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 26, 1996
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-70564 04-3208648
(Commission File Number) (IRS Employer Identification No. )
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
On January 26, 1996, Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, specifically Series 24 thereof (the "Partnership"),
completed various agreements relating to Edenfield Place Apartments, L.P., a
Georgia limited partnership (the "Operating Partnership"), including an
Amended and Restated Certificate and Agreement of Limited Partnership of the
Operating Partnership dated as of January 1, 1996 (the "Operating Partnership
Agreement"), pursuant to which the Partnership acquired a limited partner
interest in the Operating Partnership. Capitalized terms used and not
otherwise defined herein have their meanings set forth in the Operating
Partnership Agreement, a copy of which is attached hereto as Exhibit (2)(a).
The Operating Partnership owns and operates an apartment complex in
Millen, Georgia which is known as Edenfield Place Apartments (the "Apartment
Complex"). The Apartment Complex consists of 16 one-bedroom units and 32 two-
bedroom units. The Apartment Complex is currently fully occupied.
Rehabilitation financing in the amount of $362,910 was provided by First
State Bank & Trust Company. Permanent mortgage financing in the aggregate
amount of $1,326,859 (the "Mortgage Loan"), of which amount $963,949 was
assumed as of September 14, 1995 by the Operating Partnership from the prior
owner of the Apartment Complex, is being provided by the Rural Housing Service
of the United States Department of Agriculture. The Mortgage Loan matures in
June 2030. As a result of an interest credit subsidy received by the
Operating Partnership from the Permanent Lender, the effective interest rate
on the Mortgage Loan is 1%.
100% of the apartment units (48 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 Rea Development Company, Inc. of Cordele,
Georgia. The General Partner has previously developed 270 multi-family
housing units.
W.T. Lamb Management of Wrens, Georgia serves as the management agent
for the Apartment Complex (the "Management Agent"). The Management Agent
currently has 248 multi-family units under management. The Management Agent
will receive a monthly fee from the Operating Partnership equal to 5% of gross
revenues received during the previous month.
The Partnership acquired its interest in the Operating Partnership
directly from the Operating Partnership in consideration of an agreement to
make a Capital Contribution of $333+,821 which has been or will be payable to
the Operating Partnership in four (4) Installments as follows:
1. $200,292 on the latest of (i) the Admission Date, (ii) Tax Credit Set
Aside, (iii) Construction Mortgage Closing, or (iv) Permanent Mortgage
Commitment;
2. $83,455 on the latest of (i) the Completion Date, (ii) Cost Certification,
(iii) State Designation or (iv) receipt of an updated title insurance policy
satisfactory to the Investment Limited Partner;
3. $40,074 on the latest of (i) Breakeven Point, (ii) Permanent Mortgage
Commencement, or (iii) Initial 95% Occupancy Date; and
4. $10,000 on the date on which the Partnership receives the Operating
Partnership's tax return and audited financial statements for the year in
which the Breakeven Point occurred.
The total Capital Contribution of the Partnership to the Operating
Partnership is based on the Operating Partnership receiving $602,129 of Tax
Credits during the 10-year period commencing in 1996, of which $596,108 will
be allocated to the Partnership as the Investment Limited Partner of the
Operating Partnership. The Special Limited Partner of the Operating
Partnership is BCTC 94, Inc., an affiliate of the Partnership.
The Partnership believes that the Apartment Complex is adequately
insured.
Ownership interests in the Operating Partnership are as follows, subject
in each case to certain priority allocations and distributions:
Normal Capital Cash
Operations Transactions Flow
General Partner 1% 60% 90%
Partnership 99% 39.999% 10%
Special Limited 0% 0.001% 0%
The Partnership used the funds obtained from the payments of the holders
of its beneficial assignee certificates to make the acquisition of its
interest in the Operating Partnership.
Boston Capital Partners, Inc. ("BCP"), 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) $1,670
or (ii) one-half of one per cent (0.5%) of the Aggregate Cost of the Apartment
Complex. The Asset Management Fee for each fiscal year will be payable from
Cash Flow in the manner and priority set forth in Article X of the Operating
Partnership Agreement. To the extent Cash Flow in any year is insufficient to
pay the entire amount of the Asset Management Fee, the amount of such
deficiency shall be paid directly by the General Partner to BCP as an
Affiliate thereof from its own funds.
The Operating Partnership will pay a Construction and Development Fee in
the amount of $165,809 to the General Partner (or its designee) for its
service in connection with the construction and development of the Apartment
Complex payable $32,280 from the proceeds of the First Installment of the
Investment Limited Partner's Capital Contribution, $83,455 from the proceeds
of the Second Installment of the Investment Limited Partner's Capital
Contribution, $40,074 from the proceeds of the Third Installment of the
Investment Limited Partner's Capital Contribution and $10,000 from the
proceeds of the Fourth Installment of the Investment Limited Partner's Capital
Contribution. The Operating Partnership will pay to the General Partner an
Annual Partnership Management Fee commencing in 1997 for its services in
connection with managing the day-to-day business of the Operating Partnership
in an amount equal to the lesser of (i) $1,670 per annum or (ii) the excess of
(A) one-half of one percent (0.5%) of the Aggregate Cost of the Apartment
Complex over (B) the amount of the Asset Management Fee attributable to such
year. The Annual Partnership Management Fee for each fiscal year will be
payable from Cash Flow in the manner and priority set forth in Article X of
the Operating Partnership Agreement.
Item 7. Exhibits.
(a) and (b) There is no meaningful current or historic financial
information is available at this time.
(c) Exhibits. Page
(1)(a)1 Form of Dealer-Manager Agreement between Boston
Capital Services, Inc. and the Registrant (including, as an
exhibit thereto, the form of Soliciting Dealer Agreement)
(2)(a) Amended and Restated Certificate and Agreement of
Limited Partnership of Edenfield Place Apartments, L.P.
(2)(b) Certification and Agreement of Edenfield Place
Apartments, L.P.
(4)(a)2 Agreement of Limited Partnership of the Partnership
(16) None
(17) None
(21) None
(24) None
(25) None
(28) None
______________
1 Incorporated by reference to Exhibit (1) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities and Exchange
Commission.
2 Incorporated by reference to Exhibit (4) to Registration Statement
No. 33-99602 on Form S-11, as filed with the Securities and Exchange
Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Dated: March 21, 1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
By: Boston Capital Associates IV L.P.,
its General Partner
By: C&M Associates, d/b/a Boston
Capital Associates, its
General Partner
By: /s/ Herbert F. Collins
Herbert F. Collins, Partner
BOS2: 53167_1
17537/1229
EDENFIELD PLACE APARTMENTS, L.P.
AMENDED AND RESTATED
CERTIFICATE & AGREEMENT OF LIMITED PARTNERSHIP
Dated as of January 1, 1996
EDENFIELD PLACE APARTMENTS, L.P.
TABLE OF CONTENTS
Page
Preliminary Statement...................................... 1
ARTICLE I -- Defined Terms............................... 1
ARTICLE II -- Name and Business........................... 11
2.1 -- Name; Continuation.......................... 11
2.2 -- Office and Resident Agent................... 11
2.3 -- Purpose..................................... 11
2.4 -- Term and Dissolution........................ 12
ARTICLE III -- Mortgage, Refinancing and Disposition
of Property................................. 12
ARTICLE IV -- Partners; Capital........................... 13
4.1 -- Capital and Capital Accounts................ 13
4.2 -- General Partners............................ 14
4.3 -- Investment Limited Partner, Special Limited
Partner, & Original Limited Partner......... 14
4.4 -- Liability of the Limited Partner............ 15
4.5 -- Special Rights of the Investment
Limited Partner............................. 15
4.6 -- Meetings.................................... 16
ARTICLE V -- Capital Contributions of the
Investment Limited Partner and Special
Limited Partner ............................ 16
5.1 -- Payments.................................... 16
5.2 -- Return of Capital Contributions............. 19
ARTICLE VI -- Rights, Powers and Duties of General
Partners.................................... 20
6.1 -- Authorized Acts............................. 20
6.2 -- Restrictions on Authority................... 21
6.3 -- Personal Services........................... 22
6.4 -- Business Management and Control; Page
Tax Matters Partner........................ 22
6.5 -- Duties and Obligations..................... 23
6.6 -- Representations and Warranties............. 25
6.7 -- Liability on the Permanent Mortgage........ 25
6.8 -- Indemnification of the General
Partners................................... 28
6.9 -- Indemnification of the Partnership
and the Limited Partners................... 29
6.10 -- Operating Deficits......................... 30
6.11 -- Obligation to Complete the Construction
of the Apartment Complex................... 30
6.12 -- Certain Payments to the General
Partners and Others........................ 32
6.13 -- Delegation of General Partner
Authority.................................. 33
6.14 -- Assignment to the Partnership.............. 33
6.15 -- Additional Right of General Partners and
Affiliates to Develop Adjacent Property.... 34
ARTICLE VII -- Withdrawal of a General Partner;
New General Partners....................... 34
7.1 -- Withdrawal................................. 34
7.2 -- Obligation to Continue..................... 35
7.3 -- Withdrawal of All General Partners......... 35
7.4 -- Interest of General Partner After
Permitted Withdrawal....................... 35
ARTICLE VIII Transferability of Limited Partner
Interest................................... 36
8.1 -- Assignments................................ 36
8.2 -- Substituted Limited Partner................ 36
8.3 -- Restrictions............................... 37
ARTICLE IX -- Working Capital Loan; Borrowings........... 37
9.1 -- Working Capital Loan....................... 37
9.2 -- Borrowings................................. 37
Page
ARTICLE X -- Profits, Losses, Tax Credits, Distributions
and Capital Accounts........................ 38
10.1 -- Profits, Losses and Tax Credits............. 38
10.2 -- Cash Distributions Prior to Dissolution..... 40
10.3 -- Distributions Upon Dissolution.............. 42
10.4 -- Special Provisions.......................... 43
10.5 -- Authority of the General Partners to Vary
Allocations to Preserve and Protect the
Partners' Intent............................ 46
ARTICLE XI -- Management Agent............................ 47
ARTICLE XII -- Books and Records, Accounting, Tax
Elections, Etc.............................. 48
12.1 -- Books and Records........................... 48
12.2 -- Bank Accounts............................... 48
12.3 -- Auditors.................................... 49
12.4 -- Cost Recovery and Elections................. 49
12.5 -- Special Basis Adjustments................... 49
12.6 -- Fiscal Year................................. 50
12.7 -- Information to Partners..................... 50
12.8 -- Expenses of the Partnership................. 52
ARTICLE XIII General Provisions.......................... 54
13.1 -- Restrictions by Reason of Section 708
of the Code................................. 54
13.2 -- Amendments to Certificate................... 54
13.3 -- Notices..................................... 54
13.4 -- Word Meanings............................... 55
13.5 -- Binding Effect.............................. 55
13.6 -- Applicable Law.............................. 55
13.7 -- Counterparts................................ 55
13.8 -- Financing Regulations....................... 55
13.9 -- Separability of Provisions.................. 56
13.10 -- Paragraph Titles............................ 56
13.11 -- Amendment Procedure......................... 56
13.12 -- Time of Admission........................... 56
Schedule A................................................. 60
EDENFIELD PLACE APARTMENTS, L.P.
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Edenfield Place Apartments, L.P. (the "Partnership") was formed as a
Georgia limited partnership pursuant to a Certificate & Agreement of Limited
Partnership dated as of March 29, 1995 (the "Original Agreement") by and among
Rea Development Company, a Georgia corporation as general partner (the "General
Partner") and William J. Rea, Jr. and Martyne H. Rea as the limited partners,
(the "Original Limited Partners") which was filed with the Georgia Secretary of
State's Office May 24, 1995. Certain defined 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 and the Original Certificate are hereby
amended and restated in their entireties, as follows:
Article I
Defined Terms
The defined terms used in this Agreement shall have the meanings
specified below:
Actual Credit means, with respect to a particular year, the total amount
of Tax Credit properly allocable by the Partnership to the Investment Limited
Partner for such year. The Actual Credit shall be retroactively revised if the
amount of Tax Credit properly allocable to the Investment Limited Partner is
revised after audit.
Additional Limited Partner means any holder of an Interest designated as
an Additional Limited Partner pursuant to 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 ten per cent (10%) or more of any class of equity
securities of such Person or of which such Person is directly or indirectly the
owner of ten per cent (10%) or more of any class of equity securities, (d) who
is an officer, director, general partner, trustee or holder of ten per cent
(10%) or more of the voting securities or beneficial interests of any Person
referred to in the foregoing clauses (v)(a), (v)(b) or (v)(c) or (e) who,
whatever his title, performs functions for such Person or any Affiliate of such
Person similar to a Chairman or member of the Board of Directors, or executive
officer such as the President, Executive Vice President or Senior Vice
President, Corporate Secretary, or Treasurer, or any Person holding a five per
cent (5%) or more equity interest in such Person, or any Person having the
power to direct or cause the direction of such Person, whether through the
ownership of voting securities, by contract or otherwise; and (B) as to any
other named Person or Persons (i) such Person; (ii) each member of the
Immediate Family of such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses (i) or (ii); (iv)
each trustee of a trust for the benefit of any Person referred to in the
preceding clauses (i) or (ii); or (v) any other Person (a) who directly or
indirectly controls, is controlled by, or is under common control with such
Person, (b) who owns or controls ten per cent (10%) or more of the outstanding
voting securities of such Person, (c) of which ten per cent (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.
Aggregate Cost means the sum of (i) the total Capital Contributions made
or anticipated to be made by the Investment Limited Partner 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 last of the three Installments of the Capital Contribution of
the Investment Limited Partner shall not thereafter be reduced.
Agreement means this Amended and Restated Agreement and Certificate 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(a).
Apartment Complex means the real property located at Edenfield Road,
Millen, Jenkins County, Georgia, as more fully described in the Mortgage,
together with (i) all buildings and other improvements constructed or to be
constructed thereon and (ii) all furnishings, equipment and personal property
covered by the Mortgage.
Applicable Federal Rate means the "applicable federal rate" as defined in
Section 1274(d) of the Code.
Auditors means of , or such
other firm of independent certified public accountants as may be engaged by the
General Partners with the consent of Boston Capital for the purposes of
preparing the Partnership income tax returns, auditing the books and records of
the Partnership and certifying financial reports of the Partnership.
Boston Capital means Boston Capital Partners, Inc., a Massachusetts
corporation.
Breakeven Point means thirty (30) days after the first time at which, as
certified by the General Partners, based upon three (3) consecutive full
calendar months of operation occurring after the later to occur of (i) the
Admission Date or (ii) Permanent Mortgage Commencement, the rental income
(including government subsidies) of the Partnership actually received on a cash
basis (excluding prepaid rent) shall have exceeded all the Partnership's
expenses on an accrual basis (including the funding of any reserves required
pursuant to the terms of this Agreement), except for depreciation,
distributions of Cash Flow and Capital Transaction proceeds to the Partners and
the fees payable pursuant to this Agreement. For purposes of the foregoing,
expenses shall (i) include monthly payments of principal and interest in the
amount specified in the Mortgage regardless of any forbearance thereof, (ii)
include a ratable portion of the annual amount (as 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, and (iii) be adjusted, if necessary,
so that the expenses of real estate taxes and insurance are based on the
General Partners' estimate of the full value of the Apartment Complex after
completion of rehabilitation.
Capital Account has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each Partner, as
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.
Carryover Certification means the date upon which the Investment
Partnership shall have received, in a form and in a substance satisfactory to
the Investment Partnership, the certification of the Auditors that as of a date
no later than December 31, 1995, the Partnership had incurred capitalizable
costs with respect to the Apartment Complex of at least ten per cent (10%) of
the Partnership's reasonably expected basis in the Apartment Complex.
Cash Flow means the profits or losses of the Partnership from and after
the Commencement Date subject to any applicable FmHA 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 Construction Mortgage or Permanent 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 interest subsidy payments shall be included;
(h) The fees set forth in Sections 6.12 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 of the Apartment Complex pursuant to Section 6.11(a) shall
be deducted.
Certificate means the Original Certificate as amended from time to time
(including any amendment thereto effected by this Agreement).
Class Contribution means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partners, the
Investment Limited Partner, the Special Limited Partner or any Additional
Limited Partner).
Code means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations (permanent and temporary) issued thereunder.
References herein to any Code section shall include any successor provisions.
Commencement Date means the first day of the month in which the Admission
Date occurs.
Competitive Real Estate Commission means that real estate or brokerage
commission paid for the purchase or sale of the Apartment Complex or other
Partnership property which is reasonable, customary and competitive in light of
the size, type and location of the Apartment Complex or other property.
Completion Date means the 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 the fifteen (15)-year period commencing with the
first year of the Credit Period.
Consent of the Investment Limited Partner means the prior written consent
or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in Section
6.12(b).
Construction Lender means First State Bank & Trust Company in its
capacity as holder of the Construction Mortgage, or its successors or assigns
in such capacity.
Construction Mortgage means the financing for the rehabilitation of the
Apartment Complex provided by the Construction Lender in a principal amount of
up to $362,910.
Cost Certification means the date upon which the Investment Partnership
shall have received the written certification of the Auditors, in a form and in
substance satisfactory to Boston Capital, as to the itemized amounts of the
construction and development costs of the Apartment Complex and the Eligible
Basis and Applicable Percentage pertaining to each building in the Apartment
Complex.
Credit Recovery Loan means a constructive interest-bearing advance of the
Investment Limited Partner as more fully described in Section 5.1(f). Credit
Recovery Loans and interest thereon shall not be treated as loans or interest,
respectively, for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(1). For the purposes of Article X, the term Credit Recovery Loan
shall not include any portion of such an advance which shall have
theretofore been paid to the Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section 5.1(f).
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.
89-12 Requirements means the requirements set forth in Internal Revenue
Procedure 89-12 which are prerequisites to the issuance, assuming that each
General Partner is a corporation, by the Service of an advance ruling that the
Partnership will be taxed as a partnership and not as an association taxable as
a corporation for Federal income tax purposes.
Entity means any general partnership, limited partnership, corporation,
joint venture, trust, business trust, cooperative or association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person 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 for any substantial
part of such Person's property, or the issuance of an order for the
winding-up or liquidation of such Person's affairs and the continuance of
any such decree or order unstayed and in effect for a period of sixty
(60) consecutive days, or
(ii) the commencement by such Person of a proceeding seeking any
decree, order or appointment referred to in clause (i), the consent by
such Person to any such decree, order or the appointment, or taking of
any action by such Person in furtherance of any of the foregoing.
Filing Office means the Office of the Secretary of State of the State.
FmHA means the Rural Economic and Community Development (Formerly known
as the Farmers Home Administration) of the United States Department of
Agriculture.
FmHA Loan Agreement means the FmHA Loan Agreements dated June 26, 1995 by
and between the Partnership and FmHA, as amended from time to time.
General Partners means the Persons designated as General Partners in
Schedule A and any Persons who become General Partners as provided herein, in
their capacities as general partners of the Partnership. At any and all times
where there is only one General Partner, the term General Partners shall mean
such sole General Partner.
Hazardous Material shall have 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 shall also include any
meanings given to such terms in any similar state or local statutes,
ordinances, regulations or by-laws. In addition, the term Hazardous Material
shall also include 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 95% Occupancy Date means the first date upon which not less than
95% of the 48 apartment units in the Apartment Complex shall have been leased
to tenants meeting the terms of the Minimum Set-Aside Test under executed
FmHA-approved leases at rentals meeting the requirements of the Rent
Restriction Test.
Installment means an installment of the Investment Limited Partner's
Capital Contribution paid or payable to the Partnership pursuant to Section
5.1.
Interest means the entire interest of a Partner in the Partnership at any
particular time, including the right of such Partner to any and all benefits to
which a Partner may be entitled hereunder and the obligation of such Partner to
comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited Partner, an amount
equal to the Capital Contribution of the Investment Limited Partner divided by
.86 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 24 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 and FmHA, 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 Special
Limited Partner, and any Additional Limited Partner.
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.
Minimum Set-Aside Test means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40% of the
units in the Apartment Complex must be occupied by individuals with incomes
equal to 60% or less of area median income, as adjusted for family size.
Mortgage means the mortgage indebtedness of the Partnership to the
Construction Lender and/or FmHA; where the context admits, Mortgage shall mean
and include the mortgage note evidencing such indebtedness, the mortgage or
deed of trust and security agreement securing such indebtedness, the loan
agreement and all other documentation related thereto which evidence and secure
such indebtedness, including any FmHA documentation related thereto.
Original Agreement has the meaning specified in the Preliminary
Statement.
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, with respect to any
Partner, the sum of (a) the deductions attributable to Partner Non-Recourse
Debt that have been allocated to such Partner and (b) the aggregate amount of
distributions made to such Partner of proceeds of such debt that are allocable
to an increase in minimum gain attributable to such debt (but only if such
Partner or a Related Person bears the economic risk of loss for such debt) in
excess of the sum of (c) such Partner's aggregate share of the net decreases in
minimum gain attributable to such debt and (d) such Partner's share of the
decreases in the minimum gain attributable to such debt resulting from
revaluations of Partnership property subject to such debt. The net increase
(or decrease) in the minimum gain that is attributable to Partner Non-Recourse
Debt equals the sum of (i) any increase (or decrease) in the net increase in
Partnership Minimum Gain during a year that would result if such Partner
Non-Recourse Debt were treated as a Partnership Non-Recourse Liability and (ii)
any decrease (or increase) in the net decrease in Partnership Minimum Gain
during a year that would result if such Partner Non-Recourse Debt were treated
as a Partnership Non-Recourse Liability.
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
computations shall be made in a manner consistent with Treasury Regulation
Section 1.704-1T(b)(4)(iv)(c).
Partnership Non-Recourse Liability means any Partnership liability (or
portion thereof) for which no Partner or Related Person bears the economic risk
of loss as defined in Treasury Regulation Section 1.704-1T(b)(4)(iv)(k)(1).
Permanent Mortgage means the permanent financing provided, or to be
provided by FmHA for the Apartment Complex following the completion thereof in
the aggregate principal amount of $1,326,859.
Permanent Mortgage Commencement means the first date on which all of the
following shall have occurred: (a) the Completion Date; (b) the principal
amount and maturity date of the Permanent Mortgage shall have been finally
determined; and (c) amortization of the Permanent Mortgage shall have
commenced.
Person means any individual or Entity.
Project Documents means and includes the Construction Mortgage and the
Permanent Mortgage, the FmHA Loan Agreement, the Rental Assistance Agreement,
the Management Agreement, all other instruments delivered to (or required by)
the Construction Lender and/or FmHA and all other documents relating to the
Apartment Complex and by which the Partnership is bound, as amended or
supplemented from time to time.
Projected Credit means $22,354 for 1996, $59,611 per annum for each of
the years 1997 through 2005 (inclusive), and $37,257 for 2006; provided,
however, that the Projected Credit for 2005 shall be reduced by the amount, if
any, by which the Actual Credit for 1996 exceeds $22,354.
Qualified Income Offset Item means (1) an allocation of loss or deduction
that, as of the end of each year, reasonably is expected to be made (a)
pursuant to Section 704(e)(2) of the Code to a donee of an interest in the
Partnership, (b) pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership of unrealized
receivables or inventory items and (2) a distribution that, as of the end of
such year, reasonably is expected to be made to a Partner to the extent it
exceeds offsetting increases to such Partner's Capital Account which reasonably
are expected to occur during or prior to the Partnership taxable year in which
such distribution reasonably is expected to occur.
Related Person means a Person related to a Partner within the meaning of
Treasury Regulation Section 1.752-1T(h)(l)-(5).
Rent Restriction Test means the test pursuant to Section 42 of the Code
whereby the gross rent charged to tenants of the low-income units in the
Apartment Complex may not exceed thirty per cent (30%) of the qualifying income
levels.
Rental Assistance Agreement means the Rental Assistance Agreement dated
effective as of October 1, 1993, by and between Millen Villas, Ltd. and FmHA,
as it may be amended from time to time, and any successor agreement.
Reporting Fee means the fee payable to Boston Capital or an Affiliate
thereof pursuant to Section 6.12(c).
Schedule A means Schedule A to this Agreement, as amended from time to
time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and shall also include any meaning given to it in any
similar state or local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a 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 Georgia.
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 $60,213, as evidenced by the execution by or on behalf of such agency
of Form(s) 8609. For the purposes of determining State Designation, each
building in the Apartment Complex shall be treated as having received an
allocation of Tax Credit in an amount equal to the lesser of (i) the amount of
the Tax Credit carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of the 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 a
Limited Partner pursuant to Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman of Bethesda, Maryland
or such other firms of independent certified public accountants as may be
engaged by Boston Capital to review the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant to Section 42
of the Code.
Tax Credit Set-Aside means the date upon which the Partnership receives a
preliminary reservation by the authorized agency of the State of Tax Credit for
the building(s) constituting the Apartment Complex in an annual dollar amount
of not less than $60,213.
Uniform Act means the Uniform Limited Partnership Act as adopted by the
State.
Vessel has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and shall also include any meaning given to it in any
similar state or local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing, and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of
insanity or incompetence, Event of Bankruptcy, dissolution, liquidation, or
voluntary or involuntary withdrawal or retirement from the Partnership for any
reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement. Withdrawal
shall also mean the sale, assignment, transfer or encumbrance by a General
Partner of its Interest as a General Partner. A General Partner which is a
corporation or partnership shall be deemed to have sold, assigned, transferred
or encumbered its Interest as a General Partner in the event (as a result of
one or more transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to the laws of descent
and distribution) 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 Loan means a loan made by the General Partners to the
Partnership, as described in Section 9.1.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Edenfield Place Apartments, 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 P.O. Box 128, Cordele,
Georgia 31015, 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:
Rea Development Company
604 Fleming Road
Cordele, GA 31015
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in, construct,
develop, improve, maintain, operate, lease and otherwise deal with the
Apartment Complex. The Partnership shall operate the Apartment Complex in
accordance with any applicable FmHA regulations and requirements. The
Partnership shall not engage in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect until December
31, 2045, 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 FmHA;
(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 (except the Working
Capital Loan and Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly and severally, are
hereby authorized to incur personal liability for the repayment of funds
advanced by the Construction Lender (and interest thereon) pursuant to the
Construction Mortgage. However, from and after Permanent Mortgage
Commencement, neither any General Partner nor any Related Person shall at any
time bear, nor shall the General Partners permit any other Partner or any
Related
Person to bear, the economic risk of loss for the payment of any portion of any
Mortgage. The General Partners promptly shall cause the Partnership to elect,
to the extent permitted and in the manner prescribed by FmHA, that all debt
service payments made by the Partnership to FmHA shall be applied first to
interest determined at the stated rate set forth in the promissory note to
FmHA, all as provided under FmHA regulations, and then to principal due under
the Permanent Mortgage.
B. The Partnership may decrease, increase or refinance the Permanent
Mortgage and may make any required transfer or conveyance of Partnership assets
for security or mortgage purposes, provided, however, any such decrease (except
through the fifty-year amortization schedule anticipated at Permanent Mortgage
Commencement), increase or refinancing of the Permanent 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 or the leasing of all or substantially all the
apartments to a public housing authority at rents satisfactory to FmHA as
expressed in writing.
D. The total compensation to all Persons for the sale of the Apartment
Complex shall be limited to a Competitive Real Estate Commission, not to exceed
six per cent (6%) of the contract price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as set forth on
Schedule A. No interest shall be paid on any Capital Contribution. No Partner
shall have the right to withdraw its Capital Contribution or to demand and
receive property of the Partnership in return for its Capital Contribution,
except as may be specifically provided in this Agreement or required by law.
(b) An individual Capital Account shall be established and maintained on
behalf of each Partner, including any additional or substituted Partner who
shall hereafter receive an interest in the Partnership. In accordance with
Treasury Regulation Section 1.704-1(b), the Capital Account of each Partner
shall consist of (i) the amount of cash such Partner has contributed to the
Partnership plus (ii) the fair market value of any property such Partner has
contributed to the Partnership net of any liabilities assumed by the
Partnership or to which such property is subject plus (iii) the amount of
profits or income (including tax-exempt income) allocated to such Partner less
(iv) the amount of losses and deductions allocated to such Partner less (v) the
amount of all cash distributed to such Partner less (vi) the fair market value
of any property distributed to such Partner net of any liabilities assumed by
such Partner or to which such property is subject less
(vii) such Partner's share of any other expenditures which are not deductible
by the Partnership for Federal income tax purposes or which are not allowable
as additions to the basis of Partnership property and shall be (viii) subject
to such other adjustments as may be required under the Code. The Capital
Account of a Partner shall not be affected by any adjustments to basis made
pursuant to Section 743 of the Code but shall be adjusted with respect to
adjustments to basis made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted Partner (as
hereinafter defined) shall be in the same amount as, and shall replace, the
Capital Account of the Partner which such Substituted Partner succeeds, and,
for the purposes of this Agreement, such Substituted Partner shall be deemed to
have made the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term "Substituted
Partner," as used in this paragraph, shall mean a Person who shall become
entitled to receive a share of the allocations and distributions of the
Partnership by reason of such Person succeeding to all or any part of the
Interest of a Partner by assignment of all or any part of a Partner's
Interest. To the extent a Substituted Partner receives less than 100% of the
Interest of a Partner he succeeds, the original Capital Account of such
transferee
Substituted Partner and his Capital Contribution shall be in proportion to the
portion of the transferor Partner's Interest prior to the transfer which the
transferee receives, and the Capital Account of the transferor Partner who
retains a portion of his former Interest and his Capital Contribution shall
continue, and not be replaced, in proportion to the portion of the transferor
Partner's Interest prior to the transfer which the transferor Partner retains.
Nothing in this Section 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.
4.3 Investment Limited Partner, Special Limited Partner, and
Original Limited Partner
The Original Limited Partners hereby withdraw as limited partners of the
Partnership and acknowledges that they no longer have any Interest in, or
rights or claims against, the Partnership as Limited Partners as of the
Admission Date. The Investment Limited Partner, and the Special Limited
Partner are hereby admitted as the sole Limited Partners in substitution for
the Original Limited Partner as of the Admission Date and agree to be bound by
the terms and provisions of the Project Documents and this Agreement. The
names and addresses of the Investment Limited Partner and the Special Limited
Partner are as set forth on Schedule A. The General Partners shall have no
authority to admit additional Limited Partners without the Consent of the
Investment Limited Partner and the Special Limited Partner.
4.4 Liability of the Limited Partner
None of the Investment Limited Partner, the Special Limited Partner, nor
any Person who becomes an Additional Limited Partner shall be liable for any
debts, liabilities, contracts or obligations of the Partnership and shall only
be liable to pay its Capital Contribution as and when the same is 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 FmHA (if such consent is required) to:
(i) amend this Agreement in any particular;
(ii) dissolve the Partnership;
(iii) 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: (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 the FmHA 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 purpose or (b) cause the
Partnership to be treated for Federal income tax purposes as an
association taxable as a corporation;
(iv) continue the business of the Partnership with a substitute
General Partner; and
(v) approve or disapprove the sale of all or substantially all of
the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any further action
by any Partner, the Special Limited Partner or its designee shall automatically
become a General Partner and acquire in consideration of a cash payment of $100
such portion of the Interest of the removed General Partner as counsel to the
Investment Limited Partner shall determine is the minimum appropriate interest
in order to assure the continued status of the Partnership as a partnership
under the Code and under the Uniform Act, (ii) the remaining portion of the
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 Partners
shall automatically and irrevocably be delegated all of the powers and duties
of the General Partners pursuant to Section 6.13. The Special Limited Partner
or any successor General Partner proposed by the Special Limited Partner shall
have the option, exercisable in its sole discretion, to acquire the Interest of
any removed General Partner, or any portion thereof, upon payment of the agreed
or then present fair market value of such Interest or portion thereof. 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 Special 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 no less than
five (5) years with equal installments each year. In addition, upon removal,
the Partnership must promptly pay to the removed General Partner all amounts
then accrued and owing to the removed General Partner; provided, however, that
notwithstanding the language of Section 6.12, Article XI or any other provision
hereof, no removed General Partner or any Affiliate thereof shall be entitled
to receive any fee, compensation or other remuneration from the Partnership,
other than (i) the above-described payment for the Interest, or portion
thereof, of the removed General Partner, and (ii) any such fee, compensation or
other remuneration which had already been earned in full prior to the date of
such removal. The
Partnership is not authorized to enter into any arrangement whereby any fee,
compensation or other remuneration could be payable directly or indirectly to
any General Partner or Affiliate thereof in a manner inconsistent with the
immediately preceding sentence unless the Consent of the Special Limited
Partner shall have been obtained to such particular arrangement. The
Partnership may offset against any payments to a General Partner removed under
this Section 4.5 any damages suffered by the Partnership as a result of any
breach of the obligations of such General Partner hereunder. A General Partner
so removed will not be liable as a general partner for any obligations of the
Partnership after the effective date of its removal.
(c) In order to implement Section 4.5(a)(v), the General Partners are
hereby required, within five (5) days after their receipt of any offer to
purchase the Apartment Complex or all of the Interests in the Partnership, to
send a copy of such offer (or a written description of any such oral offer) to
each of the Limited Partners. If, within thirty (30) days of its receipt of
any such copy of such an offer, the Special Limited Partner shall send notice
to the General Partners that the Special Limited Partner desires that the
Partnership accept such offer, then the General Partners shall be required to
accept such offer on behalf of the Partnership and proceed with all deliberate
speed to close such transaction unless otherwise instructed by the Special
Limited Partner at any point prior to the closing of such transaction. To the
extent, if any, that the Special Limited Partner shall determine, in its
discretion, that the General Partners are not proceeding appropriately with
respect to any such offer or closing, each Partner hereby grants to the Special
Limited Partner an irrevocable (to the extent permitted by law) power of
attorney coupled with an interest to execute and deliver any and all documents
and instruments on behalf of the Partnership and any Partner as the Special
Limited Partner may deem to be necessary or appropriate in order to effect the
acceptance of and/or closing pursuant to any such offer in such a manner as the
Special Limited Partner shall, in its discretion, determine to be appropriate.
4.6 Meetings
The General Partners or Limited Partners holding more than ten per cent
(10%) of the then outstanding Limited Partner Interests may call meetings of
the Partnership for any matters for which the Limited Partners may vote as set
forth in this Agreement. A list of the names and addresses of all Limited
Partners shall be maintained as part of the books and records of the
Partnership and shall be made available upon request to any Limited Partner or
his representative at his cost. Upon receipt of a written request either in
person or by certified mail stating the purpose(s) of the meeting, the General
Partners shall provide all Limited Partners within ten (10) days after receipt
of said request, written notice (either in person or by certified mail) of a
meeting and the purpose of such meeting to be held on a date not less then
fifteen (15) nor more than sixty (60) days after receipt of said request, at a
time convenient to the Limited Partners. All meetings shall be held at the
principal office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10 shall be
paid in full in cash on the Admission Date. The Investment Limited Partner's
Capital Contribution shall be paid in cash installments (the "Installments"),
as follows:
(1) $200,292 (the "First Installment") on the latest of (i) the
Admission Date, (ii) receipt of commitment acceptable to the Investment
Limited Partner for the Permanent Mortgage; (iii) Tax Credit Set Aside;
or (iv) Closing of the Construction Mortgage;
(2) $83,455 (the "Second Installment") on the latest of (i) the
Completion Date, (ii) Cost Certification, (iii) State Designation; (iv)
receipt of an updated title insurance policy satisfactory to the
Investment Limited Partner and its counsel;
(3) $40,074 (the "Third Installment") on the latest of (i) the
Initial 95% Occupancy Date, (ii) Permanent Mortgage Commencement, or
(iii) Breakeven Point;
(4) $10,000 (the "Fourth Installment") upon receipt of a tax
return and an audited financial statement for the year in which Breakeven
Point is achieved.
provided, however, that the General Partners shall give the Investment Limited
Partner not less than 21 days' written notice prior to the due date of each
Installment subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the General Partners to the
Investment Limited Partner of a written certificate (the "Payment Certificate")
stating that as of the date of such certificate (i) all the conditions to the
payment of such Installment have been satisfied and (ii) all representations
and warranties of the 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 any Installment shall constitute a
confirmation that, as of the date of payment, all such conditions are satisfied
and all such representations and warranties are true and correct. The
obligation of the Investment Limited Partner to pay the First Installment is
also conditioned upon delivery by the General Partners to the Investment
Limited Partner of (i) a legal opinion of independent counsel to the
Partnership, which opinion must be satisfactory to the Investment Limited
Partner as to form, content and identity of counsel and (ii) an owner's title
insurance policy issued to the Partnership in an amount not less than
$1,723,990, endorsed through the Admission Date, and satisfactory to the
Investment Limited Partner, in its sole discretion, as to form, content, and
identity of title insurance company. In no event shall any Installment become
due until all of the conditions for all of the Installments listed prior to the
Installment in question in Section 5.1(a) shall have been satisfied and all of
such prior installments shall have become due. Notwithstanding the foregoing,
however, if at any time prior to the date when an Installment becomes due and
payable, the Partnership has an "Operating Deficit" (expenses in excess of
revenues which the General Partners would be required to fund pursuant to
Section 6.10), then the Investment Limited Partner may, at its option, waive
the requirement of the delivery of the Payment Certificate or any other
condition with respect to part or all of such Installment and pay such part or
all of such Installment, provided that the proceeds of the amount so paid are
used by the Partnership to fully fund such Operating Deficit; provided,
however, that if the proceeds of such amount so paid are designated in Section
6.12 or Section 10.2(c) to be used to pay fee(s) or special distribution(s),
then such proceeds shall be utilized to pay such fee(s) or special
distribution(s) and the recipient(s) thereof shall be required to, and hereby
agree to, utilize the proceeds of such fee(s) or special distribution(s) to
fund such Operating Deficit, in which case the Investment Limited Partner is
hereby authorized to directly fund such Operating Deficit with such funds then
being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be dated and
delivered not less than ten (10) nor more than thirty (30) days prior to the
due date for such Installment.
(d) If, as of the date when an Installment would otherwise be due, any
statement required to be made in the Payment Certificate for such Installment
cannot be truthfully made, the General Partners shall notify the Investment
Limited Partner of the reason why such statement would be untrue if made, and
the Investment Limited Partner shall not be required to pay such Installment;
provided, however, that if (i) any such statement can subsequently be
truthfully made and (ii) the Investment Limited Partner has not irrevocably
lost, in the good faith judgment of the Investment General Partner, any
material tax or other benefits hereunder, then the Investment Limited Partner
shall pay such Installment to the Partnership thirty (30) days after delivery
by the General Partners to the Investment Limited Partner of the Payment
Certificate together with an explanation of the manner in which each such
statement had become true.
(e) 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 date on which the first building in the Apartment Complex is placed in
service for the purposes of Section 42 of the Code (a "Reduction Year") the
Actual Credit is or was less than the Projected Credit, then the General
Partner shall pay to the Investment Limited Partner, the Reduction Amount. The
Reduction Amount shall be equal to the sum of (A) excess of the Projected
Credit for such year over the Actual Credit for such year multiplied by .56
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 Partnership used all of the Tax Credits allocated to him in the year
of allocation. The Auditors shall make their determination of the amount of
the Actual Credit with respect to each Reduction Year within 30 days following
the end of such year. The Investment Limited Partner shall be eligible to be
paid a Reduction Amount with respect to each Reduction Year. Any Reduction
Amount shall, at the option of the Investment Limited Partner, either (i) first
be applied to reduce the Installment next due to be paid by the Investment
Limited Partner, with any portion of such reduction in excess of the amount of
such Installment then being applied to reduce succeeding Installments, provided
that if no further Installments remain to be paid or if the Reduction Amount
shall exceed the sum of the amounts of the remaining Installments, then the
entire Reduction Amount or the balance of the Reduction Amount, as the case may
be, shall be paid by the General Partners to the Investment Limited Partner
promptly after demand is made therefor, as a payment of damages for breach of
warranty 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.
(f) In the event that, for any reason, at any time after the end of the
year during which there occurs the 60-month anniversary of the later of (i) the
Admission Date or (ii) the date on which the first building in the Apartment
Complex is placed in service for the purposes of Section 42 of the Code, the
amount of the Actual Credit shall be less than the Projected Credit with
respect to any fiscal year of the Partnership (such difference being
hereinafter referred to as a "Credit Shortfall"), the Investment Limited
Partner shall be treated as having made a constructive advance to the
Partnership with respect to such year (a "Credit Recovery Loan"), which shall
be deemed to have been made on January 1 of such year in an amount equal to the
sum of (i) the Credit Shortfall for such year plus (ii) the amount of any
recapture, interest or penalty payable by the limited partners and/or the
holders of beneficial assignee certificates of the Investment Limited Partner
as a result of the Credit Shortfall for such year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the Investment
Partnership used all of the Tax Credits allocated to him in the year of
allocation. Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such principal advances
shall have been deemed to have been made under this Section 5.1(f) at 9% per
annum. Credit Recovery Loans shall be payable by the Partnership as provided
in Section 10.2(b), Clause Third.
(g) If, as of the Completion Date and based upon the Cost
Certification, it is determined that the Apartment Complex will not be eligible
to receive Tax Credits in an annual amount of at least $60,213; or it is, at
any time, determined by the Auditors, the Tax Accountants or the Service that,
for any other reason, the Apartment Complex will not be eligible to receive Tax
Credit in an annual dollar amount of at least $60,213, then (a) the General
Partners shall pay to the Investment Limited Partner an amount equal to 99% of
the product of: (A) difference between (i) $60,213 and (ii) the annual amount
of Tax Credit allocated and available to the Partnership and (B) 5.6 and (b)
the Projected Credit for each year shall thereafter be redefined to mean 99% of
the total amount of Tax Credit actually so allocated and available to the
Partnership for such year (the "Revised Projected Credit"). Any amount payable
by the General Partners to the Investment Limited Partner pursuant to this
Section 5.1(g) shall, at the option of the Investment Limited Partner, either
(i) be applied to any amounts, if any, remaining to be paid by the Investment
Limited Partner pursuant to Section 5.1(a), 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.
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit Benchmarks and
Standards. If (i) by November 30, 1996 (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
meeting the terms of the Minimum Set-Aside Test under executed leases which
shall have received any necessary Agency or Lender approvals at rental levels
meeting the requirements of the Rent Restriction Test, or (ii) Permanent
Mortgage Commencement shall not have occurred prior to October 31, 1996 (or any
later date fixed by the General Partners with the Consent of the Investment
Limited Partner), or (iii) State Designation shall not have occurred by
February 1, 1997 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner), or (iv) the Partnership shall fail
to meet the Minimum Set-Aside Test or the Rent Restriction Test within 12
months of the date upon which the final building in the Apartment Complex is
placed in service; or (v) the Partnership fails to continue to meet either such
Test at any time during the sixty (60)-month period following the initial
achievement of the Minimum Set-Aside Test and Rent Restriction Test, or (vi)
the Completion Date shall not have occurred prior to September 30, 1996, or
(vii) the Breakeven Point shall not have been achieved within twelve (12)
months of the Completion Date, or (viii) on or before the Admission Date, the
Partnership has not met the requirements for, and received, a "carryover
allocation" of Tax Credits pursuant to Section 42 (h)(1)(E) of the code, or
(ix) if foreclosure proceedings have commenced under the Construction Mortgage
Loan prior to Permanent Mortgage Commencement, or (x) Carryover Certification
has not occurred by December 31, 1995. If the Investment Limited Partner
and/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 thirty (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 thirty (30) days
thereafter repurchase the Interest of such Partner by paying to such Partner an
amount equal to its Invested Amount. Provided, however, with respect to an
event whereby the General Partner shall be obligated to purchase the Interests
of the Investment Limited Partner and the Special Limited Partner because of
Force Majeure, the Repurchase Amount shall equal such Partner's Capital
Contribution minus the amount, if any, of such Partner's Capital Contribution
which shall not yet have been paid (or deemed to have been paid) to the
Partnership plus the amount of any third-party costs, including, but not
limited to, attorney's fees incurred by or on behalf of such Partner in
implementing this Section 5.2(a) in the event the Investment Limited partner
and/or the Special Limited Partner require such a repurchase. If either the
Special Limited Partner or the Investment Limited Partner elects to require a
repurchase of its Interest and the payment to it of an amount equal to its
Repurchase Amount, it shall send notice thereof to the Partnership within
thirty (30) days after the mailing date of the 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 ten (10) days after the Partnership receives any such notice from a
Partner requesting the purchase of its Interest repurchase the Interest of such
Partner by paying to such Partner an amount equal to its Repurchase Amount. In
the event of any repurchase of the Interest of the Special Limited Partner or
Investment Limited Partner under this Agreement, then upon payment of the
repurchase amount in full the Interest so repurchased shall be conveyed to the
General Partners or their designee. Any transferring Limited Partner shall
execute any and all documents of transfer as the General Partners may
reasonably request in order to effectuate such transfer.
(b) Lender Disapproval. If the Construction Lender and/or FmHA shall
disapprove, or fail to give any required approval of, the Investment Limited
Partner and/or the Special Limited Partner as a Limited Partner hereunder
within one hundred eighty (180) days of its admission to the Partnership, then
the Investment Limited 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 Construction Lender and/or FmHA in its disapproval), at the option of the
Partner being disapproved or not approved (if not directed by the Construction
Lender and/or FmHA to withdraw), cease to be a Limited Partner. The General
Partners shall, within ten (10) days of the effective date of such cessation,
pay to the Partner being disapproved or not approved an amount equal to its
Invested Amount minus the amount, if any, of such Partner's Capital
Contribution which shall not have been paid or deemed to have been paid, plus
the amount of any third party costs, including, but not limited to, attorney's
fees, incurred by or on behalf of the Partner being disapproved or not
approved.
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner of an amount equal to its Invested Amount 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 shall
have the right to irrevocably waive its right to have its Interest repurchased
pursuant to any clause or clauses of Section 5.2(a), or any portion thereof, at
any time during which any of such rights shall be in effect. Such a waiver
shall be exercised by delivery to the General 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, are thereby waived
from that date forward.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions of this
Agreement, the General Partners for, in the name and on behalf of the
Partnership, are hereby authorized to do the following in furtherance of the
purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any real
or personal property;
(2) To construct, operate, maintain, finance and improve, and to
own, sell, convey, assign, mortgage or lease any real estate and any
personal property;
(3) To borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment
Complex or any other assets of the Partnership;
(4) To execute the Construction and Permanent Mortgages, the other
Project Documents and all such other documents as the General Partners
deem necessary or appropriate in connection with the acquisition,
development and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify the
Construction and Permanent Mortgages or any other financing affecting the
Apartment Complex;
(6) To employ the Management Agent (which may be an Affiliate of
the General Partners) and to pay reasonable compensation for its
services;
(7) To employ their respective Affiliates to perform services for,
or sell goods to, the Partnership;
(8) To execute contracts with FmHA, the State or any subdivision or
agency thereof or any other government agency to make apartments or
tenants in the Apartment Complex eligible for any public-subsidy program;
(9) To execute leases of some or all of the apartment units of the
Apartment Complex to a public housing authority and/or to a non-profit
corporation, cooperative or other non-profit Entity; and
(10) To enter into any kind of activity and to perform and carry
out contracts of any kind which may be lawfully carried on or performed
by a partnership and to file all certificates and documents which may be
required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the General
Partners shall have no authority to perform any act in violation of applicable
law, FmHA or other government regulations, requirements of any Lender or the
Project Documents. In the event of any conflict between the terms of this
Agreement and any applicable FmHA or other government regulations or
requirements of the Lender, the terms of such regulations or requirements shall
govern. Neither shall the General Partners have any authority to do any of the
following acts without the Consent of the Investment Limited Partner and the
prior written consent of the Special Limited Partner:
(1) To borrow in excess of $10,000 in the aggregate at any one time
outstanding on the general credit of the Partnership, except borrowings
constituting Subordinated Loans or the Working Capital Loan;
(2) To borrow from the Partnership or commingle Partnership funds
with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the Apartment Complex or its use or which are at a
cost in excess of $10,000 in a single Partnership fiscal year, except (a)
replacements and remodeling in the ordinary course of business or under
emergency conditions or (b) construction paid for from insurance
proceeds;
(4) To acquire any real property in addition to the Apartment
Complex;
(5) Following Permanent Mortgage Commencement, to increase,
decrease (except through the fifty year amortization schedule provided
for in the Permanent Mortgage) or refinance the Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Minimum
Set-Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer the Apartment
Complex or substantially all the assets of the Partnership;
(8) To terminate any agreement with FmHA;
(9) To pledge or assign any of the Capital Contribution of the
Investment Limited Partner or the proceeds thereof; or
(10) To do any act required to be approved or ratified by all
limited partners under the Uniform Act.
(b) In the event that any General Partner violates any provision of
Section 6.2(a), the Special Limited Partner, in its sole discretion, may cause
itself or its designee to be admitted as an additional General Partner without
any further action by any other Partner. Upon any such admission of an
additional General Partner, each pre-existing General Partner shall be deemed
to have assigned proportionally to the additional General Partner,
automatically and without further action, such portion of its General Partner
interest so that the additional General Partner shall receive not less than one
percent (1%) interest in the profits, losses, tax credits and distributions of
the Partnership in consideration of $1.00 and any other consideration which may
be agreed upon. An additional General Partner so admitted shall automatically
become the Managing General Partner and be irrevocably delegated all of the
power and authority of all of the General Partners pursuant to Section 6.13.
Any such additional General Partner shall have the right to withdraw as a
General Partner at any time, leaving the pre-existing General Partners once
again as the only General Partners, the provisions of Article VII notwith-
standing. Each Partner hereby grants to the Special Limited Partner a special
power of attorney, irrevocable to the extent permitted by law and coupled with
an interest, to amend the Certificate and this Agreement and to do anything
else which, in the view of the Special Limited Partner, may be necessary or
appropriate to accomplish the purposes of this Section 6.2(b) or to enable any
additional General Partner admitted pursuant to this Section 6.2(b) to manage
the business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its economic
obligations hereunder, and each other General Partner shall fully indemnify and
hold harmless the additional General Partner from and against any and all
losses, judgments, liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with its capacity as a General Partner.
(c) Neither the Investment General Partner nor any Affiliate thereof
shall be given an exclusive right to sell, or exclusive employment to sell, the
Apartment Complex.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any salary or other
direct or indirect compensation for any services or goods provided in
connection with the Partnership or the Apartment Complex, except as may be
specifically provided in Section 6.12 and Article XI or as to which the written
consent of the Special Limited Partner shall have been obtained to the precise
terms thereof prior to the commencement of such services or the provision of
such goods. Any Partner may engage independently or with others in other
business ventures of every nature and description; neither the Partnership nor
any other Partner shall have any rights in and to such independent ventures or
the income or profits derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General Partners shall
have the exclusive right to control the business of the Partnership. The
Investment Limited Partner shall have no right to take part in the management
or control of the business of the Partnership or to transact any business in
the name of the Partnership. No provision of this Agreement which makes the
Consent of the Investment Limited Partner a condition for the effectiveness of
an action taken by the General Partners is intended, and no such provision
shall be construed, to give the Investment Limited Partner any participation in
the control of the Partnership business. Each of the Investment Limited
Partner and the Special 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. All
Partners hereby agree that Rea Development Company 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.
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 FmHA 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 FmHA, or, if the Apartment Complex is no
longer subject to FmHA 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) 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 (C) in any event, sufficient
to prevent the Partnership from becoming a co-insurer under any such policies.
No deductibles on such policies may exceed $1,000. The public liability
insurance in favor of the Partnership shall be in an amount not less than
$6,000,000. Through the Completion Date, or such later date as may be required
by the Construction Lender or FmHA, 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 FmHA or the Construction 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. Upon the request of the Investment Limited Partner to the General
Partners, the General Partners shall cause the applicable insurer to name the
Investment Limited Partner as an "additional insured" on each Partnership
insurance policy.
(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) The General Partners shall establish and maintain reasonable reserves
to provide for working capital needs, improvements, replacements and any other
contingencies of the Partnership. At a minimum, the General Partners shall
cause the Partnership to annually deposit up to $12,312 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. Funding of this account may be suspended in
any period during which this account has a balance of $123,120.
(f) Each General Partner shall be bound by the Project Documents, and no
additional General Partner shall be admitted if he, she or it has not first
agreed to be bound by this Agreement (and assume the obligations of a General
Partner hereunder) and by the Project Documents to the same extent and under
the same terms as the other General Partners.
(g) The General Partners shall take all actions necessary to ensure that
the Investment Limited Partner receives the full amount of the Projected
Credit, including, without limitation, the rental of apartments to appropriate
tenants and the filing of certifications, on a quarterly basis, that the
Apartment Complex and its tenants are in compliance with all applicable federal
and state requirements and regulations. 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 within twelve (12) months after the date that
the Apartment Complex is placed in service and throughout the Compliance Period
so as to permit the Partnership to be entitled to the maximum available Tax
Credit, (ii) the Partnership to comply with all State Tax Credit monitoring
procedures, (iii) all dwelling units in the Apartment Complex to be leased for
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 with comparable amenities available to low-income tenants on a
comparable basis without separate fees.
(h) On or before the Admission Date, the General Partners shall provide
to the Investment Limited Partner either (i) an appraisal of the Apartment
Complex prepared by a competent independent appraiser or (ii) completed FmHA
Forms 1924-13 (estimate and certificate of actual cost) and 1930-7 (statement
of budget, income and expense) or HUD project cost and budget analysis on Form
2264, or any successor FmHA or HUD form, any comparable form of a state or
other governmental agency, including any applicable Tax Credit allocation
agency, setting forth estimates with respect to construction and mortgage
financing costs and initial rental income and operating expense figures for the
Apartment Complex.
(i) The General Partners shall (i) not store (except in compliance with
all laws, ordinances, and regulations pertaining thereto) or dispose of any
hazardous Material at the Apartment Complex, or at or on any other Site or
Vessel owned, occupied, or operated either by any General Partner, any
Affiliate of a General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor.indirectly transport
or arrange for the transport of any Hazardous Material (except in compliance
with all laws, ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any General
Partner's obtaining knowledge of any potential or known release, or threat of
release, of any Hazardous Material at or from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General Partner, any
Affiliate of a General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a lien on the
Apartment Complex; (y) upon any General Partner's receipt of any notice to such
effect from any Federal, state or other governmental authority; and (z) upon
any General Partner's obtaining knowledge of any incurrence of any expense or
loss by any such governmental authority in connection with the assessment,
containment, or removal of any Hazardous Material for which expense or loss any
General Partner may be liable or for which expense or loss a lien may be
imposed on the Apartment Complex.
(j) The General Partners shall request in writing of FmHA that FmHA cause
the Investment Limited Partner to be named as an "interested party" in the
Permanent Mortgage documents, so that FmHA will notify the Investment Limited
Partner of any default or other problem under the Permanent Mortgage.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment Limited
Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership validly
existing and in good standing under the laws of the State and has
complied with all filing requirements necessary for its existence and to
preserve the limited liability of the Investment Limited Partner and the
Special Limited Partner .
(2) No event or proceeding has occurred or is pending or threatened
which would (a) materially adversely affect the Partnership or its
properties, or (b) materially adversely affect the ability of the General
Partners or any of their Affiliates to perform their respective
obligations hereunder or under any other agreement with respect to the
Apartment Complex, other than legal proceedings which have been bonded
against without recourse to Partnership assets in such manner as to stay
the effect of the proceedings or otherwise have been adequately provided
for. This subparagraph shall be deemed to include, without limitation,
the following: (x) legal actions or proceedings before any court,
commission, administrative body or other governmental authority having
jurisdiction over the zoning applicable to the Apartment Complex; (y)
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) No Partner or Related Person bears the economic risk of loss
with respect to the Permanent Mortgage. No General Partner has, either
on its own behalf or on behalf of the Partnership, incurred any financial
responsibility with respect to the Partnership prior to the Admission
Date, other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been completed in a
timely manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners of any zoning,
environmental or similar regulation applicable to the Apartment Complex
which could have a material adverse effect thereon, and the Partnership
has complied with all applicable municipal and other laws, ordinances and
regulations relating to such construction and use of the Apartment
Complex. All appropriate public utilities, including, but not limited
to, water, electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will be available
and operating properly for each unit in the Apartment Complex at the time
of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple title to
the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (a) are both permitted by the Project
Documents and are noted or excepted in the title insurance policy
delivered by the Partnership to the Investment Limited Partner in
satisfaction of the requirements of Section 5.1(b) and (b) do not
materially interfere with use of the Apartment Complex (or any part
thereof) for its intended purpose or have a material adverse effect on
the value of the Apartment Complex.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken pertaining
to the Partnership or the Apartment Complex by each Affiliate of a
General Partner which is a corporation 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 Affiliate or any of its properties is bound, nor constitute a
violation of any law, administrative regulation or court decree.
(8) Any General Partner which is a corporation (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 the 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) No Event of Bankruptcy has occurred with respect to any General
Partner.
(10) All accounts of the Partnership required to be maintained
under the terms of the FmHA Loan Agreement, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by FmHA.
(11) If the only General Partner(s) are one or more corporation(s),
then the General Partner(s) have a net worth which satisfies the 89-12
Requirements.
(12) All payments and expenses required to be made or incurred in
order to complete construction of the Apartment Complex in conformity
with the Project Documents, to fund any reserves hereunder or under any
other Project Document required to be funded at or prior to the later of
the Admission Date or Permanent Away Commencement, to satisfy all
requirements under the Project Documents and/or which form the basis for
determining the principal sum of the Permanent Mortgage and to pay the
Construction and Development Fee have been or will be paid or provided
for utilizing only (a) the funds available from the Construction
Mortgage, (b) the Capital Contribution of the Investment Limited Partner,
(c) the Capital Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, (d) the available net
rental income, if any, earned by the Partnership prior to Permanent
Mortgage Commencement (to the extent that it is permitted to be used for
such purposes by FmHA), (e) any insurance proceeds and (f) the funds
furnished by the General Partners pursuant to Sections 6.5(a) and
6.11(a).
(13) The amount of Tax Credit which is expected to be allocated by
the Partnership to the Investment Limited Partner is $22,354 for 1996,
$59,611 per annum for each of the years 1997 through 2005 (inclusive) and
$37,633 for 2006.
(14) The Apartment Complex is being developed in a manner which
satisfies and shall continue to satisfy, all restrictions, including
tenant income and rent restrictions, applicable to projects generating
Tax Credits.
(15) No General Partner, Affiliate of a General Partner or Person
for whose conduct any General Partner is or was responsible has ever: (i)
owned, occupied, or operated a Site or Vessel on which any Hazardous
Material was or is stored, transported, or disposed of, except if such
storage, transport or disposition was or is at all times in compliance
with all laws, ordinances, and regulations pertaining thereto; (ii)
directly or indirectly transported, or arranged for transport, of any
Hazardous Material (except if such transport was or 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 either
by any General Partner, Affiliate of a General Partner, or Person for
whose conduct any General Partner is or was responsible or whose
liability may result in a lien on the Apartment Complex; or (y) the
incurrence of any expense or loss by any such governmental authority or
by any other Person in connection with the assessment, containment, or
removal of any release or threat of release of any Hazardous Material
from the Apartment Complex or any such Site or Vessel.
(16) To the best of the General Partners' knowledge, no Hazardous
Material was ever or is now stored on, transported, or disposed of on the
land comprising the Apartment Complex, except to the extent any such
storage, transport or disposition was at all times in compliance with all
laws, ordinances, and regulations pertaining thereto.
(17) The General Partners have fulfilled and will continue to
fulfill all of their duties and obligations under Section 6.5.
(18) The Rental Assistance Agreement provides for rental
assistance to be provided for 100% of the units in the Apartment Complex.
(19) On or before the Admission Date, the General Partners shall
have made capital contributions in the aggregate amount of $43,090.
(20) No building which constitutes any part of the Apartment
Complex was last placed in service for any purpose within ten years of
the date such building was purchased by the Partnership, the General
Partners, or any of them, or any Affiliate of any General Partner.
(21) No building which constitutes any part of the Apartment
Complex has ever been placed into service by any General Partner, or any
them, or any Person related to the General Partners or any of them,
within the meaning of Section 42 of the Code.
(22) No building which constitutes any part of the Apartment
Complex has received an allocation of low-income housing tax credit for
which the fifteen year compliance period is still in effect.
(23) Within the ten years prior to the Partnership's acquisition of
the Apartment Complex, no rehabilitation work has been performed, on any
building which constitutes any part of the Apartment Complex, the cost
for which was greater than 25% of such building's adjusted basis.
(24) The total cost of rehabilitation expenses, as that term is
defined in Section 42 of the Code, incurred during any 24 month period
with respect to each building constituting any part of the Apartment
Complex was equal to, or greater than, the greater of (a) ten percent
(10%) of such building's unadjusted basis, or $3,000 per low-income
housing unit in such building.
(25) The Partnership has fulfilled all requirements set forth in
Section 42 of the Code for each building to qualify for the acquisition
and rehabilitation tax credits as set forth in said Section.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at any time bear
the economic risk of loss for the payment of any portion of any Mortgage, and
the General Partners shall not permit any other Partner or any Related Person
to bear the economic risk of loss for the payment of any portion of any
Mortgage, except as may be expressly permitted with respect to the Construction
Mortgage 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 interests of the
Partnership and such course of conduct did not constitute negligence or
misconduct of such General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be indemnified by the
Partnership against losses, judgments, liabilities, expenses and amounts paid
in settlement of any claims sustained in connection with the Partnership,
provided that all of the following conditions are met: (i) such General Partner
has determined, in good faith, that the course of conduct which caused the
loss, judgment, liability, expense or amount paid in settlement was in the best
interests of the Partnership; and (ii) such loss, judgment, liability, expense
or amount paid in settlement was not the result of negligence or misconduct
on the part of such General Partner or Affiliate thereof; and (iii) such
indemnification or agreement to hold harmless is recoverable only
out of the assets of the Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no General Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer shall be
indemnified for any losses, liabilities or expenses arising from or out of an
alleged violation of Federal or state securities laws unless (i) there has been
a successful adjudication on the merits of each count involving securities laws
violations as to the particular indemnitee and, the court approves
the indemnification of such litigation costs, (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee and, the court approves the indemnification of
such litigation costs or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and the court finds
that indemnification of the settlement and related costs should be made. In any
claim for indemnification for Federal or state securities law violations, the
party seeking indemnification shall, prior to seeking court approval for such
indemnification, place before the court the positions of the Securities and
Exchange Commission, the Massachusetts Securities Division, the Georgia
Securities Division, and any other applicable state securities administrator
with respect to the issue of indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance, which insures any party
against any liability as to which such party is herein prohibited from being
indemnified.
(e) The Partnership may indemnify Affiliates of a General Partner under
this Section 6.8 only if the loss involves activity in which such Affiliates
acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term "Affiliate" shall
mean any Person performing services on behalf of the Partnership who (i)
directly or indirectly controls, is controlled by or is under common control
with a General Partner; (ii) owns or controls ten per cent (10%) or more of the
outstanding voting securities of a General Partner; (iii) is an officer,
director, partner or trustee of a General Partner; or (iv) if a
General Partner is an officer, director, partner or trustee, is any company for
which the General Partner acts in any such capacity.
6.9 Indemnification of 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 Partners or
any of their Affiliates, or (b) any liabilities to which either the Partnership
or the Apartment Complex is subject; provided, however, that the
foregoing indemnification shall not apply to (i) any Mortgage or (ii) necessary
contractual obligations incurred pursuant to FmHA 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
Investment Limited Partner harmless from and against any claim brought or
threatened against the Investment Limited Partner or loss (as well as from any
and all attorneys' fees and expenses incurred in connection with any such claim
or loss) on account of the presence of any Hazardous Material at the Apartment
Complex. Any claim or loss described in the immediately preceding sentence may
be defended, compromised, settled, or pursued by the Investment
Limited Partner with counsel of the Investment Limited Partner's selection, but
at the expense of General Partners. Notwithstanding anything else set forth
herein, this indemnification shall survive the withdrawal of any General
Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to the prior written consent of FmHA (if such consent shall be
required under applicable FmHA regulations), the General Partners shall be
obligated from the later to occur of (i) Permanent Mortgage Commencement or
(ii) the Admission Date and continuing for a period of sixty (60) months to
advance funds to meet operating expenses and debt service 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 advance 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
XI 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 XI, with the proceeds
thereof being applied to such obligations, and the obligation of the
Partnership to make such payments to the General Partners or the Affiliates
thereof pursuant to Section 6.12 and/or Article XI shall be deemed satisfied to
the extent thereof (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 Partners(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 economic obligations hereunder, and
each other General Partner shall fully indemnify and hold harmless each
additional General Partner from and against any and all losses, judgments,
liabilities, expenses and amounts paid in settlement of any claims sustained in
connection with its capacity as a General Partner. 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 Fees) shall be
Subordinated Loans repayable without interest 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
(a) The General Partners shall complete the construction of the Apartment
Complex substantially in accordance with the plans and specifications approved
by FmHA 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, including refrigerators and ranges, and
shall cause all necessary certificates of occupancy for all apartment units in
the Apartment Complex to be obtained, all in accordance with the Project
Documents. If the proceeds of the Construction Mortgage, 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
FmHA to be utilized for any of the purposes hereinafter set forth, the Capital
Contribution of the Investment Limited Partner, the Capital Contributions of
the General Partners in the amounts set forth on Schedule A as of the
Admission Date, and any insurance proceeds arising out of casualties prior to
the later of Permanent Mortgage Commencement or the Admission Date as available
from time to time are insufficient to (i) acquire and complete the construction
of the Apartment Complex and satisfy all other obligations, all as provided in
the first sentence of this Section 6.11(a), (ii) make the special distributions
to the General Partners described in Section 10.2(c), if any, (iii) pay the
Construction and Development Fee, (iii) arrive at Permanent Mortgage
Commencement in conformity with the Project Documents, (iv) discharge all
Partnership liabilities and obligations arising out of any casualty giving rise
to any such insurance proceeds, and (v) provide for all other payments and
expenses required to be made or incurred through the later of Permanent
Mortgage Commencement or the Admission Date, including the funding of any
reserves required hereunder or under any other Project Document, 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 FmHA, 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
Investment Limited Partner as provided in Section 5.1 shall not be reimbursable
or otherwise change the Interest of any Person in the Partnership but shall be
borne by the General Partners; provided, however, that notwithstanding the
foregoing, to the extent any such amounts represent items which are properly
included in the Partnership's Qualified Basis and result in an increase in the
amount of Tax Credit allocated and available to the Partnership over and above
the amount of Tax Credit required in order to achieve State Designation
("Includable Items"), the General Partners shall make an additional Capital
Contribution in the amount of the Includable Items and the Partnership shall
utilize the proceeds of such additional Capital Contribution to pay the
Includable Items. In the event that the General Partners shall fail to fund
any such deficiency as required by this Section 6.11(a), an amount not in
excess of the next installment of the Construction and Development Fee due to
the General Partners or any of their Affiliates under Section 6.12 or any other
provision hereof shall be applied by the Partnership to meet such obligation of
the General Partners, and, to the extent there may still be a deficiency, any
amounts otherwise payable as the Annual Partnership Management Fee or
distributable to the General Partners pursuant to Article X shall be so
applied. Any such application of funds as described in the immediately
preceding sentence shall constitute a payment of the amount of the Fee or such
other item which such funds had been earmarked to pay, and the obligation of
the General Partners to advance such amount under this Section 6.11(a) shall be
satisfied to the extent of such application.
(b) The completion of the Apartment Complex shall be secured by a
completion bond in an amount at least equal to the full amount of the
construction contract for the Apartment Complex or by other security
satisfactory to the Investment Limited Partner, which other security may
include, but shall not be limited to, the following:
(i) a written guaranty of completion by a Person, supported by
financial statements demonstrating sufficient net worth or adequately
collateralized by other real or personal properties or other Persons'
guarantees; and/or
(ii) a retention of a reasonable portion of the Capital
Contribution of the Investment Limited Partner and/or fees to the General
Partners as a potential offset in the event the General Partners do not
perform in accordance with this Agreement.
6.12 Certain Payments to the General Partners and Others
(a) 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 the annual amount of $1,670. 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); provided,
however, that if in any fiscal year commencing with 1997, Cash Flow is
insufficient to pay the full amount of the Annual Partnership Management Fee,
the unpaid portion thereof shall accrue and be payable on a cumulative basis in
the first year in which there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X.
(b) In consideration of their consultation, advice and other services in
connection with the construction and development of the Apartment Complex, the
Partnership shall pay to the General Partners (or their designee) a
construction and development fee (the "Construction and Development Fee") in
the principal amount of $165,809, which fee shall be earned in full as to each
building in the Apartment Complex as of the date such building is completed.
The Construction and Development Fee shall be payable $32,280 from the proceeds
of the First Installment, $83,455 from the proceeds of the Second Installment,
$40,074 from the proceeds of the Third Installment, and $10,000 from the
proceeds of the Fourth Installment.
(c) The Partnership shall pay to Boston Capital or an Affiliate thereof a
fee (the "Reporting Fee") commencing in 1997 for its services in connection
with the Partnership's accounting matters relating to the Investment Limited
Partner and assisting with the preparation of tax returns and the reports
required by Section 12.7 in the annual amount of $1,670. The Reporting Fee
shall be payable from Cash Flow in the manner and priority set forth in Section
10.2(a); provided, however, that if in any fiscal year commencing with 1997,
Cash Flow is insufficient to pay the full amount of the Reporting Fee, the
unpaid portion thereof shall accrue and be payable on a cumulative basis in the
first year in which there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X.
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 instrument was
duly authorized by the General Partners. Any Person may always rely on a
certificate addressed to him and signed by any General Partner hereunder:
(1) As to who are the General Partners or Limited Partners hereunder;
(2) As to the existence or nonexistence of any fact which constitutes a
condition precedent to acts by the General Partners or in any other manner
germane to the affairs of the Partnership;
(3) As to who is authorized to execute and deliver any instrument or
document of the Partnership;
(4) As to the authenticity of any copy of this Agreement and amendments
thereto; or
(5) As to any act or failure to act by the Partnership or as to any other
matter whatsoever involving the Partnership or any Partner.
6.14 Assignment to Partnership
The General Partners hereby transfer and assign to the Partnership all of
their right, title and interest in and to the Apartment Complex and in and to
all of the Project Documents, including, but not limited to, the following: (i)
all contracts with architects, supervising architects, engineers and
contractors with respect to the development of the Apartment Complex; (ii) all
plans, specifications and working drawings heretofore prepared or obtained, in
connection with the Apartment Complex; (iii) all governmental commitments and
approvals obtained, and applications therefor, including, but not limited to,
those relating to planning zoning, building permits and Tax Credit; (iv) any
and all commitments with respect to any Mortgage(s); (v) any and all contracts
or rights with respect to any agreements with the Construction Lender or FmHA;
and (vi) any other work product related to the Apartment Complex and/or the
Partnership.
6.15 Additional Right of General Partners and Affiliates to
Develop Adjacent Property
The Partners acknowledge that the land on which the Apartment Complex is
situated is adjacent to an underdeveloped parcel (the "Adjacent Parcel") which
is owned or may be acquired by one or more of the General Partners or
Affiliates of the General Partners.
The General Partners or their Affiliates may develop the Adjacent Land as
an apartment or housing complex or otherwise; provided, however, that the
General Partners shall not develop nor permit any other Person or Affiliate to
develop the Adjacent Land (or any portion thereof) if such development would
materially adversely affect the operation of the Apartment Complex.
The General Partners, on behalf of the Partnership, are hereby authorized
to grant whatever easements may reasonably be necessary for the General
Partners or their Affiliates to develop the Adjacent Land, including, but not
limited to, easements for right-of-way, ingress and egress, sanitary sewers,
storm drains and utilities; provided, however, that the grant or use of such
easements shall not in any way diminish the fair market value of the Apartment
Complex or disrupt the operations of the Partnership, unless the General
Partners shall have obtained the Consent of the Investment Limited Partner
thereto. All costs with respect to such easements, including, without
limitation, legal, filing and construction costs, shall be borne solely by the
General Partners or their Affiliates (other than the Partnership).
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General partner shall Withdraw from the Partnership (other than by
reason of death or adjudication of incompetence or insanity) or sell, assign or
encumber its Interest without the Consent of the Investment Limited Partner and
all the other General Partners except that if the Special Limited Partner or a
designee thereof becomes a General Partner pursuant to Section 4.5(b), Section
5.2(e), Section 6.2 (b) or Section 6.10, it shall not require the consent of
any other General Partner to transfer all or any portion of its interest as a
General Partner, other than as may be required under the 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 remaining
Special Limited Partner or its designee, such General Partner's Interest and
all unpaid fees from the Partnership and shall remain liable for all his
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) If at any time the only General Partners of the Partnership shall be
one or more corporations (or partnerships with corporations as sole general
partners), they shall be obligated to have a net worth which satisfies the 89-
12 Requirements. If the General Partners shall at any time fail to meet the
requirements of this Section 7.1(b), and no additional General Partner is
admitted pursuant to Section 7.5, then they shall be deemed to have withdrawn
from the Partnership in violation of the provisions of this Section 7.1 and
shall be subject to the provisions of Section 7.1(a). Notwithstanding the
foregoing, the provisions of this Section 7.1(b) shall not apply to the Special
Limited Partner or its designee in the event it become the sole General
Partner.
7.2 Obligation to Continue
Upon,the Withdrawal of a General Partner, the remaining General Partners
shall have the right and obligation to continue the business of the Partnership
employing its assets and name, all as contemplated by the Uniform Act. Within
thirty (30) days after they obtain knowledge of the Withdrawal of a General
Partner, the remaining General Partners shall notify the Investment Limited
Partner 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 may elect to reconstitute the
Partnership and continue the business of the Partnership for the balance of the
term specified in Section 2.4 by selecting a successor General Partner. If the
Investment Limited Partner and the Special Limited Partner elect to
reconstitute the Partnership pursuant to this Section 7.3 and admit the
designated successor General Partner, the relationship among the then Partners
shall be governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in violation of
Section 7.1, the Withdrawing General Partner hereby covenants and agrees to
transfer to the remaining General Partners or to a successor General Partner
selected in accordance with Section 7.3, as the case may be, such portion of
the Withdrawing General Partner's Interest as such remaining or successor
General Partners may designate, such transfer to be made in consideration of
the payment by the transferee of either the agreed value of such Interest or,
if such value is not agreed to, the fair market value of such Interest as
determined by a committee of three qualified real estate appraisers, one
selected by the Withdrawing General Partner, one selected by the transferee and
a third selected by the other two. The portion of the Withdrawing General
Partner's Interest designated to be transferred in accordance with the
provisions of this Section 7.4 shall be sufficient to ensure the continued
treatment of the Partnership as a partnership under the Code and as a limited
partnership under the 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
shall have been made. Any holder of any portion of the Interest of a
Withdrawing General Partner which is not designated to be transferred to the
remaining or successor General Partners pursuant to the provisions of this
Section 7.4 shall become an Additional Limited Partner but (i) with the same
share of the profits, losses, tax credits, Cash Flow and other distributions to
which the holder of such Interest was entitled when held as a General Partner
Interest, and (ii) shall not participate in the votes or Consents of the
Investment Limited Partner hereunder. The admission of any successor or
additional General Partner shall be subject to the consent of FmHA (if
required) and the Consent of the Investment Limited Partner.
7.5 Admission of Additional General Partner(s) under Certain
Circumstances
In the event each of the General Partners is a corporation and the
General Partners at any time, or from time to time, fail to have a net worth
which satisfies the 89-12 Requirements, the Special Limited Partner or its
designee(s) shall be admitted (and each hereby agrees to be admitted),
automatically and without further action by them or any Partner, as additional
General Partner(s), notwithstanding any other provision of this Agreement. The
General Partners hereby agree to take all action necessary to implement this
Section 7.5. Further, the General Partners agree in such event to give prompt
written notice thereof to each Lender and to FmHA. If any Lender or FmHA
rejects the admission of any additional General Partner so admitted as a
General Partner, then such additional General Partner shall withdraw as a
General Partner promptly after an additional General Partner acceptable to each
Lender and FmHA is admitted to the Partnership. Simultaneously with such
admission, each of the previously admitted General Partners shall be deemed to
have assigned proportionally to the additional General Partner(s),
automatically and without further action, such portion of its General Partner
Interest so that the additional General Partner shall receive not less than a
one percent (1%) interest (or such greater percentage as may be required either
(i) in the opinion of the Tax Accountants, to assure the partnership status of
the Partnership for Federal income tax purposes or (ii) by FmHA) in the
profits, losses, tax credits and distributions of the Partnership in
consideration of $1.00 and any other consideration which may be agreed upon.
An additional General Partner so admitted shall automatically become the
Managing General Partner and be irrevocably delegated all of the power and
authority of all of the General Partners pursuant to Section 6.13. Each such
additional General Partner shall remain a General Partner until a Lender or
FmHA shall object thereto in writing or until such time as, in the opinion of
the Tax Accountants, the Partnership would continue to be treated as a
partnership for Federal income tax purposes notwithstanding their Withdrawal.
At such time, each such additional General Partner may, at its option, then
Withdraw without the approval of the Limited Partners upon reassignment of its
entire Interest to the remaining General Partners. Each partner hereby grants
to the Special Limited Partner a special power of attorney, irrevocable to the
extent permitted by law and coupled with an interest, to amend the Certificate
and this Agreement and to do anything else which, in the view of the Special
Limited Partner, may be necessary or appropriate to accomplish the purposes of
this Section 7.5 or to manage the business of the Partnership. The admission
of an additional General Partner shall not relieve any other General Partner of
any of its economic obligations hereunder, and each other General Partner shall
fully indemnify and hold harmless the additional General Partner from and
against any and all losses, judgments liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its capacity as a General
Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and
distribution) 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 the economic benefits of the
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 its Interest shall be subject to
all the provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an assignee as
Limited Partner in its place. Subject to Section 8.3, the General Partners
may, however, in their sole discretion, permit an assignee to become a
Substituted Limited Partner. The consent of the General Partners to an
assignment of a Limited Partner Interest under Section 8.1 shall not, in and of
itself, constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such instrument or
instruments as shall be required by the General Partners to signify the
agreement of such Substituted Limited Partner to be bound by all the provisions
of this Agreement and shall pay the Partnership's reasonable legal fees and
filing costs in connection with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would violate Section
13.1.
(b) In no event shall all or any part of a Limited Partner Interest be
Disposed of to a minor (other than to a descendant by reason of death) or to an
incompetent.
(c) The General Partners may, in addition to any other requirement they
may impose, require as a condition of any Disposition that the transferor (i)
assume all costs incurred by the Partnership in connection therewith and (ii)
furnish the Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition complies with
applicable Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition in contravention of
any of the provisions of this Section 8.3 shall be void and ineffectual and
shall not bind or be recognized by the Partnership.
(e) Notwithstanding any other provision contained in this Article VIII,
each Investment Limited Partner shall have a right of first refusal to purchase
the interest of any other Investment Limited Partner who wishes to sell or
otherwise transfer its Interest at a price equal to and on terms identical to
those of the prospective purchaser thereof and shall have at least fifteen (15)
business days in which to exercise such right after receiving notice thereof.
If there shall be more than two non-selling or
transferring Investment Limited Partners, each of which desires to exercise
such a right of first refusal, they may do so pro rata or, to the extent one
does not so desire to exercise such right, to the extent of the entire Interest
being so sold or transferred.
ARTICLE IX
Working Capital Loan; Borrowings
9.1 Working Capital Loan
In order to comply with Paragraph 5(a) of the FmHA Loan Agreement, the
General Partners have advanced to the Partnership $20,220, which amount has
been deposited by the Partnership in its general operating account (the
"Working Capital Loan"). The Working Capital Loan shall not bear interest and
shall be repaid (i) to the extent permitted by FmHA, out of Partnership funds
not required for other Partnership purposes, (ii) out of any funds which FmHA
designates as a return to the Partnership of such deposit to the Partnership's
general operating account (iii) as set forth in Article X, or (iv) as permitted
by FmHA.
9.2 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 FmHA (if required under applicable FmHA regulations or
requirements). If any Partner shall lend any monies to the Partnership, the
amount of any such loan shall not be an increase of such Partner's Capital
Contribution. If any Partner shall so lend monies, such loans shall be an
unsecured obligation of the Partnership and (except for advances required by
Section 6.11(a), Section 9.1 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, for each Partnership
fiscal year or portion thereof, all profits, tax-exempt income, losses,
non-deductible, non-capitalizable expenditures and tax credits incurred or
accrued on or after the Commencement Date, other than those arising from a
Capital Transaction, shall be allocated 99% to the Investment Limited Partner
and 1% to the General Partners.
(b) Except as otherwise specifically provided in this Article, all
profits and losses arising from a Capital Transaction shall be allocated to the
Partners as follows:
As to profits:
First, that portion of profits (including any profits treated
as ordinary income for Federal income tax purposes) shall be
allocated to the Partners who have negative Capital Account
balances in proportion to the amounts of such balances, provided
that no profits shall be allocated to a Partner under this Clause
First to increase any such Partner's Capital Account above zero;
Second, profits in excess of the amounts allocated under
Clause First above shall be allocated to the General Partners in an
amount equal to the amount of cash distributed or available to be
distributed to them pursuant to Clause Second of Section 10.2(b) as
to the particular Capital Transaction;
Third, profits in excess of the amounts allocated under
Clauses First and Second above shall be allocated to the Investment
Limited Partner in an amount equal to the amount of cash required
to pay to the Investment Limited Partner the full amount (including
interest)
of the Credit Recovery Loans;
Fourth, profits in excess of the amounts allocated under
Clauses First, Second and Third above shall be allocated (i) to the
Investment Limited Partner in an amount equal to the sum of (a) its
Invested Amount plus (b) the full amount (including interest) of
any Credit Recovery Loans and (ii) to each other Limited Partner in
an amount equal to the amount of its respective paid-in Capital
Contribution, reduced (but not below zero) in the case of each
Limited Partner (whether under clause (i) or clause (ii)) by the
sum of (A) the total amount of all prior cash distributions made to
such Limited Partner pursuant to Section 10.2(b), Clause Sixth plus
(B) the positive balance in the Capital Account of such Limited
Partner prior to the allocation made pursuant to this Clause
Fourth;
Fifth, profits in excess of the amounts allocated under
Clauses First, Second, Third and Fourth above shall be allocated to
the General Partners in the amount of their Capital Contributions
reduced (but not below zero) by the sum of (i) the total amount of
distributions previously made to them pursuant to Section 10.2(b),
Clause Seventh after the application of the final sentence of
Section 10.2(b) to credit amounts distributed under Clause Second
of Section 10.2(b) against amounts distributable under Clause
Seventh of Section 10.2(b) (and not including the amounts so
credited) plus (ii) the positive balance in the General Partners'
respective Capital Accounts prior to the allocations made pursuant
to this Clause Fifth; and
Sixth, profits in excess of the amounts allocated under
Clauses First, Second, Third, Fourth and Fifth above shall be
allocated to the Partners in the same percentages as cash is
distributed under Clause Ninth of Section 10.2(b) after the
application of the final sentence of Section 10.2(b) to credit
amounts distributed under Clause Second of Section 10.2(b) against
amounts distributable under said Clause Ninth (and not including
the amounts so credited).
As to losses:
First, an amount of losses shall be allocated to the Partners
to the extent and in such proportions as shall be necessary such
that, after giving effect thereto, the respective balances in all
Partners' Capital Accounts shall be in the ratio of 99% for the
Investment Limited Partner and 1% for the General Partners;
Second, an amount of losses shall be allocated to the
Partners until the balance in each Partner's Capital Account equals
the amount of such Partner's Capital Contribution (after the
allocation under Clause First above);
Third, an amount of losses shall be allocated to the Partners
to the extent of and in proportion to such Partners' Capital
Account balances (after the allocations under Clauses First and
Second (above); and
Fourth, any remaining amount of losses after the allocations
under Clauses First, Second and Third above shall be allocated to
the Partners in accordance with the manner in which they bear the
economic risk of loss associated with such loss; provided,
however, that in the event that no Partner bears an economic risk
of loss, then any remaining losses shall be allocated 99% to the
Investment Limited Partner and 1% to the General Partners.
(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 if and to the extent that such allocation would cause, as of the end of
the Partnership taxable year, the negative balance in the Investment Limited
Partner's Capital Account to exceed the Investment Limited Partner's share of
Partnership Minimum Gain plus the Investment Limited Partner's share, if any,
of Partner Non-Recourse Debt Minimum Gain. Any losses which are not allocated
to the Investment Limited Partner by virtue of the application of this Section
10.1(c) shall be allocated to the General Partners. 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 FmHA and Lender approval (if required), Cash Flow for each
fiscal year or portion thereof of the Partnership shall be applied as follows:
First, to the payment of the Reporting Fee for such year and for any
previous year(s) as to which the Reporting Fee shall not yet have been paid in
full;
Second, to the repayment of any Subordinated Loans;
Third, in an amount not to exceed $1,670 to the payment of the Annual
Partnership Management Fee attributable to such year; and
Fourth, the balance thereof, if any, shall be distributed annually,
within seventy-five (75) days after the end of the fiscal year, 10% to the
Investment Limited Partner and 90% to the General Partners; provided, however,
that during such time as FmHA 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 FmHA
regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine from time
to time that cash is available for distribution from a Capital Transaction,
such cash shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the Partnership
incident to the Capital Transaction), excluding (i) debts and liabilities of
the Partnership to Partners or their Affiliates and (ii) all unpaid fees owing
to the General Partners or their Affiliates; and to the establishment of any
reserves which the General Partners and the Auditors shall deem reasonably
necessary for contingent, unmatured or unforeseen liabilities or obligations of
the Partnership;
Second, to the payment of the Reporting Fee for such year and any
previous year for which the Reporting Fee shall not have been paid in full;
Third, to the payment to the Investment Limited Partner of the full
amount (including interest) of any Credit Recovery Loans;
Fourth, to the repayment of any Subordinated Loans;
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 Credit Recovery Loans and Subordinated Loans) to any of them,
including, but not limited to, the Annual Partnership Management Fee for the
fiscal year of the Capital Transaction, and Reporting Fees, but excluding the
Working Capital Loan; provided, however, that any debts or obligations to be
repaid to any Limited Partner or Affiliate thereof pursuant to this Clause
Fifth shall be repaid prior to the repayment of any such debts or obligations
to any General Partner or Affiliate thereof;
Sixth, to the Limited Partners and the General partners, on a pro-rata
basis, an amount equal to, in the case of the Limited Partners, their Invested
Amounts and, in the case of the General partners, their paid-in Capital
Contributions, minus any prior distributions made to them under this Clause
Sixth;
Seventh, except in the case of refinancing, to each partner in an amount
equal to the positive balance in his capital account; and
Eighth, any balance 39.999% to the Investment Limited Partner, .001% to
the Special Limited Partner, and 60% to the General Partners.
Notwithstanding the foregoing, however, for the purpose of determining
the amounts to be distributed under Clauses Eighth and Tenth for a particular
Capital Transaction, any distribution to the General Partners under Clause
Second for such Capital Transaction shall be credited against and reduce any
distributions which would otherwise be made to the General Partners under
Clauses Eighth and Tenth (with such credit operating first against Clause
Eighth distributions and then against Clause Tenth distributions), and the
amount not distributed to the General Partners under Clauses Eighth and Tenth
as a result thereof shall be distributed as if it were additional proceeds of
such Capital Transaction. Any proceeds of a Capital Transaction distributed to
the General Partners under Clause Second which are not currently credited
against a distribution to the General Partners under either of Clause Eighth or
Clause Tenth from such Capital Transaction shall be applied as additional
credits against any distributions to the General Partners under any of Clauses
Eighth and Tenth which may be the result of any future Capital Transactions.
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 Additional Limited Partner has a negative
balance in its Capital Account following the liquidation of the Partnership or
such Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership taxable year in which such liquidation occurs,
such Partner shall pay to the Partnership in cash an amount equal to the
negative balance in such Partner's Capital Account. Such payment shall be made
by the end of such taxable year (or, if later, within ninety (90) days after
the date of such liquidation) and shall, upon liquidation of the Partnership,
be paid to recourse creditors of the Partnership or distributed to other
Partners in accordance with the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Partnership immediately prior to the liquidation or
other distribution event; and (ii) such profits and losses shall be allocated
to the Partners in accordance with Section 10.1(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 is otherwise provided in this Agreement, all profits, tax
exempt income, losses, non-deductible non-capitalizable expenditures, tax
credits and cash distributions shared by a class of Partners shall be shared by
each Partner in such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of Partners of
which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or Partner
Non-Recourse Debt (including, without limitation, Subordinated Loans) or
(b) the Partnership incurs losses from extraordinary events which are not
recovered from insurance or otherwise (collectively "Recourse
Obligations") in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be adjusted as
follows: first, an amount of deductions attributable to the Recourse
Obligations 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
interchangeably for this purpose, and the respective classes shall
receive such respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money indebtedness
retained by the Partnership shall be distributed in accordance with
the respective portions of principal allocated to the respective classes
of Partners in accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds shall be
allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance with
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 allocation 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 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
chargeback to the extent that any of the exceptions provided in Treasury
Regulation Section 1.704-2T(i)(4) applied consistently with Treasury
Regulation Section 1.704-2(f)(2)-(5) 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, 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
distributions and allocations, the following ordering of priorities shall
apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.2(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 Section 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. Any allocation made
pursuant to this Section 10.5 shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Agreement, and no amendment of
this Agreement or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under Section
10.5(a), the General Partners are authorized to act only after having been
advised in writing by the Tax Accountants that, under Section 704(b) of the
Code and the Treasury Regulations thereunder, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum modification of the
allocations otherwise provided for in this Agreement necessary in order to
assure that, either in the then-current year or in any preceding year, each
Partner's distributive share of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures and credits (or any item thereof)
is determined and allocated in accordance with this Agreement to the fullest
extent permitted by Section 704(b) of the Code.
(c) If the General Partners are required by Section 10.5(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 allocate
profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and any item thereof) arising in later years in such
manner so as to bring the allocations of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures and credits (and each item
thereof) to the Limited Partners as nearly as possible to the allocations
thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under Section 10.5(a)
and Section 10.5(c) in reliance upon the advice of the Tax Accountants shall be
deemed to be made pursuant to the fiduciary obligation of the General Partners
to the Partnership and the Limited Partners, and no such allocation shall give
rise to any claim or cause of action by any Limited Partner.
ARTICLE XI
Management Agent
A. The General Partners shall engage the Management Agent to manage the
Apartment Complex pursuant to the Management Agreement. The 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 FmHA or, when the Apartment Complex is
not subject to FmHA regulation, in accordance with a reasonable and competitive
fee arrangement. From and after the Admission Date, the Partnership shall not
enter into any Management Agreement or modify or extend any Management
Agreement unless (i) the General Partners shall have obtained the prior written
consent of the Special Limited Partner to the identity of the Management Agent
and the terms of the Management Agreement or the modification or extension
thereof and (ii) such new Management Agreement or modified or extended
Management Agreement provides that it is terminable by the Partnership on
thirty (30) days' notice by the Partnership in the event of any change in the
identity of the General Partners.
B. 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) five per cent
(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 (a) the Apartment Complex shall be subject to a
substantial building code violation which shall not have been cured within six
months after notice from the applicable governmental agency or department or
(b) the Partnership shall not have Cash Flow of at least $1,670 during any year
after 1996, 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 FmHA, any Tax Credit
monitoring or compliance agency of the State or any other governmental agency
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 Investment Limited Partner and subject to
FmHA 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 which shall not be an Affiliate of a General
Partner. Subject to FmHA approval, if required, the Partnership shall not
enter into any future management arrangement or renew or extend any existing
management arrangement unless such arrangement is terminable without penalty
upon the occurrence of the events described in this Article XI.
D. The General Partners shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are required
under the 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 FmHA) 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 FmHA or Mortgage requirements, in interest-
bearing accounts or invested in United States Government obligations maturing
within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General Partners,
all tax returns of the Partnership. Prior to the filing of the Partnership tax
returns, and in no event later than February 1 of each year, the Auditors shall
deliver the tax returns for such year to the Tax Accountants for their review
and comment. If a dispute arises between the Auditors and the Tax Accountants
over the proper preparation of the tax returns, which cannot be resolved, then
the Tax Accountants shall make the final decision on whether any changes are
necessary. The Partnership shall reimburse Boston Capital Communications
Limited Partnership for all costs and expenses paid to the Tax Accountants for
the aforementioned services.
(b) The Auditors shall audit and certify all annual financial reports
to the Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations under
Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time periods set forth
therein, at any time thereafter upon notice from the Special Limited Partner
that a change in the identity of the Auditors is desired, the 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 anything else which in the view of the Special Limited Partner may be
necessary or appropriate to accomplish the purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost recovery
deductions are permitted, the Partnership shall elect to use, so far as
permitted by the provisions of the Code, accelerated cost recovery methods.
However, the Partnership may change to another method of cost recovery if such
other method is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner and the limited partners 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
Auditors, be most advantageous to the Investment Limited Partner and the
limited partners and/or holders of beneficial assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of the
Investment Limited Partner or a transfer of all or any part of an interest of a
partner and/or a holder of a beneficial assignee certificate of the Investment
Limited Partner, the Partnership shall elect, upon the request of the
Investment Limited Partner, pursuant to Section 754 of the Code, to adjust the
basis of the Partnership property. Any adjustments made pursuant to said
Section 754 shall affect only the successor in interest to the transferring
Partner or partner or holder of a beneficial assignee certificate thereof.
Each Partner will furnish the Partnership all information necessary to give
effect to 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
Partnership:
(i) Within forty-five (45) days after the end of each
fiscal year of the Partnership, (A) a balance sheet as of the end
of such fiscal year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for the year
then ended, all of which, except the statement of cash flows, shall
be prepared in accordance with generally accepted accounting
principles and accompanied by a report of the Auditors containing
an opinion of the Auditors, and (B) a report of the activities of
the Partnership during the period covered by the report. With
respect to any distribution to the Investment Limited Partner, the
report called for shall separately identify distributions from (1)
Cash Flow from operations during the period, (2) Cash Flow from
operations during a prior period which had been held as reserves,
(3) proceeds from disposition of property and investments, (4)
lease payments on net leases with builders and sellers, (5)
reserves from the gross proceeds of the Capital Contribution of the
Investment Limited Partner, (6) borrowed monies, and (7)
transactions outside of the ordinary course of business with a
description thereof.
(ii) Within thirty (30) days after the end of each fiscal
year of the Partnership, all information relating to the
Partnership and/or the Apartment Complex which is necessary, in the
view of the Tax Accountants, for the preparation of the Limited
Partners' Federal income tax returns.
(iii) Within thirty (30) days after the end of each quarter
of a fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited; and
(B) a statement of income for the quarter then
ended, which may be unaudited;
(C) a statement of cash flows for the quarter then
ended, which may be unaudited; and
(D) all other information which would be pertinent
to a reasonable investor regarding the Partnership and its
activities during the quarter covered by the report.
(b) Within sixty (60) days after the end of each fiscal year of the
Partnership a copy of the annual report to be filed with the United States
Treasury concerning the status of the Apartment Complex as low-income housing
and, if required, a certificate to the appropriate state agency concerning the
same.
(c) Upon the written request of the Investment Limited Partner for
further information with respect to any matter covered in item (a) or item (b)
above, the General Partners shall furnish such information within thirty (30)
days of receipt of such request.
(d) 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 of the current fiscal year. Such estimate shall be
prepared by the General Partners and the Auditors.
(e) Within fifteen (15) days after the end of any calendar quarter
during which:
(i) there is a material default by the Partnership under the
Project Documents or in payment of any mortgage, taxes, interest or other
obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by application of
funds therein for purposes materially different from those for which such
reserve was established,
(iii) the General Partners have received any notice of a material
fact which may substantially affect further distributions, or
(iv) any Partner has pledged or collaterized its Interest in the
Partnership,
the General Partners shall send the Investment Limited Partner a detailed
report of such event.
(f) After the Admission Date, the Partnership shall send to the
Investment Limited Partner, on or before the tenth day of each month, the
monthly housing credit monitoring form, and copies of all applicable periodic
reports covering the status of project operations from the previous period, as
may be required by FmHA.
(g) Within fifteen (15) days after each quarter of the Partnership's
fiscal year, the Partnership shall send to the Investment Limited Partner a
report on operations, in the form supplied by the Investment Limited Partner.
(h) The General Partners shall cause the Partnership to send to the
Investment Limited Partner a copy of each Construction Mortgage draw
requisition and any notification or correspondence from the Construction Lender
indicating that any such draw will not be paid as requisitioned. Upon receipt,
the Partnership shall send to the Investment Limited Partner copies of the
Form(s) 8609 evidencing the Tax Credit allocation. Promptly after Permanent
Mortgage Commencement, the General Partners shall send to BCCLP a closing
binder containing photocopies of the fully-executed versions of all documents
signed in connection with the Permanent Mortgage. The General Partners hereby
consent to the relevant FmHA District Office, as well as any other applicable
FMHA office, providing BCCLP with copies of all material communications between
any such office and the General Partners and/or the Partnership, including, but
not limited to, any notices of default. From and after any date upon which the
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 BCCLP, the General Partners shall send copies
of the rent rolls to BCCLP 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 the time
periods set forth therein, the General Partners shall pay as damages the sum of
$100 per day after February 15 of each year (plus interest at a rate equal to
the general base rate of interest established by the First National Bank of
Boston or its successors and assigns and announced by it as the rate charged by
it to its prime commercial customers on short-term unsecured borrowings as its
"base rate" from time to time in effect plus 3%) to the Investment Limited
Partner until such obligations shall have been fulfilled. 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 and their
Affiliates shall forthwith case to be entitled to the Annual Partnership
Management Fee and to the payment of any Cash Flow or 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, Cash Flow and Capital Transaction
proceeds otherwise due to the General Partners or their Affiliates. Such
damages may be waived in the event such failure is due to circumstances not
within the General Partner's control.
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
an adequate staff to do so and unless such provision of goods and construction
services is part of its ordinary and ongoing business in which it has
previously engaged, independent of the activities of the Investment Limited
Partner. Any such services must be reasonable for and necessary to the
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 of comparable goods and services in
the same geographic location (except that in the case of transfer agent,
custodial and similar banking-type fees, and insurance fees, the compensation,
price or fee shall be at the lesser of costs or the compensation, price or fee
of any other Person rendering comparable services as aforesaid). Cost of
services as used herein means the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel, based on the
amount of time such personnel 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 termination of
the Partnership under Section 708 of the Code. This Section 13.1 shall have no
application to any required repurchase of the Investment Limited Partner's
Interest. Any Disposition in contravention of any of the provisions of this
Section 13.1 shall be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing provisions of
this Section 13.1, however, the Investment Limited Partner may waive the
provisions of this Section 13.1 at any time as to a Disposition or series of
Dispositions, and in the event of such a wavier, this Section 13.1 shall have
no force or effect upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any Partnership
fiscal year in which the Investment Limited Partner shall have received any
distributions under Article X, the General Partners shall file an amendment to
the Certificate reducing by the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment Limited
Partner as stated in the last previous amendment to the Certificate. However,
Schedule A shall not be amended on account of any such distribution.
The Partnership shall amend the Certificate 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
documentation required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2, no such
amendments to the Certificate need be filed by the General Partners if the
Certificate is not required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing and shall
be deemed adequately given if actually delivered or if sent by registered or
certified mail, postage prepaid, to the party for whom such notice is intended
at such party's last address of record on the Partnership books.
13.4 Word Meanings
The words such as "herein", "hereinafter", "hereof", and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires. The singular shall
include the plural, and vice versa, and each gender (masculine, feminine and
neuter) shall include the other genders, unless the context requires
otherwise.
Each reference to a "Section" or an "Article" refers to the corresponding
Section or Article of this Agreement, unless specified otherwise. References
to Treasury Regulations (permanent or temporary) or Revenue Procedures shall
include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance with the
laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the same
counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each of the
provisions of this Agreement shall be subject to, 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 and
other FmHA documents in a manner satisfactory to FmHA; (d) no amendment to any
provision of the Project Documents shall become effective without the prior
written consent to FmHA (if required); and (e) the affairs of the Partnership
shall be subject to FmHA regulation, and no action shall be taken which would
require the consent or approval of FmHA unless the prior consent or approval of
FmHA shall have been obtained. No new Partner shall be admitted to the
Partnership or be substituted for without the consent of FmHA (if such consent
is then required). No amendment to this Agreement relating to matters governed
by FmHA regulations or requirements shall become effective until the prior
written consent of FmHA (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 FmHA
rules and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable and (a) if
for any reason any provision is determined to be invalid, such invalidity shall
not impair the operation of or affect those portions of this Agreement which
are valid, and (b) if for any reason any provision would cause the Investment
Limited Partner to be bound by the obligations of the Partnership (other than
the rules and regulations of FmHA and the requirements of any other 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.
13.12 Extraordinary Limited Partner Expenses
Any and all costs and expenses incurred by the Investment Limited Partner
and/or the Special Limited Partner in connection with exercising rights and
remedies against the General Partners with respect to this Agreement, including
without limitation, reasonable attorneys' fees, shall be paid by the General
Partners on demand. All amounts due to the Investment Limited Partner and/or
the Special Limited Partner pursuant to this provision shall bear interest from
demand at a rate of 9%. If any General Partner breaches any provision of this
Agreement, the Investment Limited Partner and/or the Special Limited Partner
may employ an attorney or attorneys to protect its rights hereunder, and the
General Partners shall pay on demand the reasonable attorneys' fees and
expenses incurred by the Investment Limited Partner and/or the Special Limited
Partner, whether or not a legal action is actually commenced against any
General Partner by reason of such breech. All amounts due to the Investment
Limited Partner and/or the Special Limited Partner pursuant to this provision
shall bear interest from demand at a rate equal to 9%.
13.12 Time of Admission
The Investment Limited Partner shall be deemed to have been admitted to
the Partnership as of the Commencement Date for all purposes of this Agreement,
including Article X hereof; provided, however, that if regulations are issued
under the Code or an amendment to the Code is adopted which would require, in
the opinion of the Auditors, that the Investment Limited Partner be deemed
admitted on a date other than as of the Commencement Date, then the General
Partners shall select a permitted admission date which is most favorable to the
Investment Limited Partner
WITNESS the execution hereof under seal as of the 1st day of September,
1995.
ORIGINAL (WITHDRAWING)
LIMITED PARTNERS:
/s/William J. Rea, Jr.
WILLIAM J. REA, JR.
/s/Martyne H. Rea
MARTYNE H. REA
GENERAL PARTNERS:
DEVELOPMENT COMPANY
By: /s/William J. Rea, Jr.
WILLIAM J. REA, JR., its
President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT
FUND IV, L.P. ,
a Delaware limited
partnership
By: Boston Capital Associates
IV, L.P. ,
its general partner
By: C&M Associates d/b/a
Boston Capital Associates,
its general partner
By: /s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact
For John P. Manning,
its general partner
SPECIAL LIMITED PARTNER:
BCTC 94, Inc.
By: /s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact
For John P. Manning,
its President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Article XI of the foregoing Amended and Restated
Agreement and Certificate of Limited Partnership notwithstanding any provision
of the Management Agreement to the contrary.
Management Agent
W.T. Lamb Investments
By:______________________
, its
GUARANTY
The undersigned unconditionally guarantees the performance by the General
Partner of all of its obligations under Sections 5.1, 5.2, 6.5, 6.10, 6.11(a)
and 12.7(j) of the Amended and Restated Agreement and Certificate of Limited
Partnership and hereby waives any right to require that any action be brought
against any other person or to require that resort be made to any security
prior to enforcement of this guaranty. The obligations of the undersigned
hereunder shall be binding upon the respective heirs, executors and legal
representatives of the undersigned. Execution of this Agreement by the
undersigned is solely for the purposes of undertaking this guaranty and shall
not be deemed to make the undersigned a partner of the partnership.
/s/William J. Rea, Jr.
William J. Rea, Jr.,
Individually
STATE OF GEORGIA )
) SS.
COUNTY OF CRISP )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named William J. Rea, Jr., known to me to
be the person who executed the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein are true and that he did sign the same
as his free act and deed.
WITNESS my hand and official seal this 24th day of January, 1995.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF GEORGIA )
) SS.
COUNTY OF CRISP )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named Martyne H. Rea, 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 her free act and deed.
WITNESS my hand and official seal this 24th day of January, 1995.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF GEORGIA )
) SS.
COUNTY OF CRISP )
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named William J. Rea, Jr., known to me to
be the President of Rea Development Company who being duly sworn, acknowledged
that he did sign the foregoing instrument as his free act and deed and the free
act and deed of Rea Development Company.
WITNESS my hand and official seal this 24th day of January, 1995.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
COMMONWEALTH OF MASSACHUSETTS )
)SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, known to me
to be attorney-in-fact for John P. Manning, a general partner of C&M Associates
d/b/a Boston Capital Associates, which is the general partner of Boston Capital
Associates IV, L.P., Boston Capital Associates IV, L.P. being 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 26th day of Janaury, 1995.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
COMMONWEALTH OF MASSACHUSETTS )
)SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named Bonnie Kate Fox, known to me
to be attorney-in-fact for John P. Manning, President of BCTC 94, Inc., who,
being duly sworn, acknowledged that she did sign the foregoing instrument as
her free act and deed and the free act and deed of BCTC 94, Inc.
WITNESS, my hand and official seal this day of , 1995.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
EDENFIELD PLACE APARTMENTS, L.P.
Schedule A
As of
January 1, 1996
General Partners Capital Contributions
Rea Development Company $43,090
604 Fleming Road
Cordele, Georgia 31015
Special
Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital
Partners, Inc.
313 Congress Street
Boston, Massachusetts 02210-1232
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution*
Boston Capital Tax $333,821 $200,292
Credit Fund IV, L.P.
c/o Boston Capital
Partners, Inc.
313 Congress Street
Boston, Massachusetts 02210-1232
_________________________
*Paid-in Capital Contribution as of the date of this Schedule A. Future
Installments of Capital Contribution are subject to adjustment and are due at
the times and subject to the conditions set forth in the Agreement to which
this Schedule is attached.
11490_2
BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
EDENFIELD PLACE APARTMENTS, L.P.
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of January 1, 1996, by, EDENFIELD
PLACE APARTMENTS, L.P. a Georgia limited partnership (the "Operating
Partnership"); REA DEVELOPMENT COMPANY, INC. (the "Operating General Partner)
and WILLIAM J. REA, JR. AND MARTYNE H. REA (the "Original Limited Partners")
for the benefit of BOSTON CAPITAL TAX CREDIT FUND IV, L.P. a Delaware limited
partnership (the "Investment Partnership"), BOSTON CAPITAL ASSOCIATES IV, L.P.
a Delaware limited partnership ("Boston Capital"), CROWE & CASEY, P.C. and
certain other persons or entities described herein.
WHEREAS, the Operating Partnership proposes to admit the Investment
Partnership as a limited partner thereof pursuant to the Second Amended and
Restated Agreement and Certificate of Limited Partnership of the Operating
Partnership dated as of January 1, 1996 (the "Operating Partnership
Agreement"), in accordance with which the Investment Partnership will make
substantial capital contributions to the Operating Partnership;
WHEREAS, the Investment Partnership and Boston Capital have relied upon
certain information and representations described herein in evaluating the
merits of investment by the Investment Partnership in the Operating
Partnership; and
WHEREAS, Crowe & Casey, P.C., as counsel for the Investment Partnership,
will rely upon such information and representations in connection with its
delivery of certain opinions with respect to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Operating Partnership Agreement and become a limited partner of the operating
Partnership, and for $1.00 and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Operating
Partnership, the Operating General Partner and the Original Limited Partner
hereby agree as follows for the benefit of the Investment Partnership, Boston
Capital, Crowe & Casey, P.C. and certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership, the Operating General
Partner and the Limited Partner
The Operating Partnership, the Operating General Partner and the Original
Limited Partner jointly and severally represent, warrant and certify to the
Investment Partnership, Boston Capital, and Crowe & Casey, P.C. 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 Original Limited Partner have the power and
authority to enter into and perform this Certification and Agreement; the
execution and delivery of this Certification and Agreement by the Operating
Partnership, the Operating General Partner and the Original Limited Partner
have been duly and validly authorized by all necessary action; the execution
and delivery of this Certification and Agreement, the fulfillment of its terms
and consummation of the transactions contemplated hereunder do not and will not
conflict with or result in a violation, breach or termination of or constitute
a default under (or would not result in such a conflict, violation, breach,
termination or default with the giving of notice or passage of time or both)
any other agreement, indenture or instrument by which the Operating Partnership
or any Operating General Partner or Original Limited Partner is bound or any
law, regulation, judgment, decree or order applicable to the Operating
Partnership or any Operating General Partner or the Original Limited Partner or
any of their respective properties; this Certification and Agreement
constitutes the valid and binding agreement of the Operating Partnership, the
Operating General Partner and the Original Limited Partner, enforceable against
each of them in accordance with its terms.
1.02 The Operating General Partner has delivered to the
Investment Partnership, Boston Capital or their affiliates all documents and
information which would be material to a prudent investor in deciding whether
to invest in the Operating Partnership. All factual information, including
without limitation the information set forth in Exhibit A hereto, provided to
the Investment Partnership, Boston Capital 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.
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, depreciation 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
Original Limited Partner and as to any of their affiliates, any of their
predecessors and their affiliates' predecessors, any of their directors,
officers, general partners and/or beneficial owners of ten per cent (10%) or
more of any class of their equity securities (beneficial ownership meaning the
power to vote or direct the vote and/or the power to dispose or direct the
disposition of such securities), as the case may be, and any promoters
presently connected with them in any capacity.
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 and the Operating General Partner contained in the Operating
Partnership Agreement has been duly performed to the extent that performance of
any covenant or agreement is required on or prior to the date hereof.
1.06 All conditions to admission of the Investment
Partnership as the investment limited partner 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 said 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 Form(s) 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 No Operating General Partner is related in any manner
to the Investment Partnership, nor is the Operating General Partner acting as
an agent of the Investment Partnership.
1.14 The Apartment Complex contains no substance known to be
hazardous, such as hazardous waste, lead-based paint, asbestos, methane gas,
urea formaldehyde insulation, oil, toxic substances, underground storage tanks,
polychlorinated biphenyls (PCBs), and radon; the Apartment Complex is not
affected by the presence of oil, toxic substances, or other pollutants that
could be a detriment to the Apartment Complex nor is the Operating Partnership
in violation of any local, state, or federal law or regulation; and no
violation of the Clean Air Act, Clean Water Act, Resource Conservation and
Recovery Act, Toxic Substance Control Act, Safe Drinking Water Control Act,
Comprehensive Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing. Neither the
Operating Partnership nor any Operating General Partner or Original Limited
Partner has received any notice from any source whatsoever of the existence of
any such hazardous condition relating to the Apartment Complex or of any
violation of any local, state or federal law or regulation with respect to the
Apartment Complex.
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.
2. Indemnification
2.01 The Operating General Partner (for purposes of this
Section 2.01, the "Indemnifying Parties" or, individually, an "Indemnifying
Party") agree to indemnify and hold harmless the Investment Partnership and
Boston Capital (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, leadbased paint, asbestos, methane gas, urea
formaldehyde insulation, oil, toxic substance, underground storage tanks,
polychlorinated biphenyls (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 No Indemnifying Party shall be liable under the
indemnity agreements contained in Section 2.01 unless the Indemnified Party
shall have notified the Indemnifying Party in writing within forty-five (45)
business days after the summons or other first legal process giving information
of the nature of the claim shall have been served upon the Indemnified Party or
any such of its officers, directors, employees or controlling persons, but
failure to notify an Indemnifying Party of any such claim shall not relieve it
from any liability which it may have to the Indemnified Party or any such of
its officers, directors, employees or controlling persons against whom action
is brought otherwise than on account of its indemnity agreement contained in
Section 2.01. In case any action is brought against any Indemnified Party or
any such of its officers, directors, employees or controlling persons upon any
such claim, and it notifies the Indemnifying Party of the commencement thereof
as aforesaid, the Indemnifying Party shall be entitled to participate at its
own expense in the defense, or, if it so elects, in accordance with
arrangements satisfactory to the other Indemnifying Party or parties similarly
notified, to assume the defense thereof, with counsel who shall be satisfactory
to such Indemnified Party or any such of its officers, directors, employees or
controlling persons and any other Indemnified Parties who are defendants in
such action; and after notice from the Indemnifying Party to such Indemnified
Party or any such of its officers, directors, employees or controlling persons
of its election so to assume the defense thereof and the retaining of such
counsel by the Indemnifying Party, the Indemnifying Party shall not be liable
to such Indemnified Party or any such of its officers, directors, employees or
controlling persons for any legal or other expenses subsequently incurred by
such Indemnified Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other than the
reasonable costs of investigation.
3. Miscellaneous
3.01 This Certification and Agreement is made solely for the
benefit of the Operating Partnership, the Operating General Partner, the
Original Limited Partner, Boston Capital, Crowe & Casey, P.C., and the
Investment Partnership (and, to the extent provided in Section 2, the officers,
directors, partners, employees and controlling persons referred to therein),
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement.
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
and used but not otherwise defined herein shall have the meanings given to them
in the Operating Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and seals as of
the date first above written.
OPERATING PARTNERSHIP:
EDENFIELD PLACE APARTMENTS, L.P.
By: AREA DEVELOPMENT COMPANY,
its General Partner
By: /s/william J. Rea, Jr.
William J. Rea, Jr.,
its President
OPERATING GENERAL PARTNERS:
REA DEVELOPMENT COMPANY,
its General Partner
By: /s/William J. Rea, Jr.
William J. Rea, Jr.,
its President
ORIGINAL LIMITED PARTNERS:
/s/William J. Rea, Jr.
William J. Rea, Jr.
/s/Martyne H. Rea
Martyne H. Rea
11593_1
Exhibit A
EDENFIELD PLACE APARTMENTS, L.P.
FACT SHEET
1. Construction Financing
A. Lender First State Bank & Trust Company B.
Mortgage Amount: $362,910
C. Note Date:
D. Interest Rate: Wall Street Bank Prime + .5%
E. Term:
2. Permanent Financing - Part 1 (Assumption)
A. Lender FmHA
B. Mortgage Amount: $963,949.17
C. Note Date: September 14, 1995
D. Interest Rate: 7.5%
E. Term: June 12, 2030
F. Amortization:
2A. Permanent Financing - Part 2 (Rehabilitation)
A. Lender FmHA
B. Mortgage Amount: $362,910
C. Note Date:
D. Obligation Date: June 8, 1995
E. Interest Rate: 8%
F. Term: 35 Years
G. Amortization:
3. Eligible Basis (Acquisition): $1,051,138
Eligible Basis (Rehab.): $ 589,041
4. Qualified Basis (Acquisition): $1,051,138
Qualified Basis (Rehab.): $ 589,041
5. Operating General Partner
Capital Contribution: $43,090
6. Working Capital Loan
Amount: $20,220
7. Type of Credit: 3.67%
8. Rent-up Schedule:
13% occupancy by May 31, 1996
26% occupancy by June 30, 1996
39% occupancy by July 31, 1996
52% occupancy by August 31, 1996
83% occupancy by September 30, 1996
96% occupancy by October 31, 1996
100% occupancy by November 30, 1996
9. Projected Credit to the
Investment Partnership (99%) $596,108
A. $22,354 for 1996
B. $59,611 per annum for each of the years 1997 through 2005
C. $37,257 for 2006 (provided, however, that the projected credit
for 2006 shall be reduced by the amount, if any, by which the Actual
Credit for 1996 exceeds $22,354).
10. Total Projected Credit to the
Operating Partnership (100%) $602,129
A. $22,580 for 1996
B. $60,213 per annum for each of the
years 1997 through 2005
C. $37,633 for 2006.
11. Tax Credit Approval:
A. Application
1. Date: April 5, 1995
2. Amount requested: $ 63,080
B. Reservation
1. Date: August 7, 1995
2. Amount Reserved: $ 62,521
12. Apartment Complex:
A. Name: Edenfield Apartments
B. Address: Edenfield Road
Millen, GA 30442
C. County: Jenkins
D. Type of Project: Family/Elderly
13. Area Median Income: $ 25,600
14. Type of Apartments:
Unit Basic Utility
Number Sq. Ft. Rent Allowance
1-Bedroom 16 705 $225 $53
2-Bedroom 32 860 $236 $67
15. Annual Operating Expenses
(beginning 1997): $76,779
16. Reserve Account
A. Annual: $ 12,312
B. Total: $123,120
17. Amount of Annual Asset Management
Fee to Boston Capital $1,670
(beginning 1997):
18. Amount of Annual Partnership
Management Fee: $1,670
19. Amount of Total Depreciable
Base Allocated to Personal
Property: $47,900 (3.03%)
20. Completion Date: March 1996
21. Total Capital Contribution of
Investment Partnership: $333,821
22. Schedule of Capital Contributions
A. $200,292 on the latest to occur of (i) Admission Date, (ii) Tax
Credit Set Aside, (iii) Construction Loan Closing or (iv) receipt of
Permanent Mortgage Commitment acceptable to the Investment Limited
Partner.
B. $83,455 on the latest to occur of (i) Completion Date, (ii)
Cost Certification, (iii) State Designation, (iv) receipt of an
updated title insurance policy satisfactory to the Investment Limited
Partner and its counsel, (v) compliance with Due Diligence
recommendations , (vi) receipt of a payoff letter from the contractor
stating that all amounts payable to the contractor have been paid in
full and that the Partnership is not in violation of the construction
contract or (vii) receipt of Estoppel letter from each lender;
C. $40,074 on the latest to occur of (i) the Initial 95%
Occupancy Date, (ii) Permanent Mortgage Commencement or (iii)
Breakeven Point; and
D. $10,000 on the to occurrence of (i) receipt of a tax return
and an audited financial statement for the year in which the Breakeven
Point occurred.
23. Fees and Other Items to be paid from Capital Contributions
Construction and Development Fee: $165,809
24. Operating General Partners: Rea Development Company
Address: 604 Fleming Road
Cordele, GA 31015
Telephone:
25. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
Operating General Partner: 1% 60% 50%
Investment Partnership: 99% 39.99% 50%
Special Limited Partner: 0% 0.001% 0%
26. Management Agent: W.T. Lamb Investments
Contact Person: Jennifer Lynam
Address: 206 Estelle Street
Wrens, GA 30833
Telephone Number: (706) 547-0028
Amount of Fees: $24 per occupied unit
27. Builder: Rea Construction Company
Address: P.O. Box 128
Cordele, GA 31015
Amount of Compensation: $356,204
Builder's Profit: $33,285
28. Auditor and Tax Return Preparer:
Contact Person:
Address:
Telephone Number:
Fax Number:
29. Federal Taxpayer ID Number: 58-2167643
30. Building Breakdown:
A. # of Units 48
B. # of Building
C. BIN #
cc: Boston Capital Communications Limited Partnership
Accounting Departmen
Exhibit B
Certificate of Operating Partnership,
Operating General Partner and Original Limited
Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partner and its
Original Limited Partner (as identified on the Certification and
Agreement to which this Certificate is attached as Exhibit B) hereby
represent to you that neither (i) the Operating Partnership, (ii) any
predecessor of the Operating Partnership, (iii) any of the Operating
Partnership's affiliates ("affiliate" meaning a person that controls
or is controlled by, or is under common control with, the Operating
Partnership), (iv) any sponsor (meaning any person who (1) is directly
or indirectly instrumental in organizing the Operating Partnership or
(2) will directly or indirectly manage or participate in the
management of the Operating Partnership or (3) will regularly perform,
or select the person or entity who will regularly perform, the primary
activities of the Operating Partnership), (v) any officer, director,
principal or general partner of the Operating Partnership or of any
sponsor, (vi) any officer, director, principal, promoter or general
partner of the 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 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 any State Securities
Act or for any broker-dealer or issuer with knowledge that such
broker-dealer or issuer had not or has not complied with any such 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).
11593_1
