admitted to the
Partnership as additional General Partner(s). An additional General
Partner so admitted shall automatically, without the need for any
further action by any Partner, become the Managing General Partner and
shall be delegated all of the powers and authority of all of the
General Partners pursuant to Section 6.13, and each Partner hereby
grants to any such additional General Partner a power of attorney,
coupled with an interest and irrevocable to the extent permitted by
law, to execute and deliver any and all instruments and documents
which it believes to be necessary or appropriate in order to
accomplish the purposes of this Section 6.10 and to manage the
business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner shall
indemnify and hold harmless the additional General Partner from and
against any and all Adverse Consequences sustained in connection with
the additional General Partner's status as a General Partner (other
than Adverse Consequences arising solely out of the negligence or
misconduct of such additional General Partner). For the purpose of
this Section 6.10, all expenses shall be paid on a sixty (60)-day
current basis. Moreover, the General Partner may in its sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in order to
facilitate the Partnership's compliance with the Rent Restriction
Test. All advances pursuant to Section 6.5(e) and this Section 6.10
(including any Applied Amounts), except advances from the Operating
Reserve, shall constitute non-interest-bearing Subordinated Loans.
Subordinated Loans shall be repaid in accordance with the provisions
of Article X. The form and provisions of all Subordinated Loans shall
conform to any applicable Regulations.
6.11 Obligation to Complete the Construction of the Apartment
Complex
(a) The Developer, in its capacity as the Developer and not as
a General Partner shall be obligated to complete the construction of
the Apartment Complex and achieve Permanent Mortgage Commencement in
the manner set forth in this Agreement and the Development Agreement.
(b) If and to the extent required by the Construction Lender,
the completion of the Apartment Complex shall be secured by such
security as is satisfactory to the Special Limited Partner, which may
include, but shall not be limited to, the following:
(i) a written guaranty of completion by a Person,
supported by financial statements demonstrating sufficient net
worth or adequately collateralized by other real or personal
properties or other Persons' guarantees; and/or
(ii) a retention of a reasonable portion of the Capital
Contribution of the Investment Limited Partner and/or fees to
the General Partner as a potential offset in the event the
General Partner does not perform in accordance with this
Agreement.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as compensation
for the Developer's services in connection with the acquisition,
development and rehabilitation of the Apartment Complex, the
Partnership shall pay to the Developer a development fee (the
"Development Fee") in the amount and at the times set forth in the
Development Agreement. If the Development Fee has not been fully paid
by the tenth (10th) anniversary of the Completion Date, the General
Partner shall make a Capital Contribution to the Partnership in an
amount sufficient to enable the Partnership to pay any unpaid portion
of the Development Fee.
(b) The Partnership shall pay to the Special Limited Partner
or an Affiliate thereof a fee (the "Asset Management Fee") commencing
in 1997 for its services in connection with the Partnership's
accounting matters relating to the Investment Limited Partner and
assisting with the preparation of tax returns and the reports
required by Section 12.7 in the annual amount of $1500. The Asset
Management Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a); provided however, that if in
any Fiscal Year, Cash Flow is insufficient to pay the full amount of
the Asset Management Fee, the General Partner shall advance the amount
of such deficiency to the Partnership as a Subordinated Loan. If for
any reason the Asset Management Fee is not paid in any Fiscal Year,
the unpaid portion thereof shall accrue and be payable on a cumulative
basis in the first Fiscal Year in which there is sufficient Cash Flow
or Capital Proceeds as provided in Article X.
(c) In consideration of the services of the General Partner in
managing the day-to-day business and affairs of the Partnership, the
Partnership shall pay to the General Partner an annual fee (the
"Partnership Management Fee") commencing in 1997 in the amount of up
to $1,500, payable from Cash Flow in the manner set forth in Section
10.2(a). The Partnership Management Fee shall be noncumulative so
that if there is not sufficient Cash Flow in any Fiscal Year to pay
the amount of the Partnership Management Fee specified in Section
10.2(a), clause Fifth, the Partnership shall have no obligation to pay
such shortfall in any future Fiscal Year.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or duties
hereunder to another General Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in favor
of every Person relying thereon or claiming thereunder that at the
time of the delivery thereof (i) the Partnership was in existence,
(ii) this Agreement had not been amended in any manner so as to
restrict the delegation of authority among General Partners (except as
shown in certificates or other instruments duly filed in the Filing
Office) and (iii) the execution and delivery of such instrument was
duly authorized by the General Partners. Any Person may always rely
on a certificate addressed to him and signed by any General Partner
hereunder:
(1) as to who are the General Partners or Limited
Partners hereunder;
(2) as to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the General
Partners or in any other manner germane to the affairs of the
Partnership;
(3) as to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) as to the authenticity of any copy of this Agreement
and any amendments thereto; or
(5) as to any act or failure to act by the Partnership
or as to any other matter whatsoever involving the Partnership
or any Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and assign
to the Partnership all of their right, title and interest in and to
the Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts with
architects, supervising architects, engineers and contractors with
respect to the development of the Apartment Complex; (ii) all plans,
specifications and working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all governmental
commitments and approvals obtained, and applications therefore,
including, but not limited to those relating to planning, zoning,
building permits and Tax Credits; (iv) any and all commitments with
respect to any Mortgage(s); and (v) any and all contracts or rights
with respect to any agreements with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may act as
Management Agent upon the terms and conditions set forth in Article
XI.
(b) The General Partner or any Affiliates thereof shall have
the right to contract or otherwise deal with the Partnership for the
sale of goods or services to the Partnership in addition to those set
forth herein, if (i) compensation paid or promised for such goods or
services is reasonable (i.e., at fair market value) and is paid only
for goods or services actually furnished to the Partnership, (ii) the
goods or services to be furnished shall be reasonable for and
necessary to the Partnership, (iii) the fees, terms and conditions of
such transaction are at least as favorable to the Partnership in all
material respects as would be obtainable in an arm's-length
transaction, and (iv) no agent, attorney, accountant or other
independent consultant or contractor who also is employed on a full-
time basis by the General Partner or any Affiliate shall be
compensated by the Partnership for his services. Any contract
covering such transactions shall be in writing and shall be terminable
without penalty on sixty (60) days written 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 Article XII. 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 6.15(b).
6.16 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 treasury regulations pursuant to Section 6231 of the Code. Each
Partner, by the 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 hereby is authorized, but not
required:
(i) to enter into any settlement agreement with the
Service 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 treasury regulations
thereunder) files a statement with the Service providing that
the Tax Matters Partner shall not have the authority to enter
into a settlement agreement on the behalf of such Partner;
(ii) in the event that a notice of 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;
(iii) to intervene in any action brought by any other
Partner for judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment
with the Service at any time and, if any part of such request is
not allowed by the Service, to file an appropriate pleading
(petition or complaint) for judicial review with respect to such
request;
(v) to enter into an agreement with the 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 effected by such item; and
(vi) 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 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 Partnership funds
for such purpose, but only to the extent of available Partnership
resources. 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 6.8 of this Agreement shall be fully applicable
to the Tax Matters Partner in its capacity as such.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Voluntary Withdrawal
(a) Except as set forth in Section 7.1(b) below, no General
Partner shall have the right to Withdraw voluntarily from the
Partnership or to sell, assign or encumber its Interest without the
Consent of the Investment Limited Partner and each of the other
General Partners (if any) and, if required, any Requisite Approvals.
(b) Notwithstanding the foregoing:
(i) A General Partner may at any time propose to the
Investment Limited Partner a Person to serve as such General
Partner's successor or if at such time there be more than one
General Partner, to serve as a successor to one or more of the
General Partners desiring to withdraw. If the Investment
Limited Partner has consented thereto or if, pursuant to
Section 7.5, such a consent is not required, and any Requisite
Approvals are obtained to such withdrawal and the admission of
such successor, all Partners hereby agree, subject to the
provisions of Section 7.5, that this Agreement and the
Certificate shall be appropriately amended to effect such
withdrawal and admission.
(ii) If the Special Limited Partner or its designee
becomes a General Partner pursuant to the provisions of Section
4.5(b), Section 5.2(e), Section 6.2(b) or Section 6.10, it shall
not require the consent of any other General Partner to transfer
all or any portion of its Interest as a General Partner, other
than as may be required under the Act.
(iii) The General Partner may pledge or assign its
Interest to the Construction Lender as security for the
Partnership's obligations under the Construction Loan Documents,
provided that the form and substance of such pledge or
assignment has been approved by the Special Limited Partner.
7.2 Reconstitution
(a) In the event of the Withdrawal of a General Partner, the
Partnership shall not be dissolved or required to be wound up if (i)
at the time of such Withdrawal there is at least one remaining General
Partner and that General Partner carries on the business of the
Partnership (any such remaining General Partner being hereby
authorized to carry on the business of the Partnership), or (ii)
within ninety (90) days after such Withdrawal all remaining Partners
(or if authorized by the Act, a majority of the Percentage Interests
in the Partnership) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of such
Withdrawal, of one or more additional General Partners. Within ten
(10) days after the occurrence of such Withdrawal, the remaining
General Partners, if any, shall notify the Investment Limited Partner
thereof.
(b) If it is determined, by a court of competent jurisdiction,
that the Partnership has dissolved prior to the occurrence of a
Liquidating Event, or if upon the Withdrawal of a General Partner, the
Partners fail to appoint a substitute General Partner effective as of
such event and to agree to continue the business of the Partnership as
provided in this Section 7.2, then within an additional ninety (90)
days after such determination or the last day of such ninety (90) day
period, as the case may be (the "Reconstitution Period"), a majority
of those Persons constituting the Investment Limited Partner may elect
to reconstitute the Partnership and continue its business on the same
terms and conditions set forth in this Agreement by forming a new
limited partnership on terms identical to those set forth in this
Agreement and having as a General Partner a Person designated by a
majority of those Persons constituting the Investment Limited
Partners. Upon any such election by the Investment Limited Partner,
all Partners shall be bound thereby and shall be deemed to have
consented thereto. Unless such an election is made within the
Reconstitution Period, the Partnership shall wind up its affairs in
accordance with the provisions of Section 10.3 hereof. If such an
election is made within the Reconstitution Period, then:
(i) The reconstituted limited partnership shall
continue until the occurrence of a Liquidating Event as
provided in Section 2.4;
(ii) If the successor General Partner is not a
former General Partner, then the provisions of Section
7.4(d) shall apply; and
(iii) All necessary steps shall be taken to cancel
this Agreement and the Certificate and to enter into a new
partnership agreement and certificate of limited
partnership, and the successor General Partner shall be
obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the remaining
General Partners may designate a Person to become a successor General
Partner to the Withdrawing General Partner. Except as provided in
Section 7.5 and subject to the provisions of Section 7.5, any Person
so designated, subject to any Requisite Approvals, the Consent of the
Investment Limited Partner and, if required by the Act or any other
applicable law, the consent of any other Partner so required, shall
become a successor General Partner upon his written agreement to be
bound by the Project Documents and by the provisions of this
Agreement.
(b) If any Withdrawal shall occur at a time when there is no
remaining General Partner and the Partners do not unanimously elect to
continue the business of the Partnership in accordance with the
provisions of clause (ii) of Section 7.2(a) above, then a majority of
those Persons constituting the Investment Limited Partner shall have
the right, subject to any Requisite Approvals, to designate a Person
to become a successor General Partner upon his written agreement to be
bound by the Project Documents and by the provisions of this
Agreement.
(c) If the Investment Limited Partner elects to reconstitute
the Partnership and admit a successor General Partner pursuant to this
Section 7.3, the relationship of the Partners in the reconstituted
Partnership shall be governed by this Agreement.
7.4 Interest of Predecessor General Partner
(a) Except as provided in Section 7.3(a), no assignee or
transferee of all or any part of the Interest as a General Partner of
a General Partner shall have any automatic right to become a General
Partner. Until the acquisition of the Interest of a Withdrawing
General Partner pursuant to Section 7.4(d) or 7.6, such Interest shall
be deemed to be that of an assignee and the holder thereof shall be
entitled only to such rights as an assignee may have as such under the
laws of the State.
(b) Anything herein contained to the contrary notwithstanding,
any General Partner who Withdraws voluntarily in violation of
Section 7.1 shall remain liable for all of its obligations under this
Agreement, for all its other obligations and liabilities hereunder
incurred or accrued prior to the date of its Withdrawal and for any
loss or damage which the Partnership or any of its Partners may incur
as a result of such Withdrawal (except as provided in Section 6.8(a)),
except for any loss or damage attributable to the default, negligence
or misconduct of a successor General Partner admitted in its place
under this Agreement.
(c) The estate (which term, for purposes of this
Section 7.4(c), shall include the heirs, distributees, estate,
executors, administrators, guardian, committee, trustee or other
personal representative) of a Withdrawn General Partner shall be
liable for all his liabilities and obligations hereunder, except as
provided in this Section 7.4(c). In the event of the death, insanity
or incompetency of a General Partner, his estate shall remain liable
for all of his obligations and liabilities hereunder incurred or
accrued prior to the date of such event, and for any damages arising
out of any breach of this Agreement by him, but his estate shall not
have any obligation or liability on account of the business of the
Partnership or the activities of the other General Partners after his
death, insanity or incompetency unless it becomes a General Partner
pursuant to Section 7.3(a).
(d) The Disposition of the General Partner Interest of a
General Partner who or which Withdraws voluntarily in compliance with
this Agreement shall be accomplished in such manner as shall be
reasonably acceptable to the remaining General Partners and shall be
reasonably approved by Consent of the Investment Limited Partner.
Except as provided in the preceding sentence, upon the Withdrawal of a
General Partner (other than a General Partner who or which is removed
as such pursuant to Section 4.5), such Withdrawn General Partner shall
be deemed to have automatically transferred to the remaining General
Partners, in proportion to their respective General Partner Interests,
or, if there shall be no remaining General Partner, then to the
Partnership for the benefit of the remaining Partners, all or such
portion of the General Partner Interest of such Withdrawn General
Partner which, when aggregated with the existing General Partner
Interests of all such remaining General Partners, will be sufficient
to assure such remaining General Partners a 1% interest in all
Profits, Losses, Tax Credits and distributions of the Partnership
under Article X. No documentation shall be necessary to effectuate
such transfer, which shall be automatic, and no consideration shall be
payable therefor. For the purposes of Article X, the effective date
of the transfer pursuant to the provisions of this Section 7.4(d) of
the General Partner Interest of a Withdrawn General Partner shall be
deemed to be the date on which such Withdrawal occurs. That portion
of the General Partner Interest (the "Remaining Interest") of the
Withdrawing General Partner which shall not have been transferred
pursuant to this Section 7.4(d) (except in respect of a removed
General Partner), shall be retained by such Withdrawing General
Partner (or pass to legal representatives thereof) who or which shall
have the status of a special Limited Partner, but with the right to
receive only that share of the Profits, Losses, Tax Credits and
distributions of the Partnership to which the Withdrawing General
Partner, as such, would have been entitled had he or it remained,
reduced to the extent of the General Partner Interest transferred
hereunder, but such Withdrawing Partner (or his or its legal
representatives, as the case may be) shall not be considered to be a
Special Limited Partner for the purpose of exercising any rights
reserved to the Special Limited Partner under this Agreement or
sharing the benefits allocated to the Special Limited Partner under
Article X hereof and shall not participate in the votes or consents of
the Limited Partners hereunder; provided, however, that in the case of
a General Partner who or which Withdraws involuntarily without
violation of this Agreement, the Partnership shall have the option
(but not the obligation), exercisable by notice to the holder of such
Interest within six (6) months following the date of such Withdrawal,
to acquire the Remaining Interest of such Withdrawing General Partner
(or the Special Limited Partner Interest deriving therefrom) in
accordance with the valuation and payment provisions of Section 7.8.
7.5 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant to
the preceding provisions of this Article VII, Schedule A shall be
amended to reflect such admission and an amendment to the Certificate,
also reflecting such admission, shall be filed as required by the Act.
(b) Each Partner hereby consents to and authorizes any
admission or substitution of a General Partner or any other
transaction, including, without limitation, the continuation of the
Partnership business, which has been authorized under the provisions
of this Agreement, and hereby ratifies and confirms each amendment of
this Agreement necessary or appropriate to give effect to any such
transaction.
7.6 Valuation and Sale of Interest of Former General Partner
(a) Subject to the provisions of Section 7.4(d), if the
business of the Partnership is continued after the Withdrawal of a
General Partner, or if, following such event, the Partnership is
reconstituted and continued, in each case as contemplated by this
Agreement, the Partnership shall purchase such General Partner's
Interest if such removal is without cause or if such Withdrawal is not
in violation of this Agreement (which term, and words of like import,
as used in this Section 7.6 shall refer only to the "Remaining
Interest" of such Withdrawing General Partner as defined in
Section 7.4(d) in all cases where applicable) each for a price equal
to the fair market value thereof. Such fair market value shall be
determined by two independent appraisers, one selected by the former
General Partner or its representative and one by the Partnership. If
such appraisers are unable to agree on the value of the former General
Partner's Interest, they shall jointly appoint a third independent
appraiser whose determination shall be final and binding. The
appraisers may act with or without a hearing, and the cost of the
appraisal will be shared equally between such former General Partner
and the Partnership. If a General Partner is removed by the
Investment Limited Partner for cause, or if a General Partner has
voluntarily withdrawn from the Partnership in contravention of the
terms of this Agreement, the General Partner shall forfeit its
Interest to the Partnership, not as a penalty but as liquidated
damages to compensate the Partnership for the action of such General
Partner leading to its removal, or for the fact of its violation of
the terms of this Agreement.
(b) Promptly after the determination of the purchase price of
a former General Partner's Interest pursuant to Section 7.6(a), the
Partnership shall deliver to such former General Partner a promissory
note of the Partnership for such purchase price, payable in five equal
consecutive annual installments commencing on the first anniversary of
the date of such note. Such promissory note shall bear simple
interest at the rate per annum which is at all times the AFR, payable
on the last day of each calendar quarter during which such note is
outstanding. Within one hundred twenty (120) days after the
determination of the purchase price of the former General Partner's
Interest, the Partnership may, with the consent of all remaining
General Partners and the Consent of the Investment Limited Partner,
sell such Interests to one or more Persons, who may be Affiliates of
the remaining General Partner or General Partners, and admit such
Person or Persons to the Partnership as substitute General Partners;
provided, however, that the purchase price to be paid to the
Partnership for the Interest of the former General Partner shall not
be less than its purchase price as determined by the appraisal and, if
applicable, arbitration described above. Such substitute General
Partners may pay said purchase price in installments in the manner set
forth above in this Section 7.6(b).
7.7 Designation of New General Partners
The General Partner may, with the written consent of all
Partners, at any time designate new General Partners, each with such
Interest as a General Partner in the Partnership as the General
Partner may specify, subject to any Requisite Approvals.
Any new General Partner shall, as a condition of receiving any
interest in the Partnership property, agree to be bound by the Project
Documents and any other documents required in connection therewith and
by the provisions of this Agreement, to the same extent and on the
same terms as any other General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent
and distribution) or pursuant to the provisions of Section 8.1(b), no
Limited Partner may assign all or any part of its Interest without the
written consent of the General Partner, the giving or withholding of
which is exclusively within its discretion.
(b) A Limited Partner, without the consent of the General
Partner, may assign to any Person all or any portion of the economic
benefits of the ownership of such Limited Partner's Interest;
provided, however, that such assignment shall not be binding on the
Partnership until there shall have been filed with the Partnership by
registered mail certified copies of an executed and acknowledged
assignment and the written acceptance by the assignee of all the terms
and provisions of this Agreement; if such assignment and acceptance
are not so filed, the Partnership need not recognize such assignment
for any purpose. An assignee of a Limited Partner who does not become
a Substituted Limited Partner shall have the right to receive the
allocable share of any Profits, Losses, Tax Credits or distributions
of the Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof) so
assigned if no such assignment had been made by such Limited Partner.
Any assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges of a
Limited Partner. Where the assignee does not become a Substituted
Limited Partner, the Partnership shall recognize such assignment not
later than the last day of the calendar month following receipt of
notice of assignment and all documentation required in connection
therewith.
(c) Each assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to the provisions
of Section 8.3, the General Partner may, in its sole discretion,
permit an assignee to become a Substituted Limited Partner. The
consent of the General Partner to an assignment of a Limited Partner's
Interest under Section 8.1 shall not, in and of itself, constitute its
consent to the admission of the assignee as a Substituted Limited
Partner under this Section 8.2.
(b) Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General Partner
to signify the agreement of such Substituted Limited Partner to be
bound by all the provisions of this Agreement and shall pay the
Partnership's reasonable legal fees and filing costs in connection
with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be made
if such Disposition would violate the provisions of Sections 8.1, 8.2
or 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partner may, in addition to any other
requirement it may impose, require as a condition of any Disposition
of a Limited Partner Interest that the transferor (i) assume all costs
incurred by the Partnership in connection therewith and (ii) furnish
the Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition of a
Limited Partner Interest in contravention of any of the provisions of
this Section 8.3 shall be void and ineffectual and shall not bind or
be recognized by the Partnership.
(e) Notwithstanding any other provision contained in this
Article VIII, if at any time there is more than one Investment Limited
Partner, each Investment Limited Partner shall have a right of first
refusal to purchase the Interest of any other Investment Limited
Partner who wishes to sell or otherwise transfer its Interest at a
price equal to and on terms identical to those of the prospective
purchaser thereof, to the extent reasonably practical, and shall have
at least fifteen (15) business days in which to exercise such right
after receiving notice thereof. If there shall be more than two non-
selling or transferring Investment Limited Partners, each of which
desires to exercise such a right of first refusal, they may do so pro
rata or, to the extent one does not so desire to exercise such right,
to the extent of the entire Interest being so sold or transferred.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement and may be made from any source, including Partners and
their Affiliates. Any Partnership borrowings from any Partner shall
be subject to any Requisite Approvals. If any Partner shall lend any
monies to the Partnership, the amount of any such loan shall not
increase such Partner's Capital Contribution. If any Partner shall so
lend monies, each such loan (a "Voluntary Loan") shall be an
obligation of the Partnership and (except for Subordinated Loans)
shall be repayable to such Partner on the same basis and with the same
rate of interest as would be applicable to a comparable loan to the
Partnership from a third party. Funds advanced by the General Partner
to the Partnership pursuant to the provisions of Section 6.11 shall
not constitute borrowings for the purposes of this Article IX or for
any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and Section
10.4, for each Partnership Fiscal Year or portion thereof, all
Operating Profits and Losses, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and Tax Credits incurred or
accrued on or after the Commencement Date shall be allocated ninety-
nine percent (99%) to the Investment Limited Partner and one percent
(1%) to the General Partner, provided, however, that in any Fiscal
Year in which Operating Profits are generated, such Operating Profits
shall be allocated to and among the Partners in the same percentages
as distributions of Cash Flow are made pursuant to Clause Fifth of
Section 10.2(a).
(b) Except as otherwise specifically provided in this Article,
all Profits and Losses arising from a Capital Transaction shall be
allocated to the Partners as follows:
As to Profits:
First, that portion of Profits
(including any Profits treated as ordinary income for
federal income tax purposes) shall be allocated to the
Partners who have negative Capital Account balances in
proportion to the amounts of such balances, provided that
no Profits shall be allocated to a Partner under this
Clause First to increase any such Partner's Capital
Account above zero; and
Second, Profits in excess of the amounts
allocated under Clause First above shall be allocated to
and among the Partners in the same percentages as cash is
distributed under Clauses Seventh, Eighth and Tenth of
Section 10.2(b);
As to Losses:
First, an amount of Losses shall be
allocated to the Partners to the extent and in such
proportions as shall be necessary such that, after giving
effect thereto, the respective balances in all Partners'
Capital Accounts shall be in the ratio of 99% for the
Investment Limited Partner and 1% for the General Partner;
Second, an amount of Losses shall be
allocated to the Partners until the balance in each
Partner Capital Account equals the amount of such
Partner's Capital Contribution (after the allocation under
Clause First above);
Third, an amount of Losses shall be
allocated to the Partners to the extent of and in
proportion to such Partners' Capital Account balances
(after the allocations under Clauses First and Second
above); and
Fourth, any remaining amount of Losses
after the allocation under Clauses First, Second and Third
above shall be allocated to the Partners in accordance
with the manner in which they bear the Economic Risk of
Loss associated with such Loss; provided, however, that in
the event that no Partner bears an Economic Risk of Loss
then any remaining Losses shall be allocated 99% to the
Investment Limited Partner and 1% to the General Partner.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals, Cash Flow for each
Fiscal Year or portion thereof shall be applied as follows:
First, to the payment of the Asset
Management Fee for such Fiscal Year and for any previous
Fiscal Year(s) as to which the Asset Management Fee shall
not yet have been paid in full;
Second, to the payment of any unpaid
portion of the Development Fee;
Third, to the repayment of any
Subordinated Loans, with any such payments to be applied
first to accrued but unpaid interest and then to
principal;
Fourth, with respect to any portion of
the Operating Reserve funded solely from the General
Partner's own funds, to the distribution to the General
Partner (or its designee) of any portion of the Operating
Reserve which may be released and disbursed in accordance
with the provisions of Section 6.5(e)(ii);
Fifth, to the payment of the Partnership
Management Fee in an amount not to exceed the difference
between $1,500 and the amount of Cash Flow distributed
pursuant to Clause Second of this Section 10.2(a) for such
Fiscal Year; and
Sixth, the balance thereof, if any,
shall be distributed annually, seventy-five (75) days
after the end of the Fiscal Year, 25% to the Investment
Limited Partner and 75% to the General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution and subject to the provisions of
Section 4.2(c), if Capital Proceeds are available for distribution
from a Capital Transaction, such Capital Proceeds shall be applied or
distributed as follows:
First, to the payment of all matured
debts and liabilities of the Partnership (including, but
not limited to, all expenses of the Partnership incident
to such Capital Transaction, excluding (i) debts and
liabilities of the Partnership to Partners or their
Affiliates, (ii) all unpaid fees owing to the General
Partner or its Affiliates and (iii) notes delivered and
payable pursuant to Section 7.8(b)(i) and (ii); and to the
establishment of any reserves which the General Partner
and the Auditors shall deem reasonably necessary for
contingent, unmatured or unforeseen liabilities or
obligations of the Partnership;
Second, to the payment of the
Disposition Fee to the General Partner;
Third, to the payment of any accrued and unpaid
Asset Management Fees;
Fourth, to the payment to the Investment
Limited Partner of the full amount (including interest) of
any Credit Recovery Loans;
Fifth, to the repayment of any Subordinated Loans,
with any such payments to be applied first to accrued but
unpaid interest and then to principal;
Sixth, to the repayment of any remaining
unpaid debts and liabilities owed to Partners or
Affiliates thereof by the Partnership for Partnership
obligations (exclusive of Credit Recovery Loans and
Subordinated Loans) to any of them, including, but not
limited to, accrued and unpaid amounts due in respect of
any and all fees (including but not limited to the
Development Fee) due and payable to the General Partner or
its Affiliates as set forth in Section 6.12; provided,
however, that any debts or obligations to be repaid to any
Limited Partner or Affiliate thereof pursuant to this
Clause Sixth shall be repaid prior to the repayment of any
such debts or obligations to any General Partner or
Affiliate thereof;
Seventh, to the payment to each Limited
Partner of an amount equal to its Tax Liability, in each
case minus any prior distributions made to such Partner
under this Clause Seventh, but never an amount less than
zero;
Eighth, to the payment to each General
Partner of an amount equal to its Invested Amount in each
case minus any prior distributions made to such Partner
under Clause Second of this Section 10.2(b), but never an
amount less than zero;
Ninth, except in the case of a
refinancing, to each Partner in an amount equal to the
positive balance in its Capital Account, after adjustments
pursuant to Clauses First through Eighth of this
Section 10.2(b); and
Tenth, subject to the provisions of
Section 10.3(a), any balance 50% to the Investment Limited
Partner, and 50% to the General Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the Partnership,
the remaining assets of the Partnership shall be distributed to the
Partners in accordance with the positive balances in their Capital
Accounts after taking into account all Capital Account adjustments for
the Partnership Fiscal Year, including adjustments to Capital Accounts
pursuant to Sections 10.1(b) and 10.3(b). In the event that a General
Partner or Additional Limited Partner has a negative balance in its
Capital Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership Fiscal Year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount
equal to the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such Fiscal Year (or, if later,
within ninety (90) days after the date of such liquidation) and shall,
upon liquidation of the Partnership, be paid to recourse creditors of
the Partnership or distributed to other Partners in accordance with
the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners
in liquidation or otherwise, (i) any unrealized appreciation or
unrealized depreciation in the values of such assets shall be deemed
to be Profits and Losses realized by the Partnership immediately prior
to the liquidation or other distribution event; and (ii) such Profits
and Losses shall be allocated to the Partners in accordance with the
provisions of Section 10.1(b), and any property so distributed shall
be treated as a distribution of an amount in cash equal to the excess
of such fair market value over the outstanding principal balance of
and accrued interest on any debt by which the property is encumbered.
For the purposes of this Section 10.3(b), the terms "unrealized
appreciation" or "unrealized depreciation" shall mean the difference
between the fair market value of such assets, taking into account the
fair market value of the associated financing (but subject to the
provisions of Section 7701(g) of the Code), and the Partnership's
adjusted basis for such assets as determined under the applicable
provisions of the Allocation Regulations. This Section 10.3(b) is
merely intended to provide a rule for allocating unrealized gains and
losses upon liquidation or other distribution event, and nothing
contained in this Section 10.3(b) or elsewhere herein is intended to
treat or cause such distributions to be treated as sales for value.
The fair market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the Consent of
the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures, Tax Credits and cash distributions shared by a class of
Partners shall be shared by each Partner in such class in the ratio of
such Partner's paid-in Capital Contribution to the paid-in Class
Contribution of the class of Partners of which such Partner is a
member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations
or Partner Nonrecourse Debt (including, without limitation,
Voluntary Loans or Subordinated Loans) or (b) the Partnership
incurs Losses from extraordinary events which are not recovered
from insurance or otherwise (collectively "Recourse
Obligations") in respect of any Partnership Fiscal Year, then
the calculation and allocation of Profits and Losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations shall be allocated to
the General Partner; and second, the balance of such deductions
shall be allocated as provided in Section 10.1(a).
(ii) If any Profits arise from the sale or other
disposition of any Partnership asset which shall be treated as
ordinary income under the depreciation recapture provisions of
the Code, then the full amount of such ordinary income shall be
allocated among the Partners in the proportions that the
Partnership deductions from the depreciation giving rise to such
recapture were actually allocated. In the event that
subsequently-enacted provisions of the Code result in other
recapture income, no allocation of such recapture income shall
be made to any Partner who has not received the benefit of those
items giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or
Section 10.3, the distributions of the cash portion of such
purchase price and the principal amount of such purchase money
indebtedness hereunder shall be allocated among the Partners in
the following manner: On the basis of the sum of the principal
amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds
distributable to each class of Partners based on Section 10.2(b)
or Section 10.3, as applicable, treating cash payments and
purchase money indebtedness principal interchangeably for this
purpose, and the respective classes shall receive such
respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated
to the respective classes of Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness
shall be sold, the sale proceeds shall be allocated in the same
proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with the applicable provisions of the Allocation
Regulations and its basis computed for federal income tax
purposes shall be shared among the Partners so as to take
account of such variation in a manner consistent with the
principles of Section 704(c) of the Code and Section 1.704-
1(b)(2)(iv)(g) of the Allocation Regulations.
(v) The terms "Profits" and "Losses" used in this
Agreement shall mean income and losses, and each item of income,
gain, loss, deduction or credit entering into the computation
thereof, as determined in accordance with the accounting methods
followed by the Partnership and computed in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv). Profits and
Losses for federal income tax purposes shall be allocated in the
same manner as set forth in this Article X, except as provided
in Section 10.4(b)(iv).
(vi) Nonrecourse Deductions shall be allocated 1% to the
General Partner and 99% to the Investment Limited Partner.
(vii) Partner Nonrecourse Deductions shall be allocated to
and among the Partners in the manner provided in the Allocation
Regulations.
(viii) Subject to the provisions of Section
10.4(b)(xix), if there is a net decrease in Partnership Minimum
Gain for a Partnership Fiscal Year, the Partners shall be
allocated items of Partnership income and gain in accordance
with the provisions of Section 1.704-(2)(f) of the Allocation
Regulations.
(ix) Subject to the provisions of Section 10.4(b)(xix),
if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain for a Partnership Fiscal Year then any Partner with a Share
of such Partner Nonrecourse Debt Minimum Gain shall be allocated
items of Partnership income and gain in accordance with the
provisions of Section 1.704-2(i)(4) of the Allocation
Regulations.
(x) Subject to the provisions of 10.4(b)(vi) through
10.4(b)(ix) above, in the event that any Limited Partner
unexpectedly receives any adjustments, allocations or
distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6) of the Allocation Regulations, items of Partnership
income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to the
extent required by the Allocation Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as
possible. This Section 10.4(b)(x) is intended to constitute a
"qualified income offset" provision within the meaning of the
Allocation Regulations and shall be interpreted consistently
therewith.
(xi) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(x) above, in no event shall any Limited Partner
be allocated Losses which would cause it to have an Adjusted
Capital Account Deficit as of the end of any Partnership Fiscal
Year. Any Losses which are not allocated to a Limited Partner
by reason of the application of the provisions of this Section
10.4(b)(xi) shall be allocated to the General Partner.
(xii) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(xi) above, in the event that any Limited Partner
has an Adjusted Capital Account Deficit at the end of any
Partnership Fiscal Year, items of Partnership income and gain
shall be specially allocated to each such Limited Partner in the
amount of such Adjusted Capital Account Deficit as quickly as
possible.
(xiii) Syndication Expenses for any Fiscal Year or
other period shall be specially allocated to the Investment
Limited Partner.
(xiv) For purposes of determining the Profits, Losses, Tax
Credits or any other items allocable to any period, Profits,
Losses, Tax Credits and any such other items shall be determined
on a daily, monthly, or other basis, as determined by the
General Partner using any permissible method under Code Section
706 and the Treasury Regulations thereunder.
(xv) To the extent that interest on loans (or other
advances which are deemed to be loans) made by a General Partner
to the Partnership is determined to be deductible by the
Partnership in excess of the amount of interest actually paid by
the Partnership, such additional interest deduction(s) shall be
allocated solely to such General Partner.
(xvi) Notwithstanding anything to the contrary contained
herein, the General Partner (or, if there is more than one
General Partner, all of the General Partners as a group) shall
be allocated not less than 1% of each material item of
Partnership income, gain, loss, deduction and credit
("Partnership Items") at all times during the existence of the
Partnership, provided, however, that temporary nonconformance
with the provisions of this Section 10.4(b)(xvi) shall be
permitted to the extent permitted by Revenue Procedure 89-12 or
any successor provisions. Subject to the foregoing, in the
event that there is no allocation of a material Partnership Item
to the General Partner(s) hereunder or if the amount of any
material Partnership Item allocable to the General Partner(s)
hereunder shall not equal 1% of the aggregate amount allocable
to all the Partners without giving effect to this provision,
then the amount of such Partnership Item(s) otherwise allocable
to the Limited Partners hereunder shall be correspondingly
reduced in order to assure the General Partner(s) of its or
their 1% share. Any such reduction shall be applied to reduce
the share of all classes of Limited Partners in proportion to
their respective Interests.
(xvii) For purposes of determining each Partner's
proportionate share of the excess Nonrecourse Liabilities of the
Partnership pursuant to Section 1.752-3(a)(3) of the Allocation
Regulations, the Investment Limited Partner shall be deemed to
have a 99% interest in Profits and the General Partner shall be
deemed to have a 1% interest in Profits.
(xviii) Any recapture of any Tax Credit shall be
allocated to and among the Partners in the same manner in which
the Partners share the expenditures giving rise to such Tax
Credit.
(xix) If for any Fiscal Year the application of the
minimum gain chargeback provisions of Section 10.4(b)(viii) or
Section 10.4(b)(ix) of this Agreement would cause distortion in
the economic arrangement among the Partners and it is not
expected that the Partnership will have sufficient other income
to correct that distortion, the General Partner may request a
waiver from the Commissioner of the Service of the application
in whole or in part of Section 10.4(b)(viii) or Section
10.4(b)(ix) in accordance with Section 1.704-2(f)(4) of the
Allocation Regulations. Furthermore, if additional exceptions
to the minimum gain chargeback requirements of the Allocation
Regulations have been provided through revenue rulings or other
Service pronouncements, the General Partner is authorized to
cause the Partnership to take advantage of such exceptions if to
do so would be in the best interest of a majority in interest of
the Partners.
(xx) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined to
be a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(xxi) In applying the provisions of Article X with respect
to distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed
to be reduced by Qualified Income Offset
Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Clause Sixth
of Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions of Capital Proceeds under
Clauses Seventh, Eighth, Ninth or Tenth of
Section 10.2(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section
10.4(b)(viii) or Section 10.4(b)(ix).
(5) Capital Accounts shall be increased by any
qualified income offset required under Section
10.4(b)(x).
(6) Capital Accounts shall be increased by
allocations of Operating Profits under Section
10.1(a).
(7) Capital Accounts shall be reduced by
allocations of Operating Losses under Section
10.1(a).
(8) Capital Accounts shall be reduced by
allocations of Losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of Profits under Section 10.1(b).
(xxii) To the maximum extent permitted under the
Code, allocations of Profits and Losses shall be modified so
that the Partners' Capital Accounts reflect the amount they
would have reflected if adjustments required by Sections
10.4(b)(x), 10.4(b)(xi) and 10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (and items
thereof) shall be determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of the
Code and the Allocation Regulations. In order to preserve and protect
the determinations and allocations provided for in this Agreement, the
General Partner is hereby authorized and directed to allocate Profits,
tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any Fiscal
Year differently than otherwise provided for in this Agreement to the
extent that allocating Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive share of
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be permitted by
Section 704(b) of the Code. Any allocation made pursuant to this
Section 10.5 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Agreement, and no amendment
of this Agreement or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partner is authorized to act only after
having been advised in writing by the Tax Accountants that, under
Section 704(b) of the Code and/or the Allocation Regulations, (i) the
New Allocation is necessary, and (ii) the New Allocation is the
minimum modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the then-
current Fiscal Year or in any preceding Fiscal Year, each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (or any item
thereof) is determined and allocated in accordance with this Agreement
to the fullest extent permitted by Section 704(b) of the Code and the
Allocation Regulations.
(c) If the General Partner is required by Section 10.5(a) to
make any New Allocation in a manner less favorable to the Limited
Partners than is otherwise provided for herein, then the General
Partner is authorized and directed, only after having been advised in
writing by the Tax Accountants that such an allocation is permitted by
Section 704(b) of the Code and the Allocation Regulations, to allocate
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and any item thereof) arising in later years
in such manner so as to bring the allocations of Profits, tax-exempt
income, Losses, non-deductible non-capitalizable expenditures and
credits (and each item thereof) to the Limited Partners as nearly as
possible to the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partner under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General 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.
10.6 Recapture Amount
(a) If at any time during the "compliance period" (as defined
in Section 42(i)(1) of the Code), the Apartment Complex ceases to be a
"qualified low income housing project" (as defined in Section 42(g)(1)
of the Code) or any Low-Income Unit in the Apartment Complex ceases to
be a "low income unit" (as defined in Section 42(i)(3) of the Code),
and as a result thereof all or any portion of credits allowed to the
Partnership and its Partners under Section 42 of the Code are subject
to recapture pursuant to Section 42(j) of the Code (such an occurrence
being referred to herein as a "Recapture Event"), the Investment
Limited Partner shall become entitled to additional cash distributions
equal to the "Recapture Amount".
(b) The Recapture Amount is an amount that, after deduction of
all federal income taxes payable by the Investment Limited Partner (or
its partners) as computed under Section 10.6(d) below, is equal the
sum of (i) the "credit recapture amount" allocable to the Investment
Limited Partner as defined in Section 42(j) of the Code plus (ii) the
amount of credits allocable to the Investment Limited Partner which
are disallowed in the year of the Recapture Event and in each
subsequent year.
(c) Any Recapture Amount distributable to the Investment
Limited Partner pursuant to the foregoing provisions shall be
distributed as funds become available for such distributions, but such
distributions shall not be made prior to (i) in the case of the
"credit recapture amount", the year of the Recapture Event and (ii) in
the case of any credits disallowed with respect to any year subsequent
to the Recapture Event, in each such subsequent year.
(d) Determination of the Recapture Amount shall be made on the
assumption that receipt or accrual by each partner of the Investment
Limited Partner of any amounts distributable to such partner under
Subsection (c) above will currently be subject to United States
federal income tax at the highest marginal rate applicable to
corporations for the year(s) in question (and assuming the non-
applicability of the alternative minimum tax).
(e) All computations required under this Section 10.6 shall be
made reasonably by the Investment Limited Partner, and the results of
such computations, together with a statement describing in reasonable
detail the manner in which such computations were made, shall be
delivered to the Managing General Partner in writing. Within fifteen
(15) days following receipt of such computation, the Managing General
Partner may request that the Auditors determine whether such
computations are reasonable and are not erroneous. If the Auditors
determine that such computations are unreasonable or contain errors,
then the Auditors shall determine what they believe to be the
appropriate computations. If the Investment Limited Partner does not
agree with the determination of the Auditors, then another accounting
firm other than the Auditors to be selected jointly by the Investment
Limited Partner and the Managing General Partner or, if they cannot
agree, by the American Arbitration Association, from among the ten
largest national accounting firms, shall make such computations. The
computations of the Investment Limited Partner, the Auditors, or the
other accounting firm so selected, whichever is applicable, shall be
final, binding and conclusive upon the parties. All fees and expenses
payable to an accounting firm other than the Auditors under this
paragraph shall be borne solely by the Managing General Partner. All
fees and expenses payable to the American Arbitration Association
shall be borne equally by the General Partner and the Investment
Limited Partner.
ARTICLE XI
Management Agent
11.1 General
The General Partner shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement. The
Management Agent shall receive a Management Fee of those amounts
payable from time to time by the Partnership to the Management Agent
for management services in accordance with a management contract
approved by any Agency or Lender with the right to approve the same,
or, when any such management contract is not subject to the approval
of any Agency or Lender, in accordance with a reasonable and
competitive fee arrangement. The initial Management Agent shall be
POKO Management Corp. From and after the Admission Date, the
Partnership shall not enter into any Management Agreement or modify or
extend any Management Agreement unless (i) the General Partner shall
have obtained the prior Consent of the Special Limited Partner to the
identity of the Management Agent and the terms of the Management
Agreement or the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30) days'
notice by the Partnership in the event of any change in the identity
of the General Partner. The Management Agent shall maintain insurance
in accordance with the applicable Insurance Requirements set forth in
Exhibit C. Copies of such policies (or binders) shall be provided to
the Partnership and the Investment Limited Partner within thirty (30)
days after the effective date of the Management Agreement and annually
thereafter.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however, should
the Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property management,
rent-up or leasing fees shall be paid to the Investment General
Partner or such Affiliate only for services actually rendered and
shall be in an amount equal to the lesser of (i) fees competitive in
price and terms with those of non-affiliated Persons rendering
comparable services in the locality where the Apartment Complex is
located and which could reasonably be available to the Partnership, or
(ii) five percent (5%) of the gross revenues of the Apartment Complex.
No duplicate property manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a substantial
building code violation which shall not have been cured within six
months after notice from a Governmental Authority (or for any building
code violation which is not likely to have Adverse Consequences such
cure is being diligently pursued if it cannot be effected within such
6-month period) or (ii) the Partnership shall not have achieved a 1.15
to 1.00 Debt Service Coverage Ratio during any Fiscal Year commencing
on January 1, 1998, or (iii) an Event of Bankruptcy shall occur with
respect to the Management Agent, or (iv) the Management Agent shall
commit willful misconduct or gross negligence in its conduct of its
duties and obligations under the Management Agreement or (v) there is
any change in the Persons acting as General Partners (to which the
Special Limited Partner has not consented), or (vi) the Management
Agent is cited by the Credit Agency or any other Tax Credit monitoring
or compliance agency of the State or any other Governmental Authority
for a violation or alleged violation of any applicable rules,
regulations or requirements, including, without limitation, non-
compliance with the Minimum Set-Aside Test, the Rent Restriction Test
or any other Tax Credit-related provision, then, upon request by the
Special Limited Partner and subject to Agency and Lender approval, if
required, the General Partner shall cause the Partnership to promptly
terminate the Management Agreement with the Management Agent and
appoint a new Management Agent selected by the Special Limited
Partner, which new Management Agent shall not be an Affiliate of a
General Partner. Each General Partner hereby grants to the Special
Limited Partner an irrevocable (to the extent permitted by applicable
law) power of attorney coupled with an interest to take any action and
to execute and deliver any and all documents and instruments on behalf
of such General Partner and the Partnership as the Special Limited
Partner may deem to be necessary or appropriate in order to effectuate
the provisions of this Article XI. Subject to any Requisite
Approvals, the Partnership shall not enter into any future management
arrangement or renew or extend any existing management arrangement
unless such arrangement is terminable without penalty upon the
occurrence of the events described in this Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Act or by any Governmental Authority and may
maintain such other books and records as the General Partner in its
discretion deems advisable. Each Limited Partner, or its duly
authorized representatives, shall have access to the records of the
Partnership at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records. A
list of the name and addresses of all of the Limited Partners shall be
maintained as part of the books and records of the Partnership and
shall be mailed to any Limited Partner upon request. The Partnership
may require reimbursement for any out of pocket expenses which it
incurs as a result of the exercise by any Limited Partner of its
rights under this Section 12.1, including, without limitation,
photocopying expenses.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General
Partner shall determine. Withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures
as the General Partner may determine. All deposits (including
security deposits and other funds required to be escrowed by any
Lender or Agency) and other funds not needed in the operation of the
business shall be deposited, if required by applicable law and to the
extent permitted by applicable Agency or Lender requirements, in
interest bearing accounts or invested in United States Government
obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partner, all tax returns of the Partnership. Prior to the filing of
the Partnership tax returns, and in no event later than February 1 of
each Fiscal Year, the Auditors shall deliver the tax returns for the
prior Fiscal Year to the Tax Accountants for their review and comment.
If a dispute arises between the Auditors and the Tax Accountants over
the proper preparation of the tax returns and such dispute cannot be
resolved by the Auditors and the Tax Accountants by March 1 of such
Fiscal Year, then the Tax Accountants shall make the final decision
with respect to whether any changes are necessary. The Partnership
shall reimburse the Investment Limited Partner and its Affiliates for
all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports to
the Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations
under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time
periods set forth therein, at any time thereafter upon written notice
from the Special Limited Partner, the General Partner shall appoint
replacement Auditors. If no such notice from the Special Limited
Partner is delivered, the Consent of the Special Limited Partner must
be received to the appointment of replacement Auditors. If the
General Partner fails to appoint replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to replace
the Auditors, then the Special Limited Partner shall appoint
replacement Auditors of its own choosing, the cost of which shall be
borne by the Partnership as a Partnership expense. All of the
Partners hereby grant to the Special Limited Partner a special power
of attorney, irrevocable to the extent permitted by law, coupled with
an interest, to so appoint replacement Auditors and to anything else
which in the judgment of the Special Limited Partner may be necessary
or appropriate to accomplish the purposes of this Section 12.3(c).
(d) On or prior to the date which is thirty (30) days after
the Admission Date, the General Partner shall cause the Partnership
(i) in writing, to engage the Auditors to perform the services
required herein and (ii) to deliver to the Investment Limited Partner
copies of all such engagement letters and agreements.
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to use,
so far as permitted by the provisions of the Code, accelerated cost
recovery methods. However, the Partnership may change to another
method of cost recovery if such other method is, in the opinion of the
Auditors, more advantageous to the Investment Limited Partner (and the
limited partners and/or holders of beneficial assignee certificates
thereof).
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partner in such manner as will,
in the opinion of the Auditors, be most advantageous to the Investment
Limited Partner and the limited partners and/or holders of beneficial
assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of
the Investment Limited Partner or a transfer of all or any part of an
interest of a partner and/or a holder of a beneficial assignee
certificate of the Investment Limited Partner, the Partnership shall
elect, upon the request of the Investment Limited Partner, pursuant to
Section 754 of the Code, to adjust the basis of the Partnership
property. Any adjustments made pursuant to said Section 754 shall
affect only the successor in interest to the transferring Partner or
partner or holder of a beneficial assignee certificate thereof. Each
Partner will furnish the Partnership all information necessary to give
effect to any such election.
12.6 Fiscal Year
Unless otherwise required by law, the Fiscal Year and tax year
of the Partnership shall be the calendar year. The books of the
Partnership shall be maintained on an accrual basis.
12.7 Information 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 28 of each succeeding calendar year
after the end of each Fiscal Year of the Partnership, (A) a
balance sheet as of the end of such Fiscal Year, a statement of
income, a statement of partners' equity, and a statement of cash
flows, each for the Fiscal Year then ended, all of which, except
the statement of cash flows, shall be prepared in accordance
with generally accepted accounting principles and accompanied by
a report of the Auditors containing an opinion of the Auditors
(unless as of December 31, construction of the Apartment Complex
had begun, but was not complete, then only the balance sheet
need be audited), and (B) a report of the activities of the
Partnership during the period covered by the report. With
respect to any distribution to the Investment Limited Partner,
the report called for shall separately identify distributions
from (1) Cash Flow from operations during the period, (2) Cash
Flow from operations during a prior period which had been held
as reserves, (3) proceeds from disposition of property and
investments, (4) lease payments on net leases with builders and
sellers, (5) reserves from the gross proceeds of the Capital
Contributions of the Investment Limited Partner, (6) borrowed
monies, and (7) transactions outside of the ordinary course of
business with a description thereof, with respect to any Fiscal
Year prior to the Completion Date, only an audited balance sheet
shall be required..
(ii) By February 7 of each succeeding calendar year after
the end of each Fiscal Year of the Partnership, all information
relating to the Partnership and/or the Apartment Complex which
is necessary, in the view of the Tax Accountants, for the
preparation of the Limited Partners' federal income tax returns
for the prior 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;
(B) a statement of income for the
quarter then ended, which may be unaudited;
(C) a statement of cash flows for the
quarter then ended, which may be unaudited;
(D) a certification of the General
Partner that the Apartment Complex and its tenants are in
compliance with all applicable federal, state and local
requirements and regulations;
(E) a Tax Credit monitoring form, a
copy of the rent roll for the Apartment Complex for each
month during such quarter, a statement of income and
expenses, an operating statement and an Occupancy/Rental
Report, all in a form specified by the Special Limited
Partner;
(F) all other information which would
be pertinent to a reasonable investor regarding the
Partnership and its activities during the quarter covered
by the report; and
(b) Within sixty (60) days after the end of each Fiscal Year
of the Partnership a copy of the annual report to be filed with the
United States Treasury concerning the status of the Apartment Complex
as low-income housing and, if required, a certificate to the
appropriate state agency concerning the same.
(c) upon the written request of the Investment Limited Partner
for further information with respect to any matter covered in item (a)
or item (b) above, the General Partner shall furnish such information
within thirty (30) days of receipt of such request.
(d) Prior to October 15 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the Tax Credits, Profits and
Losses of the Partnership for federal income tax purposes for the
current Fiscal Year. Such estimate shall be prepared by the General
Partner and the Auditors and shall be in the form specified by the
Special Limited Partner.
(e) Within fifteen (15) days after the end of any calendar
quarter during which:
(i) there is a material default by the Partnership under
any Project Document or in the payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially different
from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited Partner,
or
(iv) any Partner has pledged or collateralized its
Interest in the Partnership, the General Partner shall send the
Investment Limited Partner a detailed report of such event.
(f) After the Admission Date, the Partnership shall send to
the Investment Limited Partner copies of all applicable periodic
reports covering the status of project operations and any matters
relating to the Tax Credit as are required by any Lender or Agency.
(g) On or before May 1 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner a report on operations,
in the form supplied by the Special Limited Partner.
(h) The General Partner hereby consents to each Lender or
Agency providing the Special Limited Partner with copies of all
material communications between any such Lender or Agency and the
General Partner and/or the Partnership, including, but not limited to,
any notices of default.
(i) If the earlier of (A) the Completion Date or (B) the date
upon which tenants first occupied apartment units in the Apartment
Complex after the construction of such units, shall have occurred six
(6) months or more prior to the date on which the Investment Limited
Partner acquired its Interest in the Partnership, then the General
Partner shall cause to be prepared and delivered to the Investment
Limited Partner within sixty (60) days of the Admission Date the
following items:
(i) An unaudited statement of income of the Partnership
for the year (or such shorter period as there may be from the
date of the most recent audited statement of income of the
Partnership) ended on the date upon which the Investment Limited
Partner acquired its Interest in the Partnership; and
(ii) An audited statement of income of the Partnership
for any fiscal year of the Partnership ending between (A) the
earlier of (1) the Completion Date or (2) the date upon which
tenants first occupied apartment units in the Apartment Complex
after the rehabilitation of such units and (B) the date upon
which the Investment Limited Partner acquired its Interest in
the Partnership.
(j) Within thirty (30) days following the Completion Date, the
General Partner shall prepare, or cause the Auditors to prepare, and
deliver to each Limited Partner a Tax Credit basis worksheet for each
building in the Apartment Complex, all in a form specified by the
Special Limited Partner.
(k) Promptly after Permanent Mortgage Commencement, the
General Partner shall send to the Special Limited Partner a closing
binder containing photocopies of the fully executed versions of all
documents signed in connection with the Permanent Mortgage. From and
after any date upon which the General Partner receives notice from the
Special Limited Partner that the Special Limited Partner would like
copies of the monthly rent rolls for the Apartment Complex to be sent
to the Special Limited Partner, the General Partner shall send copies
of the rent rolls to the Special Limited Partner no later than ten
(10) days after the expiration of each month.
(l) If the General Partner does not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or Section
12.7(a)(ii) within the time periods set forth therein, the General
Partner shall pay as damages the sum of $500 per day (plus interest at
a rate equal to the Prime Rate plus three percent (3%)) to the
Investment Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General
Partner, and the failure to pay any such damages shall constitute a
material default by the General Partner hereunder. In addition, if
the General Partner shall fail to pay any such damages, the General
Partner and its Affiliates shall forthwith cease to be entitled to the
distribution of any Cash Flow or Capital Proceeds to which they may
otherwise be entitled hereunder. Such distributions of Cash Flow and
Capital Proceeds shall be restored only upon the payment of such
damages in full, and any amount of such damages not so paid shall be
deducted against distributions of Cash Flow and Capital Proceeds
otherwise due to the General Partner or its Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly
to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for the
sale of goods or services or the lending of money to the Partnership
or the General Partners, except for (i) management services, subject
to the restrictions set forth in Article XI, (ii) loans made by, or
guaranteed by, the Investment General Partner or any of its Affiliates
and (iii) those dealings, contracts or provision of services described
in the Investment Partnership Agreement. Extraordinary circumstances
shall only be presumed to exist where there is an emergency situation
requiring immediate action and the services required are not
immediately available from unaffiliated parties. All services
rendered under such circumstances must be rendered pursuant to a
written contract which must contain a clause allowing termination
without penalty on sixty (60) days' notice. Goods and services
provided under such circumstances must be provided at the lesser of
actual cost or the price charged for such goods or services by
independent parties.
(c) In the event that extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide construction
services in connection with the Apartment Complex. Neither the
Investment General Partner nor any of its Affiliates shall provide
such services unless it believes it has an adequate staff to do so and
unless such provision of goods and construction services is part of
its ordinary and ongoing business in which it has previously engaged,
independent of the activities of the Investment Limited Partner. Any
such services must be reasonable for and necessary to the Partnership,
actually furnished to the Partnership, and provided at the lower of
one hundred percent (100%) of the construction contract rate with
respect to the Apartment Complex or ninety percent (90%) of the
competitive price charged for such services by independent parties for
comparable goods and services in the same geographic location (except
that in the case of transfer agent, custodial and similar banking-type
fees, and insurance fees, the compensation, price or fee shall be at
the lesser of costs or the compensation, price or fee of any other
Person rendering comparable services as aforesaid). Cost of services
as used herein means the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel, based
on the amount of time such personnel spend on such services or other
method of allocation acceptable to the accountants for the Investment
Limited Partner.
(d) All services provided by the Investment General Partner or
any Affiliate thereof pursuant to Section 12.8(c) must be rendered
pursuant to the Investment Partnership Agreement or a written contract
which precisely describes the services to be rendered and all
compensation to be paid and shall contain a clause allowing
termination without penalty upon sixty (60) days' notice to the
Investment General Partner by a vote of a majority in interest of the
limited partners and assignees of beneficial interests in the
Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership to
the Investment General Partner or its Affiliates except as described
in the Investment Partnership Agreement.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition of an Interest may be made if the Interest sought
to be Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior to
the proposed date of the Disposition, would, in the opinion of the Tax
Accountants or tax counsel to the Partnership, result in the
termination of the Partnership under Section 708 of the Code. This
Section 13.1 shall have no application to any required repurchase of
the Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1 shall be
void ab initio and ineffectual and shall not bind or be recognized by
the Partnership. Notwithstanding the foregoing provisions of this
Section 13.1, however, the Investment Limited Partner may waive the
provisions of this Section 13.1 at any time as to a Disposition or
series of Dispositions, and in the event of such a waiver, this
Section 13.1 shall have no force or effect upon such Disposition or
series of Dispositions.
13.2 Amendments to Certificates
Within one hundred twenty (120) days after the end of the
Partnership Fiscal Year in which the Investment Limited Partner shall
have received any distributions under Article X, the General Partner
shall file an amendment to the Certificate reducing the amount of its
allocable share of such distribution the amount of Capital
Contribution of the Investment Limited Partner as stated in the last
previous amendment to the Certificate. However, Schedule A shall not
be amended on account of any such distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of Substitute Limited
Partners, although the General Partner may elect to do so more
frequently. In the case of assignments, where the assignee does not
become a Substitute Limited Partner, the Partnership shall recognize
the assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2,
no such amendments to the Certificate need be filed by the General
Partner if the Certificate is not required to and does not identify
the Limited Partners or their Capital Contributions in such capacity.
13.3 Notices
Except as otherwise specifically provided herein, all notices,
demands or other communications hereunder shall be in writing and
shall be deemed to have been given when the same are (i) deposited in
the United States mail and sent by certified or registered mail,
postage prepaid, (ii) delivered to a nationally recognized overnight
delivery service, (iii) sent by telecopier or other facsimile
transmission, answerback requested, or (iv) delivered personally, in
each case, to the parties at the addresses set forth below or at such
other addresses as such parties may designate by notice to the
Partnership:
(a) If to the Partnership, at the office of the Partnership
set forth in Section 2.2.
(b) If to an Investment Limited Partner or a Special Limited
Partner, at its address set forth in the Schedule, with copies to
William F. Machen, Esq., Sherburne, Powers & Needham, P.C., One Beacon
Street, 32nd Floor, Boston, MA, 02108 and
(c) If to a General Partner, at its address set forth in the
Schedule, with copies to Jeffrey A. Moerdler, Esq. at Lowenthal,
Landau, Fischer & Bring, P.C., 250 Park Avenue, New York, NY, 10177.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires. The singular shall include the plural, and vice versa, and
each gender (masculine, feminine and neuter) shall include the other
genders, unless the context requires otherwise. Each reference to a
"Section" or an "Article" refers to the corresponding Section or
Article of this Agreement, unless specified otherwise. References to
Treasury Regulations (permanent or temporary) or Revenue Procedures
shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding
upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all
so executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the
original or the same counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in effect, (i)
each of the provisions of this Agreement shall be subject to, and the
General Partner covenants to act in accordance with, the Project
Documents; (ii) the Project Documents shall govern the rights and
obligations of the Partners, their heirs, executors, administrators,
successors and assigns to the extent expressly provided therein; (iii)
upon any dissolution of the Partnership or any transfer of the
Apartment Complex, no title or right to the possession and control of
the Apartment Complex and no right to collect the rent therefrom shall
pass to any Person who is not, or does not become, bound by the
Project Documents in a manner satisfactory to the Lenders and any
Agency (to the extent that its approval is required); (iv) no
amendment to any provision of the Project Documents shall become
effective without the prior written consent of any Lender and/or
Agency (to the extent that its approval is required); and (v) the
affairs of the Partnership shall be subject to the Regulations, and no
action shall be taken which would require the consent or approval of
any Lender and/or Agency unless the prior consent or approval of such
Lender and/or Agency, as the case may be, shall have been obtained.
No new Partner shall be admitted to the Partnership, and no Partner
shall withdraw from the Partnership or be substituted for without the
consent of any Lender and/or Agency (if such consent is then
required). No amendment to this Agreement relating to matters
governed by the Regulations or requirements shall become effective
until any Requisite Approvals to such amendment shall have been
obtained.
(b) Any conveyance or transfer of title to all or any portion
of the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of any Regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable
and (a) if for any reason any provision is determined to be invalid,
such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid, and (b) if for any reason
any provision would cause the Investment Limited Partner or the
Special Limited Partner (in its capacity as a Limited Partner) to be
bound by the obligations of the Partnership (other than the
Regulations and the other requirements of any Agency or Lender), such
provision or provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partner only with
the Consent of the Investment Limited Partner and the Consent of the
Special Limited Partner.
13.12 Extraordinary Partner Expenses
(a) Any and all costs and expenses incurred by the Investment
Limited Partner and/or the Special Limited Partner in connection with
exercising rights and remedies against the General Partner with
respect to this Agreement, including, without limitation, reasonable
attorneys' fees, shall be paid by the General Partner on demand. All
amounts due to the Investment Limited Partner and/or the Special
Limited Partner pursuant to this provision shall bear interest from
demand at a rate of nine percent (9%) per annum.
(b) If any General Partner breaches any provision of this
Agreement, the Investment Limited Partner and/or the Special Limited
Partner may employ an attorney or attorneys to protect its rights
hereunder, and the General Partner shall pay on demand the reasonable
attorneys' fees and expenses incurred by the Investment Limited
Partner and/or the Special Limited Partner, whether or not a legal
action is actually commenced against any General Partner by reason of
such breach. All amounts due to the Investment Limited Partner and/or
the Special Limited Partner pursuant to this provision shall bear
interest from demand at a rate equal to nine percent (9%) per annum.
(c) If the Investor Limited Partner and/or Special Limited
Partner breaches any provision of this Agreement, the General Partner
may employ an attorney or attorneys to protect its rights hereunder,
and the Investment Limited Partner and/or the Special Limited Partner
shall pay on demand the reasonable attorneys' fees and expenses
incurred by the General Partner, whether or not a legal action is
actually commenced against any Investment Limited Partner and/or the
Special Limited Partner by reason of such breach. All amounts due to
the General Partner pursuant to this provision shall bear interest
from demand at a rate equal to nine percent (9%) per annum.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been
admitted to the Partnership as of the Commencement Date for all
purposes of this Agreement, including Article X, provided, however,
that if treasury regulations are issued under the Code or an amendment
to the Code is adopted which would require, in the opinion of the
Auditors, that the Investment Limited Partner be deemed admitted on a
date other than as of the Commencement Date, then the General Partner
shall select a permitted admission date which is most favorable to the
Investment Limited Partner.
WITNESS the execution hereof under seal as of the 31st day of
October, 1996.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER:
/s/Alan B. Weissman
Alan B. Weissmen
GENERAL PARTNER:
70 W 128 CORP., a New York corporaiton
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-in-Fact
for John P. Manning, President
SPECIAL LIMITED PARTNER:
BCTC 94, INC. , a Delaware
corporation
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-in-Fact
for John P. Manning, President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND IV,
L.P., a Massachusetts limited
partnership, by its general partner,
Boston Capital Associates IV L.P., a
Delaware limited partnership, by its
general partner, C&M Associates d/b/a
Boston Capital Associates, a
Massachusetts general partnership
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-in-Fact
for John P. Manning, a Partner
CONSENTS AND AGREEMENTS
The undersigned hereby executes this Agreement for the sole
purpose
of agreeing to the provisions of Article XI of the foregoing Agreement
of Limited Partnership notwithstanding any provision of the Management
Agreement to the contrary.
POKO Management Corp,
POKO Management Corp.,
By:
The undersigned hereby executes this Agreement for the sole
purpose
of agreeing to the provisions of Sections 6.11 and 6.12(a) of the
foregoing Agreement of Limited Partnership.
352 LENOX CORP., a New York corporation
By:
352 LENOX ASSOCIATES, LP
SCHEDULE A
As of __________________________
General Partner Capital Contribution Percentage Interests
of Operating Profits
and Losses and Tax
Credits
70 W 128 Corp. $100 1%
Weissman Management Corp.
225 Westchester Avenue
Suite 305
Port Chester, NY 10573
Special Limited Partner Capital Contribution Percentage Interests
of Operating Profits
and Losses and Tax
Credits
BCTC '94, INC. $10 0%
c/o Boston Capital Partners,
Inc.
One Boston Place, 21st Floor
Boston, MA 02108
Investment Total Agreed-to Paid-In Capital Percentage
Limited Partner Capital Contribution Contribution* Interests
of Operating
Profits and
Losses and
Tax
Credits
BOSTON CAPITAL TAX $1,034,631 $569,043 99%
CREDIT FUND IV L.P.
One Boston Place, 21st
Floor
Boston, MA 02108
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to adjustment
and are due at the times and subject to the conditions set forth in
the Agreement to which this Schedule is attached.
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PROJECTED RENTS
EXHIBIT C
DUE DILIGENCE RECOMMENDATIONS
