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) January 31, 1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-70564 04-3208648
(Commission File Number) (IRS Employer Identification No. )
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108
(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 2. Acquisition or Disposition of Assets
On January 31, 1997, Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, specifically Series 25 thereof (the "Partnership"),
completed various agreements relating to M.R.H., L.P., a Missouri limited
partnership (the "Operating Partnership"), including an Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of
January 1, 1997 (the "Operating Partnership Agreement"), pursuant to which the
Partnership acquired a limited partner interest in the Operating Partnership.
Capitalized terms used and not otherwise defined herein have their meanings
set forth in the Operating Partnership Agreement, a copy of which is attached
hereto as Exhibit (2)(a).
The Operating Partnership owns and operates an apartment complex in St.
Louis, Missouri which is licensed under the laws of the State as a Residential
Care Facility II and which is known as The Mary Ryder Home (the "Apartment
Complex"). The Apartment Complex consists of 16 private bedrooms and 32 semi-
private bedrooms for a total of 48 bedrooms (or apartment units) with a total
of 80 beds. Construction of the Apartment Complex occurred over a several
year period and was substantially completed by June 5, 1996. The Apartment
Complex is currently in the process of renting-up and it is expected to
achieve full occupancy by March 31, 1997.
Site development costs were funded in part through a $225,000 Grant
which was provided to the general partner of the Operating Partnership ("the
General Partner") by the City of St. Louis, Missouri, under the CDBG Program.
Construction financing was provided to the Operating Partnership for the
Apartment Complex by The Boatmen's National Bank of St. Louis in the amount of
up to $1,850,000 (the "Construction Loan"). The Construction Loan bore
interest at variable rate equal to the Boatmen's Corporate Base Rate plus 1/4%
and was repaid by the Operating Partnership on January 31, 1997. Various site
development and construction costs were also funded through a loan from the
General Partner in the amount of $989,629 (the "Second Mortgage Loan") which
bore interest at the rate of 10% per annum and which was also repaid on
January 31, 1997. Permanent first mortgage financing in the amount of
$1,817,465.92 (the "First Mortgage Loan") is being provided by The Boatmen's
National Bank of St. Louis. The First Mortgage Loan bears a fixed interest
rate of 8.75% and has a term of 7 years and an amortization period of 7 years.
The Capital Contributions of the Limited Partners will be utilized in part by
the Operating Partnership to pay down the First Mortgage Loan to approximately
$322,466 by December 31, 1997.
87.5% of the apartment units (42 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 Mary Ryder Home, a not-for-profit Missouri
corporation which was originally founded in 1930 under the name Joint Council
of Women's Auxiliaries by Mrs. Mary Ryder. Mrs. Ryder started a home with a
mission to respond to the depression era needs of homeless and destitute
women. The General Partner has been in the business of owning and
successfully operating the various housing facilities relating to The Mary
Ryder Home for over the past 67 years. Mrs. Ryder's daughter-in-law, Ethel
Ryder, has been the Executive Director of the General Partner since 1961, and
Mrs. Ryder's granddaughter, Catherine Jones, is the Assistant Director of the
General Partner and Administrator of the Apartment Complex. Ms. Jones, a
Licensed Nursing Home Administrator, has been with The Mary Ryder Home since
1964 and has served as the Assistant Director since 1972.
The General Partner will also serve 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 8% of gross collections
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 $1,601,573 which has been or will be payable to
the Operating Partnership in three (3) Installments as follows:
1. $795,787 (the "First Installment") on the latest of (i) the
Admission Date, (ii) State Designation, (iii) Construction
Mortgage Closing or (iv) Permanent Mortgage Commitment;
2. $795,786 (the "Second Installment") on the latest of (i) December
31, 1997, (ii) the Completion Date, (iii) Cost Certification, (iv)
Contractor's Release Date, (v) receipt by the Limited Partner of
an Updated Title Policy, (vi) the Initial 100% Occupancy Date,
(vii) Permanent Mortgage Commencement, (viii) Rental Achievement,
or (ix) satisfaction of all conditions to payment of the First
Installment; and
3. $10,000 (the "Third Installment") on the later of (i) Rental
Achievement Confirmation, (ii) release of all UCC Financing
Statements executed by the Limited Partners, or (iii) satisfaction
of all conditions to payment of the First and Second Installments.
The total Capital Contribution of the Partnership to the Operating Partnership
is based on the Operating Partnership receiving $2,888,840 of Tax Credits
during the 10-year period commencing in 1997, of which $2,859,952 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 Missouri
Limited Partner of the Operating Partnership is Midwest Capital Corporation, a
Missouri corporation.
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% 74.99% 80%
Partnership 99% 24.99% 20%
Special Limited
Partner 0% 0.01% 0%
Missouri Limited
Partner 0% 0.01% 0%
The Missouri Limited Partner will also receive 100% of all Missouri Low-Income
Housing Tax Credits allocated to the Operating Partnership.
The Partnership has or will pay to Jeffrey E. Smith, the President of
the Missouri Limited Partner, a fee equal to $142,998 (the "Standby General
Partner Fee") for his willingness to function as a Replacement General Partner
in the event the General Partner is removed from the Operating Partnership
pursuant to Section 4.5 of the Operating Partnership Agreement, as more fully
described in the Standby General Partner Agreement attached hereto as Exhibit
(2)(c). The Standby General Partner Fee shall be paid in two equal
installments of $71,499 each, which will be due and payable at the same time
the First and Second Installments of Capital Contribution of the Partnership
are paid to the Operating Partnership.
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 and to pay the Standby General Partner
Fee.
Boston Capital Asset Management Limited Partnership ("BCAMLP"), an
affiliate of the general partner of the Partnership, or another affiliate
thereof, will receive an annual Asset Management Fee 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) $3,500 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 BCAMLP as an Affiliate thereof from its own funds.
The Missouri Limited Partner or an Affiliate thereof, will receive an
annual Missouri Asset Management Fee commencing in 1997 for its services in
connection with the Operating Partnership's accounting matters relating to the
Missouri Limited Partner and assisting with the preparation of tax returns and
reports to the Missouri Limited Partner. The Missouri Asset Management Fee
will be in an amount equal to the lesser of (i) $1,500 or (ii) one-half of one
percent (0.5%) of the Aggregate Cost of the Apartment Complex. The Missouri
Asset Management Fee shall 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 Missouri Asset Management Fee, the amount of such deficiency shall be paid
directly by the General Partner to the Missouri Limited Partner or an
Affiliate thereof from its own funds.
The Operating Partnership has paid a Construction and Development Fee to
the General Partner (or its designee) for its service in connection with the
construction and development of the Apartment Complex in an amount equal to
$546,019 plus $20,572 of accrued interest thereon The Construction and
Development Fee and accrued interest thereon have been paid from the proceeds
of Capital Contributions of the General Partner. 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)
$5,000 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. The
Operating Partnership will also pay to the General Partner an annual
Management Incentive Fee commencing in 1997 for its services in planning,
supervising and developing a marketing program for the Apartment Complex in an
amount equal to 60% of available Cash Flow which will be paid in the manner
and priority set forth in Article X of the Operating Partnership Agreement.
The Operating Partnership and the General Partner have entered into an
agreement pursuant to which the General Partner will have the option and right
of first refusal to purchase the Apartment Complex at the end of the
Compliance Period as more fully described in the Option and Right of First
Refusal Agreement attached hereto as Exhibit (2)(d).
Item 7. Exhibits.
(a) and (b) As the Apartment Complex is a
new facility which is still in the rent-up stage, 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)
(2) (a) Amended and Restated Agreement of Limited Partnership
of M.R.H., L.P.
(2) (b) Certification and Agreement of M.R.H., L.P.
(2) (c) Standby General Partner Agreement
(2) (d) Option and Right of First Refusal 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. 33-70564 on Form S-11, as filed with the Securities and Exchange
Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Dated: February 11, 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
M.R.H., L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of January 1, 1997
M.R.H., L.P.
TABLE OF CONTENTS
Page
Preliminary Statement.......................................... 1
ARTICLE I -- Defined Terms................................... 1
ARTICLE II -- Name and Business............................... 15
2.1 -- Name; Continuation.............................. 15
2.2 -- Office and Resident Agent....................... 15
2.3 -- Purpose......................................... 16
2.4 -- Term and Dissolution............................ 16
ARTICLE III -- Mortgage, Refinancing and Disposition of
Property................................... 17
ARTICLE IV -- Partners; Capital............................... 17
4.1 -- Capital and Capital Accounts.................... 17
4.2 -- General Partners................................ 18
4.3 -- Investment Limited Partner, Missouri Limited Partner,
Special Limited Partner and Original Limited
Partner.......... 18
4.4 -- Liability of the Limited Partners............... 19
4.5 -- Special Rights of the Special Limited
Partner and the Investment Limited Partner.... 19
4.6 -- Meetings........................................ 21
ARTICLE V -- Capital Contributions of the Special Limited Partner, the
Missouri
Limited Partner and the Investment Limited
Partner................ 21
5.1 -- Payments........................................ 21
5.2 -- Return of Capital Contributions................. 27
ARTICLE VI -- Rights, Powers and Duties of General
Partners...................................... 30
6.1 -- Authorized Acts................................. 30
6.2 -- Restrictions on Authority....................... 30
6.3 -- Personal Services............................... 32
6.4 -- Business Management and Control; Tax Matters
Partner........................ 32
6.5 -- Duties and Obligations.......................... 33
6.6 -- Representations and Warranties.................. 35
Page
6.7 -- Liability on the Mortgages............. 39
6.8 -- Indemnification of the General
Partners...................................... 39
6.9 -- Indemnification of the Partnership and the Limited
Partners.................. 40
6.10 -- Operating Deficits.............................. 41
6.11 -- Obligation to Complete the Construction of the Apartment
Complex... .42
6.12 -- Certain Payments to the General Partners and
Others........................... 43
6.13 -- Delegation of General Partner
Authority..................................... 44
ARTICLE VII -- Withdrawal of a General Partner; New General
Partners........................ 45
7.1 -- Withdrawal...................................... 45
7.2 -- Obligation to Continue.......................... 45
7.3 -- Withdrawal of All General Partners.............. 45
7.4 -- Interest of General Partner After Permitted
Withdrawal......................... 46
ARTICLE VIII-- Transferability of Limited Partner
Interests..................................... 46
8.1 -- Assignments..................................... 46
8.2 -- Substituted Limited Partner..................... 47
8.3 -- Restrictions.................................... 47
ARTICLE IX -- Borrowings..................................... 48
ARTICLE X -- Profits, Losses, Tax Credits, Distributions
and Capital Accounts.......................... 48
10.1 -- Profits, Losses and Tax Credits................. 48
10.2 -- Cash Distributions Prior to Dissolution......... 50
10.3 -- Distributions Upon Dissolution.................. 52
10.4 -- Special Provisions.............................. 52
10.5 -- Authority of the General Partners to Vary Allocations
to Preserve and Protect the Partners' Intent.. 55
Page
ARTICLE XI -- Management Agent................................ 56
ARTICLE XII-- Books and Records, Accounting, Tax Elections,
Etc................................ 58
12.1 -- Books and Records............................... 58
12.2 -- Bank Accounts................................... 58
12.3 -- Accountants and Auditors........................ 58
12.4 -- Cost Recovery and Elections..................... 59
12.5 -- Special Basis Adjustments....................... 59
12.6 -- Fiscal Year..................................... 60
12.7 -- Information to Partners......................... 60
12.8 -- Expenses of the Partnership..................... 63
ARTICLE XIII- General Provisions.............................. 64
13.1 -- Restrictions by Reason of Section 708 of the
Code................................... 64
13.2 -- Amendments to Certificate....................... 64
13.3 -- Notices......................................... 65
13.4 -- Word Meanings................................... 65
13.5 -- Binding Effect.................................. 65
13.6 -- Applicable Law.................................. 65
13.7 -- Counterparts.................................... 65
13.8 -- Financing Regulations........................... 65
13.9 -- Separability of Provisions...................... 66
13.10 -- Paragraph Titles................................ 66
13.11 -- Amendment Procedure............................. 66
13.12 -- Time of Admission............................... 67
Schedule A..................................................... 73
Exhibit A...................................................... 74
M.R.H., L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
M.R.H., L.P. (the "Partnership") was formed as a Missouri limited
partnership pursuant to a Certificate of Limited Partnership of the
Partnership (the "Original Certificate") which was filed with the Office of
the Secretary of State of Missouri (the "Filing Office") on January 29, 1996,
and an Agreement of the Partnership dated May 29, 1996 (the "Original
Agreement") by and between Mary Ryder Home, a Missouri not for profit
corporation, as general partner and Timothy J. Butler as the initial limited
partner (the "Original Limited Partner"). Certain capitalized terms used
herein shall have the respective meanings specified in Article I.
In consideration of mutual agreements set forth herein, it is agreed and
certified, and the Original Agreement is hereby amended and restated in its
entirety, as follows:
ARTICLE I
Defined Terms
The defined terms used in this Agreement shall have the meanings
specified below:
Accountants means Boyd, Franz & Stephans LLP of St. Louis, Missouri or
such other firm of independent certified public accountants as may be engaged
by the General Partners with the consent of Boston Capital, which consent
shall not be unreasonably withheld, conditioned or delayed, to prepare the
Partnership income tax returns.
Actual Federal Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the Partnership to the
Investment Limited Partner for such year. The Actual Federal Credit shall be
retroactively revised if the amount of Tax Credit properly allocable to the
Investment Limited Partner is revised after audit or recapture.
Actual Missouri Credit means, with respect to a particular year, the
total amount of Missouri Low-Income Housing Tax Credit properly allocable by
the Partnership to the Missouri Limited Partner for such year. The Actual
Missouri Credit shall be retroactively revised if the amount of the Missouri
Low-Income Housing Tax Credit properly allocable to the Missouri Limited
Partner is revised after audit or recapture.
Additional Limited Partner means any holder of an Interest designated as
an Additional Limited Partner pursuant to Section 4.5(b) or Section 7.4.
Admission Date means the first date on which all parties hereto shall
have executed this Agreement, or, if, pursuant to the Uniform Act, the
Investment Limited Partner shall not be deemed admitted to the Partnership on
such date, then the next date thereafter on which the Investment Limited
Partner shall be deemed to be admitted to the Partnership under the Uniform
Act.
Affiliate means (A) as to the Investment Limited Partner, the Investment
General Partner or Boston Capital, (i) such Person; (ii) each member of the
Immediate Family of such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses (i) or (ii);
(iv) each trustee of a trust for the benefit of any Person referred to in the
preceding clauses (i) or (ii); or (v) any other Person (a) who directly or
indirectly controls, is controlled by, or is under common control with such
Person, (b) who is an officer of, director of, partner in or trustee of, or
serves in a similar capacity with respect to, such Person or of which such
Person is an officer, director, partner or trustee, or with respect to which
such Person serves in a similar capacity, (c) who, directly or indirectly, is
the beneficial owner of 10% or more of any class of equity securities of such
Person or of which such Person is directly or indirectly the owner of 10% or
more of any class of equity securities, (d) who is an officer, director,
general partner, trustee or holder of 10% or more of the voting securities or
beneficial interests of any Person referred to in the foregoing clauses
(v)(a), (v)(b) or (v)(c) or (e) who, whatever his title, performs functions
for such Person or any Affiliate of such Person similar to a Chairman or
member of the Board of Directors, or executive officer such as the President,
Executive Vice President or Senior Vice President, Corporate Secretary, or
Treasurer, or any Person holding a 5% or more equity interest in such Person,
or any Person having the power to direct or cause the direction of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and (B) as to any other named Person or Persons (i) such Person;
(ii) each member of the Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred to in the
preceding clauses (i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii); or (v) any other
Person (a) who directly or indirectly controls, is controlled by, or is under
common control with such Person, (b) who owns or controls 10% or more of the
outstanding voting securities of such Person, (c) of which 10% or more of the
outstanding voting securities is owned by such Person or any of the Persons
referred to in the foregoing clauses (i) through (iii), (d) who is an officer,
director, partner or trustee of such Person, or (e) for which such Person acts
in the capacity of officer, director, partner or trustee. An Affiliate of the
Investment Limited Partner or of the Investment General Partner does not
include a Person who is a partner in a partnership or joint venture with the
Investment Limited Partner or any other Affiliate of the Investment Limited
Partner if such Person is not otherwise an Affiliate of the Investment Limited
Partner or the Investment General Partner. For purposes of this definition,
the term Affiliate shall not be deemed to include any law firm (or member or
associate thereof) providing legal services to the Investment Limited Partner,
the Investment General Partner or any Affiliate of either of them.
Agency means, as applicable, MHDC, the City of St. Louis, Missouri, the
Missouri Department of Social Services, and/or any other governmental agency
having jurisdiction over the particular matter to which reference is being
made.
Aggregate Cost means the sum of (i) the total Capital Contribution made
by the Investment Limited Partner hereunder plus (ii) the proportionate amount
of the mortgage loans on, and other debts related to, the Apartment Complex,
which proportionate amount is equal to the Investment Limited Partner's
initial pro rata interest in the profits, losses, and tax credits of the
Partnership. The amount of the Aggregate Cost determined upon payment of the
Capital Contribution of the Investment Limited Partner hereunder shall not
thereafter be reduced.
Agreement means this Amended and Restated Agreement of Limited
Partnership, including Schedule A, as amended from time to time.
Annual Partnership Management Fee means the fee payable to the General
Partners pursuant to the provisions of Section 6.12(c).
Apartment Complex means the real property located in the City of St.
Louis, Missouri which is licensed under the laws of the State as a Residential
Care Facility II, as more fully described in the Mortgages and Exhibit A
hereto, together with (i) all buildings and other improvements constructed or
to be constructed thereon and (ii) all furnishings, equipment and personal
property covered by any of the Mortgages.
Applicable Federal Rate means the "applicable federal rate" as defined
in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section 42(b) of
the Code.
Asset Management Fee means the fee payable to BCAMLP or an Affiliate
thereof pursuant to Section 6.12(b).
Auditors means Boyd, Franz & Stephans LLP of St. Louis, Missouri, or
such other firm of independent certified public accountants as may be engaged
by the General Partners with the consent of Boston Capital, which consent
shall not be unreasonably withheld, conditioned or delayed, for the purposes
of auditing the books and records of the Partnership and certifying financial
reports of the Partnership.
BCAMLP means Boston Capital Asset Management Limited Partnership, a
Massachusetts limited partnership, and its successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a Massachusetts
corporation, and its successors and assigns.
BSI Contract means the contract for site development dated October 6,
1993 entered into by and between BSI Constructors, Inc. and the General
Partner.
Capital Account shall have the meaning set forth in Section 4.1(b).
Capital Contribution means, with respect to each Partner, the total
value of cash or property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any reference in this
Agreement to the Capital Contribution of a then Partner shall include a
Capital Contribution previously made by any prior Partner for the Interest of
such then Partner.
Capital Transaction means any transaction the proceeds of which are not
includable in determining Cash Flow, including, without limitation, the sale
or other disposition of all or substantially all of the assets of the
Partnership, but excluding the payment of Capital Contributions.
Cash Flow means the profits or losses of the Partnership from and after
the Commencement Date subject to any applicable Lender requirements and to the
following adjustments:
(a) Cost recovery deductions of buildings, improvements and personal
property and amortization of any financing fees shall not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining profits and
losses but which is not currently payable in cash shall be deducted when
actually paid;
(d) Payments to reserves under Section 6.5(e) shall be deducted;
(e) Any amounts paid for capital expenditures shall be deducted,
unless paid from any replacement reserve or funded through insurance;
(f) The proceeds of any Mortgage refinancing, any sale, exchange,
eminent domain taking, damage or destruction (whether insured or uninsured),
or other disposition, of all or any part of the Apartment Complex (other than
the proceeds of any business or rental interruption insurance) shall not be
included;
(g) Any rent or subsidy payments shall be included;
(h) The fees set forth in Sections 6.12, any interest on the
Construction and Development Fee, and any fee payable in connection with any
transaction referred to in clause (f) above shall not be deducted; and
(i) Prior to Permanent Mortgage Commencement, an amount equal to the
amount, if any, of net rental income applied to complete the construction and
rehabilitation of the Apartment Complex pursuant to Section 6.11 shall be
deducted.
CDBG Program means the Community Development Block Grant Program.
Certificate means the Original Certificate as it may be amended from
time to time (including any amendment thereto effected in conjunction with
this Agreement).
Class Contribution means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partners, the
Investment Limited Partner, the Missouri 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 date upon which the Apartment Complex has been
completed as evidenced by the issuance by the inspecting architect and by each
governmental agency having jurisdiction of certificates of substantial
completion or occupancy (or local equivalents) with respect to all 48
apartment units in the Apartment Complex.
Compliance Period means with respect to each building in the Apartment
Complex, the period of fifteen (15) taxable years beginning with the first
taxable year of the Credit Period, as more particularly defined in Section
42(i) of the Code.
Consent of the Investment Limited Partner means the prior written
consent or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in
Section 6.12(a).
Construction Contract means the Construction Contract dated as of
October 17, 1995 (as amended by twelve (12) change orders thereto) by and
between the General Partner and the Contractor relating to the construction of
the Apartment Complex for a total contract sum of $1,896,564.
Construction Lender means The Boatmen's National Bank of St. Louis in
its capacity as the holder of the Construction Mortgage, or its successors or
assigns in such capacity.
Construction Mortgage means the financing for the construction of the
Apartment Complex in the principal amount of up to $1,850,000 provided by the
Construction Lender.
Construction Mortgage Closing means the first date upon which the
Construction Mortgage shall have closed and the initial draw thereunder shall
have been disbursed.
Contract For Dining Services means the contract which governs the
optional central meal and dining service program available for tenants of the
Apartment Complex.
Contract For Personal Services means the contract which governs the
optional personal services program available for tenants of the Apartment
Complex.
Contractor means Paric Corporation, a Missouri corporation, of St.
Louis, Missouri, in its capacity as the contractor for the Apartment Complex
pursuant to the Construction Contract.
Contractor's Release Date shall mean the date upon which the Limited
Partners receive from the Contractor a letter satisfactory to the Limited
Partners stating (i) that the Partnership is not in default under the
Construction Contract, (ii) that the Contractor has completed all work under
the Construction Contract, and (iii) either (a) that the Contractor has been
paid in full for all work in connection with the Apartment Complex or (b) that
funds have been escrowed in order to pay all unpaid amounts owed for work in
connection with the Apartment Complex.
Controlling Person has the meaning given to it in the context of Section
15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which the Investment Limited
Partner shall have received the written certification of the Auditors, in a
form and in a substance satisfactory to Boston Capital, as to the itemized
amounts of the construction and development costs of the Apartment Complex and
the Eligible Basis and Applicable Percentage pertaining to each building in
the Apartment Complex.
Credit Period has the meaning given to it in Section 42(f)(1) of the
Code.
Disposition (including the forms Dispose and Disposing) means, as to a
Limited Partner, the assignment, sale, transfer, exchange or other disposition
of all or any part of its Interest.
Economic Risk of Loss has the meaning set forth in Treasury Regulation
Section 1.752-2.
Eligible Basis has the meaning given to it in Section 42(d) of the Code.
Entity means any general partnership, limited partnership, corporation,
limited liability company, joint venture, trust, business trust, cooperative
or association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person or in respect of any Controlling Person
of such Person in a case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such
Person or of any Controlling Person of such Person or for any substantial part
of such Person's property or the Property of any Controlling Person of such
Person, or the issuance of an order for the winding-up or liquidation of such
Person's affairs or the affairs of any Controlling Person of such Person and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days, or
(ii) the commencement by such Person or by any Controlling Person of
such Person of a proceeding seeking any decree, order or appointment referred
to in clause (i), the consent by such Person or by any Controlling Person of
such Person to any such decree, order or the appointment, or taking of any
action by such Person or by any Controlling Person of such Person in
furtherance of any of the foregoing.
Federal Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully described in
Section 5.1(f)(i). Federal Credit Recovery Loans and interest thereon shall
not be treated as loans or interest, respectively, for accounting, tax or
liability purposes or for purposes of Section 6.2(a)(1). For the purposes of
Article X, the term Federal Credit Recovery Loan shall not include any portion
of such an advance which shall have theretofore been paid to the Investment
Limited Partner.
Federal Credit Shortfall has the meaning given to it in
Section 5.1(f)(i).
Federal Reduction Amount has the meaning given to it in Section
5.1(e)(i) .
Filing Office has the meaning specified in the Preliminary Statement.
First Mortgage means the permanent financing to be provided by the First
Mortgage Lender for the Apartment Complex pursuant to the terms of the
commitment letter from the First Mortgage Lender dated January 23, 1997 in the
maximum principal amount of up to $1,817,465.92 upon such terms that receive
the written consent of the Special Limited Partner; where the context admits,
First Mortgage shall mean and include the mortgage note(s) evidencing such
indebtedness, the mortgage(s) or deed(s) of trust and security agreement(s)
securing such indebtedness, the loan agreement(s) and all other documentation
related thereto which evidence and secure such indebtedness.
First Mortgage Closing means the date upon which the First Mortgage
closes and the Construction Mortgage has been repaid in full.
First Mortgage Lender means The Boatmen's National Bank of St. Louis in
its capacity as the holder of the First Mortgage, or its successors or assigns
in such capacity.
General Partners means the Persons designated as General Partners in
Schedule A and any Persons who become General Partners as provided herein, in
their capacities as General Partners of the Partnership. At any and all times
where there is only one General Partner, the term General Partners shall mean
such sole General Partner.
Grant means the $225,000 grant provided to the General Partners for site
and demolition work at the Apartment Complex by the City of St. Louis (acting
through its Community Development Agency) under the CDBG Program.
Hazardous Material has the collective meanings given to the terms
"hazardous material", "hazardous substances" and "hazardous wastes" in the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the term "radioactive
materials" in the context of the Atomic Energy Act, 28 U.S.C. Sec. 2344, and
also includes any meanings given to such terms in any similar state or local
statutes, ordinances, regulations or by-laws. In addition, the term Hazardous
Material also includes oil and any other substance known to be hazardous.
Immediate Family means with respect to any Person, such Person's spouse,
parents, parents-in-law, descendants, nephews, nieces, brothers, sisters,
brothers-in-law, sisters-in-law, children-in-law and grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon which not less
than 100% of the 48 apartment units in the Apartment Complex shall have been
leased to and shall have been physically occupied by tenants, of which not
less than 42 of the apartment units shall constitute "low income units" for
the purposes of Section 42(i)(3) of the Code, such that the Partnership shall
be in compliance with the Minimum Set-Aside Test and the Rent Restriction
Test, as required by the Mortgages and/or by any Agency.
Installment means an installment of the Capital Contribution paid or
payable by the Investment Limited Partner and/or the Missouri Limited Partner
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 sum of the paid-in 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 partner of the
Investment Limited Partner, and any other Person who may become a successor or
additional general partner of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit Fund IV L.P.,
a Delaware limited partnership, specifically Series 25 thereof, and any Person
or Persons who replace it as Substituted Limited Partner, but shall not
include any Special Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from time to time.
Lender means the Construction Lender, the First Mortgage Lender and the
Second Mortgage Lender, each in its capacity as maker of a Mortgage loan, or
its successors and assigns in such capacity.
Limited Partners means the Investment Limited Partner, the Missouri
Limited Partner, the Special Limited Partner and any Additional Limited
Partner.
LLC means a limited liability company.
Management Agent means the management and rental agent for the Apartment
Complex.
Management Agreement means the agreement between the Partnership and the
Management Agent providing for the management of the Apartment Complex.
Management Fee means the Management Fee to which reference is made in
Article XI.A.
Management Incentive Fee means the fee described in Section 6.12(d).
MHDC means the Missouri Housing Development Commission, a public body
corporate and politic organized and existing under the laws of the State of
Missouri.
Minimum Set-Aside Test means the set aside test selected by the Partner-
ship pursuant to Section 42(g) of the Code whereby at least 40% of the units
in the Apartment Complex must be occupied by individuals with incomes equal to
60% or less of area median income, as adjusted for family size.
Missouri Asset Management Fee means the fee payable to the Missouri
Limited Partner or an Affiliate thereof pursuant to Section 6.12(e).
Missouri Credit Recovery Loan means a constructive interest-bearing
advance of the Missouri Limited Partner, as more fully described in Section
5.1(f)(ii). Missouri Credit Recovery Loans and interest thereon shall not be
treated as loans or interest, respectively, for accounting, tax or liability
purposes or for purposes of Section 6.2(a)(1). For the purposes of Article X,
the term Missouri Credit Recovery Loan shall not include any portion of such
an advance which shall have theretofore been paid to the Missouri Limited
Partner.
Missouri Credit Shortfall has the meaning given to it in Section
5.1(f)(ii).
Missouri Limited Partner means Midwest Capital Corporation, a Missouri
corporation.
Missouri Low-Income Housing Tax Credit means the Missouri tax credits
which may be allocated by the State to the Partnership pursuant to Section
135.350 RSMo.
Missouri Reduction Amount has the meaning given to it in Section
5.1(e)(ii).
Mortgages means the Construction Mortgage, the First Mortgage and the
Second Mortgage.
93% Occupancy Rate means the physical occupancy of not less than 45 of
the 48 apartment units in the Apartment Complex, of which not less than 42 of
such apartment units shall constitute "low income units" for the purposes of
Section 42(i)(3) of the Code, by tenants such that the Partnership will be in
compliance with the Minimum Set-Aside Test, the Rent Restriction Test and all
Agency requirements.
Option and Right of First Refusal Agreement means the Option and Right
of First Refusal Agreement dated as of January 1, 1997 by and between the
Partnership and the General Partner.
Original Agreement has the meaning specified in the Preliminary State-
ment.
Original Certificate has the meaning specified in the Preliminary
Statement.
Original Limited Partner has the meaning specified in the Preliminary
Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability (a) that is
considered non-recourse under Treasury Regulation Section 1.1001-2 or for
which the creditor's right to repayment is limited to one or more assets of
the Partnership and (b) for which any Partner or Related Person bears the
Economic Risk of Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of partner
nonrecourse debt minimum gain and the net increase or decrease in partner
nonrecourse debt minimum gain determined in a manner consistent with Treasury
Regulation Sections 1.704-2(d) and 1.704-2(g)(3) and 1.704-2(k).
Partnership means the limited partnership continued pursuant to this
Agreement.
Partnership Minimum Gain means the amount determined by computing, with
respect to each Partnership Non-Recourse Liability, the amount of gain, if
any, that would be realized by the Partnership if it disposed of (in a taxable
transaction) the property subject to such liability in full satisfaction of
such liability, and by then aggregating the amounts so computed. Such com-
putations shall be made in a manner consistent with Treasury Regulation
Sections 1.704-2(d) and (k).
Partnership Non-Recourse Liability means any Partnership liability (or
portion thereof) for which no Partner or Related Person bears the Economic
Risk of Loss.
Permanent Mortgage Commencement means the first date on which all of the
following shall have occurred: (a) the Completion Date; (b) the principal
amount and maturity date of the First Mortgage shall have been finally
determined; and (c) amortization of the First Mortgage shall have commenced.
Permanent Mortgage Commitment means the first date upon which the
Partnership shall have received the written commitments of the First Mortgage
Lender to make the First Mortgage, upon such terms and conditions as shall be
acceptable to the Special Limited Partner.
Person means any individual or Entity.
Project Documents means and includes the Construction Mortgage, the
First Mortgage, the Second Mortgage, the Construction Contract, the BSI
Contract, the Management Agreement, the Grant, the Option and Right of First
Refusal Agreement, all other instruments delivered to (or required by) any
Lender and/or Agency and all other documents relating to the Apartment Complex
and by which the Partnership and the General Partner is bound, as amended or
supplemented from time to time.
Projected Federal Credit means $277,058 for 1997, $285,995 per annum for
each of the years 1998 through 2006 (inclusive) and $8,937 for 2007; provided,
however, that the Projected Federal Credit for 2007 shall be reduced by the
amount, if any, by which the Actual Federal Credit for 1997 exceeds $277,058
and provided further that upon the occurrence of any of the events described
in Section 5.1(g)(i), the Projected Federal Credit shall thereafter be the
Revised Projected Federal Credit.
Projected Missouri Credit means $111,942 for 1997, $115,553 per annum
for each of the years 1998 through 2006 (inclusive) and $3,611 for 2007;
provided, however, that the Projected Missouri Credit for 2007 shall be
reduced by the amount, if any, by which the Actual Missouri Credit for 1997
exceeds $111,942 and provided further that upon the occurrence of any of the
events described in Section 5.1(g)(ii), the Projected Missouri Credit shall
thereafter be the Revised Projected Missouri Credit.
Prospectus means the prospectus contained in the registration statement
(File No. 33-99602) filed with the Securities and Exchange Commission on
behalf of the Investment Limited Partner for the registration of beneficial
assignee certificates and/or limited partnership interests under the
Securities Act of 1933, as amended, in the final form in which said prospectus
is filed with said Commission and as thereafter amended and/or supplemented
from time to time pursuant to Rule 424 under said Act, or otherwise.
Qualified Basis has the meaning given to it in Section 42(c) of the
Code.
Qualified Income Offset Item means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to be made
(a) pursuant to Section 704(e)(2) of the Code to a donee of an interest in the
Partnership, (b) pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership of unrealized
receivables or inventory items and (2) a distribution that, as of the end of
such year, reasonably is expected to be made to a Partner to the extent it
exceeds offsetting increases to such Partner's Capital Account which reason-
ably are expected to occur during or prior to the Partnership taxable year in
which such distribution reasonably is expected to occur.
Reduction Year has the meaning given to it in Section 5.1(e)(i).
Related Person means a Person related to a Partner within the meaning of
Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42 of the Code
whereby the gross rent charged to tenants of the 42 low-income units in the
Apartment Complex may not exceed 30% of the qualifying income levels.
Rental Achievement means, the thirtieth (30th) day after the first date
on at which, as certified by the General Partners, there shall have
previously occurred six (6) consecutive full calendar months of Partnership
operations (all of which months occurring after the later the Admission Date
or Permanent Mortgage Commencement), during each of which months (x) the Net
Operating Income for such month divided by (y) all debt service and other
payments required to be made on all Mortgages during such month (regardless
of any forbearance thereof) equaled or exceeded 115%. "Net Operating Income"
for a period shall be the excess of (a) the Revenues for such period, over
(b) all of the Partnership's expenses for such period on an accrual basis.
For purposes of the foregoing clause (b), expenses shall (i) include, but not
limited to, all operational costs and expenses, adjusted to include a ratable
portion of the annual amount (as reasonably estimated by the General
Partners) of those seasonal expenses (such as utilities and maintenance
expenses) which might reasonably be expected to be incurred on an unequal
basis during a full annual period of operation, (ii) include the funding of
any reserves required by any Lender, MHDC and/or pursuant to the terms of
this Agreement, (iii) be adjusted, if necessary, so that the expenses of
unabated real estate taxes and insurance are based on the General Partners'
reasonable estimate of the full assessed and unabated value and the full
replacement cost, respectively, of the Apartment Complex after completion of
construction, and (iv) exclude all Mortgage payments referred to in
clause (y) above, depreciation, distributions of Cash Flow and Capital
Transaction proceeds to the Partners and the fees payable pursuant to this
Agreement.
Rental Achievement Confirmation means the date upon which each of the
Limited Partners receives (a) a copy of the federal income tax return of the
Partnership and (b) the financial reports to be provided pursuant to Section
12.7(a)(i), in each case for the Partnership fiscal year in which Rental
Achievement shall have occurred, evidencing to the satisfaction of the
Special Limited Partner that Rental Achievement occurred in such year.
Reserve Release Date means the later of (a) three (3) years after Rental
Achievement or (b) the achievement of both (i) a 93% Occupancy Rate for
twelve consecutive months and (ii) twelve consecutive months during each of
which months (x) the Net Operating Income (as defined in Rental Achievement
above) for such month divided by (y) all debt service and other payments
required to be made on all Mortgages during such month (regardless of any
forbearance thereon) equaled or exceeded 115%.
Residential Care Facility II means a facility licensed as a "residential
care facility II" under the laws of the State pursuant to Section 198.015 of
the Omnibus Nursing Home Act.
Revenues means all cash receipts (actually received) of the Partnership
during a specified period of time, including rental assistance payments,
operating subsidies, the proceeds of rental interruption insurance receipts,
and the excess, if any, of insurance proceeds over the related restoration
costs, but excluding the proceeds of Capital Contributions, the proceeds of
the sale or other disposition of Partnership assets, liquidation proceeds,
loan or refinancing proceeds, casualty proceeds, condemnation or eminent
domain proceeds. Any net rental income applied to complete the construction
of the Apartment Complex pursuant to Section 6.11 prior to the later of
Permanent Mortgage Commencement or the Admission Date shall not be included
when determining Revenues. For the purposes of computing Revenues, rental
receipts shall not include pre-paid rent and, if attributable to any of the
forty-two (42) low-income apartment units in the Apartment Complex, shall be
included only if attributable to tenants with incomes not exceeding those
permitted by the Minimum Set-Aside Test and at a rent satisfying the Rent
Restriction Test.
Revised Projected Federal Credit has the meaning specified in Section
5.1(g)(i).
Revised Projected Missouri Credit has the meaning specified in Section
5.1(g)(ii).
Schedule A means Schedule A to this Agreement, as amended from time to
time.
Second Mortgage means the unsecured financing provided by the Second
Mortgage Lender for the Apartment Complex in the maximum principal amount of
$989,629 which together with all accrued interest thereon shall be repaid from
the proceeds of Capital Contribution contributed by the General Partners.
Second Mortgage Lender means Mary Ryder Home, a Missouri not for profit
corporation, in its capacity as the lender of the Second Mortgage, and any
successor or assignee in such capacity.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal Comprehensive Environ-
mental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601
et seq., as amended, and shall also include any meaning given to it in any
similar state or local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a Delaware corporation, and
any Person who becomes a Special Limited Partner as provided herein, in its
capacity as a special limited partner of the Partnership.
State means the State of Missouri.
State Designation means the date upon which the Partnership receives the
allocation by the authorized agency of the State of a Tax Credit for the
buildings constituting the Apartment Complex in an annual dollar amount of not
less than $288,884 as evidenced by the execution by or on behalf of such
agency of Forms 8609. For the purposes of determining State Designation, each
building in the Apartment Complex shall be treated as having received an
allocation of Tax Credit in an amount equal to the lesser of (i) the amount of
Tax Credit carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of Tax Credit set forth on the
Form 8609 as to such building.
Subordinated Loan means any loan made by the General Partners to the
Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted to the
Partnership as Limited Partner under Section 8.2 or acquires the Interest of
the Investment Limited Partner pursuant to Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman of Bethesda, Maryland
or such other firms of independent certified public accountants as may be
engaged by Boston Capital to review the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant to
Section 42 of the Code.
Title Policy means owner's title insurance policy to be issued to the
Partnership by Commonwealth Land Title Insurance Company dated not earlier
than January 29, 1997 in the insured amount of $3,707,000, which Title Policy
must be acceptable to the Special Limited Partner as to form and content and
contain only those exceptions which are acceptable to the Special Limited
Partner.
Uniform Act means the Revised Missouri Uniform Limited Partnership Act
as adopted by the State.
Updated Title Policy means the owner's title insurance policy to be
issued to the Partnership by Commonwealth Land Title Insurance Company or such
other title insurance company acceptable to the Investment Limited Partner
pursuant to the Title Policy, which policy will, among other things, update
the title to the Apartment Complex through at least Permanent Mortgage
Commencement, provide for insurance in an amount equal to at least $3,707,000
and evidence the Partnership's ownership of the Apartment Complex subject only
to such exclusions, exceptions and stipulations, as shall be acceptable to the
Investment Limited Partner, in its sole discretion.
Vessel has the meaning given to it in the Federal Comprehensive Environ-
mental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601
et seq., as amended, and shall also include any meaning given to it in any
similar state or local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of in-
sanity or incompetence, Event of Bankruptcy, dissolution, liquidation, or
voluntary or involuntary withdrawal or retirement from the Partnership for any
reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement. Withdrawal
shall also mean the sale, assignment, transfer or encumbrance by a General
Partner of its interest as a General Partner. A General Partner which is a
corporation or partnership shall be deemed to have sold, assigned, transferred
or encumbered its interest as a General Partner in the event (as a result of
one or more transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to the laws of descent
and distribution) or encumbrance of a controlling interest in a corporate
General Partner or of a general partner interest in a General Partner which is
a partnership. For purposes of this definition of Withdrawal, "controlling
interest" shall mean the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
Working Capital Reserve has the meaning set forth in Section 6.5(e)(2).
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is M.R.H., L.P. The Partners agree to
continue the Partnership which was formed pursuant to the provisions of the
Uniform Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is c/o Mary Ryder Home,
4361 Olive Street, St. Louis, Missouri 63108, at which office there shall be
maintained those records required by the Uniform Act to be kept by the
Partnership. The Partnership may have such other or additional offices as the
General Partners shall deem desirable. The General Partners may at any time
change the location of the principal office and shall give due notice thereof
to the Limited Partners.
(b) The resident agent in the State for the Partnership for service of
process is as follows:
Timothy J. Butler
c/o Mary Ryder Home
4361 Olive Street
St. Louis, Missouri 63108
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
construct, rehabilitate, develop, improve, maintain, operate, lease and
otherwise deal with the Apartment Complex. The Partnership shall operate the
Apartment Complex in accordance with any applicable Lender regulations and
requirements of any Agency and the laws of the State. The Partnership shall
not engage in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect until December
31, 2046, except that the Partnership shall be dissolved and its assets
liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially all of the
assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt, insane or
incompetent, (if a corporation or partnership) being dissolved or liquidated,
or voluntarily or involuntarily withdrawing from the Partnership for any
reason, including an inability to continue serving as a General Partner by law
or pursuant to the terms of this Agreement, if (i) the remaining General
Partner(s), if any, shall fail to continue the business of the Partnership and
reconstitute the Partnership as a successor limited partnership as provided in
Section 7.2 and (ii) the Investment Limited Partner shall fail to exercise the
right provided in Section 7.3;
(c) The election to dissolve the Partnership made in writing by the
General Partners with the Consent of the Investment Limited Partner and the
approval (if required) of each Lender;
(d) The entry of a final decree of dissolution of the Partnership by a
court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the Partnership
under the Uniform Act if the Partnership is not reconstituted pursuant to
Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners (or for
purposes of this paragraph, their trustees, receivers or successors) shall
cause the cancellation of the Certificate, liquidate the Partnership assets
and apply and distribute the proceeds thereof in accordance with Section 10.3.
Notwithstanding the foregoing, if, during liquidation, the General Partners
shall determine that an immediate sale of part or all of the Partnership's
assets would be impermissible, impractical or cause undue loss to the
Partners, the General Partners may defer liquidation of, and withhold from
distribution for a reasonable time, any assets of the Partnership except those
necessary to satisfy Partnership debts and obligations (other than
Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. Through Permanent Mortgage Commencement, the General Partners and
their Affiliates, jointly and severally, are hereby authorized to incur
personal liability for the repayment of funds advanced by the Lenders (and
interest thereon) pursuant to the Mortgages. However, from and after
Permanent Mortgage Commencement, neither any General Partner nor any Related
Person shall at any time bear, nor shall the General Partners permit any other
Partner or any Related Person to bear, the Economic Risk of Loss for the
payment of any portion of any Mortgage.
B. The Partnership may decrease, increase or refinance the Mortgages
and may make any required transfer or conveyance of Partnership assets for
security or mortgage purposes, provided, however, any such decrease (except
through the seven (7)-year amortization schedule anticipated at Permanent
Mortgage Commencement), increase or refinancing any Mortgage may be made by
the General Partners only with the Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise transfer or
convey all or substantially all the assets of the Partnership only with the
Consent of the Investment Limited Partner. Notwithstanding the foregoing and
except as set forth in Section 6.2(a)(6), no Consent of the Investment Limited
Partner shall be required for the leasing of apartments to tenants in the
normal course of operations.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner is as set forth on
Schedule A. No interest shall be paid on any Capital Contribution. No
Partner shall have the right to withdraw its Capital Contribution or to demand
and receive property of the Partnership in return for its Capital Contribu-
tion, except as may be specifically provided in this Agreement or required by
law.
(b) An individual Capital Account shall be established and maintained
on behalf of each Partner, including any additional or substituted Partner who
shall hereafter receive an interest in the Partnership. In accordance with
Treasury Regulation Section 1.704-1(b), the Capital Account of each Partner
shall consist of (i) the amount of cash such Partner has contributed to the
Partnership plus (ii) the fair market value of any property such Partner has
contributed to the Partnership net of any liabilities assumed by the Partner-
ship or to which such property is subject plus (iii) the amount of profits or
income (including tax-exempt income) allocated to such Partner less (iv) the
amount of losses and deductions allocated to such Partner less (v) the amount
of all cash distributed to such Partner less (vi) the fair market value of any
property distributed to such Partner net of any liabilities assumed by such
Partner or to which such property is subject less (vii) such Partner's share
of any other expenditures which are not deductible by the Partnership for
federal income tax purposes or which are not allowable as additions to the
basis of Partnership property and shall be (viii) subject to such other
adjustments as may be required under the Code. The Capital Account of a
Partner shall not be affected by any adjustments to basis made pursuant to
Section 743 of the Code but shall be adjusted with respect to adjustments to
basis made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted Partner (as
hereinafter defined) shall be in the same amount as, and shall replace, the
Capital Account of the Partner which such Substituted Partner succeeds, and,
for the purposes of this Agreement, such Substituted Partner shall be deemed
to have made the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term "Substituted
Partner," as used in this paragraph, shall mean a Person who shall become
entitled to receive a share of the allocations and distributions of the
Partnership by reason of such Person succeeding to all or any part of the
Interest of a Partner by assignment of all or any part of a Partner's
Interest. To the extent a Substituted Partner receives less than 100% of the
Interest of a Partner he succeeds, the original Capital Account of such
transferee Substituted Partner and his Capital Contribution shall be in
proportion to the portion of the transferor Partner's Interest prior to the
transfer which the transferee receives, and the Capital Account of the
transferor Partner who retains a portion of his former Interest and his
Capital Contribution shall continue, and not be replaced, in proportion to the
portion of the transferor Partner's Interest prior to the transfer which the
transferor Partner retains. Nothing in this Section 4.1(b) shall affect the
limitations on transferability of Interests set forth in Article VII or
Article VIII.
4.2 General Partners
The name, address and Capital Contribution of each General Partner are
as set forth on Schedule A. The Capital Contribution of the General Partners
shall be contributed no later than the Admission Date and shall be applied to
repay in full all principal and interest due on the Second Mortgage and any
outstanding balance of the Construction and Development Fee and interest
accrued thereon.
4.3 Investment Limited Partner, Missouri Limited Partner,
Special Limited Partner and Original Limited Partner
The Original Limited Partner hereby withdraws as a limited partner of
the Partnership and acknowledges that he no longer has any interest in, or
rights or claims against, the Partnership as a Limited Partner as of the
Admission Date. The Investment Limited Partner, the Missouri Limited Partner
and the Special Limited Partner are hereby admitted as additional Limited
Partners of the Partnership as of the Admission Date and agree to be bound by
the terms and provisions of the Project Documents and this Agreement. The
names and addresses of the Investment Limited Partner, the Missouri Limited
Partner and the Special Limited Partner are as set forth on Schedule A. The
General Partners shall have no authority to admit additional Limited Partners
without the Consent of the Investment Limited Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, the Missouri Limited Partner,
the Special Limited Partner and any Person who becomes an Additional Limited
Partner shall be liable for any debts, liabilities, contracts or obligations
of the Partnership and shall only be liable to pay their respective Capital
Contributions as and when the same are due hereunder and under the Uniform
Act.
4.5 Special Rights of the Investment Limited Partner and the Special
Limited Partner
(a) Notwithstanding any other provision herein, to the extent the law
of the State is not inconsistent, each of the Investment Limited Partner and
the Special Limited Partner shall have the right, subject to the prior written
consent of any Lender whose consent thereto is required, to:
(i) remove and replace any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of such General
Partner's obligations constituting fraud, bad faith, negligence, misconduct or
breach of fiduciary duty, or (B) upon the occurrence of any of the following
which would result in or is likely to result in a material detriment to or an
impairment of the Apartment Complex, the Partnership or assets of the
Partnership: (1) such General Partner shall have violated any provisions of
any Project Document or other document required in connection with any
Mortgage, or any provisions of any Agency regulations applicable to the
Apartment Complex; (2) such General Partner shall have violated any provision
of this Agreement or violated any provision of applicable law; (3) any
Mortgage shall have gone into default; or (4) such General Partner shall have
conducted its own affairs or the affairs of the Partnership in such a manner
as would (a) cause the termination of the Partnership for federal income tax
purposes or (b) cause the Partnership to be treated for federal income tax
purposes as an association taxable as a corporation; provided, however, that
any dispute between the Investment Limited Partner and/or the Special Limited
Partner and such General Partner regarding removal under this Section
4.5(a)(i) shall be settled by arbitration in accordance with the arbitration
rules of the American Arbitration Association then in effect in the City of
St. Louis, Missouri;
(ii) continue the business of the Partnership with a substitute General
Partner; and
(iii) approve or disapprove the sale of all or substantially all of the
assets of the Partnership, other than a sale pursuant to the Option and Right
of First Refusal Agreement.
(b) Upon the removal of a General Partner, (i) without any further
action by any Partner, the Special Limited Partner or its designee shall auto-
matically become a General Partner and acquire in consideration of a cash
payment of $100 such portion of the Interest of the removed General Partner as
counsel to the Investment Limited Partner shall determine is the minimum
appropriate interest in order to assure the continued status of the Partner-
ship as a partnership under the Code and under the Uniform Act, (ii) the
remaining portion of the economic Interest of the removed General Partner
shall automatically be converted to an equal economic Interest as an
Additional Limited Partner, (iii) the economic Interest of the Special Limited
Partner as the Special Limited Partner shall continue unaffected by the new
status of the Special Limited Partner or its designee as a General Partner,
and (iv) the new General Partner shall automatically be irrevocably delegated
all of the powers and duties of the General Partners pursuant to Section 6.13.
The Special Limited Partner or any successor General Partner proposed by the
Special Limited Partner shall have the option, exercisable in its sole dis-
cretion, to acquire the remainder of the Additional Limited Partner Interest,
or any portion thereof, of any removed General Partner upon payment of the
agreed or then present fair market value of such Interest or portion thereof,
which value shall include the value attributable to the ability of a General
Partner to select the Management Agent. Any dispute as to such value shall be
submitted to a committee composed of three qualified real estate appraisers,
one chosen by the removed General Partner, one chosen by the successor General
Partner or the Investment Limited Partner, as the case may be, and the third
chosen by the two so chosen. The proceedings of such committee shall conform
to the rules of the American Arbitration Association, as far as appropriate,
and its decision shall be final and binding. The expense of arbitration shall
be born equally by the removed General Partner and the Partnership. The
method of payment to the removed General Partner shall be fair; and must
protect the solvency and liquidity of the Partnership. The method of payment
will be deemed presumptively fair where it provides for an interest-bearing
promissory note coming due in five (5) years with equal installments each
year. In addition, upon removal, the Partnership must promptly pay to the
removed General Partner all amounts then accrued and owing to the removed
General Partner; provided, however, that notwithstanding the language of
Section 6.12, Article X, Article XI and any other provision hereof, no removed
General Partner or Affiliate thereof shall be entitled to receive any fee,
compensation or other remuneration from the Partnership, other than (i) the
above-described payment for the Interest, or portion thereof, of the removed
General Partner, and (ii) any such fee, compensation or other remuneration
which had already been earned in full prior to the date of such removal. The
Partnership is not authorized to enter into any arrangement whereby any fee,
compensation or other remuneration could be payable directly or indirectly to
any General Partner in a manner inconsistent with the immediately preceding
sentence unless the prior written consent of the Special Limited Partner shall
have been obtained to such particular arrangement. The Partnership may offset
against any payments to a General Partner so removed under this Section 4.5
any damages suffered by the Partnership as a result of any breach of the
obligations of such General Partner or any Affiliate thereof hereunder. A
General Partner so removed will not be liable as a general partner for any
obligations of the Partnership 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 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.
4.6 Meetings
The General Partners or Limited Partners holding more than 10% of the
then outstanding Limited Partner Interests may call meetings of the Partner-
ship 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 representa-
tive at his cost. Upon receipt of a written request either in person or by
certified mail stating the purpose(s) of the meeting, the General Partners
shall provide all Limited Partners within ten (10) days after receipt of said
request, written notice (either in person or by certified mail) of a meeting
and the purpose of such meeting to be held on a date not less then fifteen
(15) nor more than sixty (60) days after receipt of said request, at a time
convenient to the Limited Partners. All meetings shall be held at the prin-
cipal office of the Partnership.
ARTICLE V
Capital Contributions of the Special Limited Partner,
the Missouri Limited Partner and the Investment Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10 shall be
paid in full in cash on its Admission Date. The Investment Limited Partner and
the Missouri Limited Partner will make Capital Contributions of $1,601,573 and
$277,327, respectively, which will be paid to the Partnership in three (3)
installments (the "Installments") as follows:
(1) $934,451 (the "First Installment") will be made
$795,787 by the Investment Limited Partner and $138,664 by the Missouri
Limited Partner upon the latest of (i) State Designation, (ii) Construction
Mortgage Closing, (iii) Permanent Mortgage Commitment or (iv) the Admission
Date;
(2) $934,449 (the "Second Installment") will be made
$795,786 by the Investment Limited Partner and $138,663 by the Missouri
Limited Partner upon the latest of (i) Completion Date, (ii) Cost
Certification, (iii) December 31, 1997, (iv) receipt by the Limited Partners
of the Updated Title Policy, (v) Contractor's Release Date, (vi) the Initial
100% Occupancy Date, (vii) Permanent Mortgage Commencement, (viii) Rental
Achievement, or (xi) satisfaction of all conditions to the payment of the
First Installment; and
(3) $10,000 (the "Third Installment") will be made by the
Investment Limited Partner upon the later to occur of (i) Rental Achievement
Confirmation, (ii) release of all UCC Financing Statements executed by the
Limited Partners or (iii) satisfaction of all conditions to the payment of the
First and Second Installments;
provided, however, that the General Partners shall give the Investment
Limited Partner and the Missouri Limited Partner not less than twenty-one
(21) days' written notice prior to the due date of each Installment
subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner and the Missouri
Limited Partner to pay each Installment is conditioned upon delivery by the
General Partners to the Investment Limited Partner and the Missouri Limited
Partner of a written certificate (the "Payment Certificate") stating that as
of the date of such certificate (i) all the conditions to the payment of such
Installment have been satisfied and (ii) all representations and warranties
of the General Partners contained in this Agreement are true and correct.
Except as provided in the final sentence of this Section 5.1(b), acceptance
by the Partnership of an Installment shall constitute a confirmation that, as
of the date of payment, all conditions set forth in Section 5.1(a) have been
achieved. The obligation of the Investment Limited Partner and the Missouri
Limited Partner to pay the First Installment is also conditioned upon
delivery by the General Partners to the Investment Limited Partner and the
Missouri Limited Partner of (i) a legal opinion of independent Missouri
counsel to the Partnership, which opinion must be satisfactory to the
Investment Limited Partner and the Missouri Limited Partner both as to form
and as to counsel and (ii) delivery by the General Partners to the Investment
Limited Partner of the Title Policy. Notwithstanding the foregoing, however,
if at any time prior to the date when an Installment becomes due and payable,
the Partnership has any unpaid items enumerated in the numbered clauses of
the second sentence of Section 6.11 or an "Operating Deficit" (expenses in
excess of revenues which the General Partners would be required to fund
pursuant to Section 6.10), then the Investment Limited Partner and the
Missouri Limited Partner may, at their option, waive the requirement of the
delivery of the Payment Certificate or any other condition with respect to
part or all of such Installment and pay such part or all of such Installment,
provided that the proceeds of the amount so paid are used by the Partnership
to fully fund such unpaid item and/or Operating Deficit; provided, however,
that if the proceeds 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 General Partners, on their behalf and on behalf of any of
their Affiliates to the extent any of the foregoing are recipient(s) thereof
shall be required to, and hereby agree to, utilize the proceeds of such
fee(s) to fund such unpaid item and/or Operating Deficit, in which case the
Investment Limited Partner and the Missouri Limited Partner are hereby
authorized to directly fund such unpaid item and/or Operating Deficit and the
funds so applied shall be deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be dated and
delivered not less than twenty-one (21) nor more than thirty (30) days prior
to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise be due, any
statement required to be made in the Payment Certificate for such Installment
cannot be truthfully made, the General Partners shall notify the Investment
Limited Partner and the Missouri Limited Partner of the reason why such
statement would be untrue if made, and the Investment Limited Partner and the
Missouri 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 and the Missouri
Limited Partner shall not have irrevocably lost, in the good faith judgment
of the Investment General Partner and the Missouri Limited Partner, any
material tax or other benefits hereunder, then the Investment Limited Partner
and the Missouri Limited Partner shall pay such Installment to the
Partnership thirty (30) days after delivery by the General Partners to the
Investment Limited Partner and the Missouri Limited Partner of the Payment
Certificate together with an explanation of the manner in which each such
statement had become true.
(e)(i) If with respect to any year all or a portion of which occurs
during the 60-month period commencing on the later of (i) the Admission Date
or (ii) the Completion Date (a "Reduction Year") the Actual Federal Credit is
or was less than the Projected Federal Credit, then the Capital Contribution
of the Investment Limited Partner shall be reduced by the Federal Reduction
Amount. The Federal Reduction Amount shall be equal to the sum of (A) the
excess of the Projected Federal Credit for such year over the Actual Federal
Credit for such year multiplied by .746 plus (B) the amount of any recapture,
interest or penalty payable by the limited partners and/or holders of
beneficial assignee certificates of the Investment Limited Partner as a result
of such shortfall, 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 year of allocation and that each such
Person was subject to interest at the rate set forth in Section 6621(a)(2) of
the Code and to the penalty for understatement of tax set forth in Section
6662(d) of the Code. The Accountants shall make their determination of the
amount of the Actual Federal Credit with respect to each Reduction Year within
30 days following the end of such year. The Capital Contribution of the
Investment Limited Partner shall be subject to reduction as hereinabove
described with respect to each Reduction Year. Any Federal Reduction Amount
shall, at the option of the Investment Limited Partner, either (i) first be
applied to the Installment next due to be paid by the Investment Limited
Partner, with any portion of such Federal Reduction Amount in excess of the
amount of such Installment then being applied to the succeeding Installments,
provided that if no further Installments remain to be paid or if the Federal
Reduction Amount shall exceed the sum of the amounts of the remaining
Installments, then the entire Federal Reduction Amount or the balance of the
Federal Reduction Amount, as the case may be, shall be paid by the General
Partners to the Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event or (ii) be paid in its entirety by the
General Partners to the Investment Limited Partner promptly after demand is
made therefor, as a payment of damages for breach of warranty, regardless of
the reason for the occurrence of such event.
(e)(ii) If with respect to any Reduction Year the Actual Missouri
Credit is or was less than the Projected Missouri Credit, then the Capital
Contribution of the Missouri Limited Partner shall be reduced by the Missouri
Reduction Amount. The Missouri Reduction Amount shall be equal to the sum of
(A) the excess of the Projected Missouri Credit for such year over the Actual
Missouri Credit for such year multiplied by .25 plus (B) the amount of any
recapture, interest or penalty payable by the stockholders of the Missouri
Limited Partner as a result of such shortfall, assuming that each stockholder
in the Missouri Limited Partner used all of the Missouri Low-Income Housing
Tax Credits allocated to it in the year of allocation and that each such
Person was subject to interest at the rate set forth in Section 6621(a)(2) of
the Code and to the penalty for understatement of tax set forth in Section
6662(d) of the Code. The Accountants shall make their determination of the
amount of the Actual Missouri Credit with respect to each Reduction Year
within 30 days following the end of such year. The Capital Contribution of
the Missouri Limited Partner shall be subject to reduction as hereinabove
described with respect to each Reduction Year. Any Missouri Reduction Amount
shall, at the option of the Missouri Limited Partner, either (i) first be
applied to the Installment next due to be paid by the Missouri Limited
Partner, with any portion of such Missouri Reduction Amount in excess of the
amount of such Installment then being applied to the succeeding Installments,
provided that if no further Installments remain to be paid or if the Missouri
Reduction Amount shall exceed the sum of the amounts of the remaining
Installments, then the entire Missouri Reduction Amount or the balance of the
Missouri Reduction Amount, as the case may be, shall be paid by the General
Partners to the Missouri Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event or (ii) be paid in its entirety by the
General Partners to the Missouri Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event.
(f)(i) In the event that, for any reason, at any time after the end
of the year during which the 60-month anniversary of the later of (i) the
Admission Date or (ii) the Completion Date occurs, the amount of the Actual
Federal Credit shall be less than the Projected Federal Credit with respect to
any fiscal year of the Partnership (such difference being hereinafter referred
to as a "Federal Credit Shortfall"), the Investment Limited Partner shall be
treated as having made a constructive advance to the Partnership with respect
to such year (a "Federal Credit Recovery Loan"), which shall be deemed to have
been made on January 1 of such year in an amount equal to the sum of (i) the
Federal Credit Shortfall for such year plus (ii) the amount of any recapture,
interest or penalty payable by the limited partners and/or holders of
beneficial assignee certificates of the Investment Limited Partner as a result
of the Federal Credit Shortfall for such year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the Investment
Limited Partner used all of the Tax Credits allocated to it in the year of
allocation and that each such Person was subject to interest at the rate set
forth in Section 6621(a)(2) of the Code and to the penalty for understatement
of tax set forth in Section 6662(d) of the Code. Federal Credit Recovery
Loans shall be deemed to bear simple (not compounded) interest from the
respective dates on which such principal advances shall have been deemed to
have been made under this Section 5.1(f)(i) at 9% per annum. Federal Credit
Recovery Loans shall be repayable by the Partnership as provided in
Section 10.2(b), Clause Second.
(f)(ii) In the event that, for any reason, at any time after the end
of the year during which the 60-month anniversary of the later of (i) the
Admission Date or (ii) the Completion Date occurs, the amount of the Actual
Missouri Credit shall be less than the Projected Missouri Credit with respect
to any fiscal year of the Partnership (such difference being hereinafter
referred to as a "Missouri Credit Shortfall"), the Missouri Limited Partner
shall be treated as having made a constructive advance to the Partnership with
respect to such year (a "Missouri Credit Recovery Loan"), which shall be
deemed to have been made on January 1 of such year in an amount equal to the
sum of (i) the Missouri Credit Shortfall for such year plus (ii) the amount of
any recapture, interest or penalty payable by the stockholders of the Missouri
Limited Partner as a result of the Missouri Credit Shortfall for such year,
assuming that each stockholder in the Missouri Limited Partner used all of the
Missouri Low-Income Housing Tax Credits allocated to it in the year of
allocation and that each such Person was subject to interest at the rate set
forth in Section 6621(a)(2) of the Code and to the penalty for understatement
of tax set forth in Section 6662(d) of the Code. Missouri Credit Recovery
Loans shall be deemed to bear simple (not compounded) interest from the
respective dates on which such principal advances shall have been deemed to
have been made under this Section 5.1(f)(ii) at 9% per annum. Missouri Credit
Recovery Loans shall be repayable by the Partnership as provided in
Section 10.2(b), Clause Third.
(g)(i) In the event that at any time after the Completion Date the
product of the Apartment Complex's Qualified Basis and its Applicable
Percentage is determined by the Accountants, the Auditors, the Tax Accountants
or the Service to be such that the Apartment Complex will not be eligible to
receive Tax Credit in an annual dollar amount of at least $288,884 or the
Accountants, Auditors, Tax Accountants or the Service otherwise determines
that the Apartment Complex will not be eligible to receive Tax Credit in an
annual dollar amount of at least $288,884, then (a) the General Partners shall
pay to the Investment Limited Partner an amount equal to 99% of the product of
(A) the difference between (i) $2,888,840 and (ii) the total amount of Tax
Credit allocated and available to the Partnership and (B) .746, and (b) the
Projected Federal Credit for each year shall thereafter be redefined to mean
99% of the total amount of Tax Credit so allocated and available to the
Partnership for such year (the "Revised Projected Federal Credit"). Any
amount payable by the General Partners to the Investment Limited Partner
pursuant to this Section 5.1(g)(i) shall, at the option of the Investment
Limited Partner, either (i) be applied first to the Installment, if any, next
due to be paid by the Investment Limited Partner, and any balance of such
amount payable by the General Partners in excess of the amount of such
Installment shall be applied to succeeding Installments, if any, provided that
if such amount payable by the General Partners exceeds the sum of the
remaining Installments, if any, then an amount equal to the amount of such
excess shall be paid by the General Partners to the Investment Limited Partner
promptly after demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such event, or (ii)
to be paid in its entirety by the General Partners to the Investment Limited
Partner promptly after demand is made therefor, as a payment of damages for
breach of warranty, regardless of the reason for the occurrence of such event.
(g)(ii) In the event that at any time after the Completion Date the
product of the Apartment Complex's Qualified Basis and its Applicable
Percentage is determined by the Accountants, the Auditors, the Tax Accountants
or the Service to be such that the Apartment Complex will not be eligible to
receive Missouri Low-Income Housing Tax Credit in an annual dollar amount of
at least $115,553 or the Accountants, Auditors, Tax Accountants or the Service
otherwise determines that the Apartment Complex will not be eligible to
receive Missouri Low-Income Housing Tax Credit in an annual dollar amount of
at least $115,553, then (a) the General Partners shall pay to the Missouri
Limited Partner an amount equal to the product of (A) the difference between
(i) $1,155,530 and (ii) the total amount of Missouri Low-Income Housing Tax
Credit allocated and available to the Partnership and (B) .25, and (b) the
Projected Missouri Credit for each year shall thereafter be redefined to mean
the total amount of Missouri Low-Income Housing Tax Credit so allocated and
available to the Partnership for such year (the "Revised Projected Missouri
Credit"). Any amount payable by the General Partners to the Missouri Limited
Partner pursuant to this Section 5.1(g)(ii) shall, at the option of the
Missouri Limited Partner, either (i) be applied first to the Installment, if
any, next due to be paid by the Missouri Limited Partner, and any balance of
such amount payable by the General Partners in excess of the amount of such
Installment shall be applied to succeeding Installments, if any, provided that
if such amount payable by the General Partners exceeds the sum of the
remaining Installments, if any, then an amount equal to the amount of such
excess shall be paid by the General Partners to the Missouri Limited Partner
promptly after demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such event, or (ii)
to be paid in its entirety by the General Partners to the Missouri 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.
(h) From the proceeds of the First Installment, not less than $610,550
of the Limited Partners' Capital Contribution will be applied by the
Partnership to paydown the First Mortgage and from the proceeds of the Second
Installment, not less than $884,450 of the Limited Partners' Capital
Contribution will be applied by the Partnership to further paydown the First
Mortgage.
(i) Each of the Investment Limited Partner and the Missouri Limited
Partner hereby grants to the Partnership a first priority security interest in
and to such Partner's Interest, including, without limitation, any right to
distributions, in liquidation or otherwise, with respect to such Interest, for
the purpose of securing the payment to the Partnership of each respective
Installment of Capital Contribution of such Partner subsequent to the First
Installment (the "Future Installments"). The Partnership shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in the State (the "UCC") with respect to such Interest. Each of
the Investment Limited Partner and the Missouri Limited Partner further agrees
to execute and deliver to the Partnership such UCC Financing Statements and
other documents and instruments and to take such further actions as may be
reasonably necessary or appropriate in the opinion of counsel to the
Partnership in order to perfect and maintain the first priority security
interest granted hereby. In the event that the Partnership has conclusively
satisfied the conditions and procedures for payment as set forth in Sections
5.1(a) and 5.1(b) (the "Payment Conditions") and either the Investment Limited
Partner or the Missouri Limited Partner fails to make a Future Installment by
the date required therefor, such Partner shall be considered to be in default
in respect to such payment obligations and the Partnership may mail a written
notice to such defaulting Partner of the existence of such default and demand
that such default be cured within the twenty (20)-day period after the
Partnership mails such notice (as evidenced by the postmark date of the
notice) (the "Cure Period"), and failing either (i) payment in full of such
amount within the Cure Period, or (ii) receipt within the Cure Period from
such Partner of a written notification stating which Payment Condition has not
been achieved, the Partnership may then exercise any and all remedies
available to it hereunder or at law or in equity. Any action or suit which
arises in connection with any dispute between the Partnership and any Partner
as to whether a Payment Condition has been met shall be litigated only in
courts of record located in Missouri, and each Partner hereby (i) consents and
submits to the personal jurisdiction of any state or federal court located
within Missouri, (ii) waives any right to transfer or change the venue of any
such litigation to a court located outside of Missouri, and (iii) agrees to
service of process, to the extent permitted by law, by mail addressed to such
Partner's then current address as indicated on Schedule A hereto, as the same
may be amended from time to time. The Partnership and any Partner shall be
entitled to bid for and purchase all or any part of the Interest being sold at
any sale conducted pursuant to, or as permitted under, the UCC. In order to
realize upon the security interest granted herein, the Partnership may sell or
otherwise dispose of the Interest of a Partner defaulting in the payment of a
Future Installment due hereunder at public sale, with or without having the
Interest at the place of sale and upon such terms and in such manner as the
Partnership may determine. The Partnership shall give each Partner at least
ten (10) days' prior written notice of the time and place of any public sale
of the Interest or other intended disposition thereof. Such notice may be
mailed to the Partners at the addresses set forth in Schedule A, as the same
may be amended from time to time.
5.2 Return of Capital Contributions
(a) Failure to Complete and Loss of the Tax Credit. If (i) by
December 31, 1998 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner) less than 48 apartment units in the
Apartment Complex shall have been occupied by tenants so that the Minimum Set-
Aside Test shall have been met with all such occupancy being under executed
leases which shall have received any necessary Agency or Lender approvals and
with the forty-two (42) low-income units being rented at rental levels meeting
the requirements of the Rent Restriction Test, or (ii) 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
any such Test at any time during the 60-month period commencing on such date,
or (iii) prior to Permanent Mortgage Commencement, (a) foreclosure proceedings
shall have commenced under any Mortgage, (b) any of the commitments of the
Lenders to provide the Mortgages and/or any subsidy financing shall be
terminated or withdrawn and not reinstated or replaced within 90 days with
terms equally or more favorable to the Investment Limited Partner or terms for
which the Consent of the Investment Limited Partner and (if required) the
approval of the applicable Lender and any Agency shall have been obtained, or
(c) any such Lender shall have irrevocably refused to make any further
advances under its respective Mortgage and such decision shall not have been
reversed or such Lender replaced within 60 days, or (iv) First Mortgage
Closing does not occur by January 30, 1997 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner), or (v)
Permanent Mortgage Commencement shall not have been achieved by April 1, 1997
(or any later date fixed by the General Partners with the Consent of the
Investment Limited Partner), or (vi) if at any time it shall be determined by
the Service or by the Tax Accountants that as of December 31, 1996 the
Partnership had not incurred capitalizable costs with respect to the Apartment
Complex of at least ten per cent (10%) of the Partnership's reasonably
expected basis in the Apartment Complex as of December 31, 1998, or (vii) by
March 15, 1997 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner) the Investment Limited Partner
shall not have received the Cost Certification, or (viii) the General Partners
fail at any time to fulfill their obligations under Section 6.10, , then the
General Partners shall within 15 days of the occurrence thereof, send to the
Investment Limited Partner, the Missouri Limited Partner and the Special
Limited Partner notice of such event and of their obligation to repurchase the
Interests of the Investment Limited Partner, the Missouri Limited Partner and
the Special Limited Partner by paying to the Investment Limited Partner, the
Missouri Limited Partner and the Special Limited Partner an amount equal to
each such Partner's Invested Amount in the event the Investment Limited
Partner, the Missouri Limited Partner and/or the Special Limited Partner so
requires. If either the Investment Limited Partner, the Missouri Limited
Partner or the Special Limited Partner elects to require a repurchase of its
Interest and the payment to it of an amount equal to its Invested Amount, it
shall send notice thereof to the Partnership within 30 days after the mailing
date of the General Partners' notice, or at any time after the occurrence of
any of the foregoing if the General Partners shall not have sent such a notice
thereof, and the General Partners shall within ninety (90) days thereafter
repurchase the Interest of such Partner by paying to such Partner an amount
equal to its Invested Amount.
(b) Lender Disapproval. If any Lender shall disapprove, or fail to
give any required approval of, the Investment Limited Partner, the Missouri
Limited Partner and/or the Special Limited Partner as a Limited Partner
hereunder within 180 days of their respective Admission Date, then the Partner
being disapproved or not approved shall, effective as of such time or such
later time as may be selected by the Partner being disapproved or not approved
(or such other time as may be specified by the Lender in its disapproval), at
the option of the Partner being disapproved or not approved (if not directed
by the Lender to withdraw), cease to be a Limited Partner. The General
Partners shall, within 10 days of the effective date of the termination pay to
the Partner being disapproved or not approved an amount equal to its Invested
Amount plus the amount of any third party costs incurred by or on behalf of
such Partner in implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the Invest-
ment Limited Partner, the Missouri Limited Partner and/or the Special Limited
Partner of the amount due to it pursuant to either Section 5.2(a) or
Section 5.2(b), the Interest of such Partner shall terminate, and the General
Partners shall indemnify and hold harmless such Partner from any losses,
damages, and liabilities to which such Partner (as a result of its
participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited Partner and
the Missouri Limited Partner shall have the right to irrevocably waive their
right to have their Interest repurchased pursuant to any clause or clauses of
Section 5.2(a), or any portion thereof, and/or Section 5.2(b) at any time
during which any of such rights shall be in effect. Such a waiver shall be
exercised by delivery to the General Partners of a written notice stating that
the rights being waived pursuant to any specified clause or clauses of Section
5.2(a), or any specified portion thereof, and/or Section 5.2(b) are thereby
waived from that date forward.
(e) Additional General Partner. If the General Partners shall fail to
make on the due date therefor any payment required under Section 5.2(a) or
Section 5.2(b), time being of the essence, at any time thereafter the Special
Limited Partner shall have the option, exercisable in its sole discretion, to
cause itself or its designee to be admitted as an additional General Partner,
receiving from the pre-existing General Partners, proportionally out of their
Interests, in consideration of $10, a one per cent (1%) interest in the pro-
fits, losses, tax credits and distributions of the Partnership, with the
Special Limited Partner retaining its status as such and its economic interest
in the Partnership as the Special Limited Partner not being effected thereby.
Upon any such admission of the Special Limited Partner as an additional
General Partner, each of the other General Partners hereby agrees that all of
its rights and powers hereunder as a General Partner shall automatically be
irrevocably delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each Partner
hereby grants to the Special Limited Partner an irrevocable (to the extent
permitted by applicable law) power of attorney coupled with an interest to
take any action and to execute, deliver and file or record any and all docu-
ments 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 as an additional General Partner shall not relieve
any other General Partner of any of its economic obligations hereunder, and
each other General Partner shall fully indemnify and hold harmless the
additional General Partner against any and all losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained in connection
with its capacity as a General Partner.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions of this
Agreement, the General Partners for, in the name and on behalf of the Partner-
ship are hereby authorized to do the following in furtherance of the purposes
of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any real or
personal property;
(2) To construct, operate, maintain, finance and improve, and to own,
sell, convey, assign, mortgage or lease any real estate and any personal
property;
(3) To borrow money and issue evidences of indebtedness and to secure
the same by mortgage, pledge or other lien on the Apartment Complex or any
other assets of the Partnership;
(4) To execute the Mortgages, the other Project Documents and all such
other documents as the General Partners deem necessary or appropriate in
connection with the acquisition, development and financing of the Apartment
Complex;
(5) To prepay in whole or in part, refinance or modify any Mortgage or
any other financing affecting the Apartment Complex;
(6) To employ the Management Agent (which, subject to Agency approval,
may be an Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To execute contracts with any Agency, the State or any subdivision
or agency thereof or any other government agency to make apartments or tenants
in the Apartment Complex eligible for any public-subsidy program;
(8) To execute leases of some or all of the apartment units of the
Apartment Complex to a public housing authority and/or to a non-profit
corporation, cooperative or other non-profit Entity; and
(9) To enter into any kind of activity and to perform and carry out
contracts of any kind which may be lawfully carried on or performed by a
partnership and to file all certificates and documents which may be required
under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the General
Partners shall have no authority to (i) knowingly perform any act in violation
of applicable law, Agency or other government regulations, requirements of any
Lender, or the Project Documents or (ii) even unknowingly, perform any act in
violation of applicable law, Agency or other government regulations, require-
ments of any Lender, or the Project Documents if such act would or could
materially adversely effect the Apartment Complex, the Partnership, the
Investment Limited Partner or the Missouri Limited Partner. In the event of
any conflict between the terms of this Agreement and any applicable Agency or
other government regulations or requirements of any Lender, the terms of such
regulations or requirements shall govern. Neither shall the General Partners
have any authority to do any of the following acts without the Consent of the
Investment Limited Partner and the prior written consent of the Special
Limited Partner:
(1) To have borrowings in excess of $20,000 in the aggregate at any
one time outstanding on the general credit of the Partnership, except
borrowings constituting Subordinated Loans;
(2) To borrow from the Partnership or commingle Partnership funds with
funds of any other Person;
(3) Following the Completion Date, to construct any new or replacement
capital improvements on the Apartment Complex which substantially alter the
Apartment Complex or its use or which are at a cost in excess of $20,000 in a
single Partnership fiscal year, except (a) replacements and remodeling in the
ordinary course of business or under emergency conditions or (b) construction
paid for from insurance proceeds;
(4) To acquire any real property in addition to the Apartment Complex;
(5) Following Permanent Mortgage Commencement, to modify the terms of
or refinance any Mortgage;
(6) To rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Minimum Set-Aside
Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer the Apartment
Complex or substantially all the assets of the Partnership;
(8) To terminate any agreement with any Agency;
(9) To cause the Partnership to commence a proceeding seeking any
decree, relief, order or appointment in respect to the Partnership under the
federal bankruptcy laws, as now or hereafter constituted, or under any other
federal or state bankruptcy, insolvency or similar law, or the appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) for the Partnership or for any substantial part of the Partnership's
business or property, or to cause the Partnership to consent to any such
decree, relief, order or appointment instituted by any Person other than the
Partnership;
(10) To amend the Option and Right of First Refusal Agreement; or
(11) To do any act required to be approved or ratified by all limited
partners under the Uniform Act.
(b) Neither the Investment General Partner nor any Affiliate thereof
shall be given an exclusive right to sell, or exclusive employment to sell,
the Apartment Complex.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any salary or
other compensation except as may be provided in Section 6.12 and Article XI
hereof or for construction, rehabilitation and/or related services performed
by such General Partner or Affiliate in accordance with a reasonable and
competitive fee arrangement or for fees earned in connection with optional
tenant services provided under the Contract For Dining Services or the
Contract For Personal Services. Any Partner may engage independently or with
others in other business ventures of every nature and description including
the ownership, operation, management, syndication and development of competing
real estate; neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or profits derived
therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General Partners shall
have the exclusive right to control the business of the Partnership. The
Investment Limited Partner and the Missouri Limited Partner shall have no
right to take part in the management or control of the business of the
Partnership or to transact any business in the name of the Partnership. No
provision of this Agreement which makes the Consent of the Investment Limited
Partner a condition for the effectiveness of an action taken by the General
Partners is intended, and no such provision shall be construed, to give the
Investment Limited Partner any participation in the control of the Partnership
business. Each of the Special Limited Partner, the Missouri Limited Partner
and the Investment Limited Partner hereby consents to the exercise by the
General Partners of the powers conferred on them by law and this Agreement,
and the General Partners agree to exercise control of the business of the
Partnership only in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the provisions of this Section
6.4 be invoked by any General Partner or by any other Person as a defense
against or as an impediment to the ability of either the Investment Limited
Partner, the Missouri Limited Partner or the Special Limited Partner to take
any action hereunder. All Partners hereby agree that Mary Ryder Home shall
serve as the "Tax Matters Partner." In the case of litigation, the Tax
Matters Partner is required to file suit in the United States Tax Court unless
the Consent of the Investment Limited Partner is obtained to file suit in the
United States Claims Court or the United States District Court. Nothing
herein shall be construed to restrict the Partnership from engaging the
Auditors to assist the Tax Matters Partner in discharging its duties
hereunder. If the General Partner designated as the Tax Matters Partner
withdraws from the Partnership, the Partnership shall designate a successor
Tax Matters Partner in accordance with Treasury Regulation Sections
301.6231(a)(7)-1(T) or any successor Regulation. The Partnership shall notify
the Service of the designation of a successor Tax Matters Partner for such
year as well as for all prior years that the Withdrawn General Partner was
serving as Tax Matters Partner.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the Partnership
to the best of their ability, shall use their best efforts to carry out the
purpose of the Partnership, and shall devote to the Partnership such time as
may be necessary for the proper performance of their duties and the business
of the Partnership. The General Partners shall promptly take all action which
may be necessary or appropriate for the proper development, maintenance and
operation of the Apartment Complex in accordance with the provisions of this
Agreement, the Project Documents and applicable laws and regulations
including, without limitation, funding the Construction and Development Fee to
the extent Capital Contributions are insufficient. The General Partners are
responsible for the management and operation of the Partnership, including the
oversight of the rent-up and operational stages of the Apartment Complex.
(b) The General Partners shall use their best efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at the
maximum realizable level in view of (i) any applicable Agency and other
regulations, (ii) the Minimum Set-Aside Test, and (iii) the Rent Restriction
Test, and, if necessary, the General Partners shall also use their best
efforts to obtain approvals and implementation of appropriate adjustments in
the rental schedule of the Apartment Complex.
(c) The General Partners shall cause the Partnership to obtain and
keep in force, during the term of the Partnership, comprehensive casualty
insurance, including, but not limited to, fire and other risks generally
included under "extended coverage" policies, workmen's compensation and public
liability insurance in favor of the Partnership (i) with such companies and in
such amounts as shall be satisfactory to the Lenders and any applicable
governmental agency, or, if the Apartment Complex is no longer subject to
Lender or agency regulation or requirements, as shall be customary for
apartment complexes similar to the Apartment Complex, and (ii) in amounts
which shall be (A) no less than those amounts which are customary in the area
for apartment complexes such as the Apartment Complex, (B) in the case of the
"extended coverage" portion, no less than the full original replacement value
of the Apartment Complex, (C) no less than such amounts as may be reasonably
requested by the Investment Limited Partner and/or the Special Limited Partner
from time to time, and (D) in any event, sufficient to prevent the Partnership
from becoming a co-insurer under any such policies. No deductibles on such
policies may exceed $500. The public liability insurance in favor of the
Partnership shall be in an amount not less than $4,000,000, of which up to
$3,000,000 may be provided under an umbrella policy. Through the Completion
Date, or such later date as may be required by any Lender or any applicable
governmental agency, the General Partners shall also cause the Partnership to
obtain and keep in force a builder's risk policy in favor of the Partnership
in an amount not less than the greater of (i) the full replacement value of
the Apartment Complex (excluding the value of the underlying land, the site
utilities and the foundations) or (ii) such other amount as shall be required
by any Agency or Lender. Throughout the term of the Partnership, the General
Partners shall provide copies of all such policies (or binders) to the
Investment Limited Partner promptly after their receipt thereof or upon
request but no less frequently than annually. The General Partners shall
cause the applicable insurer to name each of the Investment Limited Partner
and the Special Limited Partner as an "additional insured" on each Partnership
insurance policy. Prior to the expiration date for any such Partnership
insurance policy, the General Partners shall deliver to the Investment Limited
Partner a copy of the comparable new or replacement policy, including all
endorsements, exhibits and riders thereto.
(d) The obligations of the General Partners hereunder shall be the
joint and several obligations of each General Partner. Except as otherwise
provided in Sections 4.5(b) and 7.1, such obligations shall survive any
Withdrawal of a General Partner from the Partnership.
(e)(1) The General Partners shall establish and maintain reasonable
reserves to provide for working capital needs, improvements, replacements and
any other contingencies of the Partnership as required by the Lenders and any
Agency. At a minimum, the General Partners shall cause the Partnership to
annually deposit, commencing in 1997, $8,707 from its Cash Flow into
replacement reserves; to the extent that Cash Flow (as determined before
deduction of this reserve deposit) for any year shall be insufficient to make
such deposit in full, the General Partners shall fund such shortfall from
their own funds as a Subordinated Loan. Withdrawals and expenditures from the
replacement reserve are subject to the written approval of the Lenders and any
Agency, as required.
(e)(2) In addition to the requirements of Section 6.5(e)(1), in order to
meet operating expenses of the Partnership which exceed operating income
available for the payment thereof, at or prior to Admission Date, the General
Partners shall cause the Partnership to deposit $136,000 into a segregated
reserve account to fund an operating deficit reserve fund (the "Working
Capital Reserve") which must remain funded until the achievement of the
Reserve Release Date. Disbursements from or the release of the Working
Capital Reserve shall be made only with the Consent of the Investment Limited
Partner and the written approval of the Lenders and any Agency, as required.
(f) Each General Partner shall be bound by the Project Documents, and
no additional General Partner shall be admitted if he, she or it has not first
agreed to be bound by this Agreement (and assume the obligations of a General
Partner hereunder) and by the Project Documents to the same extent and under
the same terms as the other General Partners.
(g) The General Partners shall take all actions necessary to ensure
that the Investment Limited Partner receives the full amount of the Projected
Credit and that the Missouri Limited Partner receives the full amount of the
Projected Missouri Credit, including, without limitation, the rental of
apartments to appropriate tenants and the filing of annual certifications as
may be required. In this regard, the General Partners shall, inter alia,
cause (i) the Partnership to satisfy all requirements imposed from time to
time under the Code with respect to rental levels and occupancy by qualified
tenants by the close of the first year of the Credit Period so as to permit
the Partnership to be entitled to the Tax Credit throughout the compliance
period specified in the Code, (ii) the Partnership will comply with all State
Tax Credit monitoring procedures, (iii) all 42 low-income dwelling units in
the Apartment Complex to be leased for periods of not less than six months to
persons satisfying the Rent Restriction Test, (iv) the Partnership to make all
appropriate Tax Credit elections in a timely fashion, and (v) all rental units
in the Apartment Complex to be of equal quality and all Apartment Complex
amenities, other than optional services provided under the Contract For Dining
Services or the Contract For Personal Services, to be made available to low-
income tenants on a comparable basis without separate fees.
(h) On or before the Admission Date, the General Partners shall
provide the Investment Limited Partner with an appraisal of the Apartment
Complex prepared by a competent independent appraiser.
(i) The General Partners shall (i) not store (except in compliance
with all laws, ordinances, and regulations pertaining thereto) or dispose of
any Hazardous Material at the Apartment Complex, or at or on any other Site or
Vessel owned, occupied, or operated either by any General Partner, any
Affiliate of a General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor indirectly transport
or arrange for the transport of any Hazardous Material (except in compliance
with all laws, ordinances, and regulations pertaining thereto); (iii) provide
the Limited Partners with written notice (x) upon any General Partner's
obtaining knowledge of any potential or known release, or threat of release,
of any Hazardous Material at or from the Apartment Complex or any other Site
or Vessel owned, occupied, or operated by any General Partner, any Affiliate
of a General Partner or any Person for whose conduct any General Partner is or
was responsible or whose liability may result in a lien on the Apartment
Complex; (y) upon any General Partner's receipt of any notice to such effect
from any federal, state, or other governmental authority; and (z) upon any
General Partner's obtaining knowledge of any incurrence of any expense or loss
by any such governmental authority in connection with the assessment,
containment, or removal of any Hazardous Material for which expense or loss
any General Partner may be liable or for which expense or loss a lien may be
imposed on the Apartment Complex.
(j) The General Partners shall promptly request in writing of each
Lender that such Lender cause the Investment Limited Partner to be named as an
"interested party" in the respective Mortgage documents, so that such Lender
will notify the Investment Limited Partner of any default or other problem
under its respective Mortgage.
(k) The General Partners shall take all action necessary to ensure
that the Apartment Complex operates in accordance with all the rules,
regulations and limitations governing a Residential Care Facility II under the
laws of the State.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment Limited
Partner, the Missouri Limited Partner and the Special Limited Partner as
follows:
(1) The Partnership is a duly organized limited partnership validly
existing and in good standing under the laws of the State and has complied
with all filing requirements necessary for the protection of the Investment
Limited Partner, the Missouri Limited Partner and the Special Limited Partner.
(2) No event or proceeding has occurred or is pending or threatened
which would (a) materially adversely affect the Partnership or its properties,
or (b) materially adversely affect the ability of the General Partners or any
of their Affiliates to perform their respective obligations hereunder or under
any other agreement with respect to the Apartment Complex, other than legal
proceedings which have been bonded against in such manner as to stay the
effect of the proceedings or otherwise have been adequately provided for.
This subparagraph shall be deemed to include, without limitation, the
following: (x) legal actions or proceedings before any court, commission,
administrative body or other governmental authority having jurisdiction over
the zoning applicable to the Apartment Complex; (y) labor disputes; and
(z) acts of any governmental authority.
(3) No default (or event which, with the giving of notice or the
passage of time or both, would constitute a default) has occurred and is
continuing under this Agreement or under any material provision of the Project
Documents, and the same are in full force and effect.
(4) From and after Permanent Mortgage Commencement, no Partner or
Related Person will bear the Economic Risk of Loss with respect to any
Mortgage.
(5) The Apartment Complex has been completed in conformity with the
Project Documents. There is no violation by the Partnership or the General
Partners of any zoning or similar regulation applicable to the Apartment
Complex which could have a material adverse effect thereon, or, to the best of
the knowledge of the General Partners after due inquiry, of any environmental
or similar regulation applicable to the Apartment Complex which could have a
material adverse effect thereon, and the Partnership has complied with all
applicable municipal and other laws, ordinances and regulations relating to
such construction and use of the Apartment Complex.
(6) The Partnership owns good and marketable fee simple title to the
Apartment Complex, subject to no material liens, charges or encumbrances other
than those which (a) are permitted by the Project Documents and are noted or
excepted in the Title Policy, or, after the issuance thereof, the Updated
Title Policy, and (b) do not materially interfere with use of the Apartment
Complex (or any part thereof) for its intended purpose or have a material
adverse effect on the value of the Apartment Complex.
(7) The execution and delivery of all instruments and the performance
of all acts heretofore or hereafter made or taken pertaining to the
Partnership or the Apartment Complex by each Affiliate of the General Partners
which is a corporation have been or will be duly authorized by all necessary
corporate or other action, and the consummation of any such transactions with
or on behalf of the Partnership will not constitute a breach or violation of,
or a default under, the charter or by-laws of such Affiliate or any agreement
by which such Entity or any of its properties is bound, nor constitute a
violation of any law, administrative regulation or court decree.
(8) Any General Partner which is a corporation (a "Corporation") has
been duly organized, is validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power to be a
General Partner and to perform its duties and obligations as contemplated by
this Agreement and the Project Documents. Neither the execution and delivery
by any Corporation of this Agreement nor the performance of any of the actions
of any Corporation contemplated hereby has constituted or will constitute a
violation of (a) the articles of organization or by-laws of such Corporation,
(b) any agreement by which such Corporation is bound or to which any of its
property or assets is subject, or (c) any law, administrative regulation or
court decree.
(9) Any General Partner which is a limited liability company (an
"LLC") has been duly organized, is validly existing and in good standing under
the laws of its state of organization and has all requisite power to be a
General Partner and to perform its duties and obligations as contemplated by
this Agreement and the Project Documents. Neither the execution and delivery
by an LLC of this Agreement nor the performance of any of the actions of any
LLC contemplated hereby has constituted or will constitute a violation of (a)
the articles of organization or the operating agreement of such LLC, (b) any
agreement by which such LLC is bound or to which any of its property or assets
is subject, or (c) any law, administrative regulation or court decree.
(10) No Event of Bankruptcy has occurred with respect to any General
Partner.
(11) From and after the Admission Date, 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, shall be
funded to the levels required by any Agency and each Lender, to the extent
required by any Agency, and by each Lender.
(12) The General Partner has a net worth equal to at least $50,000 of
which not less than $25,000 constitutes liquid assets.
(13) All payments and expenses required to be made or incurred in order
to complete construction of the Apartment Complex in conformity with the
Project Documents, to satisfy all requirements under the Project Documents
and/or which form the basis for determining the principal sum of the Mortgages
and to pay the Construction and Development Fee and interest thereon have been
or will be paid or provided for utilizing only (a) the funds available from
the Mortgages, (b) the Capital Contributions of the Limited Partners, (c) the
Capital Contributions of the General Partners in the amounts set forth on
Schedule A as of the Admission Date, (d) the available net rental income, if
any, earned by the Partnership prior to Permanent Mortgage Commencement (to
the extent that it is permitted to be used for such purposes by each Lender,
(e) any insurance proceeds, and (f) the funds furnished by the General
Partners pursuant to Sections 6.5(a) and 6.11.
(14) The amount of Tax Credit which is expected to be allocated by the
Partnership to the Investment Limited Partner is $277,058 for 1997, $285,995
per annum for each of the years 1998 through 2006 (inclusive) and $8,937 for
2007. The amount of Missouri Low-Income Housing Tax Credit which is expected
to be allocated by the Partnership to the Missouri Limited Partner is $111,942
for 1997, $115,553 per annum for each of the years 1998 through 2006
(inclusive) and $3,611 for 2007.
(15) The Apartment Complex has been developed in a manner which
satisfies and shall continue to satisfy, all restrictions, including tenant
income and rent restrictions, applicable to projects generating Tax Credits.
(16) The General Partners have provided to the Investment Limited
Partner a complete copy of a "Phase I" hazardous waste site assessment report
for the Apartment Complex. To the best of the knowledge of the General
Partners after due inquiry, no General Partner, Affiliate of a General
Partner, 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 (except if such storage was and is at all
times in compliance with all laws, ordinances, and regulations pertaining
thereto) transported, or disposed of; (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, 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.
(17) Except as contained in reports previously provided to the Limited
Partners, to the best of the General Partners' knowledge, no Hazardous
Material was ever or is now stored on (except to the extent any such storage
was at all times in compliance with all laws, ordinances, and regulations
pertaining thereto), transported, or disposed of on the land comprising the
Apartment Complex.
(18) The General Partners have fulfilled and will continue to fulfill
all of their duties and obligations under Section 6.5.
(19) There shall at all times throughout the Compliance Period be a
"qualified non-profit organization" as that term is defined in Section
42(h)(5)(C) of the Code which, as required by Section 42(h)(5)(B) of the Code,
(A) owns an interest in the Apartment Complex (directly or through a
partnership) and (B) materially participates (within the meaning of Section
469(h) of the Code) in the development and operation of the Apartment Complex.
For the purposes of this Section 6.6(19), the treatment of subsidiaries shall
be in accordance with Section 42(h)(5)(D) of the Code.
(20) Mary Ryder Home, the General Partner of the Partnership, is a not-
for-profit corporation which is a qualifying corporation under Section
501(c)(3) of the Code and is exempt from tax under Section 501(a) of the Code.
(21) The Apartment Complex is currently and will continue to be
licensed as a Residential Care Facility II under the laws of the State. The
services available to tenants of the Apartment Complex under the Contract For
Dining Services and the Contract For Personal Services are strictly optional
services to which tenants do not have to avail themselves as a condition of
occupancy for an apartment unit in the Apartment Complex. For tenants not
electing to utilize the services provided under the Contract For Dining
Services, practical alternatives and facilities (including separate kitchen
facilities) exist for tenants to obtain and prepare meals within the Apartment
Complex. All bathing and dressing services are offered at no additional costs
to the tenants of the Apartment Complex.
(22) The Apartment Complex does not employ skilled nursing personnel
and tenants cannot receive skilled nursing care at the Apartment Complex.
(23) Each of the forty-eight (48) apartment units in the Apartment
Complex has a lock on its door.
6.7 Liability on the 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,
and the General Partners shall not permit any other Partner or any Related
Person to bear the Economic Risk of Loss for the payment of any portion of any
Mortgage, except as may be expressly permitted pursuant to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have liability
to the Partnership or to any Limited Partner for any loss suffered by the
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
misconduct of such General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be indemnified by
the Partnership against losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained in connection with the Partnership,
provided that all of the following conditions are met: (i) such General Part-
ner has determined, in good faith, that the course of conduct which caused the
loss, judgment, liability, expense or amount paid in settlement was in the
best interests of the Partnership; and (ii) such loss, judgment, liability,
expense or amount paid in settlement was not the result of gross negligence or
misconduct on the part of such General Partner or Affiliate thereof; and (iii)
such indemnification or agreement to hold harmless is recoverable only out of
the assets of the Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no General Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer shall be
indemnified for any losses, liabilities or expenses arising from or out of an
alleged violation of federal or state securities laws unless (i) there has
been a successful adjudication on the merits of each count involving secu-
rities laws violations as to the particular indemnitee and the court approves
the indemnification of such litigation costs, (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee and the court approves the indemnification of
such litigation costs or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and the court finds
that indemnification of the settlement and related costs should be made. In
any claim for indemnification for federal or state securities law violations,
the party seeking indemnification shall, prior to seeking court approval for
such indemnification, place before the court the positions of the Securities
and Exchange Commission, the Massachusetts Securities Division, the Missouri
Securities Commission, the Tennessee Securities Division, and any other appli-
cable state securities administrator with respect to the issue of indemnifica-
tion for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance, which insures any party
against any liability as to which such party is herein prohibited from being
indemnified.
(e) 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 10% or more of the outstanding
voting securities of a General Partner; (iii) is an officer, director, partner
or trustee of a General Partner; or (iv) if a General Partner is an officer,
director, partner or trustee, is any company for which such General Partner
acts in any such capacity.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partners will indemnify and hold the Partnership and
the Limited Partners harmless from and against any and all losses, damages and
liabilities which the Partnership or any Limited Partner may incur by reason
of the (a) past, present or future actions or omissions of the General Part-
ners or any of their Affiliates constituting gross negligence or misconduct,
or (b) any liabilities to which either the Partnership or the Apartment
Complex is subject; provided, however, that the foregoing indemnification
shall not apply to (i) the Mortgages or (ii) necessary contractual obligations
incurred pursuant to Agency or Lender requirements in connection with the
operation of the Apartment Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be liable
to a Limited Partner or the Partnership for any act or omission for which the
Partnership is required to indemnify such General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold the Limited
Partners harmless from and against any claim brought or threatened against the
Limited Partners or loss (as well as from any and all attorneys' fees and
expenses incurred in connection with any such claim or loss) on account of the
presence of any Hazardous Material at the Apartment Complex. Any claim or
loss described in the immediately preceding sentence may be defended, compro-
mised, settled, or pursued by the Limited Partners with counsel of the Limited
Partners' selection, but at the expense of General Partners. Notwithstanding
anything else set forth herein, this indemnification shall survive the with-
drawal of any General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to the prior written consent of any Agency (if such consent
shall be required under applicable Agency regulations), the General Partners
shall be obligated from the later to occur of (i) Permanent Mortgage
Commencement or (ii) the Admission Date to promptly advance funds to meet
operating expenses (including full payment of the Asset Management Fee, the
Missouri Asset Management Fee and reserve deposits required pursuant to
Section 6.5(e) or by any Agency or any Lender) and debt service obligations of
the Partnership which exceed operating income available for the payment
thereof. In the event that the General Partners shall fail to make any such
advances as aforesaid, (a) the Partnership shall utilize amounts (the "Applied
Amounts") otherwise payable to the General Partners or Affiliates thereof
under Section 6.12 and/or Article X to meet the obligations of the General
Partners pursuant to this Section 6.10, with such utilization of Applied
Amounts constituting payment and satisfaction of the corresponding amounts
payable to the General Partners or Affiliates thereof under Section 6.12
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 Partners or Affiliates thereof pursuant to Section 6.12 and/or Article
X shall be deemed satisfied to the extent thereof and (b) the Special Limited
Partner shall have the option, exercisable in its sole discretion, to cause it
or one or more of its designees to be admitted to the Partnership as
additional General 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 be delegated all of the power and
authority of all of the General Partners pursuant to Section 6.13, and each
Partner hereby grants to any such additional General Partner a power of
attorney, coupled with an interest and irrevocable to the extent permitted by
law, to execute and deliver any and all instruments and documents which it
believes to be necessary or appropriate in order to accomplish the purposes of
this Section 6.10 and to manage the business of the Partnership. The
admission of an additional General Partner shall not relieve any other General
Partner of any of its obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless each additional General Partner from
and against any and all losses, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its capacity as a
General Partner. For the purpose of this Section 6.10, all expenses shall be
paid on a sixty (60)-day current basis. Moreover, the General Partners may in
their sole discretion at any time advance funds to the Partnership to pay
operating expenses of the Partnership in order to facilitate the Partnership's
compliance with the Rent Restriction Test. All advances pursuant to this
Section 6.10 (including any Applied Amounts) shall be Subordinated Loans
repayable with interest at the Applicable Federal Rate in accordance with the
provisions of Article X. The form and provisions of all Subordinated Loans
shall conform to applicable rules and regulations.
6.11 Obligation to Complete the Construction of the Apartment Complex
The General Partners shall complete the construction of the Apartment
Complex substantially in accordance with the plans and specifications approved
by any Agency and the Lenders and all requirements necessary to obtain the
required certificates of occupancy for dwelling units, or cause the same to be
completed, in a good and workmanlike manner, free and clear of all mechanics',
materialmen's or similar liens, and shall equip the Apartment Complex or cause
the same to be equipped with all necessary and appropriate fixtures, equipment
and articles of personal property, and cause all necessary certificates of
occupancy for all apartment units in the Apartment Complex to be obtained, all
in accordance with the Project Documents. If the proceeds of the Mortgages,
the net rental income, if any, of the Apartment Complex generated prior to the
later of Permanent Mortgage Commencement or the Admission Date and which is
permitted by each Agency and the Lenders to be utilized for any of the
purposes hereinafter set forth, the Capital Contributions of the Limited
Partners, the Capital Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, and any insurance proceeds
arising out of casualties prior to the later of Permanent Mortgage
Commencement or the Admission Date as available from time to time are
insufficient to (i) acquire and complete the construction of the Apartment
Complex and satisfy all other obligations, all as provided in the first
sentence of this Section 6.11, (ii) pay the Construction and Development Fee
and interest thereon, (iii) arrive at Permanent Mortgage Commencement in
conformity with the Project Documents, (iv) discharge all Partnership
liabilities and obligations arising out of any casualty giving rise to any
such insurance proceeds, and (v) provide for all other payments and expenses
required to be made or incurred through the later of Permanent Mortgage
Commencement or the Admission Date, including the funding of any reserves
required hereunder or under any other Project Document, the General Partners
shall be responsible for and obligated to pay such deficiencies and shall, to
the extent permitted under the Project Documents and any applicable
regulations or requirements of the Lenders and any Agency, be reimbursed at or
prior to the later of Permanent Mortgage Commencement or the Admission Date
only out of the proceeds designated in this sentence available from time to
time after payment of all costs described in this sentence. Any amounts not
reimbursed through Permanent Mortgage Commencement or from the proceeds of the
Capital Contribution of the Limited Partners as provided in Section 5.1 shall
not be reimbursable or otherwise change the Interest of any Person in the
Partnership but shall be borne by the General Partners; provided, however, to
the extent any such amounts are properly included in the Partnership's
Qualified Basis and result in an increase in the amount of Tax Credit
allocated and available to the Partnership over and above the amount of Tax
Credit required in order to achieve State Designation ("Includable Items"),
the General Partners shall make an additional Capital Contribution in the
amount of the Includable Items and the Partnership shall utilize the proceeds
of such additional Capital Contribution to pay the Includable Items. In the
event that the General Partners shall fail to fund any such deficiency as
required by this Section 6.11, amounts otherwise payable as the Annual
Partnership Management Fee, the Management Incentive Fee or distributable to
the General Partners pursuant to Article X shall be applied by the Partnership
to meet such obligation. Any such application of funds as described in the
immediately preceding sentence shall constitute a payment of the amount of the
Fee or such other item which such funds had been earmarked to pay, and the
obligation of the General Partners to advance such amount under this
Section 6.11 shall be satisfied to the extent of such application.
6.12 Certain Payments to the General Partners and Others
(a) In consideration of their consultation, advice and other services
in connection with the construction and development of the Apartment Complex,
the Partnership agreed to pay to the General Partners (or their designee) a
construction and development fee (the "Construction and Development Fee") in
the principal amount of $546,019 which fee shall be earned in full as of the
Completion Date. The Construction and Development Fee and any interest
accrued thereon shall be paid at the Admission Date from the proceeds of
General Partner Capital Contributions. Any portion of the Construction and
Development Fee which shall not have been paid as of the date which is six
months after it shall have been earned shall accrue interest at the Applicable
Federal Rate in effect at the time earned from the date earned through the
date of payment.
(b) The Partnership shall pay to BCAMLP 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 the lesser of (i) $3,500 or
(ii) one-half of one per cent (0.5%) of the Aggregate Cost of the Apartment
Complex. The Asset Management Fee shall be payable from Cash Flow in the
manner and priority set forth in Section 10.2(a). 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 Partners
to BCAMLP or an Affiliate thereof from their own funds.
(c) The Partnership shall pay to the General Partners a non-cumulative
fee (the "Annual Partnership Management Fee") commencing in 1997 for their
services in connection with the administration of the day to day business of
the Partnership in an annual amount equal to the lesser of (i) $5,000 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 of the Partnership shall be payable from Cash Flow in
the manner and priority set forth in Section 10.2(a).
(d) The Partnership shall pay to the General Partners a non-cumulative
fee (the "Management Incentive Fee") commencing in 1997 for their services in
planning, supervising and developing a marketing program for the Apartment
Complex in an amount equal to 60% of available Cash Flow which will be paid in
the manner and priority set forth in Section 10.2(a).
(e) The Partnership shall pay to the Missouri Limited Partner or an
Affiliate thereof a fee (the "Missouri Asset Management Fee") commencing in
1997 for its services in connection with the Partnership's accounting matters
relating to the Missouri Limited Partner and assisting with the preparation of
tax returns and reports required by Section 12.7 in the annual amount of the
lesser of (i) $1,500 or (ii) one-half of one percent (0.5%) of the Aggregate
Cost of the Apartment Complex. The Missouri Asset Management Fee shall be
payable from Cash Flow in the manner and priority set forth in Section
10.2(a). To the extent Cash Flow in any year is insufficient to pay the
entire amount of the Missouri Asset Management Fee, the amount of such
deficiency shall be paid directly by the General Partners to the Missouri
Limited Partner or an Affiliate thereof from their own funds.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving hereunder, each
General Partner may from time to time, by an instrument in writing, delegate
all or any of his powers or duties hereunder to another General Partner or
General Partners.
Every contract, deed, mortgage, lease and other instrument executed by
any General Partner shall be conclusive evidence in favor of every Person
relying thereon or claiming thereunder that at the time of the delivery
thereof (a) the Partnership was in existence, (b) this Agreement had not been
amended in any manner so as to restrict the delegation of authority among
General Partners (except as shown in certificates or other instruments duly
filed in the Filing Office) and (c) the execution and delivery of such instru-
ment 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, the
Certificate and 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.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the Partnership (other than
by reason of death or adjudication of incompetence or insanity) or sell,
assign or encumber his or its interest without the Consent of the Investment
Limited Partner and all the other General Partners, except that if the Special
Limited Partner or a designee becomes a General Partner pursuant to Section
4.5(b) or Section 5.2(e), it shall not require the consent of any other
General Partner to transfer all or any portion of its interest as a General
Partner, other than as may be required under the Uniform Act. In the event of
any Withdrawal by a General Partner in violation of this Section 7.1, such
General Partner, in addition to being subject to any and all other legal
remedies which may be pursued by the Partners, shall forfeit to the Special
Limited Partner or its designee, such General Partner's Interest and all
unpaid fees from the Partnership and shall remain liable for all of the With-
drawing General Partner's obligations under this Agreement. In addition, upon
such Withdrawal and transfer, the Special Limited Partner or its designee
shall automatically become a General Partner without further action by the
Withdrawing General Partner or any other Partner, and each Partner hereby
consents to such transfer and to the admission of the Special Limited Partner
or its designee as a General Partner in such a situation. Such transfer shall
occur automatically upon such Withdrawal without further action by such
Withdrawing General Partner.
(b) The General Partners must have a net worth equal to at least
$50,000, of which not less than $25,000 constitutes liquid assets. If the
General Partners shall at any time fail to meet the requirements of this
Section 7.1(b), then they shall be deemed to have withdrawn from the
Partnership in violation of the provisions of this Section 7.1 and shall be
subject to the provisions of Section 7.1(a). Notwithstanding the foregoing,
the provisions of the Section 7.1(b) shall not apply to the Special Limited
Partner or its designee in the event it becomes the sole General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining General Partners
shall have the right and obligation to continue the business of the Partner-
ship employing its assets and name, all as contemplated by the Uniform Act.
Within 30 days after they obtain knowledge of the Withdrawal of a General
Partner, the remaining General Partners shall notify the Limited Partners of
such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is no remaining
General Partner, the Investment Limited Partner, the Special Limited Partner
and the Missouri Limited Partner may elect to reconstitute the Partnership and
continue the business of the Partnership for the balance of the term specified
in Section 2.4 by selecting a successor General Partner. The Missouri Limited
Partner hereby delegates to the Special Limited Partner the right to act on
its behalf in connection with this paragraph and hereby grants the Special
Limited Partner a power of attorney to act on its behalf in connection with
this Section 7.3. If the Investment Limited Partner and the Special Limited
Partner, acting on its own behalf and on behalf of the Missouri Limited
Partner, elect to reconstitute the Partnership pursuant to this Section 7.3
and admit the designated successor General Partner, the relationship among the
then Partners shall be governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in violation of
Section 7.1 and except as otherwise provided in Section 4.5(b), the With-
drawing General Partner hereby covenants and agrees to transfer to the
remaining General Partners or to a successor General Partner selected in
accordance with Section 7.3, as the case may be, such portion of the With-
drawing General Partner's Interest as such remaining or successor General
Partners may designate, such transfer to be made in consideration of the pay-
ment by the transferee of either the agreed value of such Interest, or if such
value is not agreed to, the fair market value of such Interest as determined
by a committee of three qualified real estate appraisers, one selected by the
Withdrawing General Partner, one selected by the transferee and a third
selected by the other two. The portion of the Withdrawing General Partner's
Interest designated to be transferred in accordance with the provisions of
this Section 7.4 shall be sufficient to ensure the continued treatment of the
Partnership as a partnership under the Code and as a limited partnership under
the Uniform Act, and, for the purposes of Article X, shall be deemed to be
effective as of the date of Withdrawal, but the Partnership shall not make any
distributions to the designated transferee until the transfer has been made.
Any holder of any portion of the Interest of a Withdrawing General Partner
which is not designated to be transferred to the remaining or successor
General Partners pursuant to the provisions of this Section 7.4 shall become
an Additional Limited Partner but (i) with the same share of the profits,
losses, tax credits, Cash Flow and other distributions to which the holder of
such Interest was entitled when held as a General Partner Interest, and (ii)
shall not participate in the votes or Consents of the Investment Limited
Partner hereunder. The admission of any successor or additional General
Partner shall be subject to the consent of each Agency (if required), the
consent of each Lender (if required) and the Consent of the Investment Limited
Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and dis-
tribution) or Section 8.1(b), no Limited Partner may assign all or any part of
its Interest without the written consent of the General Partners, the giving
or withholding of which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the General Partners,
may assign to any Person all or any portion of its economic benefits of
ownership of its 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, and shall only have, the right to receive the
share of allocations and distributions of the Partnership to which the
assigning Limited Partner would have been entitled with respect to the
Interest (or portion thereof) so assigned if no such assignment had been made
by such Limited Partner. Any assigning Limited Partner whose permitted
assignee becomes a Substituted Limited Partner shall thereupon cease to be a
Limited Partner and shall no longer have any of the rights or privileges of a
Limited Partner. Where the assignee does not become a Substituted Limited
Partner, the Partnership shall recognize such assignment not later than the
last day of the calendar month following receipt of notice of assignment and
all documentation required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further assignment of his Interest shall be
subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an assignee as
Limited Partner in its place. Subject to Section 8.3, the General Partners
may, however, in their sole discretion, permit an assignee to become a
Substituted Limited Partner. The consent of the General Partners to an
assignment of a Limited Partner Interest under Section 8.1 shall not, in and
of itself, constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such instrument or
instruments as shall be required by the General Partners to signify the
agreement of such Substituted Limited Partner to be bound by all the
provisions of this Agreement and shall pay the Partnership's reasonable legal
fees and filing costs in connection with its substitution as a Limited
Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would violate
Section 13.1.
(b) In no event shall all or any part of a Limited Partner Interest be
Disposed of to a minor (other than to a descendant by reason of death) or to
an incompetent.
(c) The General Partners may, in addition to any other requirement they
may impose, require as a condition of any Disposition that the transferor
(i) assume all costs incurred by the Partnership in connection therewith and
(ii) furnish them with an opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable federal and state
securities laws.
(d) Any sale, exchange, transfer or other Disposition in contravention
of any of the provisions of this Section 8.3 shall be void and ineffectual and
shall not bind or be recognized by the Partnership.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement including, but not limited to, the restrictions of Section 6.2, and
may be made from any source, including Partners and their Affiliates. Any
Partnership borrowings from any Partner shall be subject to the prior written
consent of each Agency (if required under applicable Agency regulations or
requirements) and each Lender (if required in its Mortgage documentation). If
any Partner shall lend any monies to the Partnership, the amount of any such
loan shall not be an increase of such Partner's Capital Contribution. If any
Partner shall so lend monies, such loans shall be an obligation of the
Partnership and (except for advances required by Section 6.11 and Subordinated
Loans) shall be repayable to such Partner on the same basis and with the same
rate of interest as would be applicable to a comparable loan to the
Partnership from a third party.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4 hereof, for each
Partnership fiscal year or portion thereof, (i) all profits, tax-exempt
income, losses, non-deductible non-capitalizable expenditures and Tax Credits
incurred or accrued on or after the Commencement Date, other than those
arising from a Capital Transaction, shall be allocated 99% to the Investment
Limited Partner and 1% to the General Partners and (ii) all Missouri Low-
Income Housing Tax Credits allocated on or after the Commencement Date shall
be allocated 100% to the Missouri Limited Partner. Notwithstanding the
foregoing however, to the extent that the Accountants, the Auditors, the Tax
Accountants and/or the Service reach the conclusion that the allocation of
100% of the Missouri Low-Income Housing Tax Credits to the Missouri Limited
Partner could lead to the allocation or distribution of any Partnership item
in a ratio different from that otherwise provided herein, the allocation of
the Missouri Low-Income Housing Tax Credits shall be altered so as to
eliminate any such effect upon the allocation or distribution of any other
Partnership item.
(b) Except as otherwise specifically provided in this Article, all
profits and losses arising from a Capital Transaction shall be allocated to
the Partners as follows:
As to profits:
First, an amount of profit equal to the aggregate negative balances (if
any) in the Capital Accounts of all Partners having negative balance Capital
Accounts shall be allocated to such Partners in proportion to their negative
Capital Account balances until all such Capital Accounts shall have zero
balances; and
Second, an amount of profits shall be allocated to each of the Partners
until the positive balance in the Capital Account of each Partner equals, as
nearly as possible, the amount of cash which would be distributed to such
Partner if the aggregate amount in the Capital Accounts of all Partners were
cash available to be distributed in accordance with the provisions of Clauses
Second, Third, Sixth Seventh, Eighth, Ninth, Tenth and Eleventh of Section
10.2(b).
As to losses:
First, an amount of losses equal to the aggregate positive balances (if
any) in the Capital Accounts of all Partners having positive balance Capital
Accounts shall be allocated to such Partners in proportion to their positive
Capital Account balances until all such Capital Accounts shall have zero
balances; provided, however, that if the amount of losses to be so allocated
is less than the sum of the positive balances in the Capital Accounts of those
Partners having positive balances in their Capital Accounts, then such losses
shall be allocated to the Partners in such proportions and in such amounts so
that the Capital Account balances of each Partner shall equal, as nearly as
possible, the amount such Partner would receive if an amount equal to the
excess of (a) the sum of all Partners' balances in their Capital Accounts
computed prior to the allocation of losses under this clause First over
(b) the aggregate amount of losses to be allocated to the Partners pursuant to
this clause First were distributed to the Partners in accordance with the
provisions of Clauses Second, Third, Sixth, Seventh, Eighth, Ninth, Tenth and
Eleventh of Section 10.2(b).; and
Second, the balance, if any, of such losses shall be allocated 1% to the
General Partners and 99% to the Investment Limited Partner.
(c) Notwithstanding the foregoing provisions of Sections 10.1(a) and
10.1(b), in no event shall any losses be allocated to the Investment Limited
Partner, the Missouri Limited Partner, the Special Limited Partner or any
additional General Partner admitted pursuant to Section 4.5(b) or Section
5.2(e), if and to the extent that such allocation would cause, as of the end
of the Partnership taxable year, the negative balance in such Partner's
Capital Account to exceed such Partner's share of Partnership Minimum Gain
plus such Partner's share, if any, of Partner Non-Recourse Debt Minimum Gain.
Any losses which are not allocated to a Partner by virtue of the application
of this Section 10.1(c) shall be allocated to the General Partners, excluding
any General Partner admitted pursuant to Section 4.5(b) or Section 5.2(e).
For purposes of this Section 10.1(c), a Partner's Capital Account shall be
treated as reduced by Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Lender and Agency approval (if required), Cash Flow for each
fiscal year or portion thereof of the Partnership shall be applied in the
following priority:
First, $5,000 to the pro rata payment of the Asset Management Fee for
such year and the Missouri Asset Management Fee for such year;
Second, an annual payment in an amount to be determined by the General
Partners may be applied to reduce the outstanding balance of the First
Mortgage;
Third, to the repayment of the principal amount of any Subordinated
Loans;
Fourth, to the payment of the Annual Partnership Management Fee for such
year;
Fifth, 60% of remaining Cash Flow shall be applied toward the payment of
the Management Incentive Fee for such year; and
Sixth, the balance thereof, if any, shall be distributed annually,
within 75 days after the end of the fiscal year, 20% to the Investment Limited
Partner and 80% to the General Partners; provided, however, that during such
time as any Agency and Lender regulations are applicable to the Apartment
Complex, the total amount of Cash Flow which may be so distributed to the
Partners in respect to any fiscal year shall not exceed such amounts as any
Agency and Lender regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine from time
to time that cash is available for distribution from a Capital Transaction,
such cash shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the Part-
nership (including, but not limited to, all expenses of the Partnership inci-
dent to the Capital Transaction and costs, fees, and commissions incident to
the sale of the Apartment Complex), excluding (i) debts and liabilities of the
Partnership to Partners or their Affiliates and (ii) all unpaid fees owing to
the General Partners or their Affiliates and; to the establishment of any
reserves which the General Partners and the Accountants shall deem reasonably
necessary for contingent, unmatured or unforeseen liabilities or obligations
of the Partnership;
Second, to the payment to the Investment Limited Partner of the full
amount (including interest) of any Federal Credit Recovery Loans;
Third, to the payment of the Missouri Limited Partner of the full amount
(including interest) of any Missouri Credit Recovery Loans;
Fourth, to the repayment of any Subordinated Loans, including the
interest, if any, thereon;
Fifth, to the repayment of any then-unpaid debts and liabilities owed to
Partners or Affiliates thereof by the Partnership for Partnership obligations
(exclusive of Federal Credit Recovery Loans, Missouri Credit Recovery Loans
and Subordinated Loans) to any of them; provided, however, that any debts or
obligations to be repaid to the Investment Limited Partner, the Special
Limited Partner or Affiliate of either of them pursuant to this Clause Fifth
shall be repaid prior to the repayment of any such debts or obligations to any
other Partner or Affiliate thereof;
Sixth, to the Investment Limited Partner in an amount equal to the
amount of all federal, state and local taxes attributable to such Capital
Transaction;
Seventh, to the payment to the General Partners of their respective
Invested Amounts minus any prior distributions made to them under this Clause
Seventh or pursuant to Section 10.2(c), but never an amount less than zero;
Eighth, to the payment of the Investment Limited Partner and the Special
Limited Partner of their respective Invested Amounts minus any prior
distributions made to them under this Clause Eighth, but never an amount less
than zero;
Ninth, to the payment of the Missouri Limited Partner of its Invested
Amount minus any prior distributions made to it under this Clause Ninth, but
never an amount less than zero;
Tenth, except in the case of a Capital Transaction which constitutes a
refinancing, to each Partner in an amount equal to the positive balance, if
any, in each Partners' Capital Account, after the payments described in Clause
First through Ninth of this Section 10.2(b) and the allocations in
Section 10.1(b) relating to these payments; and
Eleventh, any balance 24.99% to the Investment Limited Partner, .01% to
the Special Limited Partner, 74.99% to the General Partners and .01% to the
Missouri Limited Partner.
(c) Special Distribution
The Partnership shall make a special cash distribution to the General
Partners which will be paid $49,999 from the proceeds of the Second
Installment and $10,000 from the proceeds of the Third Installment. The
special cash distribution shall be treated as a distribution pursuant to
Section 731 of the Code.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership, the remaining
assets of the Partnership shall be distributed to the Partners in accordance
with the positive balances in their Capital Accounts after taking into account
all Capital Account adjustments for the Partnership taxable year, including
adjustments to Capital Accounts pursuant to Sections 10.1(b) and 10.3(b). In
the event that a General Partner or the Additional Limited Partner has a
negative balance in its Capital Account following the liquidation of the Part-
nership or such Partner's Interest, after taking into account all Capital
Account adjustments for the Partnership taxable year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount equal to
the negative balance in such Partner's Capital Account. Such payment shall be
made by the end of such taxable year (or, if later, within 90 days after the
date of such liquidation) and shall, upon liquidation of the Partnership, be
paid to recourse creditors of the Partnership or distributed to other Partners
in accordance with the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Partnership immediately prior to the liquidation or
other distribution event; and (ii) such profits and losses shall be allocated
to the Partners in accordance with Section 10.1(b), and any property so
distributed shall be treated as a distribution of an amount in cash equal to
the excess of such fair market value over the outstanding principal balance of
and accrued interest on any debt by which the property is encumbered. For the
purposes of this Section 10.3(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market value of such
assets, taking into account the fair market value of the associated financing
(but subject to Section 7701(g) of the Code), and the Partnership's adjusted
basis for such assets as determined under Regulation Section 1.704-1(b). This
Section 10.3(b) is merely intended to provide a rule for allocating unrealized
gains and losses upon liquidation or other distribution event, and nothing
contained in this Section 10.3(b) or elsewhere herein is intended to treat or
cause such distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be selected by the
General Partners with the Consent of the Investment Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all profits, tax-
exempt income, losses, non-deductible non-capitalizable expenditures, tax
credits and cash distributions shared by a class of Partners shall be shared
by each such Partner in such class in the ratio of such Partner's paid-in
Capital Contribution to the paid-in Class Contribution of the class of
Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or Partner
Non-Recourse Debt (including, without limitation, Subordinated Loans) or
(b) the Partnership incurs losses from extraordinary events which are not
recovered from insurance or otherwise (collectively "Recourse Obligations") in
respect of any Partnership taxable year, then the calculation and allocation
of profits and losses shall be adjusted as follows: first, an amount of
deductions attributable to the Recourse Obligations shall be allocated to the
General Partners; and second, the balance of such deductions shall be
allocated as provided in Section 10.1(a).
(ii) If any profit arises from the sale or other disposition of any
Partnership asset which shall be treated as ordinary income under the
depreciation recapture provisions of the Code, then the full amount of such
ordinary income shall be allocated among the Partners in the proportions that
the Partnership deductions from the depreciation giving rise to such recapture
were actually allocated. In the event that subsequently-enacted provisions of
the Code result in other recapture income, no allocation of such recapture
income shall be made to any Partner who has not received the benefit of those
items giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase money indebtedness
in partial payment of the purchase price of the Apartment Complex and such
indebtedness is distributed to the Partners pursuant to the provisions of
Section 10.2(b) or Section 10.3, the distributions of the cash portion of such
purchase price and the principal amount of such purchase money indebtedness
hereunder shall be allocated among the Partners in the following manner: On
the basis of the sum of the principal amount of the purchase money
indebtedness and cash payments received on the sale (net of amounts required
to pay Partnership obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds distributable to each
class of Partners based on Section 10.2(b) or Section 10.3, as applicable,
treating cash payments and purchase money indebtedness principal inter-
changeably for this purpose, and the respective classes shall receive such
respective percentages of the net cash purchase price and purchase money
principal. Payments on such purchase money indebtedness retained by the
Partnership shall be distributed in accordance with the respective portions of
principal allocated to the respective classes of Partners in accordance with
the preceding sentence, and if any such purchase money indebtedness shall be
sold, the sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset which
has a variation between its basis computed in accordance with Treasury
Regulation Section 1.704-1(b) and its basis computed for federal income tax
purposes shall be shared among the Partners so as to take account of such
variation in a manner consistent with the principles of Section 704(c) of the
Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement shall mean
income and losses, and each item of income, gain, loss, deduction or credit
entering into the computation thereof, as determined in accordance with the
accounting methods followed by the Partnership and computed in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv). Profits and losses for federal
income tax purposes shall be allocated in the same manner as set forth in this
Article X, except as provided in Section 10.4(b)(iv).
(vi) If there is a net decrease in Partnership Minimum Gain during a
Partnership taxable year, each Partner will be allocated items of income and
gain for such year (and, if necessary, subsequent years) in proportion to, and
to the extent of, an amount equal to such Partner's share of the net decrease
in Partnership Minimum Gain during the year, before any other allocation of
Partnership items for such taxable year. A Partner shall not be subject to
this mandatory allocation of income or gain to the extent that any of the
exceptions provided in Treasury Regulation Section 1.704-2(f)(2)-(5) applies.
All allocations pursuant to this Section 10.4(b)(vi) shall be in accordance
with Treasury Regulation Section 1.704-2(f). This provision is a "minimum
gain chargeback" within the meaning of Treasury Regulation 1.704-2(f) and
shall be construed so as to be interpreted as such.
(vii) If there is a net decrease in Partner Non-Recourse Debt Minimum
Gain during a Partnership taxable year, then each Partner with a share of the
minimum gain attributable to such debt at the beginning of such year will be
allocated items of income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of the net
decrease in Partner Non-Recourse Debt Minimum Gain during the year. A Partner
is not subject to this Partner Non-Recourse Debt Minimum Gain chargeback to
the extent that any of the exceptions provided in Treasury Regulation Section
1.704-2(h)(4) applied consistently with Treasury Regulation Section 1.704-
2(f)(2)-(5) applies. Such allocations shall be made in a manner consistent
with the requirements of Treasury Regulation Section 1.704-2(i)(4) under
Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an allocation
of loss or deduction or expenditures described in Section 705(a)(2)(B) of the
Code made (1) pursuant to Section 704(e)(2) of the Code to a donee of an
Interest, (2) pursuant to Section 706(d) of the Code as the result of a change
in any Partner's Interest, or (3) pursuant to Regulation
Section 1.751-1(b)(2)(ii) as a result of a distribution by the Partnership of
unrealized receivables or inventory items or (b) a distribution, and such
allocation and/or distribution would cause the negative balance in such
Partner's Capital Account to exceed (i) such Partner's share of Partnership
Minimum Gain plus (ii) the amount of such Partner's obligation, if any, to
restore a negative balance in such Partner's Capital Account plus (iii) such
Partner's share of Partner Non-Recourse Debt Minimum Gain with respect to
which such Partner or a Related Person to such Partner bears the Economic Risk
of Loss, then such Partner shall be allocated items of income and gain in an
amount and manner sufficient to eliminate such negative balance as quickly as
possible. For purposes of this Section 10.4(b)(viii), a Partner's Capital
Account shall be treated as reduced by Qualified Income Offset Items.
(ix) In the event that any fee payable to 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.
(x) In applying the provisions of Article X with respect to distri-
butions and allocations, the following ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by Qualified Income
Offset Items.
(2) Capital Accounts shall be reduced by distributions of Cash Flow
under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions from Capital
Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain chargeback
under Section 10.4(b)(vi) or 10.4(b)(vii).
(5) Capital Accounts shall be increased by any qualified income offset
under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by allocations of profits under
Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of losses under
Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of losses under
Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of profits under
Section 10.1(b).
(xi) To the maximum extent permitted under the Code, allocations of
profits and losses shall be modified so that the Partners' Capital Accounts
reflect the amounts they would have reflected if adjustments required by
Sections 10.4(b)(vi), 10.4(b)(vii) and 10.4(b)(viii) had not occurred.
10.5 Authority of the General Partners to Vary Allocations to Preserve
and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's distributive
share of profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) shall be determined and allocated
in accordance with this Agreement to the fullest extent permitted by Section
704(b) of the Code. In order to preserve and protect the determinations and
allocations provided for in this Agreement, the General Partners are hereby
authorized and directed to allocate profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items thereof)
arising in any year differently than otherwise provided for in this Agreement
to the extent that allocating profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item thereof) in
the manner provided for herein would cause the determinations and allocations
of each Partner's distributive share of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures or credits (or any item thereof)
not to be permitted by Section 704(b) of the Code and the Treasury Regulations
promulgated thereunder. Any allocation made pursuant to this Section 10.5
shall be deemed to be a complete substitute for any allocation otherwise
provided for in this Agreement, and no amendment of this Agreement or approval
of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under Sec-
tion 10.5(a), the General Partners are authorized to act only after having
been advised in writing by the Tax Accountants that, under Section 704(b) of
the Code, (i) the New Allocation is necessary, and (ii) the New Allocation is
the minimum modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the then-current year
or in any preceding year, each Partner's distributive share of profits, tax-
exempt income, losses, non-deductible non-capitalizable expenditures and
credits (or any item thereof) is determined and allocated in accordance with
this Agreement to the fullest extent permitted by Section 704(b) of the Code
and the Treasury Regulations thereunder.
(c) If the General Partners are required by Section 10.5(a) to make any
New Allocation in a manner less favorable to the Limited Partners than is
otherwise provided for herein, then the General Partners are authorized and
directed, only after having been advised in writing by the Tax Accountants
that such an allocation is permitted by Section 704(b) of the Code, to allo-
cate profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and any item thereof) arising in later years in such
manner so as to bring the allocations of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures and credits (and each item
thereof) to the Limited Partners as nearly as possible to the allocations
thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under Section 10.5(a)
and Section 10.5(c) in reliance upon the advice of the Tax Accountants shall
be deemed to be made pursuant to the fiduciary obligation of the General Part-
ners to the Partnership and the Limited Partners, and no such allocation shall
give rise to any claim or cause of action by any Limited Partner.
ARTICLE XI
Management Agent
A. Subject to Article XI.C., the General Partners shall have the
exclusive right to engage the Management Agent (which may be a General Partner
or an Affiliate thereof if approved by each Agency and each Lender whose
approval is required) 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 each Agency and each Lender whose approval is required or, if the
amount of the Management Fee is not subject to Agency regulation or Lender
approval, in accordance with a reasonable and competitive fee arrangement, but
in no event shall the Management Fee exceed eight per cent (8%) of the gross
rental income from the Apartment Complex without the Consent of the Investment
Limited Partner. From and after the Admission Date, the Partnership shall not
enter into any Management Agreement or modify or extend any Management
Agreement unless (i) the General Partners shall have obtained the prior
written consent of the Special Limited Partner to the identity of the
Management Agent and the terms of the Management Agreement or the modification
or extension thereof and (ii) such new Management Agreement or modified or
extended Management Agreement has a term which does not exceed one year and
provides that it is terminable by the Partnership on thirty (30) days' notice
by the Partnership in the event of any change in the identity of the General
Partners.
B. Notwithstanding the foregoing, however, should the Investment
General Partner or an Affiliate thereof perform property management services
for the Partnership, property management, rent-up or leasing fees shall be
paid to the Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser of (i) fees
competitive in price and terms with those of non-affiliated Persons rendering
comparable services in the locality where the Apartment Complex is located and
which could reasonably be available to the Partnership, or (ii) 5% of the
gross revenues of the Apartment Complex. No duplicate property management
fees shall be paid to any Person.
C. If (i) the Management Agent is a General Partner or an Affiliate
of a General Partner, and the Apartment Complex shall be subject to a
substantial building code violation which shall not have been cured within six
months after notice from the applicable governmental agency or department, or
(ii) an Event of Bankruptcy shall occur with respect to the Management Agent,
or (iii) the Management Agent shall commit willful misconduct or gross
negligence in its conduct of its duties and obligations under the Management
Agreement, or (iv) there is any change in the identity of the General
Partners, or (v) the Management Agent is cited by any governmental agency,
including any Tax Credit monitoring or compliance agency of the State, for a
violation or alleged violation of any applicable rules, regulations or
requirements, including, but not limited to, non-compliance with the Minimum
Set-Aside Test, the Rent Restriction Test or any other Tax Credit-related
provision, then, upon request by the Special Limited Partner and subject to
Agency approval, if required, the General Partners must cause the Partnership
to promptly terminate the Management Agreement with the Management Agent and
appoint a new Management Agent selected by the Special Limited Partner, which
new Management Agent shall not be an Affiliate of a General Partner. Each
General Partner hereby grants to the Special Limited Partner an irrevocable
(to the extent permitted by applicable law) power of attorney coupled with an
interest to take any action and to execute and deliver any and all documents
and instruments on behalf of such General Partner and the Partnership as the
Special Limited Partner may deem to be necessary or appropriate in order to
effectuate the provisions of this Article XI.C. Subject to Agency and Lender
approval, if required, the Partnership shall not enter into any future
management arrangement unless such arrangement is terminable upon the
occurrence of the events described in this Article XI.
D. The General Partners shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
E. This Article XI is subject to all restrictions and limitations set
forth in Section 13.8.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are required
under the Uniform Act or by any governmental agency having jurisdiction and
may maintain such other books and records as the General Partners in their
discretion deem advisable. Every Limited Partner, or its duly authorized
representatives, shall at all times have access to the records of the
Partnership at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records. A list of the
names and addresses of all of the Limited Partners shall be maintained as part
of the books and records of the Partnership and shall be mailed to any Limited
Partner upon request. A reasonable charge for copy work may be charged by the
Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General Partners
shall determine. Withdrawals shall be made only in the regular course of
Partnership business on such signature or signatures as the General Partners
may determine. All deposits (including security deposits and other funds
required to be escrowed by any Lender) and other funds not needed in the
operation of the business shall be deposited, if required by applicable law
and to the extent permitted by applicable Agency or Mortgage requirements and
applicable State law, in interest-bearing accounts or invested in United
States Government obligations maturing within one year. The General Partners
shall not be obligated to maximize the interest rates received on Partnership
funds.
12.3 Accountants and Auditors
(a) The Accountants shall prepare, for execution by the General
Partners, all tax returns of the Partnership. Prior to the filing of the
Partnership tax returns, and in no event later than February 15th of each
year, the Accountants shall deliver the tax returns for such year to the Tax
Accountants for their review and comment. If a dispute arises between the
Accountants and the Tax Accountants over the proper preparation of the tax
returns and such dispute cannot be resolved by March 1 of such year, then the
Tax Accountants shall make the final decision on whether any changes are
necessary. The Partnership shall reimburse BCAMLP for all costs and expenses
paid to the Tax Accountants for the aforementioned services arising as a
result of such a dispute.
(b) The Auditors (who may also be the Accountants) shall audit and
certify all annual financial reports to the Partners in accordance with
generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations under
Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time periods set
forth therein, at any time thereafter upon notice from the Special Limited
Partner that a change in the identity of the Auditors is desired, the General
Partners, on behalf of the Partnership, shall promptly terminate the
Partnership's engagement of the Auditors, and the prior written consent of the
Special Limited Partner must be received to the appointment of replacement
Auditors. If no such consent is received to the appointment of replacement
Auditors within thirty (30) days of the notice from the Special Limited
Partner to replace the Auditors, then the Special Limited Partner shall
appoint replacement Auditors of its own choosing, the cost of which shall be
borne by the Partnership as a Partnership expense. All Partners hereby grant
to the Special Limited Partner a special power of attorney, irrevocable to the
extent permitted by law, coupled with an interest, to so appoint replacement
Auditors and to do anything else which in the view of the Special Limited
Partner may be necessary or appropriate to accomplish the purposes of this
Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost recovery
deductions are permitted, the Partnership shall elect to use, so far as per-
mitted 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. Notwithstanding the foregoing,
however, unless the Consent of the Investment Limited Partner is received
permitting a different cost recovery schedule, the Partnership shall
depreciate its personal and real property utilizing the alternative
depreciation system of Section 168(g)(2) of the Code.
(b) Subject to the provisions of Section 12.5, all other elections
required or permitted to be made by the Partnership under the Code shall be
made by the General Partners in such manner as will, in the opinion of the
Accountants, 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 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 and/or a holder of beneficial assignee certificate thereof.
Each Partner will furnish the Partnership all information necessary to give
effect to such election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the calendar year.
The books of the Partnership shall be kept on an accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and distributed to
all Persons who were Partners at any time during a fiscal year of the Part-
nership:
(i) Within forty-six (46) days after the end of each fiscal year of
the Partnership, (A) a balance sheet as of the end of such fiscal year, a
statement of income, a statement of partners' equity, and a statement of cash
flows, each for the year then ended, all of which, except the Cash Flow
statement, shall be prepared in accordance with generally accepted accounting
principles and accompanied by a report of the Auditors containing an opinion
of the Auditors, and (B) a report of the activities of the Partnership during
the period covered by the report. With respect to any distribution to the
Investment Limited Partner, the report called for shall separately identify
distributions from (1) Cash Flow from operations during the period, (2) Cash
Flow from operations during a prior period which had been held as reserves,
(3) proceeds from disposition of property and investments, (4) lease payments
on net leases with builders and sellers, (5) reserves from the gross proceeds
of the Capital Contribution of the Investment Limited Partner, (6) borrowed
monies, and (7) transactions outside of the ordinary course of business with a
description thereof.
(ii) Within forty-five (45) days after the end of each fiscal year of
the Partnership, all information which is necessary, in view of the Tax
Accountants, for the preparation of the Limited Partners' federal income tax
returns.
(iii) Within forty-five (45) days after the end of each quarter of a
fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income and expenses for the quarter then
ended, which may be unaudited, in the form specified by BCAMLP;
(C) a statement of cash flows for the quarter then ended, which
may be unaudited;
(D) a low-income housing credit monitoring form, rent rolls and
occupancy/rental report in the form specified by BCAMLP; and
(E) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities during
the quarter covered by the report.
(iv) Within the latest of (a) forty-five (45) days after the end of
each fiscal year of the Partnership or (b) within two (2) weeks of receipt by
the Partnership from MHDC, a copy of the annual report on Form(s) 8609 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 and any reports filed in
connection with the compliance monitoring conducted by MHDC on behalf of the
State.
(b) Upon the written request of the Investment Limited Partner for
further information with respect to any matter covered in item (a) above, the
General Partners shall furnish such information within thirty (30) days of
receipt of such request to the extent that the General Partners possess the
information or can acquire it without unreasonable effort or expense.
(c) Prior to October 15 of each year, the Partnership shall send to
the Investment Limited Partner an estimate of the Investment Limited Partner's
share of the tax credits, profits and losses of the Partnership for federal
income tax purposes for the current fiscal year. Such estimate shall be pre-
pared by the General Partners and the Auditors.
(d) Within ninety (90) days after the end of each fiscal year of the
Partnership, the General Partners shall provide to the Limited Partners:
(i) a certification from the General Partners that (A) all
Mortgage payments payable and all taxes and insurance with respect to
the Apartment Complex are current as of the date of the year-end report,
(B) there is no default under the Project Documents or this Agreement,
or if there is any such default, a detailed description thereof, and
(C) there is no building, health or fire code violation or similar
violation of a governmental law, ordinance or regulation against the
Apartment Complex or, if there is any such violation, a detailed
description thereof; and
(ii) a descriptive statement of all transactions during the
fiscal year between the Partnership and General Partners or any
Affiliate thereof, including the nature of the transaction and the
payments involved.
(e) Within 15 days after the end of any calendar quarter during which:
(i) there is a material default by the Partnership under the Project
Documents or in payment of any mortgage, taxes, interest or other obligation
on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by application of funds
therein for purposes materially different from those for which such reserve
was established,
(iii) any General Partner has received any notice of a material fact
which may substantially affect further distributions, or
(iv) any Partner has pledged or collateralized its Interest in the
Partnership,
the General Partners shall send the Limited Partners a detailed report of such
event.
(f) After the Admission Date, the Partnership shall send to the
Investment Limited Partner, on or before the tenth day of each month, the
monthly housing credit monitoring form in a form prescribed by BCAMLP, as well
as copies of all applicable periodic reports covering the status of project
operations from the previous period, as may be required by MHDC.
(g) On or before ninety (90) days after the expiration of each fiscal
year of a General Partner, such General Partner shall send to the Investment
Limited Partner copies of the balance sheet and income statement of such
General Partner for such fiscal year, which financial statements shall be
audited by an independent certified public accountant.
(h) The General Partner shall cause the Partnership to send to the
Investment Limited Partner a copy of each Mortgage draw requisition and any
notification or correspondence from any Lender indicating that any such draw
will not be paid as requisitioned. Promptly upon receipt, the Partnership
shall send to the Investment Limited Partner copies of all documents
evidencing any "carryover allocation" pursuant to Section 42(h)(1)(E) of the
Code and the Form(s) 8609 evidencing the Tax Credit allocation. Promptly
after Permanent Mortgage Commencement, the General Partners shall send to
BCAMLP closing binders containing photocopies of the fully-executed versions
of all documents signed in connection with the Mortgages. The General
Partners hereby consent to any governmental agency's providing BCAMLP with
copies of all material communications between any such office and the General
Partners and/or the Partnership, including, but not limited to, any notices of
default. From and after any date upon which the General Partners receive
notice from the Investment Limited Partner that the Investment Limited Partner
would like copies of the monthly rent rolls for the Apartment Complex to be
sent to BCAMLP, the General Partners shall send copies of the rent rolls to
BCAMLP no later than ten (10) days after the expiration of each month.
(i) If the earlier of (A) the Completion Date or (B) the date upon
which tenants first occupied apartment units in the Apartment Complex shall
have occurred six months or more prior to the date upon which the Investment
Limited Partner acquired its Interest in the Partnership, then the General
Partners shall cause to be prepared and delivered to the Investment Limited
Partner within 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 and (B) the date upon which the Investment Limited Partner
acquired its Interest in the Partnership.
(j) If the General Partners do not cause the Partnership to fulfill
its obligations under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within
forty-six (46) days after the end of any fiscal year of the Partnership, the
General Partners shall pay as damages the sum of $100 per day to the
Investment Limited Partner until such obligations shall have been fulfilled;
provided, however, that the Investment Limited Partner may waive any such
monetary penalty if the failure of the Partnership to fulfill its reporting
obligations is attributable to force majeure. Such damages shall be paid
forthwith by the General Partners, and failure to so pay shall constitute a
material default of the General Partners hereunder. In addition, if the
General Partners shall so fail to pay, the General Partners shall forthwith
cease to be entitled to the Annual Partnership Management Fee, the Management
Incentive Fee and to the payment of any Cash Flow or Capital Transaction
proceeds to which they may otherwise be entitled hereunder. Such payments of
the Annual Partnership Management Fee, Cash Flow and Capital Transaction
proceeds shall be restored only upon the payment of such damages in full, and
any amount of such damages not so paid shall be deducted against payments of
the Annual Partnership Management Fee, the Management Incentive Fee, Cash Flow
and Capital Transaction proceeds otherwise due to the General Partners.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly to and
paid by the Partnership.
(b) Except in extraordinary circumstances, neither the Investment
General Partner nor any Affiliate thereof shall be permitted to contract or
otherwise deal with the Partnership for the sale of goods or services or the
lending of money to the Partnership or the General Partners, except for (i)
management services, subject to the restrictions set forth in Article XI.B.,
(ii) loans made by, or guaranteed by, the Investment General Partner or any of
its Affiliates, and (iii) those dealings, contracts or provision of services
described in the Investment Partnership Agreement or the Prospectus.
Extraordinary circumstances shall only be presumed to exist where there is an
emergency situation requiring immediate action and the services required are
not immediately available from unaffiliated parties. All services rendered
under such circumstances must be rendered pursuant to a written contract which
must contain a clause allowing termination without penalty on sixty (60) days'
notice. Goods and services provided under such circumstances must be provided
at the lesser of actual cost or the price charged for such goods or services
by independent parties.
(c) In the event extraordinary circumstances arise, the Investment
General Partner and its Affiliates may provide construction services in
connection with the Apartment Complex. Neither the Investment General Partner
nor any of its Affiliates shall provide such services unless it believes it
has adequate staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing business in which it
has previously engaged, independent of the activities of the Investment
Limited Partner. Any such services must be reasonable for and necessary to
the Investment Limited Partner, actually furnished to the Investment Limited
Partner, and provided at the lower of 10% of the construction contract rate
with respect to the Apartment Complex or 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 rate cost of personnel, including an
allocation of overhead directly attributable to such personnel, based on the
amount of time such personnel spent on such services or other method of
allocation acceptable to the accountants for the Investment Limited Partner.
(d) All services provided by the Investment General Partner or any
Affiliate thereof pursuant to Section 12.8(c) must be rendered pursuant to the
Investment Partnership Agreement or a written contract which precisely
describes the services to be rendered and all compensation to be paid and
shall contain a clause allowing termination without penalty upon sixty (60)
days' notice to the Investment General Partner by a vote of a majority in
interest of the limited partners and assignees of beneficial interests in the
Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership to the
Investment General Partner or its Affiliates except as described in the
Investment Partnership Agreement or in the Prospectus.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be Disposed of,
when added to the total of all other Interests Disposed of within the period
of twelve consecutive months prior to the proposed date of the Disposition,
could, in the opinion of tax counsel to the Partnership, result in the ter-
mination of the Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the Investment Limited
Partner's Interest. Any Disposition in contravention of any of the provisions
of this Section 13.1 shall be void ab initio and ineffectual and shall not
bind or be recognized by the Partnership. Notwithstanding the foregoing
provisions of this Section 13.1, however, the Investment Limited Partner may
waive the provisions of this Section 13.1 at any time as to a Disposition or
series of Dispositions, and in the event of such a waiver, this Section 13.1
shall have no force or effect upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within 120 days after the end of any fiscal year in which the Investment
Limited Partner shall have received any distributions under Article X, the
General Partners shall file an amendment to the Certificate reducing by the
amount of its allocable share of such distribution the amount of Capital Con-
tribution 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 substituted Limited Partners, although
the General Partners may elect to do so more frequently. In the case of
assignments, where the assignee does not become a Substituted Limited Partner,
the Partnership shall recognize the assignment not later than the last day of
the calendar month following receipt of notice of assignment and all documen-
tation 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 Partners if the
Certificate is not required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing and shall
be deemed adequately given if actually delivered or if sent by registered or
certified mail, postage prepaid, to the party for whom such notice is intended
at such party's last address of record on the Partnership books. Notice shall
be deemed received upon actual receipt or, if receipt shall be refused, upon
refusal.
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 the masculine gender shall include the feminine and
neuter, and vice versa, unless the context otherwise requires. References to
"Sections" and "Articles" refer to Sections and Articles of this Agreement,
unless otherwise specified. References to any 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 exe-
cuted shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the same
counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each of the
provisions of this Agreement shall be subject to, and the General Partners
covenant to act in accordance with, the Project Documents; (b) the Project
Documents shall govern the rights and obligations of the Partners, their
heirs, executors, administrators, successors and assigns to the extent
expressly provided therein; (c) upon any dissolution of the Partnership or any
transfer of the Apartment Complex, no title or right to the possession and
control of the Apartment Complex and no right to collect the rent therefrom
shall pass to any Person who is not, or does not become, bound by the Project
Documents in a manner satisfactory to each Agency; (d) no amendment to any
provision of the Project Documents shall become effective without the prior
written consent of each Agency (if required); and (e) the affairs of the
Partnership shall be subject to Agency regulation, and no action shall be
taken which would require the consent or approval of any Agency unless the
prior consent or approval of such Agency shall have been obtained. No new
Partner shall be admitted to the Partnership, and no Partner shall withdraw
from the Partnership or be substituted for without the consent of each Agency
(if such consent is then required). No amendment to this Agreement relating
to matters governed by Agency regulations or requirements shall become
effective until the prior written consent of each Agency (if required) to such
amendment shall have been obtained.
Any conveyance or transfer of title to all or any portion of the
Apartment Complex required or permitted under this Agreement shall in all
respects be subject to all conditions, approvals and other requirements of
Agency rules and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable and
(a) if for any reason any provision is determined to be invalid, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid, or (b) if for any reason any provision would cause
the Investment Limited Partner or the Missouri Limited Partner to be bound by
the obligations of the Partnership (other than the rules and regulations of
any Agency and the requirements of any Lender), such provision or provisions
shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any article
or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only with the
Consent of the Investment Limited Partner and the prior written consent of the
Special Limited Partner.
13.12 Time of Admission
Each of the Investment Limited Partner, the Missouri Limited Partner and
the Special Limited Partner shall be deemed to have been admitted to the
Partnership as of the Commencement Date for all purposes of this Agreement,
including Article X; provided, however, that if regulations are issued under
the Code or an amendment to the Code is adopted which would require, in the
opinion of the Accountants, that the Investment Limited Partner, the Missouri
Limited Partner and/or the Special Limited Partner be deemed admitted on a
date other than as of the Commencement Date, then the General Partners shall
select a permitted admission date which is most favorable to such Limited
Partner(s).
WITNESS the execution hereof under seal as of the 1st day of January,
1997.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER:
/s/Timothy J. Butler
TIMOTHY J. BUTLER
GENERAL PARTNER:
MARY RYDER HOME
By:/s/Catherine A. Jones
Catherine A. Jones, Assistant Director
MISSOURI LIMITED PARTNER:
MIDWEST CAPITAL CORPORATION
By: /s/Pat Bess
Pat Bess, Vice President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX
CREDIT FUND IV L.P. (SERIES 25)
By: Boston Capital
Associates IV L.P.,
its general partner
By: C&M Associates d/b/a
Boston Capital Associates, its general
partner
By:/s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact for
John P. Manning,
Partner
SPECIAL LIMITED PARTNER:
BCTC 94, INC.
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, Attorney-In-
Fact for John P. Manning,
President
STATE OF MISSOURI )
) SS.
CITY OF ST. LOUIS )
BEFORE ME, the undersigned Notary Public in and for said City and State,
personally appeared the above-named Timothy J. Butler, known to me to be the
person who executed the foregoing instrument and, being duly sworn,
acknowledged that the statements therein are true and that he did sign the
same as his free act and deed.
WITNESS my hand and official seal this 31st day of January, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:___________
STATE OF MISSOURI )
) SS.
CITY OF ST. LOUIS )
BEFORE ME, the undersigned Notary Public in and for said City and State,
personally appeared the above-named Catherine A. Jones, known to me to be the
Assistant Director, of Mary Ryder Home, who, being duly sworn, acknowledged
that the statements therein are true and that she did sign the same as her
free act and deed and that the same is the duly authorized free act and deed
of Mary Ryder Home.
WITNESS my hand and official seal this 31st day of January, 1997.
_________________________________
Notary Public
_________________________________
Name (Printed)
My Commission Expires:__________
STATE OF MISSOURI )
) SS.
COUNTY OF BOONE )
BEFORE ME, the undersigned Notary Public in and for said County and
State personally appeared the above-named Pat Bess, known to me to be the Vice
President of Midwest Capital Corporation and the person who executed the
foregoing instrument and who being duly sworn acknowledged that the statements
therein are true and that she did sign the same as the duly authorized free
act and deed of Midwest Capital Corporation.
WITNESS my hand and official seal this 30th day of January, 1997.
_________________________________
Notary Public
_________________________________
Name (Printed)
My Commission Expires:__________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, as
Attorney-In-Fact for John P. Manning, known to me to be a Partner of C&M
Associates d/b/a Boston Capital Associates , the general partner of Boston
Capital Associates IV L.P., which is the general partner of Boston Capital Tax
Credit Fund IV L.P., who, being duly sworn, acknowledged that she did sign the
foregoing instrument, that the statements therein contained are true and that
the same is the duly authorized free act and deed of Boston Capital Tax Credit
Fund IV L.P.
WITNESS my hand and official seal this 30th day of January, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: __________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, Attorney-
In-Fact for John P. Manning, known to me to be the President of BCTC 94, Inc.,
who, being duly sworn, acknowledged that she did sign the foregoing
instrument, that the statements therein contained are true and that the same
is the duly authorized free act and deed of BCTC 94, Inc.
WITNESS my hand and seal this 30th day of January, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires: __________
M.R.H., L.P.
Schedule A
As of
January 1, 1997
Total Agreed-To Paid-In
General Partner Capital Contribution* Capital Contribution*
Mary Ryder Home $1,622,647.00
$1,622,647.00
4361 Olive Street
St. Louis, MO 63108
Missouri Limited Partner
Midwest Capital Corporation $277,327.00 $138,664.00
11000 South Airport Drive
P.O. Box 7688
Building No. 1, South Wing
Columbia, MO 65205
Special Limited Partner
BCTC 94, Inc. $10.00 $
10.00
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, MA 02108-4406
Investment Limited Partner
Boston Capital Tax $1,601,573.00 $795,787.00
Credit Fund IV L.P.
(Series 25)
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, MA 02108-4406
_________________
*Paid-In Capital Contribution as of the date of this Schedule A. Future
Installments of Capital Contribution, if any, 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. This Schedule A does not include
contingent obligations to fund additional capital contributions, including but
not limited to the obligations of the General Partners pursuant to Section
6.11.
M.R.H., L.P.
EXHIBIT A
LEGAL DESCRIPTION
The land is situated at 4361 Olive Street in the City of St. Louis, State of
Missouri and is legally described as follows:
A tract of land in Block 4582 of the City of St. Louis being the same tract of
land shown on the "LOT BOUNDARY ADJUSTMENT PLAT" recorded in Plat Book 66 page
48 of the City of St. Louis Records and being more particularly described as
follows: Beginning at a point on the North line of Olive Street, 60 feet
wide, distant 117.00 feet East of its intersection with the East line of
Newstead Avenue, 60 feet wide; thence along a line parallel to the East line
of Newstead Avenue North 30 degrees 50 minutes 30 seconds East a distance of
152.50 feet to the South line of an alley, 20 feet wide; thence along the
South line of said alley South 59 degrees 12 minutes East a distance of 344.13
feet to a point distant 345.30 feet West of the West line of Pendleton Avenue,
60 feet wide; thence leaving said South line South 30 degrees 48 minutes West
a distance of 152.50 feet to the North line of Olive Street; thence along the
North line of Olive Street North 59 degrees 12 minutes West a distance of
344.25 feet to the point of beginning, containing 1.205 acres more or less.
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
_____________________________________
CERTIFICATION AND AGREEMENT
for
M.R.H., L.P.
____________________________________
CERTIFICATION AND AGREEMENT made as January 31, 1997, by M.R.H., L.P., a
Missouri limited partnership (the "Operating Partnership"); MARY RYDER HOME, a
Missouri not for profit corporation (the "Operating General Partner"); and THE
INSIGHT GROUP, INC., a Missouri corporation (the "Consultant") for the benefit
of BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited partnership (the
"Investment Partnership"), BCTC 94 , INC., a Delaware corporation (the
"Special Limited Partner"), BOSTON CAPITAL ASSOCIATES IV L.P., a Delaware
limited partnership (the "Investment General Partner"), MIDWEST CAPITAL
CORPORATION, a Missouri corporation (the "Missouri Limited Partner"),
PEABODY & BROWN, CRAIG A. VAN MATRE, P.C. ("Van Matre"), JOSEPH W. MOONEY,
III, Attorney At Law ("Mooney") and certain other persons or entities
described herein. The Investment Partnership, the Special Limited Partner and
the Missouri Limited Partner shall hereinafter be sometimes referred to
collectively as the "Limited Partners".
WHEREAS, the Operating Partnership proposes to admit the Limited
Partners as limited partners thereof pursuant to an Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of
January 1, 1997 (the "Operating Partnership Agreement") in accordance with
which the Investment Partnership will make a substantial capital contribution
to the Operating Partnership, the Special Limited Partner will make a $10
capital contribution to the Operating Partnership and the Missouri Limited
Partner will make a $277,327 capital contribution to the Operating
Partnership;
WHEREAS, the Limited Partners and the Investment General Partner have
relied upon certain information and representations described herein in
evaluating the merits of investment by the Limited Partners in the Operating
Partnership;
WHEREAS, Peabody & Brown, as counsel for the Investment Partnership, the
Special Limited Partner and the Investment General Partner, will rely upon
such information and representations in connection with its delivery of
certain opinions with respect to this transaction;
WHEREAS, Van Matre, as counsel for the Missouri Limited Partner, will
rely upon such information and representations in connection with its delivery
of certain opinions with respect to this transaction; and
WHEREAS, Mooney, as counsel for the Operating Partnership and the
Operating General Partner, will rely on such information and representations
in connection with its delivery of certain opinions with respect to this
transaction.
NOW, THEREFORE, to induce the Limited Partners to enter into the
Operating Partnership Agreement, and for $1.00 and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Operating Partnership, the Operating General Partner and the Consultant hereby
agree as follows for the benefit of the Limited Partners, the Investment
General Partner, Peabody & Brown, Van Matre, Mooney and certain other persons
hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership, the Operating General
Partner and the Consultant
The Operating Partnership, the Operating General Partner and the
Consultant jointly and severally represent, warrant and certify to the Limited
Partners, the Investment General Partner, Peabody & Brown, Van Matre and
Mooney that, with respect to the Operating Partnership, as of the date hereof:
1.01 The Operating Partnership is duly organized and in good
standing as a limited partnership pursuant to the laws of the state of its
formation with full power and authority to own its apartment complex (the
"Apartment Complex") and conduct its business; the Operating Partnership, the
Operating General Partner and the Consultant have the power and authority to
enter into and perform this Certification and Agreement; the execution and
delivery of this Certification and Agreement by the Operating Partnership, the
Operating General Partner and the Consultant have been duly and validly
authorized by all necessary action; the execution and delivery of this
Certification and Agreement, the fulfillment of its terms and consummation of
the transactions contemplated hereunder do not and will not conflict with or
result in a violation, breach or termination of or constitute a default under
(or would not result in such a conflict, violation, breach, termination or
default with the giving of notice or passage of time or both) any other
agreement, indenture or instrument by which the Operating Partnership, the
Operating General Partner or the Consultant is bound or any law, regulation,
judgment, decree or order applicable to the Operating Partnership, the
Operating General Partner or the Consultant or any of their respective
properties; this Certification and Agreement constitutes the valid and binding
agreement of the Operating Partnership, the Operating General Partner and the
Consultant, enforceable against each of them in accordance with its terms.
1.02 All factual information, including without limitation the
information set forth in Exhibit A hereto, provided to the Limited Partners,
the Investment General Partner or their affiliates either in writing or
orally, did not, at the time given, and does not, on the date hereof, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they are made. The
Operating General Partner has also delivered to the Limited Partners, the
Investment General Partner or their affiliates all documents and other
information which has been requested by such parties. Since the date of the
financial statements for the Operating General Partner previously delivered,
there has been no material adverse change in the financial position of the
Operating General Partner. The estimates of occupancy rates, operating
expenses and tax credits set forth on Exhibit A are reasonable in light of the
knowledge and experience of the Operating General Partner.
1.03 As of the date hereof, each of the representations contained
in Exhibit B attached hereto is true, accurate and complete as to each of the
Operating Partnership, the Operating General Partner and the Consultant and as
to any of their affiliates, any of their predecessors and their affiliates'
predecessors, any of their directors, officers, general partners and/or
beneficial owners of ten per cent (10%) or more of any class of their equity
securities (beneficial ownership meaning the power to vote or direct the vote
and/or the power to dispose or direct the disposition of such securities), as
the case may be, and any promoters presently connected with them in any
capacity.
1.04 Each of the representations and warranties contained in the
Operating Partnership Agreement is true and correct as of the date hereof.
1.05 Each of the covenants and agreements of the Operating
Partnership, the Operating General Partner and the Original Limited Partner
contained in the Operating Partnership Agreement has been duly performed to
the extent that performance of any covenant or agreement is required on or
prior to the date hereof.
1.06 All conditions to admission of the
Limited Partners as limited partners of the Operating Partnership contained in
the Operating Partnership Agreement have been satisfied.
1.07 No default has occurred and is
continuing under the Operating Partnership Agreement or any of the Project
Documents (as such term is defined in the Operating Partnership Agreement) for
the Operating Partnership.
1.08 The Operating General Partner agrees to take all actions
necessary to claim the Projected Credit, including, without limitation, the
filing of Forms 8609 with the Internal Revenue Service.
1.09 No person or entity other than the Operating Partnership
holds any equity interest in the Apartment Complex.
1.10 The Operating Partnership has the sole responsibility to pay
all maintenance and operating costs, including all taxes levied and all
insurance costs, attributable to the Apartment Complex.
1.11 The Operating Partnership, except to the extent it is
protected by insurance and excluding any risk borne by lenders, bears the sole
risk of loss if the Apartment Complex is destroyed or condemned or there is a
diminution in the value of the Apartment Complex.
1.12 No person or entity except the Operating Partnership has the
right to any proceeds, after payment of all indebtedness, from the sale,
refinancing, or leasing of the Apartment Complex.
1.13 The Operating General Partner is not related in any manner
to the Limited Partners, nor is the Operating General Partner acting as an
agent of the Limited Partners.
1.14 The Apartment Complex does not contain in a level above that
deemed safe by all applicable governmental agencies, any substance known to be
hazardous, such as hazardous waste, lead-based paint, asbestos, methane gas,
urea formaldehyde insulation, oil, toxic substances, underground storage
tanks, polychlorinated biphenals (PCBs), and radon; the Apartment Complex is
not affected by the presence of oil, toxic substances, or other pollutants
that could be a detriment to the Apartment Complex nor is the Operating
Partnership in violation of any local, state, or federal law or regulation;
and no violation of the Clean Air Act, Clean Water Act, Resource Conservation
and Recovery Act, Toxic Substance Control Act, Safe Drinking Water Control
Act, Comprehensive Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing. Neither the
Operating Partnership, the Operating General Partner nor the Original Limited
Partner has received any notice from any source whatsoever of the existence of
any such hazardous condition relating to the Apartment Complex or of any
violation of any local, state or federal law or regulation with respect to the
Apartment Complex.
1.15 The fair market value of the Apartment Complex exceeds the
total amount of indebtedness encumbering the Apartment Complex and is expected
to continue to do so throughout the term of such indebtedness.
1.16 The Apartment Complex is not in violation of any State or
local health or building code or regulation.
1.17 As of December 31, 1996, the Operating Partnership had a
basis in the Apartment Complex equal to at least 10% of its anticipated basis
in the Apartment Complex as of December 31, 1998, and, all buildings in the
Apartment Complex will be placed in service for purposes of Section 42 of the
Code not later than December 31, 1998.
1.18 The Apartment Complex does not receive assistance under the
HUD Section 8 Moderate Rehabilitation Program other than under the Stewart B.
McKinney Homeless Assistance Act of 1988.
1.19 The Apartment Complex is located in a qualified census tract
for purposes of Section 42(d)(5)(C) of the Code.
1.20 A "qualified non-profit organization" as defined in Section
42(h)(5)(C) of the Code will own an interest in and materially participate in
the development and operation of the Apartment Complex throughout the
Compliance Period for purposes of Section 42(h)(5) of the Code.
1.21 The Operating General Partner is the general partner of the
Operating Partnership and will continue to remain as such at all times the
Operating Partnership is in existence.
1.22 The Operating General Partner is a qualified non-profit
organization as defined in Section 42(h)(5)(C) of the Code.
1.23 The Apartment Complex is currently licensed and operates as
a "Residential Care Facility II" under the laws of the State and will continue
to be so licensed and operate as such at all times. The services available to
tenants of the Apartment Complex under the Contract For Dining Services and
the Contract For Personal Services are strictly optional services to which
tenants do not have to avail themselves as a condition of occupancy for an
apartment unit in the Apartment Complex. For tenants not electing to utilize
the services provided under the Contract For Dining Services, practical
alternatives and facilities (including separate kitchen facilities) exist for
tenants to obtain and prepare meals within the Apartment Complex. All bathing
and dressing services are offered at no additional costs to the tenants.
1.24 The Apartment Complex does not employ any skilled nursing
personnel and tenants cannot receive skilled nursing care at the Apartment
Complex.
1.25 Each of the forty-eight (48) apartment units in the
Apartment Complex has a lock on its door.
2. Indemnification
2.01 The Operating General Partner (for purposes of this
Section 2.01, the "Indemnifying Party") agrees to indemnify and hold harmless
the Limited Partners and the Investment General Partner (for purposes of this
Section 2.01, the "Indemnified Parties" or, individually, an "Indemnified
Party") and each officer, director, employee and person, if any, who controls
any party against any losses, claims, damages or liabilities (collectively,
"Liabilities"), joint or several, to which any Indemnified Party or such
officer, director, employee or controlling person may become subject, insofar
as such Liabilities or actions in respect thereof arise out of or are based
upon (i) a breach by such Indemnifying Party of any of his representations,
warranties or covenants to such Indemnified Party or any such of its officers,
directors, employees or controlling persons under this Certification and
Agreement or (ii) liability under any statute, regulation, ordinance, or other
provision of federal, state, or local law or any civil action pertaining to
the protection of the environment or otherwise pertaining to public health or
employee health and safety, including, without limitation, protection from
hazardous waste, lead-based paint, asbestos, methane gas, urea formaldehyde
insulation, oil, toxic substance, underground storage tanks, polychlorinated
biphenals (PCBs), and radon; and to reimburse each such Indemnified Party and
each such officer, director, employee or controlling person for any legal or
other expenses reasonably incurred by it or them in connection with
investigating or defending against any such Liability or action; provided,
however, that the Indemnifying Party shall not be required to indemnify any
Indemnified Party or any such officer, director, employee or controlling
person for any payment made to any claimant in settlement of any Liability or
action unless such payment is approved by the Indemnifying Party or by a court
having jurisdiction of the controversy. This indemnity agreement shall remain
in full force and effect notwithstanding any investigation made by any party
hereto, shall survive the termination of any agreement which refers to this
indemnity and shall be in addition to any liability which the Indemnifying
Party may otherwise have.
2.02 The Indemnifying Party shall be liable under the indemnity
agreements contained in Section 2.01 unless the Indemnified Party shall have
notified the Indemnifying Party in writing within forty-five (45) business
days after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Indemnified Party or any
such of its officers, directors, employees or controlling persons, but failure
to notify an Indemnifying Party of any such claim shall not relieve it from
any liability which it may have to the Indemnified Party or any such of its
officers, directors, employees or controlling persons against whom action is
brought otherwise than on account of its indemnity agreement contained in
Section 2.01. In case any action is brought against any Indemnified Party or
any such of its officers, directors, employees or controlling persons upon any
such claim, and it notifies the Indemnifying Party of the commencement thereof
as aforesaid, the Indemnifying Party shall be entitled to participate at its
own expense in the defense, or, if it so elects, in accordance with arrange-
ments satisfactory to any other Indemnifying Party or parties similarly noti-
fied, to assume the defense thereof, with counsel who shall be satisfactory to
such Indemnified Party or any such of its officers, directors, employees or
controlling persons and any other Indemnified Parties who are defendants in
such action; and after notice from the Indemnifying Party to such Indemnified
Party or any such of its officers, directors, employees or controlling persons
of its election so to assume the defense thereof and the retaining of such
counsel by the Indemnifying Party, the Indemnifying Party shall not be liable
to such Indemnified Party or any such of its officers, directors, employees or
controlling persons for any legal or other expenses subsequently incurred by
such Indemnified Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other than the
reasonable costs of investigation.
3. Miscellaneous
3.01 This Certification and Agreement is made solely for the
benefit of the Operating Partnership, the Operating General Partner, the
Consultant, the Investment General Partner, Peabody & Brown, Van Matre,
Mooney and the Limited Partners (and, to the extent provided in Section 2, the
officers, directors, partners, employees and controlling persons referred to
therein), and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement.
3.02 This Certification and Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, all of which
together shall constitute one and the same instrument.
3.03 Terms defined in the Operating Partnership Agreement but not
otherwise defined herein shall have the meanings given them in the Operating
Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and seals as of
the date first above written.
OPERATING PARTNERSHIP: CONSULTANT:
M.R.H., L.P. THE INSIGHT GROUP, INC.
By: Mary Ryder Home, By:/s/Timothy J. Butler
its general partner Timothy J. Butler, President
By:/s/Catherine A. Jones
Catherine A. Jones
Assistant Director
OPERATING GENERAL PARTNER:
MARY RYDER HOME
By:/s/Catherine A. Jones
Catherine A. Jones,
Assistant Director
Exhibit A
M.R.H., L.P.
FACT SHEET
1. Sources and Uses of Funds
A. Sources of Funds
(i) First Mortgage Loan: $1,817,466
(ii) Second Mortgage Loan: 989,629
(iii) Capital Contribution (Operating
General Partner): 1,622,647
(iv) Capital Contribution (Investment
Partnership): 1,601,573
(v) Capital Contribution (Missouri
Limited Partner): 277,327
Total Sources of Funds: $6,308,642
B. Uses of Funds
To Be Paid
Total At Closing
(i) Construction Costs (Paric Corp.): $1,896,564 $
0
(ii) Construction Costs (BSI Constructors, Inc.): 262,655 0
(iii) Bid Consulting: 3,000
0
(iv) Alarms, Blinds, Etc. 10,745
0
(v) Demolition: 13,280
0
(vi) Builder's Bond: 18,567
0
(vii) Furniture and Fixtures: 62,760
0
(viii) Architectural Fees (Pfaff): 113,793 15,750
(ix) Architectural Fees (Kostecki): 18,828
0
(x) Architectural Fees (Russell & Axon): 20,396
0
(xi) Tax Credit Fees: 19,200
0
(xii) Legal Fees (Insight Group): 100,000
100,000
(xiii) Construction Interest: 118,428
0
(xiv) Construction Insurance: 8,807
0
(xv) Pre-Construction Interest: 13,551
0
(xvi) Environmental Study: 14,838
0
(xvii) Survey & Engineering: 6,780
0
(xviii) Title and Recording and Disbursing: 11,650
2,500
(xix) Cost Certification: 2,500
0
(xx) Consulting Fee (Insight Group): 87,250
50,000
(xxi) Land: 92,446
0
(xxii) Legal Fees (Neimann): 8,500
0
(xxiii) Other Legal Fees: 3,248
0
(xxiv) Development Fee: 546,019
546,019
(xxv) Development Fee Int.: 20,572
20,572
(xxvi) Tax Abatement: 1,190
0
(xxvii) Working Capital Reserve: 36,000
36,000
(xxviii) Construction Period Real Estate Taxes: 8,397 0
(xxix) Relocation Costs: 7,810
0
(xxx) Construction Loan Fee (Boatmen's): 9,119
0
(xxxi) Permanent Financing Fee (Equitable): 29,000 0
(xxxii) Permanent Financing Fee (Boatmen's): 4,543
0
(xxxiii) Paydown of First Mortgage 1,495,000
610,550
(xxxiv) Operating Reserve: 100,000
100,000
(xxxv) Repayment of Second Mortgage: 989,629
989,629
(xxxvi) Second Mortgage Interest: 66,427
66,42
7
(xxxvii) Property Appraisal: 7,500 0
(xxxviii) Return of Operating General Partner
Capital Contribution: 59,999
0
(xxxix) Contingency: 19,651
19,651
Total Uses of Funds: $6,308,642
$2,55
7,098
2. Construction Mortgage Financing
A. Lender: The Boatmen's
National Bank of St. Louis
B. Mortgage Amount: $1,850,000
C. Note Date: November 28, 1995
D. Interest Rate: Variable (Corporate Base Rate Plus 1/4%)
E. Term: Repaid January 30, 1997
3. First Mortgage Financing
A. Lender: The Boatmen's National Bank of St. Louis
B. Mortgage Amount: $1,817,465.92
C. Note Date: January 29, 1997
D. Interest Rate: 8.75%
E. Term: 7 years
4. Second Mortgage Financing
A. Lender: Mary Ryder Home
B. Mortgage Amount: $989,629
C. Note Date: May 29, 1996
D. Interest Rate: 10%
E. Repaid: January 30, 1997
5. Grant
A. Grantor: City of St. Louis (CDBG Program)
B. Grant Amount: $225,000
6. Eligible Basis: $2,957,611
7. Qualified Basis: $3,364,283
8. Capital Contribution (Operating
General Partner): $1,622,647
9. Type of Credit: 9% low income housing
(with 130% increase in basis due to
location in Qualified Census Tract
10. Rent-up Schedule by Units:
75% occupancy as of January 1, 1997
88% occupancy by February 28, 1997
100% occupancy by March 31, 1997
11. Projected Credit to the
Investment Partnership (99%) $2,859,952
A. $277,058 for 1997,
B. $285,995 per annum for each of the years 1998 through 2006,
and
C. $8,937 for 2007.
12. Total Projected Credit to the Operating Partnership
(100%): $2,888,840
A. $279,856 for 1997,
B. $288,884 per annum for each of the years 1998 through 2006,
and
C. $9,028 for 2007.
13. Projected Missouri Credit
to the Missouri Limited Partner (100%) $1,155,530
A. $111,942 for 1997;
B. $115,553 per annum for each of the years 1998 through 2006;
and
B. $3,611 for 2007.
14. Tax Credit Approval:
A. Initial Tax Credit Application
1. Date: January 29, 1996
2. Credit Amount Requested: $333,390
B. Firm Tax Credit Reservation
1. Date: September 19, 1996
2. Credit Amount Reserved: $288,884
C. Form 8609 Allocation
1. Date: December 31, 1996
2. Credit Amount Allocated: $288,884
3. Credit Percentage: 8.60%
15. Apartment Complex:
A. Name: The Mary Ryder Home
B. Address: 4361 Olive Street
St. Louis, MO
C. County: St. Louis
D. Type of Project: Residential Care Facility II
16. Area Median Income: $46,900
17. Type of Apartments:
Approximate
Unit
Number Square Ft. Rent
Private Bedrooms 16 192.5 $474
Semi-Private
Bedroom 32 220 $474
18. Annual Operating Expenses (beginning in 1998): $141,203
19. Operating and Working Capital Reserves: $136,000
20. Annual Deposit to Replacement Reserve Account: $8,707
21. Amount of Annual Asset Management Fee to Boston Capital Asset
Management Limited Partnership: $3,500
22. Amount of Annual Missouri Asset Management Fee to Missouri
Limited Partner: $1,500
23. Amount of Annual Partnership Management Fee to Operating
General Partner: $5,000
24. Amount of Annual Management Incentive Fee to Operating
General Partner: 60% of remaining Cash Flow after certain priority
distributions as set forth in Article X of Operating Partne
rship
Agreement
25. Amount of Total Depreciable Base Allocated to Personal Property: $78,57
1
26. Completion Date: June 5, 1996
27. Total Capital Contribution of Investment Partnership and Missouri
Limited Partner: $1,878,900
28. Schedule of Capital Contribution:
A. $934,451 (the "First Installment") will be made $795,787 by
the Investment Partnership and $138,664 by the Missouri
Limited Partner upon the latest of (i) State Designation,
(ii) Construction Mortgage Closing, (iii) Permanent Mortgage
Commitment or (iv) the Admission Date;
B. $934,449 (the "Second Installment") will be made $795,786 by
the Investment Partnership and $138,663 by the Missouri
Limited Partner upon the latest of (i) Completion Date,
(ii) Cost Certification, (iii) receipt by the Limited
Partners of the Updated Title Policy, (iv) Contractor's
Release Date, (v) December 31,1997, (vi) the Initial 100%
Occupancy Date, (vii) Permanent Mortgage Commencement,
(viii) Rental Achievement, or (ix) satisfaction of all
conditions to the payment of the First Installment; and
C. $10,000 (the "Third Installment") will be made by the
Investment Partnership upon the later to occur of (i) Rental
Achievement Confirmation, (ii) release of all UCC Financing
Statements executed by the Limited Partners or
(iii) satisfaction of all conditions to the payment of the
First and Second Installments;
29. Fees, Special Distributions, Return of Capital and Other Items to
be paid from Capital Contributions of Limited Partners:
A. Repayment of First Mortgage Debt: $1,495,000
B. Pfaff Partnership: $ 15,750
C. Reserve Funding: $ 136,000
D. Other Direct Development Costs: $ 172,151
E. Return of Operating General Partner
Capital Contribution: $ 59,999
30. Operating General Partner: Mary Ryder Home
Address: 4361 Olive Street
St. Louis, MO 63108
Telephone Number: (314)531-1144
Contact Persons: Ms. Catherine A. Jones
31. Ownership Interests
Normal Capital
Cash
Operations Transactions
Flow
Operating General
Partner: 1% 74.99% 80%
Investment Partnership: 99% 24.99% 20%
Special Limited Partner: 0% 0.01% 0%
Missouri Limited Partner: 0% 0.01% 0%
32. Management Agent: Mary Ryder Home
Contact Persons: Ms. Catherine A. Jones
Address: 4361 Olive Street
St. Louis, MO 63108
Telephone Number: (314)531-1144
Amount of Fee: 8% of gross monthly collected rents
33. Builder: Paric Corporation
Address: 689 Craig Road
St. Louis, MO 63141
Amount of Compensation: $1,896,564
34. Builder: BSI Constructors, Inc.
Address: 6767 Southwest Avenue
St. Louis, MO 63143
Amount of Compensation: $262,655
35. Architect: Pfaff Partnership, Inc.
Address: 180 Weidman Road
Manchester, MO 63021
Amount of Fee: $113,793
36. Auditor: Boyd, Franz & Stephans LLP
Contact Person: John Nanos
Address: 12755 Olive Street
Suite 11
St. Louis, MO 63141
Telephone Number: (314)576-7400
37. Tax Return Preparer: Boyd, Franz & Stephans LLP
Contact Persons: John Nanos
Address: 12755 Olive Street Suite 11
St. Louis, MO 63141
Telephone Number: (314)576-7400
38. Federal Taxpayer ID Number: 43-1759307
39. Building Breakdown: Building No. No. of Units BIN #
1 48 MO-96-00282
40. MHDC 1996 LIHTC Case Number: 96-031
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partner and Consultant
Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partner and the
Consultant (as identified on the Certification and Agreement to which
this Certificate is attached as Exhibit B) hereby represent to you that
none of (i) the Operating Partnership, (ii) any predecessor of the
Operating Partnership, (iii) any of the Operating Partnership's
affiliates ("affiliate" meaning a person that controls or is controlled
by, or is under common control with, the Operating Partnership),
(iv) any sponsor (meaning any person who (1) is directly or indirectly
instrumental in organizing the Operating Partnership or (2) will
directly or indirectly manage or participate in the management of the
Operating Partnership or (3) will regularly perform, or select the
person or entity who will regularly perform, the primary activities of
the Operating Partnership), (v) any officer, director, principal or
general partner of the Operating Partnership or of any sponsor, (vi) any
officer, director, principal, promoter or general partner of any
Operating General Partner, (vii) any beneficial owner of ten per cent or
more of any class of the equity securities of the Operating Partnership
or of any sponsor (beneficial ownership meaning the power to vote or
direct the vote and/or the power to dispose or direct the disposition of
such securities), (viii) any promoter of the Operating Partnership
(meaning any person who, acting alone or in conjunction with one or more
other persons, directly or indirectly has taken, is taking or will take
the initiative in founding and organizing the business of the Operating
Partnership or any person who, in connection with the founding and
organizing of the business or enterprise of the Operating Partnership,
directly or indirectly receives in consideration of services or
property, or both services and property, ten per cent or more of any
class of securities of the Operating Partnership or ten per cent or more
of the proceeds from the sale of any class of such securities; provided,
however, a person who receives such securities or proceeds either solely
as underwriting commissions or solely in consideration of property shall
not be deemed a promoter if such person does not otherwise take part in
founding and organizing the enterprise) presently connected with the
Operating Partnership in any capacity:
(1) Has filed a registration statement which is the
subject of any pending proceeding or examination under the securities
laws of any jurisdiction, or which is the subject of a any refusal order
or stop order thereunder entered within five years prior to the date
hereof;
(2) Has been convicted of or pleaded nolo contendere to a
misdemeanor or felony or, within the last ten years, been held liable in
a civil action by final judgment of a court based upon conduct showing
moral turpitude in connection with the offer, purchase or sale of any
security, franchise or commodity (which term, for the purposes of this
Certificate shall hereinafter include commodity futures contracts) or
any other aspect of the securities or commodities business, or involving
racketeering, the making of a false filing or a violation of Sections
1341, 1342 or 1343 of Title 18 of the United States Code or arising out
of the conduct of the business of an issuer, underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or involving
theft, conversion, misappropriation, fraud, breach of fiduciary duty,
deceit or intentional wrongdoing including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny fraudulent
conversion or misappropriation of property or conspiracy to defraud, or
which is a crime involving moral turpitude, or within the last five
years of a misdemeanor or felony which is a criminal violation of
statutes designed to protect consumers against unlawful practices
involving insurance, securities, commodities, real estate, franchises,
business opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order, judgment
or decree entered within five years prior to the date hereof entered or
issued by or procured from a state securities commission or
administrator, the Securities and Exchange Commission ("SEC"), the
Commodities Futures Trading Commission or the U.S. Postal Service, or to
(b) any administrative order or judgment, arising out of the conduct of
the business of an underwriter, broker, dealer, municipal securities
dealer, or investment adviser, or involving deceit, theft, fraud or
fraudulent conduct, or breach of fiduciary duty, or which is based upon
a state banking, insurance, real estate or securities law or (c) has
been the subject of any administrative order, judgment or decree in any
state in which fraud, deceit, or intentional wrongdoing, including, but
not limited to, making untrue statements of material fact or omitting to
state material facts, was found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of any security
or offering, or to any order, judgment or decree in which registration
violations were found or which prohibits, denies or revokes the use of
any exemption from registration in connection with the offer, purchase
or sale of securities, or to an SEC censure or other order based on a
finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction entered within
five years prior to the date hereof, temporarily, preliminarily or
permanently restraining or enjoining such persons from engaging in or
continuing any conduct or practice in connection with any aspect of the
securities or commodities business or involving the making of any false
filing or arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, or investment adviser, or
which restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against unlawful
or deceptive practices involving insurance, banking, commodities, real
estate, franchises, business opportunities, consumer goods and services,
or is subject to a United States Postal Service false representation
order entered within five years prior to the date hereof, or is subject
to a temporary restraining order or preliminary injunction with respect
to conduct alleged to have violated section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an exchange
registered as a national securities exchange, an association registered
as a national securities association, or any self-regulatory
organization registered pursuant to the Securities Exchange Act of 1934,
or a Canadian securities exchange, or association or self-regulatory
organization operating under the authority of the Commodity Futures
Trading Commission, or is subject to any currently effective order or
order entered within the past five years of the SEC, the Commodity
Futures Trading Commission or any state securities administrator denying
registration to, or revoking or suspending the registration of, such
person as a broker-dealer, agent, futures commission merchant, commodity
pool operator, commodity trading adviser or investment adviser or
associated person of any of the foregoing, or prohibiting the transaction
of business as a broker-dealer or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding before the SEC or
any state securities commission or any regulatory authority willfully
made or caused to be made any statement which was at the time and in the
light of the circumstances under which it was made false or misleading
with respect to any material fact, or has willfully omitted to state in
any such application, report or proceeding any material fact which is
required to be stated therein or necessary in order to make the
statements made, in the light of the circumstances under which they are
made, not misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or statement
in a timely manner;
(8) Has willfully violated any provision of the Securities
Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture
Act of 1939, the Investment Advisers Act of 1940, the Investment Company
Act of 1940, the Commodity Exchange Act of 1974 or the securities laws
of any state, or any predecessor law, or of any rule or regulation under
any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any of the
statutes or rules or regulations referred to in subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if he
is a broker-dealer, or his employees, if he is an investment adviser,
but no person shall be deemed to have failed in such supervision if
there have been established procedures, and a system for applying such
procedures, which would reasonably be expected to prevent and detect,
insofar as practicable, any violation of statutes, rules or orders
described in subsection (8) and if such person has reasonably discharged
the duties and obligations incumbent upon him by reason of such
procedures and system without reasonable cause to believe that such
procedures and system were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state securities
administrator within five years prior to the date hereof or is subject
to a currently effective United States Postal Service fraud order or has
engaged in dishonest or unethical practices in the securities business
or has taken unfair advantage of a customer or is the subject of
sanctions imposed by any state or federal securities agency or self-
regulatory agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his obligations as
they mature, or is in such financial condition that he cannot continue
his business with safety to his customers, or has not sufficient
financial responsibility to carry out the obligations incident to his
operations or has been adjudged a bankrupt or made a general assignment
for the benefit of creditors; or
(13) Is selling or has sold, or is offering or has offered
for sale, in any state securities through any unregistered agent
required to be registered under the Pennsylvania Securities Act of 1972,
as amended (the "Pennsylvania Act") or for any broker-dealer or issuer
with knowledge that such broker- dealer or issuer had not or has not
complied with the Pennsylvania Act.
If the Operating Partnership is subject to the requirements of
Section 12, 14 or 15(d) of the Securities Exchange Act of 1934, then the
Operating Partnership has filed all reports required by those Sections
to be filed during the 12 calendar months preceding the date hereof (or
for such shorter period that the Operating Partnership was required to
file such reports).
STANDBY GENERAL PARTNER AGREEMENT
Relating to
M.R.H., L.P.
THIS STANDBY GENERAL PARTNER AGREEMENT (the "Agreement") is
entered into as of January 1, 1997 (the "Effective Date") by and among
JEFFREY E. SMITH of Columbia, Missouri ("Smith"); BOSTON CAPITAL TAX
CREDIT FUND IV L.P., specifically Series 25 thereof, a Delaware limited
partnership (the "Investment Limited Partner"); and BCTC94, INC., a
Delaware corporation (the "Special Limited Partner"). This Agreement is
entered into in connection with the investment by the Investment Limited
Partner and the Special Limited Partner in M.R.H., L.P., a Missouri
limited partnership (the "Operating Partnership").
RECITALS
WHEREAS, the Investment Limited Partner and the Special Limited
Partner have been admitted to the Operating Partnership as Limited
Partners pursuant to the terms and provisions of the Amended and
Restated Limited Partnership Agreement of the Operating Partnership
dated January 1, 1997 (the "Operating Partnership Agreement");
WHEREAS, the Operating Partnership owns a 48-unit residential care
facility apartment complex in St. Louis, Missouri known as The Mary
Ryder Home (the "Apartment Complex");
WHEREAS, Mary Ryder Home, a Missouri not for profit corporation
(the "General Partner") is the current general partner of the Operating
Partnership;
WHEREAS, the Investment Limited Partner and the Special Limited
Partner shall have the right, subject to prior Agency and Lender
approval if required, to remove the General Partner or any successor
thereto as general partner of the Operating Partnership under certain
circumstances, as described in Section 4.5 of the Operating Partnership
Agreement, and to replace the General Partner with a new general partner
of the Operating Partnership (the "Replacement General Partner");
WHEREAS, the Investment Limited Partner and the Special Limited
Partner are desirous of engaging on a standby basis a Missouri-based
individual or entity with real estate operating experience with
properties similar generating Tax Credits such as the Apartment Complex
which can be appointed at the discretion of the Investment Limited
Partner and/or the Special Limited Partner as the Replacement General
Partner in the event the General Partner is removed as general partner
of the Operating Partnership pursuant to Section 4.5 of the Operating
Partnership Agreement;
WHEREAS, Smith is a Missouri resident with significant real estate
operating experience who is also familiar with the Apartment Complex,
the multi-family housing market in the St. Louis, Missouri area, and the
terms and provisions of the Operating Partnership Agreement;
WHEREAS, Smith is willing to stand by and in the event the General
Partner is removed as the general partner of the Operating Partnership
pursuant to Section 4.5 of the Operating Partnership Agreement, subject
to Smith's due diligence review at the time of such removal, to either
(i) be admitted to the Operating Partnership as the Replacement General
Partner or (ii) cause an Affiliate of his (which Affiliate must be
approved in advance by either the Investment Limited Partner or the
Special Limited Partner) to be admitted to the Operating Partnership as
the Replacement General Partner if he or his designee is paid a fee of
$142,998 (the "Standby General Partner Fee") in two (2) equal
installments (the "Installments") of $71,499, which Installments
correspond to and will be due and payable at the same time as the First
and Second Installments of Capital Contribution of the Investment
Limited Partner are paid to the Operating Partnership; and
WHEREAS, the Investment Limited Partner is willing to pay to Smith
or his designee the Standby General Partner Fee in Installments as noted
above as part of its investment attributable to the Operating
Partnership.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, the parties
hereto hereby agree as follows:
1. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Operating Partnership
Agreement.
2. Subject to the receipt of the Standby General Partner Fee in
Installments as set forth herein, Smith hereby agrees that he or an
Affiliate approved by the Investment Limited Partner or the Special
Limited Partner will serve as Replacement General Partner of the
Operating Partnership in accordance with the terms and provisions of the
Operating Partnership Agreement if so appointed by the Investment
Limited Partner and/or the Special Limited Partner in the event of the
removal of the General Partner as the general partner of the Operating
Partnership pursuant to Section 4.5 of the Operating Partnership
Agreement and subject to Smith's due diligence review at the time of
such removal.
3. Each of the Investment Limited Partner and the Special
Limited Partner shall have the right to appoint Smith or an Affiliate
thereof properly designated by Smith and approved in advance by the
Investment Limited Partner or the Special Limited Partner as the
Replacement General Partner in the event of removal of the General
Partner as the general partner of the Operating Partnership pursuant to
Section 4.5 of the Operating Partnership Agreement, subject to the
Operating Partnership satisfying the requirements of Smith's due
diligence review at the time of such removal; provided, however, that
this Agreement does not obligate the Investment Limited Partner and/or
the Special Limited Partner to appoint Smith or any such Affiliate as
the Replacement General Partner in the event the General Partner is so
removed.
4. The Investment Limited Partner hereby agrees to pay the
Standby General Partner Fee to Smith or his designee in two equal
Installments of $71,499 each at the same time as the First and Second
Installments of Capital Contribution of the Investment Limited Partner
are paid to the Operating Partnership as part of its investment
attributable to the Operating Partnership.
5. Smith hereby represents that he has the power and authority
to enter into and perform the activities contemplated by this Agreement.
6. The Investment Limited Partner hereby represents that it is
a limited partnership which is duly formed and validly existing under
the laws of the State of Delaware and which has the power and authority
to enter into and perform the activities contemplated by this Agreement.
7. The Special Limited Partner hereby represents that it is a
corporation which is duly organized, validly existing and in good
standing under the laws of the State of Delaware and which has the power
and authority to enter into and perform the activities contemplated by
this Agreement.
8. This Agreement may be executed in multiple counterparts all
of which shall constitute one and the same instrument.
9. This Agreement shall terminate on the date which is 40 years
from the date upon which the Apartment Complex is placed in service by
the Operating Partnership, unless sooner terminated by agreement of all
parties hereto.
10. Except as otherwise stated herein, this Agreement contains
the entire agreement of the parties with respect to the subject matter
hereof.
11. This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts applicable
to contracts to be performed wholly therein, without giving effect to
any conflicts of law principles or cases.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the Effective Date.
BOSTON CAPITAL TAX
CREDIT FUND IV L.P. (SERIES 25)
/s/Pat Bess
PAT BESS, ATTORNEY-IN-FACT
FOR JEFFREY E. SMITH
By: Boston Capital Associates IV L.P.,
its general partner
By: C&M Associates
d/b/a Boston Capital
Associates,
its general partner
By:/s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact for
John P. Manning, Partner
BCTC94, Inc.
By:/s/Bonnie Kate Fox
Bonnie Kate Fox, Attorney-In-
Fact for John P. Manning, President
STATE OF MISSOURI )
) SS.
COUNTY OF BOONE )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named Pat Bess, known to me to be
the Attorney-In-Fact for Jeffrey E. Smith and the person who executed
the foregoing instrument and, being duly sworn, acknowledged that the
statements therein are true and that she did sign the same as her free
act and deed and as the free act and deed of Jeffrey E. Smith.
WITNESS my hand and official seal this 30th day of January, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, known
to me to be the Attorney-In-Fact for John P. Manning, a Partner of C&M
Associates d/b/a Boston Capital Associates, the general partner of
Boston Capital Associates IV L.P., which is the general partner of
Boston Capital Tax Credit Fund IV L.P., who, being duly sworn,
acknowledged that she did sign the foregoing instrument, that the
statements therein contained are true and that the same is the duly
authorized free act and deed of Boston Capital Tax Credit Fund IV L.P.
WITNESS my hand and official seal this 30th day of January, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County
and Commonwealth, personally appeared the above-named Bonnie Kate Fox,
known to me to be the Attorney-In-Fact for John P. Manning, the
President of BCTC94, Inc., who, being duly sworn, acknowledged that she
did sign the foregoing instrument, that the statements therein contained
are true and that the same is the duly authorized act and deed of
BCTC94, Inc.
WITNESS my hand and seal this 30th day of January, 1997.
__________________________________
Notary Public
__________________________________
Name (Printed)
My Commission Expires:___________
OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT
This OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT ("Agreement") is
entered into as of the 1st day of January, 1997, by and between M.R.H.,
L.P., a Missouri limited partnership (the "Owner") and MARY RYDER HOME,
a Missouri not for profit corporation (the "Optionee").
RECITALS:
A. The Owner owns those certain improvements consisting of
forty-eight (48) residential units for low- and moderate-income tenants
located in St. Louis, Missouri, and the land on which the improvements
are situated, which is more particularly described on Exhibit A attached
hereto and made a part hereof by this reference (together, the
"Project").
B. The Optionee is the general partner (the "General Partner")
of the Owner under the Amended and Restated Agreement of Limited
Partnership of the Owner dated as of January 1, 1997 ("Partnership
Agreement").
C. The parties desire to set forth the terms of the option and
right of first refusal from the Owner to the Optionee to purchase the
Project.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
GRANT OF OPTION AND RIGHT OF FIRST REFUSAL
The Owner hereby grants to the Optionee an option and right of
first refusal to purchase the Project on the terms and conditions set
forth in this Agreement. The Optionee's right to exercise the option
and right of first refusal is subject to the Optionee having provided to
the Owner an opinion of counsel reasonably acceptable to the Owner and
to each of the Investment Limited Partner, the Special Limited Partner
and the Missouri Limited Partner of the Owner (collectively, the
"Limited Partners") that the exercise of the option or the right of
first refusal will not cause any recapture of tax credits ("Tax
Credits") to any partner of the Owner (a "Partner") allowable under
Section 42 of the Internal Revenue Code of 1986, as amended (the
"Code"), that there is no default of any of the obligations of the
Optionee under the Partnership Agreement, and that the Optionee is a
qualified nonprofit organization or governmental agency as required for
the purposes of Section 42(i)(7)(A) of the Code (an "Eligible
Purchaser"). If at any time during the term of this option and right of
first refusal, the Optionee is no longer the General Partner of the
Owner pursuant to the terms of the Partnership Agreement, the grant of
option and right of first refusal shall be null and void and shall be of
no further force or effect.
ARTICLE II
TERM OF OPTION AND
RIGHT OF FIRST REFUSAL
The term of the option and right of first refusal shall commence
one day after Owner completes its 15-year "compliance period" under
Section 42(i)(1) of the Code, so that the term of the option and right
of first refusal is expected to commence on January 1, 2012; and the
term of the option and right of first refusal shall expire on January 1,
2013.
ARTICLE III
MANNER OF EXERCISING OPTION AND RIGHT OF FIRST REFUSAL
3.1 The Optionee shall exercise its option by delivering to the
Owner, with a copy to the Limited Partners as required under
Article VII, during the option term, written notice of the exercise.
The notice of exercise shall state that the option is exercised without
condition or qualification.
3.2 If, during the term of its right of first refusal, 1) the
Owner receives a bona fide third party offer (an "Offer") to purchase
the Project at a price not less than the minimum purchase price under
Section 42(i)(7)(B) of the Code (the "Statutory Purchase Price"); 2) the
Owner determines that it is in the best interest of the Owner to sell
the Project upon the terms set forth in the Offer; and 3) the Owner
provides to the Optionee a notification in writing of the Offer (an
"Offer Notification"), and the Owner's determination to sell, the
Optionee shall then have the option, if the Optionee is then an Eligible
Purchaser, to thereupon exercise its right of first refusal within ten
(10) days of receiving the Offer Notification upon the precise terms set
forth in the Offer, except that the price to be paid by the Optionee
shall be the Statutory Purchase Price. If the Optionee does not so
exercise its right of first refusal, then the Owner may proceed to sell
the Project to the maker of the Offer pursuant to the terms set forth in
the Offer and this Agreement shall terminate.
3.3 At any time during the term of the right of first refusal,
the General Partner shall have the right to solicit bids for the sale of
the Project, and any bona fide bid from a third party in connection with
such solicitation can constitute an Offer which triggers the right of
first refusal.
3.4 Notwithstanding the foregoing, it shall be a requirement
that upon any exercise of the option or the right of first refusal that,
in addition to the purchase price for the Property being paid, all
accrued but unpaid fees or other debts or obligations owed by the Owner
or the Optionee to any Limited Partner or Affiliate of a Limited Partner
be paid in full (whether through the proceeds of an additional Capital
Contribution by the Optionee to the Owner or otherwise); neither the
option nor the right of first refusal shall close without the payment in
full of all such amounts.
ARTICLE IV
OPTION PURCHASE PRICE
4.1 The purchase price for the Project under the option shall be
the greater of (a) the Fair Market Value, or (b) the Statutory Purchase
Price; provided, however, that if prior to exercise of the option
(1) the Internal Revenue Service (the "Service") shall have published an
applicable regulation or revenue ruling (the applicability of such a
regulation or ruling being determined in its judgment by tax counsel to
the Investment Limited Partner), (2) the Service shall have issued an
applicable private letter ruling to the Owner (the applicability of such
a ruling being determined in its judgment by tax counsel to the
Investment Limited Partner), or (3) tax counsel to the Investment
Limited Partner or counsel to the Optionee acceptable to the Investment
Limited Partner shall have issued an opinion letter, in the applicable
situation (clause (1), (2) or (3)) concluding that property of the
nature and use of the Project may be sold under the option described in
this Agreement at the Statutory Purchase Price, even though such a price
may be less than the fair market value of the Project, without adversely
affecting the Tax Credits or deductions that would otherwise be
available to the Limited Partners, then the option price shall be equal
to the Statutory Purchase Price.
4.2 The Fair Market Value of the Project shall refer to the fair
market value of the Project at the time of the exercise of the option
and shall be determined as follows: The Special Limited Partner, on
behalf of the Owner, and the Optionee shall select a mutually acceptable
appraiser who shall determine the fair market value of the Project. In
the event the parties are unable to agree upon an appraiser, the Special
Limited Partner, on behalf of the Owner, and the Optionee shall each
select an appraiser. If the difference between the two appraisals is
within ten per cent (10%) of the lower of the two appraisals, then the
Fair Market Value shall be the average of the two appraisals. If the
difference between the two appraisals is greater than ten per cent (10%)
of the lower of the two appraisals and at least one of the appraisals
exceeds the Statutory Purchase Price, then the two appraisers shall
jointly select a third appraiser. If the two appraisers are unable
jointly to select a third appraiser, then the appointment of the third
appraiser shall be made by the then President of the St. Louis,
Missouri, Chapter of the American Arbitration Association or his or her
designee. If the third appraisal is less than either of the first two,
then the Fair Market Value shall be the average of the two lowest
appraisals. If the third appraisal is greater than the first two, then
the Fair Market Value shall be the average of the two highest
appraisals. If the third appraisal falls between the previous two
appraisals, the Fair Market Value shall be the value established by the
third appraisal. The Owner and the Optionee shall share the cost
equally of any appraiser jointly selected or shall pay the costs of the
appraiser they each select and shall share the cost equally of any third
appraiser. Any appraiser selected pursuant to this section shall be an
MAI appraiser with at least five years of relevant experience. The
appraisals shall take into account any requirements that the Project
remain dedicated for the use of low-income households pursuant to any
restrictions under any loan agreements, regulatory agreements, or
otherwise and shall take into account any tax benefits or other subsidy
or financing benefits available to projects providing affordable housing
in a manner similar to the Project. Notwithstanding the foregoing,
however, in no event shall the Fair Market Value be less than $1,000.
4.3 The Optionee shall pay the purchase price in immediately
available funds at the closing. However, in lieu of paying the purchase
price in cash at closing, Optionee may assume any outstanding debts
secured by deeds of trust or mortgages on the Project and any other
obligations of Owner, provided that any holder of such underlying
obligation consents to the assumption, with the balance of the purchase
price, if any, being payable in immediately available funds.
ARTICLE V
COMPLETION OF SALE
5.1 The sale of the Project shall close no later than one
hundred twenty (120) days after the Owner's receipt of the Optionee's
written notice of exercise of the option, at which time the purchase
price shall be payable as set forth in Section 4.3. At or before the
closing, the Optionee shall obtain the consent to the sale from the
Missouri Housing Development Commission, or the successor thereto as the
Tax Credit allocating agency for the State or Missouri, and from the
holders of any mortgages or deeds of trust on the Project, if required.
5.2 The Owner shall convey the Project to the Optionee in an "as
is" condition without representation or warranty.
ARTICLE VI
QUITCLAIM DEED ON TERMINATION OF OPTION
AND RIGHT OF FIRST REFUSAL
Upon termination of its rights pursuant to Article I or Article II
of this Agreement, the Optionee agrees, upon the Owner's request, to
execute and deliver a quitclaim deed to the Owner within thirty (30)
days after said termination and to execute, acknowledge, and deliver any
other documents required by the Owner's title insurance company to
remove the cloud of this Agreement from the Owner's title to the
Project.
ARTICLE VII
NOTICES
Any notice or other communication required or permitted to be
given under this Agreement shall be in writing and shall be personally
delivered, including but not limited to overnight delivery, or deposited
in the U.S. mail, certified, return receipt requested, first class and
postage prepaid, addressed to each party at the following addresses or
such other address as may be designated by a notice pursuant to this
Article VII:
If intended for the Owner, shall be addressed to:
M.R.H., L.P.
4361 Olive Street
St. Louis, MO 63108
with a copy to the Investment and the Special Limited Partners at the
following address:
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, MA 02108-4406
with a copy to the Missouri Limited Partner at the following address:
Midwest Capital Corporation
11000 South Airport Drive
P.O. Box 7688
Building No. 1, South Wing
Columbia, MO 65205
and, if intended for the Optionee, shall be addressed to:
Mary Ryder Home
4361 Olive Street
St. Louis, MO 63108
Any notice provided in accordance with this Article VII shall be
deemed to have been given on the delivery date or the date that delivery
is refused by the addressee, as shown on the return receipt.
ARTICLE VIII
ATTORNEY FEES
In the event of any action, arbitration, or proceeding at law or
in equity to enforce any provision of this Agreement or to protect or
establish any right or remedy of any party hereunder, the unsuccessful
party to the litigation shall pay to the prevailing party all costs and
expenses, including reasonable attorney fees incurred therein by the
prevailing party, and if the prevailing party recovers judgment in any
action, proceeding, or arbitration, the costs, expenses, and attorney
fees shall be included in and as a part of the judgment.
ARTICLE IX
ARBITRATION
Any party hereto that becomes involved in any controversy relating
to this Agreement may require that all disputes, claims, counterclaims,
and defenses ("Claims") relating in any way to this Agreement or any
transaction of which this Agreement is a part (the "Transaction") be
settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and Title 9 of
the U.S. Code; provided that such arbitration need not be conducted
under the jurisdiction of the American Arbitration Association. All
Claims will be subject to the statutes of limitations applicable if they
were litigated.
If arbitration occurs, one neutral arbitrator will decide all
issues unless any party's claim is $100,000 or more, in which case three
neutral arbitrators will decide all issues. In the event the parties
cannot mutually agree upon an arbitrator or arbitrators, then the rules
for selecting an arbitrator or arbitration service under the Commercial
Arbitration Rules of the American Arbitration Association and Title 9 of
the U.S. Code shall apply. All arbitrators will be active Missouri
State Bar members in good standing. All arbitration hearings will be
held in St. Louis, Missouri. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award may be entered in any
court with jurisdiction.
If any party institutes any judicial proceeding relating to the
Transaction, such action shall not be a waiver of the right to submit
any Claim to arbitration. In addition, all parties have the right
before, during, and after any arbitration to exercise any number of the
following remedies, in any order or concurrently: (i) setoff,
(ii) self-help repossession, (iii) judicial or nonjudicial foreclosure
against real or personal property collateral, or (iv) provisional
remedies, including injunction, appointment of receiver, attachment,
claim and delivery, and replevin.
ARTICLE X
MISCELLANEOUS
(a) Each party hereby agrees to indemnify the other party from
and against any real estate brokerage commissions or similar obligations
incurred by the indemnifying party as a result of the negotiations or
exercise of this option.
(b) The rights and obligations of the Owner and the Optionee
under this Agreement shall inure to the benefit of, and bind, their
respective successors and assigns.
(c) The captions used herein are for convenience of reference
only and are not part of this Agreement and do not in any way limit or
amplify the terms and provisions hereof.
(d) Time is of the essence of each and all of the agreements,
covenants, and conditions of this Agreement.
(e) This Agreement shall be interpreted in accordance with and
governed by the laws of the State of Missouri.
(f) This Agreement constitutes the entire agreement between the
Owner and the Optionee with respect to the subject matter hereof and
supersedes all prior offers and negotiations, oral and written. This
Agreement may not be amended or modified in any respect whatsoever
except by an instrument in writing signed by Owner and Optionee, and
after receiving the prior written consent of the Special Limited
Partner.
(g) All capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Partnership
Agreement.
IN WITNESS WHEREOF, the Owner and the Optionee have executed this
Agreement as of the date first above written.
OWNER:
M.R.H., L.P.
By: Mary Ryder Home,
its general partner
By:/s/Catherine A. Jones
Catherine A. Jones,
Assistant Director
OPTIONEE:
MARY RYDER HOME
By: /s/ Catherine A. Jones
Catherine A. Jones,
Assistant Director
State of Missouri )
)SS.
City of St. Louis )
On this 31st day of January, 1997, before me, the undersigned, a
Notary Public in and for said state, personally appeared Catherine A.
Jones, personally known to me or proved to me on the basis of
satisfactory evidence to be the duly authorized Assistant Director of
Mary Ryder Home, the general partner of M.R.H., L.P., and acknowledged
to me that said corporation executed the same as such partner and that
such limited partnership executed the within instrument.
WITNESS my hand and official seal.
___________________________________
Notary Public in and for said state
State of Missouri )
)SS.
City of St. Louis )
On this 31st day of January, 1997, before me, the undersigned, a
Notary Public in and for said state, personally appeared Catherine A.
Jones, personally known to me or proved to me on the basis of
satisfactory evidence to be the duly authorized Assistant Director of
Mary Ryder Home and acknowledged to me that said corporation executed
the within instrument.
WITNESS my hand and official seal.
___________________________________
Notary Public in and for said state
EXHIBIT A
The land located at 4361 Olive Street in the City of St. Louis, State of
Missouri and which is legally described as follows:
A tract of land in Block 4582 of the City of St. Louis being the same
tract of land shown on the "LOT BOUNDARY ADJUSTMENT PLAT" recorded in
Plat Book 66 page 48 of the City of St. Louis Records and being more
particularly described as follows: Beginning at a point on the North
line of Olive Street, 60 feet wide, distant 117.00 feet East of its
intersection with the East line of Newstead Avenue, 60 feet wide; thence
along a line parallel to the East line of Newstead Avenue North 30
degrees 50 minutes 30 seconds East a distance of 152.50 feet to the
South line of an alley, 20 feet wide; thence along the South line of
said alley South 59 degrees 12 minutes East a distance of 344.13 feet to
a point distant 345.30 feet West of the West line of Pendleton Avenue,
60 feet wide; thence leaving said South line South 30 degrees 48 minutes
West a distance of 152.50 feet to the North line of Olive Street; thence
along the North line of Olive Street North 59 degrees 12 minutes West a
distance of 344.25 feet to the point of beginning, containing 1.205
acres more or less.
