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)
September 12, 1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-70564 04-3208648
(Commission File Number) (IRS Employer Identification No.)
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108-4406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
On September 12, 1997, Boston Capital Tax Credit Fund IV
L.P., a Delaware limited partnership, specifically Series 26
thereof (the "Partnership") completed various agreements relating
to Escher SRO Project, L.P. a New Jersey limited partnership
(the "Operating Partnership"), including an Amended and Restated
Agreement of Limited Partnership of the Operating Partnership
dated as of September 12, 1997 (the "Operating Partnership
Agreement"), pursuant to which the Partnership acquired a limited
partner interest in the Operating Partnership. Capitalized terms
used and not otherwise defined herein have their meanings set
forth in the Operating Partnership Agreement, a copy of which is
attached hereto as Exhibit (2)(a).
The Operating Partnership owns and operates a recently
renovated apartment complex located at 50 Escher Street, Trenton,
New Jersey, which is known as Escher Street SRO (the "Apartment
Complex"). The Apartment Complex consists of one building which
previously was a vacant factory building and now contains 104
units, of which 100 are single room occupancy residential units
and the remaining four (4) units are for use by the Apartment
Complex superintendent, the Manager and the maintenance staff.
The Apartment Complex is currently in the rent-up stage and is
expected to achieve 100% occupancy by April 30, 1998.
The Operating Partnership is receiving permanent financing
in the amount of $1,590,000 (the "City Loan") from the City of
Trenton, New Jersey (the "City"). The City Loan has a 16 year
term and accrues interest at 9% per annum with a pay rate of 7.5%
per annum. The Operating Partnership is also receiving a loan
from the City in the amount of $100,000 which is being used by
the Operating Partnership to fund a portion of the Operating
Deficit Reserve. The Operating Partnership is also receiving a
loan in the amount of $419,956 (the "Balanced Housing Loan") from
the Balanced Housing Development Corporation, the General Partner
of the Apartment Complex. The proceeds of the Balance Housing
Loan were received by the General Partner from Sovereign Bank,
F.S.B. under the Federal Home Loan Bank Board AHP Program and
were in turn loaned to the Operating Partnership by the General
Partner at the Applicable Federal Rate of interest over a 30-year
term. The Operating Partnership is also receiving a grant in
the amount of $399,791 from the New Jersey Housing and Mortgage
Finance Agency.
It is expected that 100% of the rental apartment units in
the Apartment Complex will qualify for the low-income housing tax
credit (the "Tax Credits") under Section 42 of the Internal
Revenue Code of 1986, as amended (the "Code").
The General Partner of the Operating Partnership is Balanced
Housing Development Corporation, a New Jersey corporation
(the "General Partner"). The General Partner is also serving as
the Developer of the Apartment Complex and an affiliate of
the General Partner, Fela, Inc. d/b/a Emet Realty Management and
Development Company, Inc. is serving as the Management Agent of
the Apartment Complex. Donald Brown is the President of both
the General Partner and the Management Agent. Mr. Brown has an
extensive background in accounting, mortgage banking,
construction, financing development and management of various
forms of real estate, including single room occupancy facilities.
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
$3,748,125 to the Operating Partnership in six (6) Installments
as follows:
I. $1,992,618 on the latest to occur of (A) Tax Credit Set
Aside, (B) Initial Closing, (C) receipt by Boston
Capital of an acceptable commitment of the City of
Trenton regarding the restructure of the City Loan, (D)
the Admission Date, or (E) receipt by Boston Capital of
an acceptable commitment for title insurance
(the "First Installment");
II. $805,507 on the latest to occur of (A) 75% Construction
Completion, as determined by Boston Capital, (B)
receipt of an owner's title insurance policy
satisfactory to the Special Limited Partner, (C)
confirmation by Boston Capital that each of
the itemized outstanding due diligence matters has been
completed by the General Partner to the reasonable
satisfaction of Boston Capital, or (D) receipt of a
payoff letter from the Contractor stating that all
amounts due and payable to the Contractor have been
paid in full and that the Operating Partnership is not
in violation of the Construction Contract, and
satisfaction of all of the conditions to the payment of
the First Installment (the "Second Installment");
III. $400,000 on the latest to occur of (A) Substantial
Completion, (B) State Designation or (C) Cost
Certification, and satisfaction of all of
the conditions to the payment of the First and Second
Installments (the "Third Installment");
IV. $220,000 on the later to occur of (A) Initial 95%
Occupancy Date (B) Final Closing or (C) First Rental
Achievement, and satisfaction of all conditions to
the payment of the First, Second and Third Installments
(the "Fourth Installment");
V. $320,000 upon (A) Second Rental Achievement and (B)
satisfaction of all conditions to the payment of
the First, Second, Third and Fourth Installments
(the "Fifth Installment"); and
VI. $10,000 upon (A) the receipt by the Partnership of
the Operating Partnership's federal income tax return
for the year in which Rental Achievement occurred and
(B) satisfaction of all conditions to the payment of
the First, Second, Third, Fourth and Fifth Installments
(the "Sixth Installment").
The total Capital Contribution of the Partnership to
the Operating Partnership is based on the Operating Partnership
receiving $5,949,400 of Tax Credits during the 10-year period
commencing in 1998 of which 99.99% ($5,948,805) 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 as set forth in the Operating Partnership
Agreement:
Normal Capital
Operations Transactions Cash Flow
General Partner 0.01% 50% 80%
Partnership 99.99% 50% 20%
The Partnership used the funds obtained from the payments of
the holders of its beneficial assignee certificates to make
the acquisition of its interest in the Operating Partnership.
The Operating Partnership shall pay to Boston Capital or an
affiliate thereof an annual Asset Management Fee in the amount of
$7,500 per annum, commencing in 1998, for services in connection
with the preparation of reports required pursuant to
Section 13.04 of the Operating Partnership Agreement. The Asset
Management Fee for each fiscal year will be payable from Cash
Flow; provided, however, that if in any fiscal year Cash Flow is
insufficient to pay all or any portion of the Asset Management
Fee the unpaid portion, shall accrue, without interest, 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 XI of the Operating
Partnership Agreement.
The Operating Partnership shall pay to the General Partner a
fee (the "Incentive Partnership Management Fee") commencing in
1998 (pro rata for 1997) for its services in connection with
the managing of the day to day business of the Operating
Partnership in an annual amount equal $7,500 per annum.
The Incentive Partnership Management Fee for each fiscal year of
the Operating Partnership shall be payable from Cash Flow to
the extent Cash Flow is available therefor for such year;
provided, however, that if in any fiscal year commencing with
1998 (pro rata for 1997), Cash Flow is insufficient to pay
the full amount of the Incentive Partnership Management Fee,
the unpaid portion thereof shall accrue, without interest, 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 XI of the Operating
Partnership Agreement.
In consideration of its consultation, advice and other
services in connection with the construction and development of
the Apartment Complex, the Operating Partnership shall pay to
the Developer a development fee (the "Development Fee") in
the total amount of $964,774. The Development Fee shall be
payable $86,549 from the proceeds of the First Installment,
$220,000 from the proceeds of the Fourth Installment, $320,000
from the proceeds of the Fifth Installment and $10,000 from
the proceeds of the Sixth Installment, with the unpaid balance of
$328,225 (the "Deferred Development Fee") payable as provided in
Article XI of the Operating Partnership Agreement.
The Management Agent for the Apartment Complex will receive a fee
equal to 8.5% of Total Operating Revenue of the Apartment Complex
with potential to increase to a maximum of 10% of Total Operating
Revenue of the Apartment Complex.
Item 7. Exhibits.
(c) Exhibits. Page
(1) (a)<F1> Form of Dealer-Manager Agreement between
Boston Capital Services, Inc. and
the Registrant (including, as an exhibit
thereto, the form of Soliciting Dealer
Agreement)
(2) (a) Amended and Restated Agreement of Limited
Partnership of Escher SRO Project, L.P.
(2) (b) Certification and Agreement relating to
Escher SRO Project, L.P.
(4) (a)2<F2> Agreement of Limited Partnership of
the Partnership
(16) None
(17) None
(21) None
(24) None
(25) None
(28) None
_______________
<F1> Incorporated by reference to Exhibit (1) to Registration
Statement No. 33-70564 on Form S-11, as filed with the
Securities and Exchange Commission.
<F2> Incorporated by reference to Exhibit (4) to Registration
Statement No. 33-70564 on Form S-11, as filed with the
Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.
Dated: April 22, 1998
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
ESCHER SRO PROJECT, L.P.
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
September __, 1997
TABLE OF CONTENTS
ARTICLE I CONTINUATION OF PARTNERSHIP
1.01 Continuation
1.02 Name
1.03 Principal Executive Offices; Agent for Service of
Process
1.04 Term
1.05 Recording
ARTICLE II DEFINED TERMS
ARTICLE III PURPOSE AND BUSINESS OF THE PARTNERSHIP
3.01 Purpose of the Partnership
3.02 Authority of the Partnership
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS; DUTIES
AND OBLIGATIONS
4.01 Representations, Warranties and Covenants Relating
to the
Apartment Complex and the Partnership
4.02 Duties and Obligations Relating to the Apartment
Complex and the
Partnership
ARTICLE V PARTNERS, PARTNERSHIP INTERESTS AND OBLIGATIONS OF
THE PARTNERSHIP
5.01 Partners, Capital Contributions and Partnership
Interests
5.02 Return of Capital Contribution
5.03 Withholding of Capital Contribution Upon Default
5.04 Legal Opinions
5.05 Repurchase Obligation
ARTICLE VI CHANGES IN PARTNERS
6.01 Withdrawal of a General Partner
6.02 Admission of a Successor or General Partner
6.03 Effect of Bankruptcy, Death, Withdrawal, Dissolution
or Incompetence of a General Partner
ARTICLE VII ASSIGNMENT TO THE PARTNERSHIP
7.01 Assignment of Contracts, etc
ARTICLE VIII RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL
PARTNER
8.01 Management of the Partnership
8.02 Limitations Upon the Authority of the General
Partner
8.03 Management Purposes
8.04 Delegation of Authority
8.05 General Partner or Affiliates Dealing with
Partnership
8.06 Other Activities
8.07 Liability for Acts and Omissions
8.08 Partnership Status
8.09 Construction of the Apartment Complex, Construction
Cost Overruns, Operating Deficits
8.10 Development Fee
8.11 Incentive Partnership Management Fee
8.11.1 Asset Management Fee
8.12 Withholding of Fee Payments
8.13 Removal of the General Partner
8.14 Selection of Management Agent
8.15 Removal of the Management Agent
8.16 Replacement of the Management Agent
8.17 Subordinated Loans to the Partnership
8.18 Reserve Fund for Replacements
ARTICLE IX TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS OF
INTERESTS OF LIMITED PARTNERS
9.01 Purchase for Investment
9.02 Restrictions on Transfer of Limited Partner's
Interests
9.03 Admission of Substitute Limited Partners
9.04 Rights of Assignee of Partnership Interest
ARTICLE X RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
10.01 Management of the Partnership
10.02 Limitation on Liability of Limited Partners
10.03 Other Activities
10.04 Ownership by Limited Partner of Corporate General
Partner or Affiliate
ARTICLE XI ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX
CREDITS AND CASH DISTRIBUTIONS
11.01 Allocation of Taxable Income, Tax Losses and Tax
Credits
11.02 Allocation of Taxable Income and Tax Losses from
Capital Transactions
11.03 Distribution of Cash Flow
11.04 Distributions of Distributable Proceeds from Capital
Transactions and Distributable Proceeds from
Refinancings
11.05 Allocations Among Partners
11.06 Qualified Income Offset
11.07 Minimum Gain Allocations
11.08 Regulatory Allocations
11.09 Partners' Partnership Non-recourse Liabilities
11.10 Tax Allocations: Code Section 704(c)
11.11 Tax Matters Partner
11.12 Capital Accounts
11.13 Authority of General Partner to Vary Allocations to
Preserve and Protect Partner's Intent
ARTICLE XII SALE, DISSOLUTION AND LIQUIDATION
12.01 Dissolution of the Partnership
12.02 Winding Up and Distribution
ARTICLE XIII BOOKS AND RECORDS, ACCOUNTING TAX ELECTIONS,
ETC.
13.01 Books and Records
13.02 Bank Accounts
13.03 Accountants
13.04 Reports to Partners
13.05 Section 754 Elections
13.06 Fiscal Year and Accounting Method
ARTICLE XIV AMENDMENTS
14.01 Proposal and Adoption of Amendments
ARTICLE XV CONSENTS, VOTING AND MEETINGS
15.01 Method of Giving Consent
15.02 Submissions to Limited Partners
15.03 Meetings; Submission of Matter for Voting
ARTICLE XVI GENERAL PROVISIONS
16.01 Burden and Benefit
16.02 Applicable Law
16.03 Counterparts
16.04 Separability of Provisions
16.05 Entire Agreement
16.06 Liability of the Investment Partnership
16.07 Environmental Protection
16.08 Notices to the Investment Partnership
16.09 Notices to the General Partner
16.10 Withdrawal of Initial Limited Partner
ESCHER SRO PROJECT, L.P.
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
This Amended and Restated Agreement of Limited Partnership
is made and entered into as of the ___ day of September, 1997, by
and among the undersigned parties.
WHEREAS, a Certificate of Limited Partnership for ESCHER SRO
PROJECT, L.P. (the "Partnership") was filed with the Secretary of
State of New Jersey on January 6, 1992 (the "Certificate"); and
WHEREAS, as of October 31, 1991, Balanced Housing
Development Corp., a New Jersey corporation as the General
Partner (the "General Partner"), and Ronald Brown as initial
limited partner (the "Initial Limited Partner"), executed an
Agreement of Limited Partnership of ESCHER SRO PROJECT, L.P., a
New Jersey limited partnership (the "Agreement") for the
formation of the Partnership pursuant to the New Jersey Revised
Uniform Limited Partnership Act (the "Act").
WHEREAS, the Partnership has been formed to acquire,
develop, rehabilitate, construct, own, maintain and operate one
three-story building with a total of one-hundred four (104)
efficiency-type single room occupancy units ("SRO's"), one-
hundred of which are intended for rental to very low and low
income, single, homeless individuals with the remaining four (4)
units to be used by management staff, to be known as the Escher
Street SRO, and to be located in the North Ward section of
Trenton, New Jersey (the "Apartment Complex"); and
WHEREAS, the Partnership has acquired title to the Apartment
Complex subject to mortgages and other liens securing
construction and permanent financing Loans; and
WHEREAS, pursuant to a Restated Agreement and Certificate of
Limited Partnership of Escher SRO Project, L.P. dated April 10,
1997, the Initial Limited Partner withdrew from the Partnership
and Boston Capital Tax Credit Fund IV, L.P. (Series 26), a
Delaware limited partnership was admitted as a Limited Partner to
the Partnership; and
WHEREAS, the parties hereto now desire to enter into this
Amended and Restated Agreement of Limited Partnership to (i)
continue the Partnership; (ii) admit BCTC 94, Inc., a Delaware
corporation, to the Partnership as the Special Limited Partner;
(iii) impose additional conditions on the Initial Limited
Partner's withdrawal from the Partnership; (iv) reassign
Interests in the Partnership; and (v) set forth all of the
provisions governing the Partnership.
NOW, THEREFORE, in consideration of the foregoing, of mutual
promises of the parties hereto and of other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree to continue the
Partnership pursuant to the Act, as set forth in this Amended and
Restated Agreement of Limited Partnership, which reads in its
entirety as follows:
ARTICLE I
CONTINUATION OF PARTNERSHIP
1.01. Continuation. The undersigned hereby continue the
Partnership as a limited partnership under the Act.
1.02. Name. The name of the Partnership is ESCHER SRO
PROJECT, L.P.
1.03. Principal Executive Offices; Agent for Service of
Process. The principal executive and record office of the
Partnership and the resident agent for service of process shall
be Ronald Brown, with an address at 66 North Hillside Avenue,
P.O. Box 23, Livingston, NJ 07039. The Partnership may change
the location of its principal executive office to such other
place or places as may hereafter be determined by the General
Partner. The General Partner shall promptly notify all other
Partners of any change in the principal executive office. The
Partnership may maintain such other offices at such other place
or places as the General Partner may from time to time deem
advisable.
1.04. Term. The term of the Partnership commenced as of
December 31, 1991 and shall continue until December 31, 2050,
unless the Partnership is sooner dissolved in accordance with the
provisions of this Agreement.
1.05. Recording. Upon the execution of this Amended and
Restated Agreement of Limited Partnership by the parties hereto,
the General Partner shall take all necessary action required by
law to perfect and maintain the Partnership as a limited
partnership under the laws of the State and to effectuate the
admission of the Investment Partnership and BCTC 94, Inc. as
Limited Partners and the withdrawal of the initial Limited
Partner hereunder, and shall register the Partnership under any
assumed or fictitious name statute or similar law in force and
effect in the State.
ARTICLE II
DEFINED TERMS
In addition to the abbreviations of the parties set forth in
the preamble to this Agreement, the following defined terms used
in this Agreement shall have the meanings specified below:
"Accountants" means such firm of independent certified
public accountants as may be engaged by the General Partner, with
the Consent of BCTC 94, Inc., to prepare the Partnership income
tax returns and to be responsible for the Partnership's audit and
tax matters reporting obligations under Section 13.04 hereof.
"Act" means the Revised Uniform Limited Partnership Act of
New Jersey, as amended from time to time during the term of the
Partnership.
"Actual Credit" means as of any point in time, the total
amount of the Tax Credits actually allocated by the Partnership
to the Investment Partnership, representing ninety-nine percent
(99%) of the Tax Credits actually received by the Partnership, as
shown on the applicable tax return of the Partnership.
"Admission Date" means the date upon which the Investment
Partnership is admitted to the Partnership.
"Affiliate" means any Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by
or is under common control with a General Partner, or with
another designated Person, as the context may require.
"Affiliated Limited Partnership" means any limited
partnership, other than the Partnership, in which the General
Partner or an Affiliate of a General Partner is a general partner
and the Investment Partnership or an Affiliate of the Investment
Partnership is a limited partner.
"Agency" and/or "HMFA" means the New Jersey Housing and
Mortgage Finance Agency in its capacity as the designated agency
of the State of New Jersey to allocate Low-Income Housing Tax
Credits, acting through any authorized representative.
"Agreement" means this Amended and Restated Agreement of
Limited Partnership, as amended from time to time.
"Apartment Complex" means the land owned by the Partnership
located at 50 Escher Street, Trenton, New Jersey, and the 104-
unit SRO rental housing development and other improvements being
constructed and/or rehabilitated thereon, to be owned and
operated by the Partnership, and known as the Escher Street SRO.
"Applicable Percentage" has the meaning given to it in
Section 42(b) of the Code.
"Asset Management Fee" means the fee payable by the
Partnership to Boston Capital, or an Affiliate thereof, pursuant
to Section 8.11.1.
"Balanced Housing Loan" means a loan in the original
principal amount of $419,956 from Balanced Housing Development
Corp. to the Partnership as evidenced by the applicable Loan
Documents.
"Bankruptcy" or "Bankrupt" as to any Person means the filing
of a petition for relief as to any such Person as debtor or
bankrupt under the Bankruptcy Act of 1898 or the Bankruptcy Code
of 1978 or like provision of law (except if such petition is
contested by such Person and has been dismissed within 90 days);
insolvency of such Person as finally determined by a court
proceeding; filing by such Person of a petition or application to
accomplish the same or for the appointment of a receiver or a
trustee for such Person or a substantial part of his assets;
commencement of any proceedings relating to such Person under any
other reorganization, arrangement, insolvency, adjustment of debt
or liquidation law of any jurisdiction, whether now in existence
or hereinafter in effect, either by such Person or by another,
provided that if such proceeding is commenced by another, such
Person indicates his approval of such proceeding, consents
thereto or acquiesces therein, or such proceeding is contested by
such Person and has not been finally dismissed within 90 days.
"BCTC 94, Inc." means BCTC 94, 94, Inc., a Delaware
corporation, which is the Special Limited Partner of the
Partnership.
"Boarding House Grant" means those funds in the amount of
$399,791 from the New Jersey Housing and Mortgage Finance Agency
("HMFA") to the Partnership subject to, and for purposes of
maintaining and operating the Project as a Boarding House.
"Book Depreciation" has the meaning set forth in Section
11.12C.
"Book Profits and Losses" means the Taxable Income or Tax
Losses of the Partnership, adjusted for purposes of determining
and maintaining the Partners' Capital Accounts as provided in
Section 11.12.
"Boston Capital" means Boston Capital Partners, Inc., a
Massachusetts corporation.
"Capital Account" means the capital account of a Partner as
described in Section 11.12.
"Capital Contribution" with respect to any Partner, means
the total amount of money and the initial Gross Asset Value of
any property (other than money) contributed or agreed to be
contributed, as the context requires, to the Partnership by each
Partner pursuant to the terms of this Agreement. Any reference
to the Capital Contribution of a Partner shall include the
Capital Contribution made by a predecessor holder of the Interest
of such Partner.
"Capital Transaction" means the sale, exchange or
disposition (other than leasing in the ordinary course of
business) of any Partnership property that is not in the ordinary
course of business, or casualty damage to or condemnation of any
Partnership property, or any substantial interest therein or
portion thereof.
"Carryover Certification" means December 5, 1995, the date
upon which the Partnership received, in a form and in substance
satisfactory to the Investment Partnership, the certification of
the Accountants that as of a date no later than December 31,
1995, the Partnership incurred capitalizable costs with respect
to the Apartment Complex of at least ten percent (10%) of the
Partnership's reasonably expected basis in the Apartment Complex
as of December 31, 1995, so that each building in the Apartment
Complex constitutes a "qualified building" for the purposes of
Section 42(h)(1)(E)(ii) of the Code.
"Carryover Allocation" means the Carryover Allocation
Agreement from the Agency to the Partnership dated as of
December 5, 1995 setting forth certain terms and conditions of
the Partnership upon which the tax credit allocation is
contingent.
"Cash Flow" means, with respect to any year or other
applicable period, (a) all Revenues received by the Partnership
during such period, plus (b) any amounts which the General
Partner, acting jointly with BCTC 94, Inc., and subject to the
approval of the Lender, if required, releases from the Reserve
Fund for Replacements as being no longer necessary to hold as
part of the Reserve Fund for Replacements, or from Operating
Deficit Reserve less (i) all operating expenses and obligations
of the Partnership paid or payable (on a thirty-day current
basis) during the applicable period, including without limitation
escrow deposits for taxes and insurance, maintenance and repairs,
(ii) all sums due or currently required to be paid under the
terms of the Loans or any other third-party indebtedness of the
Partnership, and (iii) all amounts from Revenues, if any, added
or required to be added to the Reserve Fund for Replacements
and/or the Operating Deficit Reserve during such period. In no
event will deductions in determining Cash Flow pursuant to
clauses (i) and (ii) above include payments made on account of:
the Asset Management Fee, amounts due on any Subordinated Loans,
the Incentive Partnership Management Fee, and/or the Deferred
Development Fee. Cash Flow shall be determined separately for
each fiscal year and shall not be cumulative.
"Certificate" means the Certificate of Limited Partnership
for Escher SRO Project, L.P. filed with the Secretary of State of
New Jersey on January 6, 1992, or any certificate of limited
partnership or any other instrument or document which is required
under the law of the State to be signed and sworn to by the
Partners of the Partnership and filed in the appropriate public
offices within the State to perfect or maintain the Partnership
as a limited partnership under the laws of the State, to effect
the admission, withdrawal or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited
Partners as limited partners under the laws of the State.
"City Lender" and/or the "City" means the City of Trenton,
New Jersey or its successors and assigns, in its capacity as
lender to the Partnership of $1,590,000 pursuant to the terms of
the City Loan Documents, and in its capacity as lender to the
Partnership of $100,000 pursuant to the terms of the $100,000
City Note.
"City Loan" means the portion of the Loans to the
Partnership from the City of Trenton, New Jersey pursuant to the
City Loan Documents, in the total maximum principal amount of
$1,590,000 as evidenced by the City Loan Documents, the proceeds
of which shall be or have been advanced (see also Permanent
Loan).
"City Loan Documents" means those documents executed by the
Partnership and delivered to the City with respect to the
restructuring of the Original City Loan Documents including
without limitation, the Amended and Restated Mortgage Note in the
amount of $1,590,000, (the "City Note"), the Amended and Restated
Mortgage covering the Project and as security for the City Note
(the "City Mortgage"), any other documents executed by the
Partnership in connection with the City Loan all dated as of
___________, 1997, and the $100,000 City Note.
"$100,000 City Note" means a loan from the City to the
Partnership, the proceeds of which shall be used to fund a
portion of the Operating Deficit Reserve.
"Construction Loan" means the initial portion of the City
Loan, the proceeds of which have been or shall be used to fund
construction of the Project.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any corresponding provision or provisions
of succeeding law.
"Compliance Period" has the meaning ascribed to such term in
Section 42 of the Code.
"Consent" means the prior written consent or approval of
BCTC 94, Inc. and/or the Investment Partnership and/or any other
Partner, as the context may require, to do the act or thing for
which the consent is solicited, and which consent shall not be
unreasonably delayed.
"Construction Contract" means that certain construction
contract dated in 1994 in the amount of Two Million Seven Hundred
Ten Thousand and 00/100 ($2,710,000), as amended by that certain
Amendment to Construction Contract dated as of May 20, 1997,
amending among other things, the contract price to One Million,
Nine Hundred Twenty-Five Thousand and 00/100 ($1,925,000)
(including all exhibits and attachments thereto) entered into
between the Partnership and the Contractor pursuant to which the
Apartment Complex is being constructed.
"Contractor" means Allied Construction Services, Inc. in its
capacity as the general construction contractor for the Apartment
Complex.
"Cost Certification" means the date upon which each Limited
Partner shall have received the written certification of the
Accountants, in a form and in substance satisfactory to Boston
Capital, as to the itemized amounts of the completed construction
and development costs of the Apartment Complex and the Eligible
Basis and Applicable Percentage (in each case, as defined in
Section 42(d) of the Code), pertaining to each building in the
Apartment Complex.
"Counsel" or "Counsel for the Partnership" shall mean the
law office of Brach, Eichler, Rosenberg, Silver, Bernstein,
Hammer & Gladstone, A Professional Corporation or such other
attorney or law firm upon which the Investment Partnership and
the General Partner shall agree; provided, however, that if any
section of this Agreement either (i) designates particular
counsel for the purpose described therein, or (ii) provides that
counsel for the purpose described therein shall be chosen by
another method or by another Person, then such designation or
provision shall prevail over this general definition. The General
Partner shall not be deemed a client of Hinckley, Allen & Snyder.
The Limited Partners have been, and will continue to be,
separately represented by Hinckley, Allen & Snyder or such other
counsel as they may choose in connection with all Partnership
matters, and the Limited Partners shall not be deemed clients of
Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone,
A Professional Corporation.
"Credit Recovery Loan" has the meaning set forth in Section
5.01(d)(iii).
"Credit Shortfall" means the amount by which the Actual
Credit is less than the Projected Credit (or Revised Projected
Credit) for any year or portion thereof.
"Debt Service" means scheduled principal and interest
payments on indebtedness under the Loans determined on an annual
basis for each year of Partnership operations, but excluding (i)
principal and interest due on acceleration of the Loans upon
occurrence of an event of default and (ii) balloon payments of
principal and interest due upon expiration of the term of the
Loans.
"Debt Service Coverage Ratio" means the ratio of (i) rental
and miscellaneous income of the Partnership from the operation of
the Apartment Complex in the ordinary course of business and all
other income of the Partnership including unrestricted earnings
on reserve or escrow funds other than proceeds of any loans to
the Partnership and investment earnings on funds on deposit in
the Reserve Fund for Replacements and/or Operating Deficit
Reserve ("Gross Income") minus all accrued operational costs of
the Apartment Complex; including, but not limited to taxes,
assessments, Reserve Fund for Replacements deposits, maintenance
and repairs, fees due and payable (other than the Incentive
Partnership Management Fee, the Asset Management Fee and the
Deferred Development Fee), and a ratable portion of the annual
amount (as reasonably estimated by the General Partner) of those
seasonal or periodic expenses (such as utilities, maintenance
expenses and real estate taxes) which might reasonably be
expected to be incurred on an unequal basis during a full annual
period of operations, but excluding amounts due under
Subordinated Loans to (ii) Debt Service.
"Developer" means Balanced Housing Development Corp.
"Deferred Development Fee" means any portion of the
Development Fee not actually paid to and received by the
Developer from the Installments, the payment of which is deferred
and payable only in accordance with Sections 5.01(a), 11.03(A)(c)
and 11.04(A)(b)(i) hereof.
"Development Fee" means the fee payable by the Partnership
to the Developer pursuant to Section 8.10 of this Agreement.
"Development Sources" means the aggregate of: (a) the
proceeds of the Loans; (b) the Capital Contributions of the
General Partner, as set forth in Section 5.01(a) of this
Agreement; (c) not more than $3,101,576 ($3,748,125-$636,549
Development Fee paid from equity) of the Capital Contributions of
the Investment Partnership to the Partnership; and (d) any rental
income of the Partnership for the period prior to Final Closing.
"Distributable Proceeds from Capital Transactions" means the
excess of all cash receipts and other consideration arising from
the sale or other disposition of all or any portion of the
Apartment Complex or any proceeds realized from condemnation,
casualty, or title defect, but excluding proceeds, if any, from
rental interruption insurance or a temporary condemnation in the
nature of a lease, over the sum of the following, to the extent
paid out of such cash receipts or other consideration: (i) the
amount of cash disbursed or to be disbursed in connection with or
as an expense of such sale or other disposition, (ii) the amount
necessary for the payment of all debts and obligations of the
Partnership arising from or otherwise related to such sale or
other disposition or to which the Apartment Complex is subject
and which are otherwise then due (other than debts and
obligations owed to the Partners and their Affiliates, which
shall be satisfied in the order set forth in Section 11.04), and
(iii) any amounts set aside by the General Partner for reserves
which the General Partner deems reasonably necessary for
contingent, unmatured or unforeseen liabilities of the
Partnership.
"Distributable Proceeds from Refinancings" means the excess
of the gross proceeds of any borrowing by the Partnership over
the sum of the following, to the extent paid out of such gross
proceeds: (i) any amounts disbursed to repay then existing loans
of the Partnership and to pay and provide for all debts and
obligations of the Partnership then to be paid or which are
otherwise then due (other than debts and obligations owed to the
Partners and their Affiliates, which shall be satisfied in the
order set forth in Section 11.04), (ii) all reasonable expenses
of such borrowings, including, without limitation, all commitment
fees, brokers' commissions, and attorneys' fees, (iii) all
amounts paid to improve the Apartment Complex or for any other
purpose in order to satisfy conditions to or established in
connection with such borrowings, and (iv) any amounts used to
meet the operating expenses of the Apartment Complex or set aside
by the General Partner for reserves which the General Partner
deems reasonably necessary for contingent, unmatured, or
unforeseen liabilities of the Partnership.
"Eligible Basis" has the meaning given to it in Section
42(d) of the Code.
"Excess Development Costs" means all funds in excess of the
Development Sources which are required to (i) complete
construction of the Apartment Complex, including paying any final
cost overruns and the cost of any change orders which have been
approved by the Lender and which are not funded from Development
Sources, (ii) achieve Substantial Completion, (iii) achieve Final
Closing and satisfy any escrow deposit requirements which are
conditions to the Final Closing, including without limitation,
any amounts necessary for local taxes, utilities, insurance
premiums and other amounts which are required, (iv) pay any
applicable loan assessment fees, discounts or other costs and
expenses incurred by the Partnership as a result of the
occurrence of the Final Closing, (v) make that portion of the
required initial $200,000 deposit into the Operating Deficit
Reserve not made available from the $100,000 City Note from the
City, and (vi) pay any Operating Deficits incurred by the
Partnership prior to the occurrence of Rental Achievement.
"Extended Use Commitment" means the agreement between the
Partnership and the Agency, which is intended to meet the
definition of a "long term commitment to low-income housing" as
required by Section 42(h)(6) of the Code and the requirements of
the Agency's Low-Income Housing Tax Credit Program.
"40-60 Set-Aside Test" means the Minimum Set-Aside Test
whereby at least 40% of the units in the Apartment Complex must
be occupied by individuals with incomes of 60% or less of area
median income, as adjusted for family size.
"50-50 Set Aside Test" means the Minimum Set-Aside Test
selected by the Partnership pursuant to its tax credit
application submitted to the Agency, whereby at least 50% of the
units in the Apartment Complex must be occupied by individuals
with incomes of 50% or less of the area median income, as
adjusted for family size. This 50-50 Set-Aside Test shall be
binding on the Project for the duration of the compliance and
extended use periods and enforceable via a deed of easement and a
restrictive covenant which will be recorded against the Project
by the Agency.
"Final Closing" means the occurrence of all of the
following: (i) execution by the Partnership, delivery to and
acceptance by the City of the City Loan Documents as approved in
form and substance by Boston Capital, (ii) Substantial
Completion, and (iii) the receipt by the Partnership of any
approvals necessary from any Lender hereunder as may be required
pursuant to the terms of the Loan Documents and upon satisfaction
or waiver of all conditions set forth therein.
"First Rental Achievement" means the date upon which the
Partnership shall have for the first time, maintained a Debt
Service Coverage Ratio of not less than 1.15 for any three
consecutive full calendar months, with each such calendar month
taken individually, after Substantial Completion. The
calculation of Rental Achievement does not include the Asset
Management Fee.
"General Partner" means Balanced Housing Development
Corporation, a New Jersey corporation and any other Person or
entity admitted as a general partner pursuant to this Agreement,
and their respective successors pursuant to this Agreement,
including particularly the provisions of Section 6.03 and 8.13.
"General Partner Special Capital Contribution" has the
meaning ascribed to such term in Section 5.01 of this Agreement.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
adjusted pursuant to Section 11.12B.
"HMFA" see definition of Agency.
"Incentive Partnership Management Fee" means the fee payable
by the Partnership to the General Partner pursuant to Section
8.11 of this Agreement.
"Initial Closing" means the date upon which all of the
following conditions have been satisfied: (i) the execution by
the Partnership and the City of a commitment for permanent
financing in form and substance acceptable to Boston Capital;
(ii) satisfactory review by Boston Capital of draft of City Loan
Documents; and (ii) this Agreement has been duly executed by all
parties hereto.
"Initial 95% Occupancy Date" means the first date, after the
completion of rehabilitation, upon which 95% of the apartment
units in the Apartment Complex have been leased to, and ninety-
five (95) of the units are currently occupied by, qualified
tenants under executed Agency approved leases, if any such
approval is applicable.
"Installment" means an Installment of the Investment
Partnership's Capital Contribution paid or payable to the
Partnership pursuant to Section 5.01.
"Interest" or "Partnership Interest" means the ownership
interest of a Partner in the Partnership at any particular time,
including the right of such Partner to any and all benefits to
which such Partner may be entitled as provided in this Agreement
and in the Act, together with the obligations of such Partner to
comply with all the terms and provisions of this Agreement and of
said Act. Such Interest of each Partner shall, except as
otherwise specifically provided herein, be that percentage of the
aggregate of such benefit or obligation specified by Section 5.01
as such Partner's Percentage Interest.
"Invested Amount" means (i) as to the Investment
Partnership, an amount equal to the paid-in Capital Contribution
of the Investment Partnership divided by .73 and (ii) as to any
other Partner, an amount equal to its paid-in Capital
Contribution.
"Investment Partnership" means Boston Capital Tax Credit
Fund IV, L.P., (Series 26), a Delaware limited partnership, which
is a Limited Partner of the Partnership.
"Land" means the tracts of land located at 50 Escher Street
in Trenton, New Jersey, upon which the Apartment Complex will be
located.
"Lenders" shall mean, collectively or individually, as
applicable, the City of Trenton, the New Jersey Housing Finance
Agency and Balanced Housing Development Corp., or its/their
successors and assigns in such capacity, including any Substitute
Lenders permitted pursuant to Section 8.02(b)(v) hereof, each
acting through any authorized representative.
"Limited Partners" means the Investment Partnership and/or
BCTC 94, Inc., or any other Limited Partner in such Person's
capacity as a limited partner of the Partnership.
"Liquidator" means the General Partner or, if there are none
at the time in question, such other Person who may be appointed
in accordance with applicable law and who shall be responsible
for taking all action necessary or appropriate to wind up the
affairs of, and distribute the assets of, the Partnership upon
its dissolution.
"Loan Documents" means, collectively, the City Loan
Documents; a $399,791 Promissory Note (the "$399,791 Note")
issued in conjunction with a Loan Agreement and Deed Restriction
and a Rental Assistance Agreement, each dated as of January 31,
1997, and any other instruments, documents or agreements related
to the Boarding House Grant from the Partnership to HMFA (the
"Boarding House Grant"); the $419,956 Promissory Note, including
any addendums thereto from the Partnership to Balanced Housing
Development Corp. dated as of May 31, 1995 (the "$419,956 Note"),
and the Affordable Housing Restriction Agreement from the
Partnership to the Agency and any other documents from the
Partnership to any Lender in connection with any Loan referenced
herein, as the same may be assigned or transferred.
"Loan(s)" means, the City Loan as evidenced by the City Loan
Documents including without limitation an Amended and Restated
$1,590,000 Mortgage Note, secured by the City Mortgage and other
related security documents and financing statements and the
conditional loan from the City in the amount of $100,000
evidenced by the $100,000 City Note; the conditional Boarding
House Grant in the principal amount of $399,791 made to the
Partnership by HMFA, as evidenced by the applicable Loan
Documents including without limitation the $399,791 Note as the
same may be assigned or transferred; and to the Balanced Housing
Loan in the principal amount of $419,956, as evidenced by the
applicable Loan Documents including without limitation, the
$419,956 Note, as the same may be assigned or transferred.
"Low-Income Housing Tax Credit" means the low-income housing
tax credit allowed for low-income housing projects pursuant to
Section 42 of the Code.
"Management Agent" means Fela, Inc. d/b/a Emet Realty
Management and Development Company, Inc., an affiliate of the
General Partner, the management and rental agent for the
Apartment Complex and/or its successors and/or assigns, as
described in Section 8.05 hereof.
"Management Agreement" means the agreement between the
Partnership and the Management Agent providing for the management
of the Apartment Complex.
"Minimum Gain" means the amount determined by computing,
with respect to each non-recourse liability of the Partnership,
the amount of Taxable Income, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction thereof,
and by then aggregating the amounts so computed, in accordance
with Treasury Regulation 1.704-2(d). For purposes of determining
the amount of such Taxable Income with respect to a liability,
the adjusted basis, for federal income tax purposes, of the asset
subject to the liability shall be allocated among all the
liabilities that the asset secures in the manner set forth in
Treasury Regulation 1.704-2(d)(2) (or successor provisions). If
Partnership property subject to one or more non-recourse
liabilities of the Partnership is, under Treasury Regulation
1.704-1(b)(2)(iv)(d),(f), or (r), properly reflected on the books
of the Partnership at a book value that differs from the adjusted
tax basis of such property, then the determination of Minimum
Gain shall be made with reference to such book value.
"Minimum Set-Aside Test" means the set-aside test selected
by the Partnership pursuant to Section 42(g) of the Code with
respect to the percentage of units in its Apartment Complex to be
occupied by tenants with incomes equal to no more than a certain
percentage of area median income. The Partnership has selected
or will select the 40-60 Set-Aside Test as the Minimum Set-Aside
Test, but also must comply with the 50-50 Set-Aside Test pursuant
to the election made under the Tax Credit Application to the
Agency for Project Credits.
"Mortgage(s)" means the City Mortgage given by the
Partnership to the City Lender securing the City Loan.
"Net Capital Contribution" means an amount equal to a
Partner's paid-in Capital Contribution, less the aggregate amount
of cash distributions, if any, made to such Partner hereunder,
excluding repayment of loans or fees for services, as provided in
the definition of Cash Flow.
"Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(c) of the Treasury Regulations. The amount of
Nonrecourse Deductions for a Fiscal Year of the Partnership
equals the net increase, if any, in the amount of Minimum Gain
during that Fiscal Year, determined according to the provisions
of Treasury Regulation Section 1.704-2(c).
"Notice" means a writing containing the information required
by this Agreement to be communicated to a Partner and sent by
registered or certified mail, postage prepaid, return receipt
requested, to such Partner at the last known address of such
Partner, the date of registry thereof or the date of the
certification receipt therefor being deemed the date of such
Notice; provided, however, that any written communication
containing such information sent to such Partner actually
received by such Partner shall constitute Notice for all purposes
of this agreement.
"Operating Deficit" means the amount by which (i) the income
of the Partnership from rental payments made by tenants of the
Apartment Complex and all other income of the Partnership,
including unrestricted earnings on reserve or escrow funds (other
than proceeds of any loans to the Partnership and investment
earnings on funds on deposit in the Reserve Fund for
Replacements) for a particular period of time, is exceeded by
(ii) the sum of all the operating expenses, including all Debt
Service payments, operating and maintenance expenses, deposits
into the Reserve Fund for Replacements, any Lender' fee payments,
and all other Partnership obligations or expenditures, excluding
payments to the General Partner, payments for construction of the
Apartment Complex and fees and other expenses and obligations of
the Partnership to be paid from the Capital Contributions of the
Investment Partnership to the Partnership pursuant to this
Agreement, during the same period of time.
"Operating Deficit Loan" means a loan made pursuant to
Section 8.09(b).
"Operating Deficit Reserve" means the operating deficit
reserve account established and maintained pursuant to the
provisions of Section 8.18(b) of this Agreement.
"Original City Loan" means the original loan to the
Partnership from the city in the original maximum principal
amount of $1,600,000, as of December 28, 1992 as evidenced by the
Original City Loan Documents.
"Original City Loan Documents" means collectively, the
Original City Note, the Mortgage from the Partnership to the City
securing payment of the Original City Note and any and all other
documents executed in connection therewith.
"Original City Note" means that Mortgage Note dated
December 28, 1992 from the Partnership to the City in the
original principal amount of $1,690,000.
"Partner" means any General Partner or any Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning
attributed to "partner loan nonrecourse debt minimum gain" in
Treasury Regulation 1.704-2(i)(3).
"Partner Loan Nonrecourse Deductions" means any deductions
of the Partnership that are attributable to a nonrecourse
liability for which a Partner bears the risk of loss within the
meaning of Treasury Regulation Section 1.704-2(i).
"Partnership" means Escher SRO Project, L.P.
"Partnership Agreement" means this Amended and Restated
Agreement of Limited Partnership, as amended from time to time.
"Percentage Interest" means the percentage Interest of each
Partner as set forth in
Section 5.01.
"Permanent Loan" means collectively, the Balanced Housing
Loan and the City Loan.
"Person" means any individual, partnership, corporation,
trust or other entity.
"Plans and Specifications" means the plans and
specifications (as applicable) for the rehabilitation and
reconfiguration of the Apartment Complex, referred to in the
Construction Contract and any changes thereto made in accordance
with the terms of this Agreement.
"Project Documents" means and includes this Agreement, the
Loan Documents, the Extended Use Commitment, the Management
Agreement and all other instruments delivered to (or required by)
the Lender or the Agency and all other documents relating to the
Apartment Complex and by which the Partnership is bound, as
amended or supplemented from time to time.
"Projected Credit" means Low-Income Housing Tax Credits in
the amount of $446,160 for 1998, $594,880.00 per year for each of
the years 1999 through 2007, and $148,720 for 2008, which the
General Partner has projected to be the total amount of the Tax
Credits which will be allocated to the Investment Partnership by
the Partnership, constituting ninety-nine and 99/100 percent
(99.99%) of the Tax Credits which are projected to be available
to the Partnership; provided, however, that if the Actual Credit
for 1998 is greater than (or less than) $446,160 the Projected
Credit for the year 2008 shall be reduced (increased) by an
amount equal to the amount by which the Actual Credit for 1998
exceeds (or is less than) $446,160.
"Rent Restriction Test" means the test pursuant to Section
42 of the Code whereby the gross rent charged to tenants of the
low-income units in the Apartment Complex cannot exceed 30% of
the qualifying income levels of those units under Section 42.
"Reserve Fund for Replacements" means the reserve fund for
replacements with respect to the Apartment Complex as established
pursuant to the provisions of Section 8.18(a) of this Agreement.
"Revenues" means all cash receipts of the Partnership during
any period except for Capital Contributions, proceeds from the
liquidation, sale or refinancing of Partnership property or of a
Capital Transaction, or the proceeds of any loan to the
Partnership.
"Revised Projected Credit" has the meaning set forth in
Section 5.01(d)(i).
"Second Rental Achievement" means the date upon which the
Partnership shall have or the first time, maintained a Debt
Service Coverage Ratio of not less than 1.15 for any six
consecutive full calendar months, with each such calendar month
taken individually, after Substantial Completion. The calculation
of Rental Achievement does not include the Asset Management Fee.
"Share of Minimum Gain" means for each Partner, the excess
of (1) the sum of (a) the aggregate Non-Recourse Deductions
allocated to such Partner (and such Partner's predecessors in
interest) up to that time and (b) the aggregate distributions to
such Partner (and such Partner's predecessors in interest) up to
that time of proceeds of a non-recourse liability that are
allocable to an increase in Partnership Minimum Gain over (2) the
sum of (a) such Partner's (and such Partner's predecessors' in
interest) aggregate share of the net decrease in Partnership
Minimum Gain up to that time and (b) such Partner's (and such
Partner's predecessors' in interest) aggregate share of the
decreases up to that time in Partnership Minimum Gain resulting
from revaluations of Partnership Property subject to one or more
non-recourse liabilities of the Partnership, as more fully set
forth in Treasury Regulation 1.704-2(g).
"State" means the State of New Jersey.
"State Designation" means, with respect to the Apartment
Complex, the final allocation by the Agency of Low-Income Housing
Tax Credits, as evidenced by the receipt by the Partnership of
IRS Form 8609 executed by the Agency as to all buildings in the
Apartment Complex. In the event that State Designation is
anticipated to occur more than 60 days after the Agency's receipt
of Cost Certification, then, for purposes of Section 5.01(c)
hereof, State Designation shall mean evidence of the Agency's
receipt of Cost Certification, provided that the Partnership's
Carryover Allocation of 1994 Tax Credits remains valid and in
full force and effect.
"Subordinated Loan" means any loan made by the General
Partner to the Partnership pursuant to Section 8.17.
"Substantial Completion" means the date upon which the
Partnership has received all necessary certificates of
substantial completion or certificates of occupancy from the
applicable governmental jurisdiction(s) or authority(ies)
relating to 100% of the SRO Units in the Apartment Complex, or
(ii) receipt of a certification from the inspecting architect in
form and substance acceptable to Boston Capital, with respect to
satisfactory completion of one hundred percent (100%) of the
apartment units in the Apartment Complex; provided, however, that
Substantial Completion shall not be deemed to have occurred if on
such date any liens or other encumbrances as to title to the Land
and the Apartment Complex exist, other than those securing the
Loans and/or those Consented to by the Investment Partnership.
"Substitute Limited Partner" means any Person admitted to
the Partnership as a Limited Partner pursuant to Section 9.03.
"Syndication Expenses" means all expenditures classified as
syndication expenses pursuant to Treasury Regulation Section
1.709-2(B). Syndication Expenses shall be taken into account in
determining and maintaining Capital Accounts pursuant to Section
11.12 of this Agreement at the time they would be taken into
account under the Partnership's method of accounting if they were
deductible expenses.
"Taxable Income" and "Tax Losses" means the Partnership's
taxable income or tax losses, respectively, for each fiscal year
(or part thereof) as determined for federal income tax purposes,
including, where the context requires, all items of income, gain,
loss, deduction and credit which enter into the computation
thereof.
"Tax Credit" means the Low-Income Housing Tax Credit.
"Tax Credit Set Aside" means the date upon which the
Partnership received a reservation, effective for 1995, subject
to a the Carryover Allocation of Tax Credits meeting the
requirements of Section 42(h)(1)(E) of the Code and Treasury
Regulations for an allocation of Tax Credit for the building(s)
constituting the Apartment Complex in an annual dollar amount of
not less than $594,940.00, which reservation shall not have
expired or been revoked prior to the date on which the First
Installment is paid. The Tax Credit Set Aside for the
Partnership was issued by the Agency through a Preliminary
Reservation Letter to the Partnership dated June 26, 1995, and
subsequently superseded by the Carryover Allocation.
"Total Operating Revenue" means gross residential rental
revenue less vacancy plus other income.
"75% Construction Completion" means the date upon which the
Partnership has received either (i) all necessary certificates of
substantial completion or certificates of occupancy from the
applicable governmental jurisdiction(s) or authority(ies)
relating to 75% of the SRO units in the Apartment Complex, or
(ii) receipt of a certification from the inspecting architect in
form and substance acceptable to Boston Capital, with respect to
satisfactory completion of seventy-five percent (75%) of the
overall construction of the Apartment Complex, provided, however,
that 75% Construction Completion shall not be deemed to have
occurred if on such date any liens or other encumbrances as to
title to the Land and the Apartment Complex exist, other than
those securing the Loans and/or those Consented to by the
Investment Partnership.
ARTICLE III
PURPOSE AND BUSINESS OF THE PARTNERSHIP
3.01. Purpose of the Partnership. The Partnership has
been organized to acquire the Land and to develop, finance,
construct, own, maintain, operate and sell or otherwise dispose
of the Apartment Complex, in order to obtain long-term
appreciation, cash income, Tax Credits and tax losses and to
manage the Apartment Complex in a manner that provides and
preserves safe, decent, affordable housing and needed supportive
services.
3.02. Authority of the Partnership. In order to carry
out its purpose, the Partnership is empowered and authorized to
do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and
accomplishment of its purpose, and for the protection and benefit
of the Partnership, including but not limited to the following:
(a) acquire ownership of the Land;
(b) construct, operate, maintain, improve, buy, own, sell,
convey, assign, mortgage, rent or lease any real estate and any
personal property necessary to the operation of the Apartment
Complex;
(c) provide housing, subject to the Minimum Set-Aside Test
and the Rent Restriction Test and consistent with the
requirements of the Project Documents so long as any Project
Documents remain(s) in force;
(d) enter into any kind of activity, and perform and carry
out contracts of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the purposes of the
Partnership;
(e) borrow money and issue evidences of indebtedness in
furtherance of the Partnership business and secure any such
indebtedness by mortgage, pledge, or other lien;
(f) maintain and operate the Apartment Complex, including
hiring the Management Agent (which Management Agent may be any of
the Partners or an Affiliate thereof) and entering into any
agreement for the management of the Apartment Complex during its
rent-up and after its rent-up period;
(g) subject to the approval of the Agency and/or the
Lender, if required, and to other limitations expressly set forth
elsewhere in this Agreement, negotiate for and conclude
agreements for the sale, exchange, lease or other disposition of
all or substantially all of the property of the Partnership, or
for the refinancing of any Loans on the property of the
Partnership;
(h) enter into the Loan Documents with the Lenders and
grant the Mortgages, enter into the Loans and all other documents
required by the Lenders with respect to the Loans, and the
Extended Use Commitment with the Agency, providing for
regulations with respect to rents, profits, dividends and the
disposition of the Apartment Complex and the long-term use of the
Apartment Complex for low-income housing;
(i) rent dwelling units in the Apartment Complex from time
to time, in accordance with the provisions of the Code applicable
to Low-Income Housing Tax Credits and in accordance with
applicable federal, state and local regulations, collecting the
rents therefrom, paying the expenses incurred in connection with
the Apartment Complex, and distributing the net proceeds to the
Partners, subject to any requirements which may be imposed by the
Extended Use Commitment and the Loan Documents; and
(j) do any and all other acts and things necessary or
proper in furtherance of the Partnership business.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS; DUTIES AND
OBLIGATIONS
4.01. Representations, Warranties and Covenants Relating
to the Apartment Complex and the Partnership. As of the date
hereof, the General Partner hereby represents, warrants and
covenants to the Partnership and to the Partners that:
(a) the construction and development of the Apartment
Complex has begun or shall commence within seven (7) business
days from the date of Initial Closing and shall be completed in a
timely and workmanlike manner in accordance with (i) all
applicable requirements of the Construction Contract and the
Project Documents, (ii) all applicable requirements of all
appropriate governmental entities, and (iii) the Plans and
Specifications of the Apartment Complex that have been or shall
be hereafter approved by the Lender and any applicable
governmental entities, as such Plans and Specifications may be
changed from time to time with the approval of the Lender and any
applicable governmental entities, if such approval shall be
required;
(b) at the time of commencement of construction, at Initial
Closing and as of the date hereof, the Land was, and is properly
zoned for the Apartment Complex, all consents, permissions and
licenses required by all applicable governmental entities have
been obtained (excepting however any certificates of occupancy
which must be obtained prior to the occupancy of the Apartment
Complex, which such certificates will be obtained by the General
Partner on behalf of the Partnership), and to the best of its
knowledge, the Apartment Complex conformed and conforms to all
applicable federal, state and local land use, zoning,
environmental and other governmental laws and regulations;
(c) all appropriate public utilities, including sanitary
and storm sewers, water, gas and electricity, are currently
available and will be operating properly for all units in the
Apartment Complex at the time of first occupancy of such units;
(d) at Initial Closing and as of the date hereof, good and
marketable fee simple title to the Apartment Complex was and is
held by the Partnership, and title insurance policies of a
financially responsible institution acceptable to the Lender and
to BCTC 94, Inc., in the amount of the replacement cost of the
Apartment Complex, which amount shall not be less than the
aggregate of the Capital Contributions ($3,748,125 ) of the
General Partner and the Investment Partnership and the principal
amount of the Loans ($2,509,747), in favor of the Partnership and
Lender, respectively, were issued on or before Initial Closing,
and shall remain in full force and effect, subject only to such
easements, covenants, restrictions and such other standard
exceptions as are normally included in owner's or mortgagee's
title insurance policies and which are acceptable to BCTC 94,
Inc. and the Lender and shall contain a non-imputation
endorsement as to the Investment Partnership and BCTC 94, Inc.
and such other endorsements as deemed reasonably necessary by the
Lender and BCTC 94, Inc.;
(e) other than that expressly disclosed to the Limited
Partners, the General Partner is not aware of any default under
any agreement, contract, lease, or other commitment, or of any
claim, demand, litigation, proceedings or governmental
investigation pending or threatened against it, the Apartment
Complex or the Partnership, or related to the business or assets
of the Partnership or of the Apartment Complex, which claim,
demand, litigation, proceeding or governmental investigation
could result in any judgment, order, decree, or settlement which
would materially and adversely affect the business or assets of
the Partnership, the General Partner, or of the Apartment
Complex;
(f) except for the commitment fees paid to the Lender,
neither the General Partner nor any Affiliate of the General
Partner or the Partnership, has entered, or shall enter, into any
agreement or contract for the payment of any Loans discounts,
additional interest, yield maintenance or other interest charges
or financing fees or any agreement providing for the guarantee of
payment of any such interest charges or financing fees relating
to the Loans;
(g) the execution of this Agreement, the incurrence of the
obligations set forth in this Agreement, and the consummation of
the transactions contemplated by this Agreement do not violate
any provision of law, any order, judgment or decree of any court
binding on the Partnership, the General Partner or any of them or
their Affiliates, any provision of any indenture, agreement, or
other instrument to which the Partnership or they or either of
them is a party or by which the Partnership or the Apartment
Complex is affected, and is not in conflict with, and will not
result in a breach of or constitute a default under any such
indenture, agreement, or other instrument or result in creating
or imposing any lien, charge, or encumbrance of any nature
whatsoever upon the Apartment Complex;
(h) the Construction Contract has been entered into
between the Partnership and the Contractor; no other
consideration or fee shall be paid to the Contractor, in its
capacity as the Contractor, other than the amounts set forth in
the Construction Contract or as evidenced by change orders
approved by the Lender to the extent such approvals are required,
or as otherwise disclosed in writing to and approved by the
Investment Partnership; and all change orders that have been
submitted by the Contractor to date have been paid in full;
(i) at Initial Closing and as of the date hereof, a
builder's risk insurance policy was and is in full force and
effect, and fire and extended coverage insurance for the full
replacement value of the Apartment Complex (excluding the value
of the Land, site utilities, landscaping and foundations) which
shall include flood insurance, if the Apartment Complex is in a
flood hazard area designated by the United States Department of
Housing and Urban Development, and public liability insurance in
the amount of not less than $1,000,000 per occurrence and
$2,000,000 in the aggregate, per location (with no deductible for
liability), and a $4,000,000 umbrella policy, all in favor of the
Partnership and naming the Investment Partner as an additional
insured and loss payee, are in full force and effect and will be
maintained in full force and effect during the term of the
Partnership; all such policies shall be in amounts set forth in
this Paragraph, and with insurers reasonably satisfactory to BCTC
94, Inc., and shall be paid for out of Partnership assets;
following Substantial Completion, the General Partner, on behalf
of the Partnership, will maintain $5,000,000 of liability
insurance covering the Land and the Apartment Complex;
The term "full replacement value" as used herein shall mean
and include the total cost of replacement of the Apartment
Complex at each respective stage of construction thereof up to
completion.
(j) neither the General Partner nor the Partnership has
incurred any financial responsibility with respect to the
Apartment Complex prior to the date of execution of this
Agreement, other than that expressly disclosed to the Investment
Partnership;
(k) at the time of Initial Closing and at Final Closing, at
the time of execution of this Agreement, and at Substantial
Completion, the Partnership was, is and will continue to be a
valid limited partnership, duly organized under the laws of the
State, had, has and shall continue to have full power and
authority to acquire the Land and to rehabilitate, construct,
develop, operate and maintain the Apartment Complex in accordance
with the terms of this Agreement, and has taken and shall
continue to take all action under the laws of the State and any
other applicable jurisdiction that is necessary to protect the
limited liability of the Limited Partners and to enable the
Partnership to engage in its business;
(l) no restrictions on the sale or refinancing of the
Apartment Complex, other than the restrictions set forth in the
Loan Documents, in the Extended Use Commitment and as set forth
in this Agreement, exist as of the date hereof, and no such
restrictions shall, at any time while the Investment Partnership
is a Limited Partner, be placed upon the sale or refinancing of
the Apartment Complex;
(m) the Apartment Complex is being developed in a manner
which satisfies, and shall continue to satisfy, all restrictions,
including tenant income and rent restrictions, applicable to
projects generating Low-Income Housing Tax Credits under Section
42 of the Code;
(n) the Projected Credits applicable to the Apartment
Complex are $446,160.00 for 1998, $594,880.00 per year for each
of the years 1999 through 2007, and $148,720.00 for 2008, which
the General Partner has projected to be the total amount of the
Tax Credits which will be allocated to the Investment Partnership
by the Partnership, constituting ninety-nine and 99/100 percent
(99.99%) of the Tax Credits which are projected to be available
to the Partnership; provided, however, that if the Actual Credit
for 1998 is greater than (or less than) $446,160.00 the Projected
Credit for the year 2008 shall be reduced (increased) by an
amount equal to the amount by which the Actual Credit for 1998
exceeds (or is less than) $446,160.00;
(o) the General Partner obtained from the Agency on
December 5, 1995, a duly authorized, valid and binding carryover
allocation of Low-Income Housing Tax Credits in the name of the
Partnership and as to the Apartment Complex in an amount not less
than $594,940 per year.
(p) the Partnership shall satisfy all conditions to the
Agency's allocation of Tax Credits set forth in the Carryover
Allocation dated December 5, 1995 and all exhibits thereto and
all other documents entered into with the Agency, within the time
periods specified and in each case to the extent required to be
satisfied as of the date hereof, and shall be in full compliance
with the Agency's requirements and shall place the Project in
service by December 31, 1997;
(q) to the best of its knowledge after due inquiry, at the
time of the execution of this Agreement, the General Partner has
fully complied with all applicable material provisions and
requirements of any and all purchase and/or lease agreements,
loan agreements, Project Documents and other agreements with
respect to the acquisition, development, financing,
rehabilitation, construction and operation of the Apartment
Complex; it shall take, and/or cause the Partnership to take, all
actions as shall be necessary to achieve and maintain continued
compliance with the provisions, and fulfill all applicable
requirements, of such agreements.
(r) the obligations of the General Partner, including the
obligation to pay the annual Asset Management Fee, shall be
guaranteed by Ronald Brown, individually and/or another person or
entity approved by the Investment Partnership (the "Guarantor").
Any payments made by the Guarantor directly to the Partnership or
the Investment Partnership pursuant to the ("Payment on
Guaranty") shall be deemed to relieve the General Partner of such
payment obligation.
(s) the Partnership shall make all necessary filings and
take any other actions, as applicable, in order to defer the
start of the credit period until 1998.
4.02. Duties and Obligations Relating to the Apartment
Complex and the Partnership. The General Partner shall have the
following duties and obligations with respect to the Apartment
Complex and the Partnership:
(a) all requirements shall be met which are necessary to
obtain or achieve (i) compliance with the Minimum Set-Aside Test,
the Rent Restriction Test, and any other requirements necessary
for the Apartment Complex to initially qualify, and to continue
to qualify, for Tax Credits, including all requirements set forth
in the Extended Use Commitment, (ii) issuance of all necessary
certificates of occupancy, including all governmental approvals
required to permit occupancy of all of the apartment units in the
Apartment Complex, (iii) Initial Closing and Final Closing, and
(iv) compliance with all provisions of the Project Documents;
(b) while conducting the business of the Partnership, it
shall not act in any manner which it knows or should have known
after due inquiry will (i) cause the termination of the
Partnership for federal income tax purposes without the Consent
of the Investment Partnership, or (ii) cause the Partnership to
be treated for federal income tax purposes as an association
taxable as a corporation;
(c) the Apartment Complex shall be managed upon Substantial
Completion so that (i) no less than eighty per cent (80%) of the
gross income from the Apartment Complex in every year is rental
income from dwelling units in the Apartment Complex used to
provide living accommodations not on a transient basis (taking
into consideration Code Section 42(i)(3)(B)(4) which provides
that SRO units are not treated as transient merely because they
are rented on a month-by-month basis), (ii) the rental of all
units in the Apartment Complex complies with the tenant income
limitations and other restrictions under the Rent Restriction
Test and as set forth in the Extended Use Commitment and all
applicable documents entered into in connection with the Loans,
and (iii) one hundred percent (100%) of the units in the
Apartment Complex are occupied or held for occupancy by
individuals with incomes of sixty percent (60%) or less of area
median income as adjusted for family size, and of that 100% at
least fifty percent (50%) of the units are occupied or held for
occupancy by individuals with incomes of fifty percent (50%) or
less of the area median income as adjusted for family size;
(d) the General Partner shall exercise good faith in all
activities relating to the conduct of the business of the
Partnership, including the development, operation and maintenance
of the Apartment Complex, and shall take no action with respect
to the business and property of the Partnership which is not
reasonably related to the achievement of the purpose of the
Partnership;
(e) all of (i) the fixtures, maintenance supplies, tools,
equipment and the like now and to be owned by the Partnership or
to be appurtenant to, or to be used in the operation of the
Apartment Complex, as well as (ii) the rents, revenues and
profits earned from the operation of the Apartment Complex, will
be free and clear of all security interests and encumbrances
except for the Loans and the Mortgages, and any additional
security agreements executed in connection therewith;
(f) the General Partner will execute on behalf of the
Partnership all documents necessary to elect, pursuant to
Sections 732, 743 and 754 of the Code, to adjust the basis of the
Partnership's property upon the request of the Investment
Partnership, if, in the sole opinion of the Investment
Partnership, such election would be advantageous to the
Investment Partnership;
(g) the General Partner shall guarantee payment by the
Partnership of the Development Fee pursuant to Section 8.10;
(h) the General Partner shall comply and cause the
Partnership to comply with the provisions of all applicable
governmental and contractual obligations;
(i) the General Partner shall be responsible for the
payment of any fines or penalties imposed by the Agency or the
Lender pursuant to the Project Documents and any documents
executed in connection with obtaining Tax Credits (other than
with respect to payments of principal or interest under the Loans
from and after Final Closing);
(j) the General Partner shall promptly notify the
Investment Partnership of any written or oral notice of (i) any
default or failure of compliance with respect to the Loans or any
other financial, contractual or governmental obligation of the
Partnership or the General Partner (in the case of the General
Partner, if such default or failure of compliance may have a
material adverse impact on the Partnership or its operations), or
(ii) any IRS proceeding regarding the Apartment Complex or the
Partnership;
(k) the General Partner shall, provide the Investment
Partnership and BCTC 94, Inc. with such information and sign such
documents as are necessary for the Investment Partnership and
BCTC 94, Inc. to make timely, accurate and complete submissions
of federal and state income tax returns;
(l) within thirty (30) days following the Admission Date,
the General Partner shall submit to Boston Capital evidence of
the Partnership's engagement of Accountants, who have been
approved by BCTC 94, Inc., to be responsible for the
Partnership's audit and tax matter reporting obligations under
Section 13.04 hereof. BCTC 94, Inc. hereby acknowledges that the
accounting firm of Rothstein, Kass & Co. is approved by BCTC 94,
Inc. as the initial Accountant for the Partnership.
(m) the General Partner shall provide to BCTC 94, Inc., for
its approval and Consent, prior to execution and no later than
the end of the first year of the credit period as defined in
Section 42 of the Code, a copy of the Extended Use Commitment to
be entered into between the Partnership and the Agency.
ARTICLE V
PARTNERS, PARTNERSHIP INTERESTS AND OBLIGATIONS OF THE
PARTNERSHIP
5.01. Partners, Capital Contributions and Partnership
Interests.
(a) The General Partner, its principal address or place of
business, its Capital Contributions and Percentage Interests are
as follows:
Balanced Housing $100.00 0.01%
Development Corporation
66 North Hillside Avenue
P.O. Box 23
Livingston, NJ 07039
In the event that the Partnership has not paid all or part
of the Deferred Development Fee when the final payment is due
pursuant to the Development Agreement and Section 8.10 hereof,
the General Partner shall contribute to the Partnership an amount
equal to any such remaining principal balance (the "General
Partner' Special Capital Contribution") and the Partnership shall
thereupon make a payment in an equal amount to pay off the
principal balance due under the Development Agreement.
(b) (i) The Investment Partnership, its principal office
or place of business, its Capital Contribution and its Percentage
Interest is as follows:
Boston Capital Corporate
Tax Credit Fund IV, A
Limited Partnership (Series 26)
c/o Boston Capital $3,748,125.00 99.98%
Partners, Inc. (as more
One Boston Place specifically set forth
21st Floor in subparagraph (c)
Boston, MA 02110 immediately below)
(ii) The SpecialLmited Partner, its principal office
of place of business, its Capital Contribution and its Percentage
Interest as follows:
BCTC 94, Inc. $10.00 0.01%
c/o Boston Capital
Partners, Inc.
One Boston Place
21st Floor
Boston, MA 02210
(c) Subject to the provisions of this Agreement, including
without limitation, the provisions of Sections 5.01(d) and 5.03,
the Investment Partnership shall be obligated to make Capital
Contributions to the Partnership in the aggregate amount of
$3,748,125.00 in six (6) installments (the "Installments"),
which Installments shall be due and payable in cash by the
Investment Partnership to the Partnership, within ten (10) days
after the Investment Partnership shall have received evidence,
reasonably satisfactory to it, of the occurrence of each of the
conditions set forth below as to the applicable Installment, as
set forth below. Notwithstanding anything to the contrary
contained herein, the First Installment (as defined below) shall
be due and payable within five (5) business days after the
receipt by the Investment Partnership of evidence reasonably
satisfactory to it, of the occurrence of each of the conditions
of the First Installment, shall be used for Project costs, and
shall be held in escrow by the Investment Partnership or the City
Lender to be disbursed to the Partnership upon the submission of
draw requests, a satisfactory site inspection and satisfactory
title review by the Investment Partnership and/or the City
Lender.
(i) $1,992,618 on the latest to occur of (A) Tax Credit
Set Aside, (B) Initial Closing, (C) receipt by Boston
Capital of an acceptable commitment of the City of
Trenton regarding the restructure of the City Loan, (D)
the Admission Date, or (E) receipt by Boston Capital of
an acceptable commitment for title insurance (the "First
Installment");
(ii) $805,507 on the latest to occur of (A) 75%
Construction Completion, as determined by Boston Capital,
(B) receipt of an owner's title insurance policy
satisfactory to BCTC 94, Inc., (C) confirmation by Boston
Capital that each of the itemized outstanding due
diligence matters identified on Exhibit 5.01 has been
completed by the General Partner to the reasonable
satisfaction of Boston Capital, or (D) receipt of a
payoff letter from the Contractor stating that all
amounts due and payable to the Contractor have been paid
in full and that the Partnership is not in violation of
the Construction Contract, and satisfaction of all of the
conditions to the payment of the First Installment (the
"Second Installment");
(iii) $400,000 on the latest to occur of (A) Substantial
Completion (B) State Designation or (C) Cost
Certification, and satisfaction of all of the conditions
to the payment of the First, and Second Installments (the
"Third Installment");
(iv) $220,000 on the later to occur of (A) Initial 95%
Occupancy Date (B) Final Closing or (C) First Rental
Achievement, and satisfaction of all conditions to the
payment of the First, Second, and Third Installments (the
"Fourth Installment");
(v) $320,000 upon (A) Second Rental Achievement and (B)
satisfaction of all conditions to the payment of the
First, Second, Third and Fourth Installments (the "Fifth
Installments");
(vi) $10,000 upon (A) the receipt by the Investment
Partnership of the Partnership's federal income tax
return for the year in which Rental Achievement occurred
and (B) satisfaction of all conditions to the payment of
the First, Second, Third, Fourth and Fifth Installments
(the "Sixth Installment").
As a condition precedent to each payment set forth above other
than the First Installment, the General Partner shall, not less
than twenty (20) days nor more than thirty (30) days prior to the
time such Installment is due, give the Investment Partnership
Notice in the form of a written certification that: (A) all
conditions precedent to such Installment have been satisfied, (B)
the representations, warranties and covenants given by the
General Partner in Section 4.01(a) are valid and accurate, where
still applicable, with respect to the General Partner, the
Partnership and/or the Apartment Complex, as of the date of such
certificate, and (C) to the best of their knowledge, after due
inquiry, no condition exists which would, pursuant to Section
5.03, entitle the Investment Partnership to withhold the payment
of such Installment. Based upon the giving of such Notice, such
Installment shall be made on the due date therefor, or if such
Notice is not timely given, then within twenty-one (21) days
after receipt of such Notice.
Notwithstanding anything to the contrary contained herein,
$263,170.00 in principal plus any interest fees and expenses
payable in connection with that certain Promissory Note from the
Partnership to Boston Capital Tax Credit Fund, IV, L.P. in the
original principal amount of $263,170.00 shall be paid in full
from the proceeds of the First Installment.
(d) (i) Upon the occurrence of Cost Certification and
State Designation, if ninety-nine and 99/100 percent (99.99%) of
the aggregate amount of Tax Credits: (A) for which the
Partnership would be eligible with respect to the Apartment
Complex based upon the Cost Certification, and/or (B) allocated
by the Agency with respect to the Apartment Complex, is less than
the aggregate amount of the Projected Credit (the "Allocation
Differential"), then the Capital Contribution of the Investment
Partnership shall be reduced by the "Adjustment Amount". The
Adjustment Amount shall be equal to the Allocation Differential
multiplied by eighty-five and 40/100 percent (85.40%). Any such
reduction in Capital Contribution shall be applied to reduce the
Third Installment and if, and to the extent necessary, the Fourth
Installment and if, and to the extent necessary, the Fifth
Installment, and if, and to the extent necessary, the Sixth
Installment. If no further Installments are due to be paid, then
the entire amount of such reduction shall be repaid by the
Partnership to the Investment Partnership promptly after demand
is made therefor. The General Partner is obligated to provide
such funds to the Partnership as shall be necessary to cause the
aforesaid payment to be made by the Partnership to the Investment
Partnership. Any such funds provided by the General Partner shall
be treated as a loan payable in accordance with Section 11.04A(6)
hereof, which loan will bear interest at the Applicable Federal
Rate, or as a Capital Contribution at the election of BCTC 94,
Inc., notice of which election BCTC 94, Inc. will timely provide
to the General Partner. In the event that there is a reduction
in Capital Contributions equal to the Adjustment Amount, then the
amount of the Projected Credit shall be proportionately reduced
to reflect the Allocation Differential, and thereafter shall be
referred to as the "Revised Projected Credit".
(ii) If at any time the Accountants determine
that, for any fiscal year or portion thereof during the
Partnership's operation, ending on the date five (5) years from
and after the date of Substantial Completion (the "Reduction
Period"), the Actual Credit for such fiscal year or portion
thereof is less than the Projected Credit (or Revised Projected
Credit) applicable to such fiscal year or portion thereof, then
the Capital Contribution of the Investment Partnership shall be
reduced by the Reduction Amount. The "Reduction Amount" shall be
equal to the sum of (A) the Credit Shortfall multiplied by
eighty-five and 40/100 percent (85.4%), and (B) the amount of any
recapture, interest or penalty payable by the limited partners of
the Investment Partnership (assuming pass through of all such
liability in the year incurred and a tax rate equal to the
maximum individual rate applicable in such year) as a result of
the Credit Shortfall for such year. Any reduction in Capital
Contribution shall first be applied to reduce the Installment
next due to be paid by the Investment Partnership, and any
portion of such reduction in excess of such Installment shall be
applied to reduce succeeding Installments. If no further
Installments are due to be paid, then the entire amount of such
reduction shall be repaid by the Partnership to the Investment
Partnership promptly after demand is made therefor. The General
Partner is obligated to provide such funds to the Partnership as
shall be necessary to cause the aforesaid payment to be made by
the Partnership to the Investment Partnership.
(iii) In the event that, for any reason, at any
time after the Reduction Period, there is a Credit Shortfall with
respect to any fiscal year during the Partnership's operation,
the Investment Partnership shall be treated as having made a
constructive advance to the Partnership with respect to such year
(a "Credit Recovery Loan"), which shall be deemed to have been
made on January 1 of such year, in an amount equal to the sum of
(A) the Credit Shortfall for such year, plus (B) the amount of
any recapture, interest or penalty payable by the limited
partners of the Investment Partnership (assuming pass-through of
all such liability in the year incurred and a tax rate equal to
the maximum individual rate applicable in such year) as a result
of the Credit Shortfall for such year. Credit Recovery Loans
shall be deemed to bear simple (not compounded) interest, from
the respective dates on which such principal advances are deemed
to have been made under this Section 5.01(d) (iii) at 9% per
annum. Credit Recovery Loans shall be repayable by the
Partnership as provided in Section 11.04(A)(b).
(e) Upon the occurrence of Cost Certification and State
Designation, if ninety-nine percent and 99/100 (99.99%) of the
aggregate amount of the Tax Credits for which the Partnership
would be eligible during the "credit period" (as defined in
Section 42 of the Code) with respect to the Apartment Complex
based upon the Cost Certification is greater than the aggregate
amount of the Projected Credit (the "Allocation Increase"), and
the amount of the Tax Credits allocated by the Agency, pursuant
to the Tax Credit Set Aside or any additional binding allocation
of Tax Credits received by the Partnership from the Agency, with
respect to the Apartment Complex is sufficient to permit the
Partnership to recognize the Allocation Increase, then and to the
extent such funds are available to the Investment Partnership,
the Capital Contribution of the Investment Partnership shall be
increased by the Allocation Increase multiplied by .63. Any such
increase in Capital Contribution shall be applied to increase the
Fifth Installment.
(f) Without the Consent of all of the Partners, no
additional Persons may be admitted as additional Limited Partners
and Capital Contributions may be accepted only as and to the
extent expressly provided for in this Article V.
5.02. Return of Capital Contribution. Except as
provided in this Agreement, no Partner shall be entitled to
demand or receive the return of his Capital Contribution.
5.03. Withholding of Capital Contribution Upon Default.
In the event that: (a) either General Partner, or any successor
General Partner shall not have substantially complied with any
material provisions under this Agreement, after Notice from the
Investment Partnership of such noncompliance and failure to cure
such noncompliance within a period of sixty (60) days from and
after the date of such Notice, or (b) Lender shall have declared
the Partnership to be in default under the Loans and all
applicable grace and cure periods have expired, and such default
occurs outside of the period during which the City is restricted
from foreclosing on the Apartment Complex pursuant to the City
Loan Documents, or (c) foreclosure proceedings shall have been
commenced against the Apartment Complex, then the Partnership and
the Investment Partnership, at its sole election, may cause the
withholding of payment of any Installment otherwise payable to
the Partnership. Notwithstanding the provisions herein, in the
event that an Installment payment becomes due during the cure
period stated in this Section 5.03(a), the Investment
Partnership, at its sole election, may cause the withholding of
any payment of any such Installment otherwise payable to the
Partnership until the termination of such cure period, and then,
according to the provisions herein.
All amounts so withheld by the Investment Partnership under
this Section 5.03 shall be promptly released to the Partnership
only after the General Partner or the Partnership has cured the
default justifying the withholding, as demonstrated by evidence
reasonably acceptable to the Investment Partnership.
5.04. Legal Opinions. As a condition precedent to
payment of the First Installment, the Investment Partnership
shall have received the opinion of Brach, Eichler, Rosenberg,
Silver, Bernstein, Hammer & Gladstone, A Professional Corporation
counsel to the Partnership and to the General Partner, which
opinion shall be in form and substance satisfactory to the
Investment Partnership and shall explicitly state that Hinckley,
Allen & Snyder, of Boston, Massachusetts, counsel to the Limited
Partner, may explicitly rely upon them.
5.05. Repurchase Obligation.
(a) If (i) Substantial Completion has not occurred by March
31, 1998; (ii) the Partnership has not received State Designation
by August 30, 1998, unless as a result of some delay in the
State's or the Agency's processing of the necessary forms for
said Sate Registration which is not in any way as a result of, or
attributable to any action or inaction by the Partnership; (iii)
Rental Achievement does not occur within 24 months from and after
the occurrence of Substantial Completion; (iv) the Partnership
fails to meet the Minimum Set-Aside Test and the Rent Restriction
Test within 24 months of the date that the Apartment Complex is
placed in service; (v) the Partnership fails to meet either the
Minimum Set-Aside Test and the Rent Restriction Test at anytime
during the first 60 months after initial achievement of the
Minimum Set Aside and Rent Restriction Tests (vi) Final Closing
has not occurred by August 30, 1998; (vii) an event of default
described in Section 5.03(a), (b) and/or (c) shall exist and
shall not have been cured within 30 days after the occurrence of
such default; (viii) the buildings comprising the Apartment
Complex are not placed in service prior to December 31, 1997;
(ix) the General Partner fails to make Subordinated Loans as
required by this Agreement; then the General Partner shall,
within 30 days of the occurrence thereof, send to the Investment
Partnership Notice of such event and of its obligation to
purchase the Interest of the Investment Partnership hereunder and
pay to the Investment Partnership the Invested Amount in the
event the Investment Partnership in its sole discretion requires
such purchase of its Interest. Thereafter, the General Partner,
within 30 days of its receipt of Notice from the Investment
Partnership of such election, shall acquire the entire Interest
of the Investment Partnership in the Partnership by making
payment to the Investment Partnership, in cash, of an amount
equal to the Invested Amount.
(b) If the Lender and/or the Agency shall disapprove the
Investment Partnership as a Partner hereunder within 180 days of
its admission to the Partnership, then the Investment Partnership
shall, effective as of such time (or such other time as may be
specified by the Lender and/or the Agency in its disapproval),
cease to be a Limited Partner. The General Partner shall, within
10 days of the effective date of such termination, purchase the
Interest of the Investment Partnership in the Partnership and pay
to the Investment Partnership an amount equal to its Net Capital
Contribution.
(c) Upon receipt by the Investment Partnership of any such
payment of its Net Capital Contribution or the Invested Amount,
as applicable, the Interest of the Investment Partnership shall
terminate, the Investment Partnership shall execute, acknowledge
and deliver such documents of assignment as the General Partner
shall require and effectuate the termination or transfer of its
Interest, and the General Partner shall indemnify and hold
harmless the Investment Partnership from any losses, damages,
and/or liabilities to which the Investment Partnership (as a
result of its participation hereunder) may be subject, except as
and to the extent of any losses, damages and/or liabilities
arising from the Investment Partnership's own negligence,
misconduct or fraud.
ARTICLE VI
CHANGES IN PARTNERS
6.01. Withdrawal of a General Partner.
(a) A General Partner may withdraw from the Partnership or
sell, transfer or assign his or its Interest as General Partner
only with the prior Consent of BCTC 94, Inc., and of the Lender,
if required, and only after being given written approval by the
necessary parties as provided in Section 6.02, and by the Lender,
if required, of the General Partner(s) to be substituted for him
or it or to receive all or part of his or its Interest as General
Partner.
(b) In the event that a General Partner withdraws from the
Partnership or sells, transfers or assigns his or its entire
Interest pursuant to Section 6.01(a), he or it shall be and shall
remain liable for all obligations and liabilities incurred by him
or it as General Partner, or arising out of any events occurring
before such withdrawal, sale, transfer or assignment shall have
become effective, but shall be free of any obligation or
liability incurred on account of the activities of the
Partnership from and after the time such withdrawal, sale,
transfer or assignment shall have become effective, including
without limitation, liability for new advances in Operating
Deficit Loans, Subordinated Loans, Reserve Fund Replacements,
payments under Section 5.05, Asset Management Fees and
Contributions for Development Fees.
(c) In the event that the General Partner withdraws from
the Partnership or sells, transfers or assigns its entire
interest pursuant to Section 6.01(a), the Guarantor shall remain
liable for all obligations and liabilities so long as, and to the
extent of the General Partner, and shall be free of any
obligation or liability similarly as the General Partner,
hereunder.
(d) In the event that the General Partner withdraws from
the Partnership or sells, transfers or assigns its entire
Interest pursuant to Section 6.01(a), such withdrawal shall not
serve to release the Guarantor from any obligations to the
Operating Partnership or the Investment Partnership or the
General Partner, unless provisions satisfactory to the Special
Limited Partner in its sole discretion, have been made for
substantial payment of any such obligations.
In the event that any party brings any suit or other
proceeding with respect to the subject matter or enforcement of
this Section 6.01, the prevailing party (as determined by the
court, agency or other authority before which such suit or
proceeding is commenced) shall, in addition to such other relief
as may be awarded, be entitled to recover attorneys' fees,
expenses and costs of investigation as reasonably incurred.
6.02. Admission of a Successor or General Partner. A
Person shall be admitted as a General Partner of the Partnership
only if the following terms and conditions are satisfied:
(a) the withdrawal of any withdrawing General Partner and
the admission of such Person shall have been Consented to by the
remaining General Partner or its successors and the Investment
Partnership, and Consented to, if required, by the Lender;
(b) the successor or additional Person shall have accepted
and agreed to be bound by (i) all the terms and provisions of
this Agreement, by executing a counterpart hereof, and (ii) all
the terms and provisions of the Loan Documents, including by
executing a counterpart thereof to the extent required by a
Lender, and (iii) all the terms and provisions of such other
documents or instruments as may be required or appropriate in
order to effect the admission of such Person as a General
Partner, and an amendment to this Agreement and/or the
Certificate, as applicable, evidencing the admission of such
Person as a General Partner shall have been filed and all other
actions required by Section 1.05 in connection with such
admission shall have been performed;
(c) if the successor or additional Person is a corporation
or a limited liability company, it shall have provided the
Partnership with evidence satisfactory to counsel for the
Partnership of its authority to become a General Partner, to do
business in the State and to be bound by the terms and provisions
of this Agreement; and
(d) counsel for the Partnership shall have rendered an
opinion that the admission of the successor or additional Person
is in conformity with the Act and that none of the actions taken
in connection with the admission of the successor Person will
cause the termination or dissolution of the Partnership or will
cause it to be classified other than as a partnership for federal
income tax purposes.
6.03. Effect of Bankruptcy, Death, Withdrawal,
Dissolution or Incompetence of a General Partner.
(a) In the event of the Bankruptcy of a General Partner or
the withdrawal, death or dissolution of a General Partner or an
adjudication that a General Partner is incompetent (which term
shall include, but not be limited to, insanity) the business of
the Partnership shall be continued by the other General Partner,
if any, (and the other General Partner, by execution of this
Agreement, expressly so agrees to continue the business of the
Partnership); provided, however, that if the withdrawn, Bankrupt,
deceased, dissolved or incompetent General Partner is then the
sole General Partner, unless the Investment Partnership within
ninety (90) days after receiving Notice of such Bankruptcy,
withdrawal, death, dissolution or adjudication of incompetence
elects to designate a successor General Partner and continue the
Partnership upon the admission of such successor General Partner
to the Partnership, the Partnership shall be terminated.
(b) Upon the Bankruptcy, death, dissolution or adjudication
of incompetence of a General Partner, such General Partner shall
immediately cease to be a General Partner and his or its Interest
shall without further action be converted to a Limited Partner
Interest; provided, however, that if such Bankrupt, dissolved,
incompetent or deceased General Partner is the sole remaining
General Partner, such General Partner shall cease to be a General
Partner only upon the expiration of ninety (90) days after Notice
to the Investment Partnership of the Bankruptcy, death,
dissolution or declaration of incompetence of such General
Partner; and provided further that if such Bankrupt, dissolved,
incompetent or deceased General Partner is the sole remaining
General Partner, the converted Partnership Interest of such
replaced General Partner shall be ratably reduced to the extent
necessary to insure that the substitute General Partner holds a
1% Percentage Interest (as set forth in Section 5.01) and will
receive such percentage interest distribution of the General
Partner's percentage pursuant to Section 11.04A(c), as is deemed
reasonable by the Limited Partners as a result of good faith
negotiations with such substitute General Partner; such replaced
General Partner whose Interest has been converted to that of a
Limited Partner shall remain entitled to his or its proportionate
share of the remainder of the distribution pursuant to Section
11.04A(c), and shall be entitled to repayment of all loans
previously made and fees accrued but not paid, up to such time of
conversion, but shall not be entitled to repayment of any loans
made or fees accrued subsequent to such time of conversion, and
shall be released from liabilities incurred after conversion, as
provided in Section 6.01(b).
Except as set forth above, such conversion of a General
Partner Interest to a Limited Partner Interest shall not affect
any rights, obligations or liabilities (including without
limitation, any of the General Partner's obligations under
Section 8.09 herein) of the Bankrupt, deceased, dissolved or
incompetent General Partner existing prior to the Bankruptcy,
death, dissolution or incompetence of such person as a General
Partner (whether or not such rights, obligations or liabilities
were known or had matured).
(c) If, at the time of the withdrawal, Bankruptcy, death,
dissolution or adjudication of incompetence of a General Partner,
the Bankrupt, deceased, dissolved or incompetent General Partner
was not the sole General Partner of the Partnership, the
remaining General Partner or General Partner shall promptly (i)
give Notice to the Limited Partners of such Bankruptcy, death,
dissolution or adjudication of incompetence, and (ii) make such
amendments to this Agreement and execute and file such amendments
or documents or other instruments as are necessary to reflect the
continuation of the Partnership and the conversion of the
Interest of the Bankrupt, deceased, dissolved or incompetent
General Partner and his having ceased to be a General Partner.
The remaining General Partner or General Partner are hereby
granted an irrevocable power of attorney to execute any or all
documents on behalf of the Partners and the Partnership and to
file such documents as may be required to effectuate the
provisions of this Section 6.03.
ARTICLE VII
ASSIGNMENT TO THE PARTNERSHIP
7.01 Assignment of Contracts, etc. The General Partner
hereby transfers and assigns to the Partnership all of its right,
title and interest in and to the Apartment Complex, including the
following:
(i) all contracts with architects, engineers,
contractors and supervising architects with respect to the
construction or development of the Apartment Complex;
(ii) all plans, specifications and working
drawings, heretofore prepared or obtained in connection with the
Apartment Complex and all governmental approvals obtained,
including planning, zoning and building permits;
(iii) any and all commitments with respect to the
Loans; and
(iv) any other work product related to the
Apartment Complex.
ARTICLE VIII
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
8.01. Management of the Partnership.
(a) Except as otherwise set forth in this Agreement, the
General Partner, within the authority granted to it under this
Agreement, shall have full, complete and exclusive discretion to
manage and control the business of the Partnership for the
purposes stated in Article III, shall make all decisions
affecting the business of the Partnership and shall manage and
control the affairs of the Partnership to the best of its
ability and use its best efforts to carry out the purpose of the
Partnership. In so doing, the General Partner shall take all
actions necessary or appropriate to protect the interests of the
Limited Partners and of the Partnership. The General Partner
shall devote such of its time as is necessary to the affairs of
the Partnership.
(b) Except as otherwise set forth in this Agreement and
subject to the applicable Lender' rules and regulations and the
provisions of the Project Documents, the General Partner (acting
for and on behalf of the Partnership), in extension and not in
limitation of the rights and powers given by law or by the other
provisions of this Agreement, shall, in its sole discretion, have
the full and entire right, power and authority in the management
of the Partnership business to do any and all acts and things
necessary, proper, convenient or advisable to effectuate the
purpose of the Partnership. In furtherance and not in limitation
of the foregoing provisions, the General Partner is specifically
authorized and empowered to execute and deliver, on behalf of the
Partnership, the Project Documents and to execute any and all
other instruments and documents, and amendments thereto, as shall
be required in connection with the Loans, including, but not
limited to, executing any mortgage, note, contract, building loan
agreement, bank resolution and signature card, release,
discharge, or any other document or instrument in any way related
thereto or necessary or appropriate in connection therewith;
provided, however, that copies of all applications for advances
of Loans proceeds, as applicable, which occur after the Admission
Date shall be provided to the Investment Partnership prior to the
disbursement of any funds pursuant thereto. All decisions made
for and on behalf of the Partnership by the General Partner shall
be binding upon the Partnership. No person dealing with the
General Partner shall be required to determine their authority to
make any undertaking on behalf of the Partnership, nor to
determine any facts or circumstances bearing upon the existence
of such authority.
(c) Subject to the terms of this Partnership Agreement, the
General Partner shall be responsible for the management and
administration of the Partnership business and shall have all
rights and authority generally conferred by law or necessary,
advisable or consistent with accomplishing the purpose of the
Partnership. Subject to the consent of the Special Limited
Partner, which consent shall not be unreasonably withheld or
delayed, the General Partner shall have the power to assign
duties and may delegate any of its powers, rights and obligations
hereunder and may appoint, employ, contract or otherwise deal
with any person for the transaction of business of the
Partnership, which person may, but only under the supervision of
the General Partner perform any acts or services for the
Partnership as the General Partner may approve.
The General Partner shall provide regular, continuous and
substantial services to the Partnership and shall materially
participate (within the meaning of Section 469(h) of the Code) in
the development of the Apartment Complex and the operations and
administration of the Partnership.
In addition, the General Partner shall be responsible for
insuring the Apartment Complex and the operation thereof at all
times comply and are in conformance with all applicable Articles
of the Constitution of the State of New Jersey and of the New
Jersey Revenue and Taxation Code, as amended.
The General Partner may interface with appropriate state
departments empowered to allocate and administer Tax Credits, and
shall supervise all activities with the state reasonably
necessary to enjoyment of the Tax Credits for the Apartment
Complex.
The General Partner may effect and monitor the compliance of
the Partnership and the Apartment Complex with governmental
regulations applicable thereto. Those efforts may include making
appropriate administrative filings and monitoring the income and
other qualifications of residents.
The General Partner is also primarily responsible for the
rehabilitation and construction of the Apartment Complex.
(d) Notwithstanding anything to the contrary contained
herein, the Limited Partners reserve the right, at their option
to conduct a lease audit on twenty five (25%) percent of the
initial leases executed in connection with the Apartment Complex
in order to ensure compliance with the applicable Rent
Restriction Test, Minimum Set Aside Test, or any other applicable
tenant restriction test ("Lease Audit"). The Limited Partners
shall select at their option, any combination of leases which
shall comprise the Lease Audit (the "Selected Leases"). The
Lease Audit shall consist of a review of the complete tenant
files in connection with the Selected Leases, including but not
limited to any tenant financial information. Further, the Lease
Audit shall be conducted with the cooperation of, and at the sole
cost and expense of the General Partner if the Lease Audit
reveals a material noncompliance. A material noncompliance shall
be deemed to exist if at least five (5) leases reveal
noncompliance or violations of any applicable tenant restriction
test. If the Lease Audit does not reveal a material
noncompliance the Limited Partners shall bear the cost of such
audit.
8.02. Limitations Upon the Authority of the General
Partner.
(a) The General Partner shall not have any authority to:
(i) perform any act in violation of any applicable law
or regulation thereunder;
(ii) perform any act in violation of the provisions of
the Extended Use Commitment, the Loan Documents, or any other
Project Documents;
(iii) do any act required to be approved or
ratified in writing by all Limited Partners under the Act unless
the right to do so is expressly otherwise given in this
Agreement;
(iv) rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements of the
Rent Restriction Test or Minimum Set-Aside Tests or to any
individuals where income exceeds 60% (or 50%, as applicable) of
area median income, as adjusted for family size; or
(v) borrow from the Partnership or commingle
Partnership funds with funds of any other Person.
(b) The General Partner shall not, without the Consent of
BCTC 94, Inc., have any authority to:
(i) sell or otherwise dispose of, at any time, all or
substantially all of the assets of the Partnership;
(ii) borrow in excess of $10,000 in the aggregate
at any one time outstanding on the general credit of the
Partnership, except borrowings constituting Subordinated Loans or
Credit Recovery Loans;
(iii) following Substantial Completion, construct
any new or replacement capital improvements on the Apartment
Complex which substantially alter the Apartment Complex or its
use or which are at a cost in excess of $10,000 in a single
Partnership fiscal year, except (a) replacements and remodeling
in the ordinary course of business or under emergency conditions
or (b) construction paid for from insurance proceeds;
(iv) acquire any real property on behalf of the
Partnership in addition to the Apartment Complex; or
(v) refinance the Mortgage Loan(s), provided that,
with the Consent of BCTC 94, Inc. the General Partner may
substitute, in whole or in part, the Loans with other permanent
first mortgage financing, provided such financing (a) is without
recourse to any Partner of the Partnership, (b) has a term that
ends no earlier than the last day of the "Compliance Period" as
defined in Code Section 42, (c) has fixed debt service no greater
than the fixed debt service applicable to the Loans during the
Permanent Term and (d) permits use of refinancing proceeds only
for Partnership purposes approved by the Investment Partnership.
8.03. Management Purposes. In conducting the business
of the Partnership, the General Partner shall be bound by the
Partnership's purpose(s) set forth in Article III.
8.04. Delegation of Authority. Subject to Section 8.05
hereof, the General Partner may employ, contract, or otherwise
deal with any Person in connection with the performance of its
management responsibilities hereunder, provided such Person acts
only under the supervision of the General Partner.
8.05. General Partner or Affiliates Dealing with
Partnership.
(a) Fela, Inc., d/b/a Emet Realty Management and
Development Company, Inc., ("Emet Management") an affiliate of
the General Partner, shall be the Management Agent for a one
year term after Substantial Completion. Thereafter, any contract
with Emet Management may be renewable on an annual basis as
approved by the Investment Partnership. The Management Agent may
receive an annual property management fee of eight and one half
percent (8.5%) of Total Operating Revenue. The Management Agent
shall be eligible for an increase in the annual property
management fee up to an amount not to exceed ten percent (10%) of
Total Operating Revenue in the event that the Project meets the
following criteria: (i) the Per Unit Expense (as defined below)
does not exceed the amounts set forth below; and (ii) the
Replacement Reserve funded at $15,000 per year; and (iii) the
Project achieves and maintains a minimum Debt Service Coverage
Ratio of 1.20. Collectively, items (i)-(iii) hereof shall be
referred to as the "Management Fee Increase Conditions." The
"Per Unit Expense" as used herein shall mean the per unit
operating expense of no more than $3,635 in the base year of
1998, plus an increase of three percent (3%) annually. The
Management Fee Increase Conditions shall be calculated annually
to determine the Management Agent's eligibility for the increased
property management fee,. In the event that said management
contract is not renewed, the General Partner or any Affiliate may
act as Management Agent on a temporary basis for the interim
period pending selection of a replacement Management Agent
reasonably acceptable to Boston Capital and the City Lender and
on such terms and conditions permitted by applicable regulations
of the Lender and the Agency, and may receive compensation at the
highest rates approved and permitted by the Lender or the Agency
at any time subject to the terms herein; provided, however, that
the Management Agent may not receive compensation in excess of an
amount equal to ten percent (10%) of Total Operating Revenue
generated from the Project.
(b) The General Partner or any Affiliates thereof shall
have the right to contract or otherwise deal with the Partnership
for the sale of goods or services to the Partnership in addition
to those set forth herein, including the Construction Contract
which is excluded from this Section 8.05, if (A) compensation
paid or promised for such goods or services is reasonable (i.e.,
at fair market value) and is paid only for goods or services
actually furnished to the Partnership, (B) the goods or services
to be furnished shall be reasonable for and necessary to the
Partnership, (C) the fees, terms and conditions of such
transaction are at least as favorable to the Partnership as would
be obtainable in an arm's-length transaction, (D) no agent,
attorney, accountant or other independent consultant or
contractor who also is employed on a full-time basis by the
General Partner or any Affiliate shall be compensated by the
Partnership for his services.
Any contract covering such transactions shall be in writing
and (other than the Development Agreement) shall be terminable
without penalty on sixty (60) days Notice. Any payment made to
the General Partner or any Affiliate for such goods or services
shall be fully disclosed to all Limited Partners in the reports
required under Section 13.04. Neither the General Partner nor
any Affiliate shall, by the making of lump-sum payments to any
other Person for disbursement by such other Person, circumvent
the provisions of this Section 8.05(b).
8.06. Other Activities. The General Partner and any
Affiliates thereof may engage in or possess interests in other
business ventures of every kind and description for their own
account, including, without limitation, serving as general
partner of other partnerships which own, either directly or
through interests in other partnerships, government-assisted
housing projects similar to the Apartment Complex. Neither the
Partnership nor any of the Partners shall have any rights by
virtue of this Agreement in or to such other business ventures or
to the income or profits derived therefrom.
8.07. Liability for Acts and Omissions. No General
Partner shall be liable, responsible or accountable in damages or
otherwise to any of the Partners for any act or omission
performed or omitted by him or it, or any of them, in good faith
on behalf of the Partnership and in a manner reasonably believed
by him or it or any of them to be within the scope of the
authority granted to him or it or any of them by this Agreement
and in the best interest of the Partnership, except for gross
negligence, willful misconduct, fraud or any material breach of
his or its or their fiduciary duty as General Partner with
respect to such acts or omissions. Any loss or damage incurred
by any General Partner by reason of any act or omission performed
or omitted by him or it or any of them in good faith on behalf of
the Partnership and in a manner reasonably believed by him or it
or any of them to be within the scope of the authority granted to
him or it by this Agreement and in the best interests of the
Partnership (but not, in any event, any loss or damage incurred
by any General Partner by reason of gross negligence, willful
misconduct, fraud or any material breach of his or its or their
fiduciary duty as General Partner with respect to such acts or
omissions, or liabilities of the Partners chargeable to the
General Partner) shall be paid from Partnership assets to the
extent available (but the Limited Partners shall not have any
personal liability to the General Partner under any circumstances
on account of any such loss or damage incurred by the General
Partner or on account of the payment thereof).
8.08. Partnership Status. The Partners intend that the
Partnership will be classified as a partnership for federal
income tax purposes. The General Partner will undertake any and
all actions necessary under the Code and the regulations
promulgated thereunder, including any future amendments to such
regulations, to ensure that the Partnership will be classified as
a partnership for federal income tax purposes. The General
Partner will file or cause to be filed any elections that may be
required (but only if required) under the Code and the
regulations promulgated thereunder, including any future
amendments to such regulations, in order to ensure that the
Partnership will be classified as a partnership for federal
income tax purposes. The General Partner will not change its
classification status or election without the consent of BCTC 94,
Inc.
8.09. Construction of the Apartment Complex,
Construction Cost Overuns, Operating Deficits.
(a) (i) The Partnership has entered into the Construction
Contract. The General Partner shall be responsible for:
(A) achieving completion of construction of
the Apartment Complex on a timely basis
in accordance with the Plans and
Specifications, this Agreement and the
Project Documents;
(B) meeting all requirements for obtaining
all necessary permanent, unconditional certificates of
occupancy for all the apartment units in
the Apartment Complex;
(C) fulfilling all actions required of the
Partnership to assure that the Apartment
Complex satisfies the Minimum Set-Aside
Test and the Rent Restriction Test; and
(D) causing the making of the Loans by the
Lenders and the achievement of Initial
Closing and Final Closing.
(ii) The General Partner hereby is obligated to pay all
Excess Development Costs; the Partnership shall have no
obligation to pay any Excess Development Costs.
(iii) In the event that the General Partner shall
fail to pay any such Excess Development Costs as required in this
Section 8.09(a), an amount not in excess of the next installment
of the Development Fee due to the Developer shall be applied by
the Partnership as an offset against such obligations of the
General Partner.
Any such direction and application of funds otherwise
payable to the Developer as aforesaid shall be deemed to have
been paid by the Partnership to the Developer and then applied to
reduce the amount of the Excess Development Costs, and the
Partnership's obligation to make installment payments to the
Developer pursuant to Section 8.10(a), as well as the Investment
Partnership's obligation to make future Installments, shall be
deemed satisfied to the extent of the funds applied to reduce the
General Partner's obligation to fund Excess Development Costs,
and the obligations of the General Partner pursuant to Sections
8.09(a) (i) or 8.09(a) (ii) shall be deemed satisfied to the
extent of the funds applied.
(iv) The General Partner's obligations under this
Section 8.09(a) shall be guaranteed by Ronald Brown, individually
pursuant to an Unlimited Guaranty of even date herewith.
(b) In the event that, at any time (subject to the
hereinafter set forth limitations), an Operating Deficit shall
exist, then the General Partner shall provide such funds to the
Partnership as shall be necessary to pay such Operating
Deficit(s) in the form of a loan to the Partnership (the
"Operating Deficit Loan(s)"). An Operating Deficit Loan shall be
a Subordinated Loan payable in accordance with the provisions of
Section 8.17; Operating Deficit Loans shall bear no interest.
In the event that the General Partner shall fail to make any
such Operating Deficit Loan as aforesaid, the Partnership shall
utilize amounts otherwise payable to the Developer as
installments of the Development Fee pursuant to Section 8.10 of
this Agreement to meet the obligations of the General Partner
pursuant to this Section 8.09(b). Amounts so utilized shall also
constitute the payment and satisfaction of installments of the
Development Fee payable to the Developer under the aforesaid
section of this Agreement, and the obligation of the Partnership
to make such installment payments to the Developer, pursuant to
such section, as well as the Investment Partnership's obligation
to make future installments, shall be reduced correspondingly.
For the purposes of this Section 8.09(b), all expenses shall be
paid on a sixty (60) day current basis. The obligation of the
General Partner to make Operating Deficit Loans shall be secured
by a Limited Guaranty from Ronald Brown.
8.10. Development Fee. The Partnership has entered into
a Development Agreement of even date herewith with the Developer
for its services in connection with the development and
construction of the Apartment Complex. In consideration for such
services, a Development Fee in the total amount of $964,774 shall
be payable by the Partnership to the Developer, solely from the
Capital Contributions by the Investment Partnership except as
provided in Sections 4.02(g), 5.01(a), 8.18(b), 11.03A(c) and
11.04(A)(b)(1).
The Development Fee shall be due and payable by the
Partnership to the Developer as follows:
(a) $86,549 upon receipt by the Partnership of the First
Installment;
(b) $220,000.00 upon receipt by the partnership of the
Fourth Installment;
(c) $320,000.00 upon receipt by the partnership of the
Fifth Installment;
(d) $10,000 upon receipt by the Partnership of the Sixth
Installment; and
(e) the Deferred Development Fee, if any, shall be payable
only in accordance with Sections 11.03(A)(c), 11.04A(b)(1)
and 8.18(b) or, if not sooner paid, on the last day of the
period ending ten years after the issuance of the
Certificate of Occupancy.
8.10.1 Payment to a Partner for Services Rendered. The
Development Fee shall be treated for federal income tax purposes
as a payment to a partner for services rendered other than in the
capacity as partner pursuant to Section 707(a) of the Code.
8.11. Incentive Partnership Management Fee. The
Partnership has entered into a Partnership Management Services
Agreement with the General Partner of even date herewith for its
services in managing the business of the Partnership for the
period from the date hereof throughout the term of the
Partnership, an annual Incentive Partnership Management Fee in
the amount of $7,500 per annum if available from Cash Flow,
commencing in 1998 pursuant to the Partnership Management
Services Agreement. Such agreement includes provisions to the
effect that in return for its services in administering and
directing the business of the Partnership, maintaining
appropriate books and records relating to all financial affairs
of the Partnership, and reporting periodically to the Partners,
the Lender and the Agency with respect to the financial and
administrative affairs of the Partnership and the Apartment
Complex, the Partnership shall pay to the General Partner, from
the Cash Flow and/or from Proceeds of Capital Transactions of the
Partnership available for distribution and in accordance with
Section 11.03A an annual Incentive Partnership Management Fee.
If, in any Fiscal Year, Cash Flow and/or proceeds from Capital
Transactions are insufficient to pay the Incentive Partnership
Management Fee, any unpaid portion of said Incentive Partnership
Management Fee shall accrue, without interest and shall be
payable on a cumulative basis in the first year in which there is
sufficient Cash Flow available for the payment of such fee, or in
the first year in which proceeds of a Capital Transaction are
available.
Such fee shall be payable in accordance with the provisions
of any applicable regulations of any Lender or the Agency and of
the Project Documents and shall be in an amount equal to $7,500
per year, commencing in 1998 with a pro rata portion of the
Incentive Partnership Management Fee for 1997 pursuant to the
Partnership Management Services Agreement, and payable from Cash
Flow in accordance with Section 11.03A(e).
8.11.1 Asset Management Fee. The Partnership shall pay
to Boston Capital, or an Affiliate thereof, an annual Asset
Management Fee in the amount of $7,500 per annum, commencing in
1998, for its services in assisting with the preparation of the
reports required pursuant to Section 13.04. The Asset Management
Fee shall be payable from Cash Flow as provided in Section
11.03A(b) and from proceeds from Capital Transaction as provided
in Section 11.04 A(b)(1). If in any Fiscal Year, Cash Flow
and/or proceeds from Capital Transactions are insufficient to pay
the Asset Management Fee, any unpaid portion of said Asset
Management Fee shall accrue, without interest, and shall be
payable on a cumulative basis in the first year in which there is
sufficient Cash Flow available for the payment of such fee, or,
in the first year in which proceeds of a Capital Transaction are
available.
8.12. Withholding of Fee Payments. In the event that
(a) a General Partner or any successor General Partner shall not
have substantially complied with any material provisions under
this Agreement or the applicable limited partnership agreement,
or (b) any financing commitment of any lender, or any agreement
entered into by the Partnership for financing related to the
Apartment Complex shall have terminated prior to their respective
termination date(s), or (c) foreclosure proceedings shall have
been commenced against the Apartment Complex then (i) such
General Partner shall be in default of this Agreement, and the
Partnership shall withhold payment of any installment of fees
payable pursuant to Sections 8.10 and 8.11, and (ii) the General
Partner shall be liable for the Partnership's payment of any and
all installments of the Development Fee payable pursuant to
Section 8.10, to the extent that the Investment Partnership has
withheld any Installment(s) pursuant to Section 5.03 as a result
of the above-described default.
All amounts so withheld by the Partnership under this
Section 8.12 shall be promptly released only after the General
Partner has cured the default justifying the withholding, as
demonstrated by evidence reasonably acceptable to the Investment
Partnership.
8.13. Removal of the General Partner.
(a) BCTC 94, Inc., acting on behalf of the Investment
Partnership, so long as the Investment Partnership is a Partner,
shall have the right to remove any or all General Partner (i) for
any intentional misconduct or gross negligence in the discharge
of its duties and obligations as a General Partner (provided that
such misconduct or failure results in, or is likely to result in,
a material detriment to or an impairment of the Apartment Complex
or assets of the Partnership), or (ii) upon the occurrence of any
of the following:
(A) such General Partner shall have violated any of
the material provisions of: (i) the Loan Documents, including a
payment default which continues uncured for a period of thirty
(30) days during the first ten years of the term of the City
Loan; in years 11-15 of the City Loan and in the event that the
HUD Section 8 Contracts are not renewed, then a material default
under the City Loan Documents shall not include a payment
default; in the event that the HUD Section 8 Contracts are
renewed in any event after said ten years, including on an annual
basis during years 11-15, then any payment default which
continues uncured for a period of thirty (30) days under the City
Loan Documents shall be considered a material default; (ii) the
Extended Use Commitment; (iii) any provisions of any other
Project Document or other document required in connection with
the Loans, or (iv) any provisions of the Agency regulations
applicable to the Apartment Complex;
(B) such General Partner shall have violated any
material provision of this Agreement or any provision of
applicable law, which violations shall include, without
limitation (i) withdrawal of the General Partner without the
Consent of the Investment Partnership pursuant to the Section
6.01(a), (ii) the failure of the General Partner to make
Subordinated Loans required under this Agreement or (iii) the
failure of a sole General Partner which is a corporation to
satisfy the requirements of Section 8.08;
(C) such General Partner shall have caused either
Loans to go into default; or
(D) such General Partner shall have conducted its own
affairs or the affairs of the Partnership in such manner as
would: (1) cause the termination of the Partnership for federal
income tax purposes; or (2) cause the Partnership to be treated
for federal income tax purposes as an association, taxable as a
corporation.
(b) BCTC 94, Inc. shall give Notice to all Partners of its
determination that any such General Partner shall be removed.
The General Partner shall have sixty (60) days after receipt of
such Notice to cure any default or other reason for such removal,
or to provide BCTC 94, Inc. with evidence satisfactory to BCTC
94, Inc. that the General Partner is diligently pursuing the cure
of said default or remedy for other reason for such removal, in
which event it shall remain as General Partner. If, at the end
of such cure period such General Partner has not cured any
default or other reason for such removal, or has not provided
BCTC 94, Inc. at least five (5) days prior to the end of such
cure period, with evidence that such General Partner is
proceeding diligently to the satisfaction of BCTC 94, Inc., to
cure said default or other reason for such removal, then (i)
without any further action by any Partner, BCTC 94, Inc. or its
designee shall automatically become a General Partner and acquire
in consideration of a cash payment of $5 such portion of the
Interest of the removed General Partner as counsel to the
Investment Partnership shall determine is the minimum appropriate
interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the Act,
(ii) the remaining portion of the economic Interest of the
removed General Partner shall automatically be converted to an
equal economic Interest as an Additional Limited Partner,
provided that such removed General Partner and any guarantor of
its obligations shall have no further liability to the
Partnership or the Partners for liabilities incurred after the
date of withdrawal, but shall be and remain liable for all
obligations and liabilities incurred by such removed General
Partner, or arising out of any events occurring before such
removal became effective, including but not limited to its
obligations set forth in Section 8.09 hereof. Additionally, the
loans previously made to the Partnership by the removed General
Partner will be paid when properly due and payable according to
their respective loan terms, except that the Partnership may
offset against any payments due thereunder to a General Partner
removed under this Section 8.13, any damages suffered by the
Partnership as a result of any breach of the obligations of such
General Partner hereunder, (iii) the economic Interest of BCTC
94, Inc. as the Special Limited Partner shall continue unaffected
by the new status of BCTC 94, Inc. or its designee as a General
Partner, and (iv) the new General Partner shall automatically be
irrevocably delegated all of the powers and duties of the General
Partner hereunder.
(c) BCTC 94, Inc. or any successor General Partner proposed
by the Special Limited Partner shall have the option, exercisable
in its sole discretion, to acquire the Additional Limited Partner
Interest, or any portion thereof, of any removed General Partner
upon payment of the agreed or then present fair market value of
such Interest or portion thereof. Any dispute as to the value of
the Interest or portion thereof to be acquired pursuant to the
immediately preceding sentence shall be submitted to a committee
composed of three qualified real estate appraisers, one chosen by
the removed General Partner, one chosen by the successor General
Partner, and the third chosen by the two so chosen. The
proceedings of such committee shall conform to the rules of the
American Arbitration Association, as far as appropriate, and its
decision shall be final and binding. The expense of arbitration
shall be born equally by the removed General Partner and the
Partnership. The method of payment will be deemed presumptively
fair where it provides for a promissory note bearing simple
interest at nine percent (9%) per annum coming due in no less
than five (5) years with equal installments each year, and a cash
down payment of fifteen percent (15%), and may provide for a
mortgage to secure said promissory note in the event that such
promissory note exceeds $100,000.
(d) Upon removal, no General Partner or any Affiliate
thereof shall be entitled to receive any fee, compensation or
other remuneration from the Partnership, other than the above-
described payment for the Interest, or portion thereof, of the
Removed General Partner or pursuant to Section 8.13(b) above.
The Partnership is not authorized to enter into any arrangement
whereby any fee, compensation or other remuneration could be
payable directly or indirectly to any General Partner or
Affiliate thereof in a manner inconsistent with the immediately
preceding sentence unless the prior written consent of BCTC 94,
Inc. shall have been obtained to such particular arrangement.
The Partnership may offset against any payments to a General
Partner removed under this Section 8.13 any damages suffered by
the Partnership as a result of any breach of the obligations of
such General Partner hereunder. A General Partner so removed
will not be liable as a general partner for any obligations of
the Partnership incurred after the effective date of its removal,
but shall be and remain liable for all obligations and
liabilities incurred by it as General Partner before such removal
became effective, including, but not limited to, its obligations
set forth in Section 8.09 hereof.
(e) The General Partner hereby grants to each of the
Investment Partnership and BCTC 94, Inc. an irrevocable power of
attorney, coupled with an interest, to execute any and all
documents on behalf of the Partners and the Partnership as shall
be legally necessary and sufficient to effect all of the
foregoing provisions of this Section 8.13. The election by the
Investment Partnership to remove such General Partner under this
Section shall not limit or restrict the availability and use of
any other remedy which the Investment Partnership or any other
Partner might have with respect to the General Partner in
connection with their undertakings and responsibilities under
this Agreement.
8.14. Selection of Management Agent. The Partnership,
with the approval of the Lenders and the Agency, if required,
shall engage such person, firm or company as the General Partner
may select, and as the Investment Partnership may approve, which
approval shall not be unreasonably withheld (hereinafter referred
to as "Management Agent") to manage the operation of the
Apartment Complex during the rent-up period and following
Substantial Completion for a period of one year, and thereafter
such management contract may be extended on an annual basis
unless terminated for cause. The Management Agent shall be paid
a management fee subject to the approval of the Lender and the
Agency, if required. The contract between the Partnership and
the Management Agent and the management plan for the Apartment
Complex shall be in a form acceptable to the Lender and the
Agency, if required. Emet Management hereby is approved by the
parties hereto as the initial Management Agent.
8.15. Removal of the Management Agent. The General
Partner, (i) may, upon receiving any required approval of the
Lender and the Agency, dismiss the Management Agent as the entity
responsible for the Apartment Complex under the terms of the
contract between the Partnership and the Management Agent, and
(ii) at the request of the Investment Partnership, shall remove
the Management Agent in the event that (A) the Investment
Partnership, in its reasonable discretion, determines that the
Management Agent does not possess the necessary experience to
properly manage the Apartment Complex or (B) the Management Agent
is declared Bankrupt, is dissolved, or makes an assignment for
the benefit of its creditors, or for any intentional misconduct
by the Management Agent or gross negligence in the discharge of
its duties and obligations as Management Agent, including,
without limitation, for any action or failure to take any action
which:
(1) violates in any material respect any provision
of the Management Agreement entered into with the
Partnership and approved by the Lender, and/or any provision
of the Extended Use Commitment and/or the Loan Documents
applicable to the Apartment Complex, or the Lender approved
management plan for the Apartment Complex, or
(2) violates in any material respect any provision
of this Agreement or provision of applicable law.
8.16. Replacement of the Management Agent. Upon the
removal of the Management Agent as the entity responsible for the
management of the Apartment Complex, a substitute Management
Agent, which may be an Affiliate of the General Partner, shall be
named by the General Partner, subject to the consent of the
Lender, if required, and the consent of BCTC 94, Inc.
8.17. Subordinated Loans to the Partnership. In the
event that additional funds are required by the Partnership for
any purpose relating to the business of the Partnership or for
any of its obligations, expenses, costs or expenditures, the
Partnership may borrow such funds as are needed from any Partners
or other Person or organization, including the General Partner,
for such period of time and on such terms as the General Partner,
the Investment Partnership and the Lender, if so required, may
agree and at the rate of interest then prevailing for comparable
loans (except for Operating Deficit Loans made pursuant to
Section 8.09(b), which shall bear interest only as provided in
Section 8.09(b)); provided however, that no such additional loans
shall be secured by any mortgage or other encumbrance on the
property of the Partnership without the prior approval of the
Investment Partnership and the approval of the Lender, if
required; except that such approvals shall not be required in the
case of the hypothecation of personal property purchased by the
Partnership and not included in the security agreements executed
by the Partnership at the time of Initial Closing. Loans made
under this Section shall be repaid as set forth in Sections 11.03
and 11.04 of this Agreement, but any amount of any such loan that
is outstanding at the time of the occurrence of any of the events
described in Sections 11.04 or 12.01 shall be repaid as provided
in Section 11.04A(b)(4). A General Partner is not obligated to
make any Subordinated Loans except as provided for in Section
8.11.1.
8.18. Reserve Fund for Replacements.
(a) Reserve Fund for Replacements. The Partnership shall
establish a Reserve Fund for Replacements with respect to the
Apartment Complex, as required by the Lender and BCTC 94, Inc.
The Partnership shall make deposits into the Reserve Fund equal
to $15,000.00 annually commencing in 1998 with a pro rata share
to be paid for 1997 (the "Required Deposit"); such deposits may
be suspended only as approved by the City Lender or, as
applicable as hereinafter stated BCTC 94, Inc. Funds in the
Reserve Fund for Replacements are intended to be employed for the
replacement as needed of fixtures, equipment, structural elements
and other components of the Apartment Complex of a capital
nature. All interest earnings on funds on deposit in the Reserve
Fund for Replacements shall be retained therein for the aforesaid
purposes. The Reserve Fund for Replacement shall remain under
the joint control of the General Partner and BCTC 94, Inc.
Withdrawals from the Reserve Fund for Replacements shall be made
only with the Consent, or upon the direction, of the General
Partner and BCTC 94, Inc.
(b) Operating Deficit Reserve.
(i) The Partnership shall establish the Operating
Deficit Reserve as a separate, interest-bearing account with a
financial institution acceptable to BCTC 94, Inc. and shall
deposit therein initial funds in the amount of $200,000 (the
"Initial Reserve Fund Deposit") from the proceeds of the
applicable Installment pursuant to the following schedule: (x)
$100,000 upon Substantial Completion; and (y) $100,000 upon
Substantial Completion from proceeds of the $100,000 Note. The
Operating Deficit Reserve shall be increased annually to the
extent of Cash Flow pursuant to Section 11.03(A)(a). Funds in
the Operating Deficit Reserve are intended to be employed solely
for the payment of Operating Deficits. All interest earnings on
funds on deposit in the Operating Deficit Reserve shall be
retained therein for the aforesaid purposes. The Operating
Deficit Reserve shall remain under joint control of the General
Partner and BCTC 94, Inc. Withdrawals from the Operating Deficit
Reserve shall be made only with the Consent, or upon the
direction, of the General Partner and BCTC 94, Inc.
(ii) The Operating Deficit Reserve shall be released to
the Partnership upon the later to occur of (x) the termination of
the "tax credit compliance period" and/or the "extended use
period" as such term is defined pursuant to IRC Section 42(h)(6),
or (y) the termination, release or discharge of the City Loan.
(iii) Notwithstanding anything to the contrary
contained herein, in the event that the Project receives a five
(5) year renewal of the HUD Section 8 McKinney Fund contracts
(the "Five Year Section 8 Extension"), then at such time eighty
percent (80%) of the balance of the Operating Deficit Reserve
shall be disbursed to the General Partner subject to
Section 8.18(b)(iv) below, and provided that (x) the Partnership
maintains a minimum Operating Deficit Reserve balance of $100,000
and (y) all accrued fees payable to the Limited Partner have been
paid (conditions (x) and (y) herein shall be referred to as the
"Reserve Disbursement Conditions"). In the event that the Five
Year Section 8 Extension is not granted, then the General Partner
shall receive fifteen percent (15%) of the balance of the
Operating Deficit Reserve upon each one-year renewal of said HUD
Section 8 contracts, provided that the Reserve Disbursement
Conditions are met prior to each disbursement of said funds.
However, in any event, funds shall be released from the Operating
Deficit Reserve in an amount sufficient to pay any Deferred
Developer Fee, if not sooner paid, on the last day of the period
ending ten years after the issuance of the Certificate of
Occupancy.
(iv) Funds released from the Operating Deficit Reserve
pursuant to this Section 8.18(b)(iii) shall be disbursed (x) to
the General Partner as a return of any General Partner Special
Capital Contribution made pursuant to Section 5.01(a); (y) to the
Developer in respect of any unpaid Deferred Developer Fee; and
then (z) to Balanced Housing Development Corporation as repayment
of the Balance Housing Loan. If, at the time of any release from
the Operating Deficit Reserve there is no Partnership obligation
outstanding to the Developer in respect of the Deferred Developer
Fee or to Balanced Housing Loan, or to the General Partner in
respect of any Special Capital Contributions made pursuant to
Section 5.01(a) the amount released from the Operating Deficit
Reserve shall be treated as Partnership Revenue.
(v) Notwithstanding anything to the contrary contained
herein, in the event that there is a delay up to ninety (90) days
in the receipt by the Partnership of the initial HUD Section 8
McKinney Funds (the "McKinney Funds") due the Partnership, and
said McKinney Funds are to be received by the Partnership to be
applied retroactively, then the Initial Reserve Fund Deposit
funds may be used by the Partnership to pay for normal operating
expenses of the Partnership. Upon receipt by the Partnership of
the McKinney Funds, said Initial Reserve Fund Deposit shall be
replenished by the Partnership.
ARTICLE IX
TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS OF INTERESTS OF
LIMITED PARTNERS
9.01. Purchase for Investment.
(a) The Investment Partnership hereby represents and
warrants to the General Partner and to the Partnership that the
acquisition of its Interest is made as principal for its account
for investment purposes only and not with a view to the resale or
distribution of such Interest, except insofar as the Securities
Act of 1933 and any applicable securities law of any state or
other jurisdiction permit such acquisitions to be made for the
account of others or with a view to the resale or distribution of
such Interest without requiring that such Interest, or the
acquisition, resale or distribution thereof, be registered under
the Securities Act of 1933 or any applicable securities law of
any state or other jurisdiction.
(b) The Investment Partnership agrees that it will not
sell, assign or otherwise transfer its Interest or any fraction
thereof to any Person who does not similarly represent and
warrant and similarly agree not to sell, assign or transfer such
Interest or fraction thereof to any Person who does not similarly
represent and warrant and agree.
(c) The Investment Partnership shall not sell, assign or
otherwise transfer its Interest or any fraction thereof to any
Person until the Investment Partnership has provided the
Partnership with a legal opinion, reasonably satisfactory to the
General Partner, that such sale, assignment or other transfer
does not violate any state or federal securities laws or require
the Interest to be registered under any such laws.
9.02. Restrictions on Transfer of Limited Partner's
Interests.
(a) Under no circumstances will any offer, sale, transfer,
assignment, hypothecation or pledge of any Limited Partner
Interest be permitted unless the General Partner, in its sole
discretion, shall have Consented.
(b) The Limited Partner whose interest is being
transferred shall pay such reasonable expenses as may be incurred
by the Partnership in connection with such transfer.
9.03. Admission of Substitute Limited Partners.
(a) Subject to the other provisions of this Article IX, an
assignee of the Interest of a Limited Partner (which shall be
understood to include any purchaser, transferee, donee, or other
recipient of any disposition of such Interest) shall be admitted
as a Substitute Limited Partner of the Partnership only upon the
satisfactory completion of the following:
(i) Consent of the General Partner (which may be
withheld in its sole discretion) and the consent of the Lender,
if required, shall have been given, which Consent of the General
Partner may be evidenced by the execution by the General Partner
of an amended Agreement and/or Certificate evidencing the
admission of such Person as a Limited Partner pursuant to the
requirements to the Act;
(ii) the assignee shall have accepted and agreed to be
bound by the terms and provisions of this Agreement by executing
a counterpart thereof or an appropriate amendment hereto, and
such other documents or instruments as the General Partner may
require in order to effect the admission of such Person as a
Limited Partner;
(iii) an amended Agreement and/or Certificate
evidencing the admission of such Person as a Limited Partner
shall have been filed for recording pursuant to the requirements
of the Act to the extent required in order to effectuate the
admission of such Person as a Limited Partner;
(iv) the assignee shall have represented and agreed in
writing as required by Section 9.01;
(v) if the assignee is a corporation, the assignee
shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of its authority to
become a Limited Partner under the terms and provisions of this
Agreement; and
(vi the assignee or the assignor shall have
reimbursed the Partnership for all reasonable expenses, including
all reasonable legal fees and recording charges, incurred by the
Partnership in connection with such assignment.
(b) For the purpose of allocation of profits, losses and
credits, and for the purpose of distributing cash of the
Partnership, a Substitute Limited Partner shall be treated as
having become, and as appearing in, the records of the
Partnership as a Partner upon his signing of an amendment to this
Agreement, agreeing to be bound hereby.
(c) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the
documentation required by this Section and making all official
filings and publications. The Partnership shall take all such
action, including the filing of any amended Agreement and/or
Certificate evidencing the admission of any Person as a Limited
Partner, and the making of any other official filings and
publications, as promptly as practicable after the satisfaction
by the assignee of the Interest of a Limited Partner of the
conditions contained in this Article IX to the admission of such
Person as a Limited Partner of the Partnership. Any cost or
expense incurred in connection with such admission shall be borne
by the Partnership to the extent of available Partnership assets,
and otherwise by such assignee.
9.04. Rights of Assignee of Partnership Interest.
(a) Except as provided in this Article and as required by
operation of law, the Partnership shall not be obligated for any
purpose whatsoever to recognize the assignment by any Limited
Partner of his (its) Interest until the Partnership has received
actual Notice thereof.
(b) Any Person who is the assignee of all or any portion of
a Limited Partner's Interest, but does not become a Substitute
Limited Partner and desires to make a further assignment of such
Interest, shall be subject to all the provisions of this Article
IX to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of his (its) Interest.
ARTICLE X
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
10.01. Management of the Partnership. No Limited Partner
shall take part in the management or control of the business of
the Partnership nor transact any business in the name of the
Partnership. Except as otherwise expressly provided in this
Agreement, no Limited Partner shall have the power or authority
to bind the partnership or to sign any agreement or document in
the name of the Partnership. No Limited Partner shall have any
power or authority with respect to the Partnership except insofar
as the consent of any Limited Partner shall be expressly required
and except as otherwise expressly provided in this Agreement.
10.02. Limitation on Liability of Limited Partners. The
liability of each Limited Partner shall be limited to its Capital
Contribution as and when payable under the provisions of this
Agreement. No Limited Partner shall have any other liability to
contribute money to, or in respect of the liabilities or
obligations of, the Partnership, nor shall any Limited Partner be
personally liable for any obligations of the Partnership. No
Limited Partner shall be obligated to make loans to the
Partnership.
10.03. Other Activities. Any Limited Partner may engage
in or possess interests in other business ventures of every kind
and description for its own account, including without
limitation, serving as general or limited partner of other
partnerships which own, either directly or through interests in
other partnerships, government-assisted housing projects similar
to the Apartment Complex. Neither the Partnership nor any of the
Partners shall have any right by virtue of this Agreement in or
to such other business ventures to the income or profits derived
therefrom.
10.04. Ownership by Limited Partner of Corporate General
Partner or Affiliate. No Limited Partner shall, at any time,
either directly or indirectly, own any stock or other interest in
any corporate General Partner if such ownership by itself or in
conjunction with other stock or other interests owned by other
Limited Partners would, in the opinion of Hinckley, Allen &
Snyder or other tax counsel to the Investment Partnership,
jeopardize the classification of the Partnership as a partnership
for federal income tax purposes. In the event of any violation
of the provisions of this Section by any one or more Limited
Partners, such Limited Partner or Limited Partners shall either
dispose of their Interests in the Partnership (subject to and in
compliance with the provisions of Article IX) or of their stock
or other interest in the corporate General Partner or Affiliates
to the extent necessary so that, in the opinion of counsel for
the Partnership, the classification of the Partnership as a
partnership for federal income tax purposes is no longer in
jeopardy. The obligation of any such disposition required of
more than one Limited Partner shall be shared among them on an
equitable basis. Notwithstanding the foregoing, neither the
General Partner nor any Limited Partner shall be liable in
damages to the Partnership or to any Partner by reason of any
violation of this Section, except for damages arising (a) out of
any material misrepresentation by any Limited Partner relating to
the ownership of stock or other interest in a corporate General
Partner or any affiliate by him or by any member of his family
(within the meaning of the attribution rules set forth in Section
318 of the Code), or (b) out of any failure by any Limited
Partner to dispose of his Interest in the Partnership or of his
stock or other interest in a corporate General Partner or
Affiliate within a reasonable time after Notice to such Limited
Partner by the Partnership of the obligations to make such
disposition.
ARTICLE XI
ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX CREDITS AND CASH
DISTRIBUTIONS
Section 11.01. Allocation of Taxable Income, Tax Losses and
Tax Credits.
A. General. Subject to the special allocations set forth
in this Article XI, Taxable Income, Tax Credits and Tax Losses
for each fiscal year of the Partnership (or part thereof) other
than those to be allocated pursuant to Section 11.01B, Section
11.01C, or Section 11.02 hereof, shall be allocated 99.99% to the
Investment Partnership and .01% to the General Partner.
B. Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other period shall be specially allocated 99.99%
to the Investment Partnership and .01% to the General Partner.
C. Partner Loan Nonrecourse Deductions. Any Partner Loan
Nonrecourse Deductions for any Fiscal Year or other period shall
be specially allocated to the Partner who bears the economic risk
of loss with respect to the loan to which such Partner Loan
Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i).
Section 11.02. Allocation of Taxable Income and Tax Losses
from Capital Transactions. Subject to the special allocations
set forth in this Article XI, Taxable Income and Tax Losses from
Capital Transactions shall be allocated to the Partners as
follows:
(i) Taxable Income from Capital Transactions shall be
allocated:
(a) first, to the Partners with negative Capital
Accounts pro rata in such amounts as will result in the
elimination of the negative Capital Accounts of such Partners;
provided, however, that if Taxable Income to be allocated
pursuant to this Section 11.02(i)(a) is insufficient to eliminate
all negative Capital Accounts, such Taxable Income will be
allocated to Partners with negative Capital Accounts in the
proportion that each such Partner's negative Capital Account
bears to the total of all such Negative Capital Accounts;
(b) then, the balance, if any, of such Taxable Income
shall be allocated 50% to the General Partner and 50% to the
Investment Partnership.
(ii) Tax Losses from Capital Transactions shall be
allocated:
(a) first, to the extent of the respective positive
balances in the Partners' Capital Accounts; and
(b) any balance, 99.99% to the Limited Partner and
.01% to the General Partner.
(iii) Notwithstanding the foregoing provisions, if Taxable
Income to be allocated includes income treated as ordinary income
for federal income tax purposes because such Taxable Income is
attributable to the recapture of depreciation under Section 1245
or 1250 of the Code, such Taxable Income, to the extent treated
as ordinary income, shall be allocated to and reported by the
Partners in proportion to their accumulated depreciation
allocations. The Partnership shall keep records of such
allocations of depreciation to the Partners. In determining the
accumulated depreciation allocations of the Partners,
depreciation deductions for each taxable year shall be deemed
allocated to the Partners in the same proportion as the Taxable
Income or Tax Losses in that particular taxable year were
allocated to the Partners.
11.03 Distribution of Cash Flow.
A. Subject to Lender approval, if required, Cash Flow
shall be determined for each fiscal year and shall be applied or
distributed at such time or times as the General Partner deem
appropriate, but in no event less than once in each fiscal year,
in the following order of priority:
(a) First, to payment of the Asset Management Fee
currently due, together with any accrued but unpaid Asset
Management Fees;
(b) Second, to increase the Operating Deficit Reserve,
and to replace any withdrawals therefrom, so that the minimum
balance of said Operating Deficit Reserve reaches $990,000 by the
last day of the period ending ten years after the issuance of the
Certificate of Occupancy, and in any event is maintained at no
less than $100,000 after said ten year period, or is released
pursuant to Section 8.18(b);
(c) Third, to payment to the Developer of the Deferred
Development Fee;
(d) Fourth, to repayment of any amounts due with
respect to any Subordinate Loans (including without limitation,
Operating Deficit Loans made under Section 8.09(b);
(e) Fifth, to payment of the Incentive Partnership
Management Fee currently due;
(f) Any balance, split 80% to the General Partner and
20% to the Investment Partnership.
Section 11.04 Distributions of Distributable Proceeds from
Capital Transactions and Distributable Proceeds from
Refinancings.
A. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings (other than liquidating
distributions pursuant to Section 12.02) shall be distributed in
the following order of priority:
(a) First, to the payment of any debts and liabilities
(including unpaid fees but excluding any debts, liabilities
and/or fees owed to any Partners) and to the establishment of any
required reserves;
(b) Second, to the payment of any debts and
liabilities (including unpaid fees) owed to the Partners or any
Affiliates by the Partnership for Partnership obligations,
including the repayment of any Credit Recovery Loans made
pursuant to Section 5.01(d)(iii) or any Operating Deficit Loans
made pursuant to Section 8.09(b) and the funding of reserves
under Section 8.18; provided, however, that the foregoing debts
and liabilities owed to Partners and their Affiliates shall be
paid or repaid, as applicable, in the following order of priority
if and to the extent applicable:
(1) The Deferred Developer Fee, if any,
(2) The Asset Management Fees currently due,
together with any accrued and unpaid Asset Management
Fees, if any,
(3) The repayment to the Investment Partnership of
any Reduction Amount pursuant to Section 5.01(d)(ii)
together with any accrued or unpaid interest or Credit
Recovery Loan Pursuant to Section 5.01(d)(iii) together
with any accrued or unpaid interest;
(4) Subordinated Loans to the General Partner;
(5) Any other such debts and liabilities;
provided, however, that all such other debts and
liabilities owed to the Investment Partnership shall be
paid prior to any such debts and liabilities owed to
the General Partner; and
(c) the balance, if any, 50% to the General Partner
and 50% to the Investment Partnership.
B. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings shall be
distributed within 90 days after the end of the fiscal
quarter in which such Capital Transaction or Refinancing
occurs. Distributions of Distributable Proceeds from
Capital Transactions and Distributable Proceeds from
Refinancings to the Partners shall be made only after
Capital Accounts have been adjusted to reflect all previous
allocations of Taxable Income and Tax losses to the
Partners, for distributions of Cash Flow, and for any other
distributions of Distributable Proceeds form Capital
Transactions or Distributable Proceeds from Refinancings.
C. Amounts remaining in the Operating Deficit Reserve at
the time of any of the foregoing distributions shall be
utilized by the Partnership to reduce any amounts which
remain outstanding under the Development Agreement, and if
no such amounts remain outstanding, they shall be applied to
the payment of obligations and distributions to the Partners
in the order set forth in this Section 11.04A.
Section 11.05 Allocations Among Partners.
A. For purposes of determining the Taxable Income (or Tax
Losses) or any other items allocable to any period, Taxable
Income (or Tax Losses) and any such other items shall be
determined on a daily, monthly, or other basis, as determined by
the General Partner using any permissible method under Code
Section 706 and the Treasury Regulations thereunder.
B. Taxable Income, Tax Losses, and Tax Credits for all
purposes of this Agreement shall be determined in accordance with
the accrual accounting method. Except as otherwise provided in
this Agreement, all items of Partnership income, gain, loss,
deduction, and any other allocations, including allocation of
Book Profits and Losses, shall be divided among the Partners in
the same proportions as they share Taxable Income, Tax Credits,
and Taxable Losses, as the case may be, for such fiscal year.
C. In any year in which a Partner sells, assigns or
transfers all or any portion of an Interest to any Person who
during such year is admitted as a substitute Partner, the share
of all Taxable Income, Tax Losses, and Tax Credits, allocated to
and of all Cash Flow and all cash proceeds distributable under
Section 11.04 distributed to, all Partners which is attributable
to the Interest sold, assigned or transferred shall be divided
between the assignor and the assignee using any one of the
following methods as determined by agreement between the assignor
and assignee: (i) ratably on the basis of the number of days in
such year before, and the number of days on and after, the
execution by the assignee of this Agreement, or (ii) by dividing
the Partnership fiscal year into two segments, the first segment
being the time period in such year before the execution by the
assignee of this Agreement and the second segment being the time
period in such year beginning on the date of execution of this
Agreement, and allocating Taxable Income, Tax Losses, Tax
Credits, Cash Flow, and all cash proceeds distributable in each
such segment among the persons who were Partners during that
segment, or (iii) using such other method as provided by the Code
or regulations thereunder.
D. In the event that there is a determination that there
is any original issue discount or imputed interest attributable
to the Capital Contribution of any Partner, or any loan between a
Partner and the Partnership, any income or deduction of the
Partnership attributable to such imputed interest or original
issue discount on such Capital Contribution or loan (whether
stated or unstated) shall be allocated solely to such Partner.
E. In the event that the deduction of all or a portion of
any fee paid or incurred by the Partnership to a Partner or an
Affiliate of a Partner is disallowed for federal income tax
purposes by the Internal Revenue Service with respect to a
taxable year of the Partnership, the Partnership shall then
allocate to such Partner an amount of gross income of the
Partnership for such year equal to the amount of such fee as to
which the deduction is disallowed.
F. If any Partner's Interest in the Partnership is reduced
but not eliminated because of the admission of new Partners or
otherwise, or if any Partner is treated as receiving any items of
property described in Section 751(a) of the Code, the Partner's
Interest in such items of Section 751(a) property that was
property of the Partnership while such Person was a Partner shall
not be reduced, but shall be retained by the Partner so long as
the Partner has an Interest in the Partnership and so long as the
Partnership has an Interest in such property.
G. The Partners are aware of the income tax consequences
of the allocations made by this Article XI and hereby agree to be
bound by the provisions of this Article XI in reporting their
shares of Partnership income and loss for income tax purposes.
H. If a taxing authority ignores the characterization of
any amounts (other than the receipt of a profits interest in the
Partnership by a Partner) paid to a Partner (or an Affiliate
hereof) as salaries, management fees, commissions or other
compensation for services, including interest ("Compensation"),
and refuses to treat such payments as either guaranteed payments
within the meaning of Code Section 707(c) or payments made to
such Partner other than in such Partner's capacity as a Partner
within the meaning of Code Section 707(a), and such taxing
authority ultimately treats such amounts paid to a Partner (or an
Affiliate thereto) as a distribution to such Partner for federal
income tax purposes which reduces such Partner's Capital Account,
then the Compensation shall be offset to the extent possible by a
special allocation of an item of income or gain of the
Partnership to the recipient Partner so that, consistent with the
intent of the Partners, the Compensation shall not be treated as
a distribution which reduces the recipient Partner's Capital
Account without an offsetting allocation of income or gain.
Accordingly, such Partner shall be allocated the first available
items of Partnership income and gain (including in a succeeding
year) in an amount equal to the Compensation.
Section 11.06 Qualified Income Offset.
(i) Notwithstanding any other provision of this
Article XI, in the event any Partner unexpectedly receives (a) an
adjustment to the Capital Account balance of such Partner as
described in Section 1.704-1(b)(2)(ii)(d)(4) of the Treasury
Regulations, (b) an allocation to such Partner of loss or
deduction of the type described in Section 1.704-
1(b)(2)(ii)(d)(5) of the Treasury Regulations, or (c) a
distribution to such Partner in excess of any offsetting increase
in the Partner's Capital Account balance during or prior to the
year of distribution, items of Partnership Taxable Income and of
income that constitute a credit to such Partner's Capital Account
shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Treasury Regulations under Code Section 704(b), the Qualified
Income Offset Amount (defined in Section 11.06(ii)) created by
such adjustments, allocations, or distributions as quickly as
possible, provided that an allocation pursuant to this Section
11.06(i) shall be made only if and to the extent that such
Partner would have a Qualified Income Offset Amount after all
other allocations provided for in this Article have been
tentatively made as if this Section 11.06(i) were not in this
Agreement.
(ii) Notwithstanding anything to the contrary
contained in this Agreement, in no event shall Tax Losses of the
Partnership be allocated to a Partner if such allocation would
result in such Partner having a "Qualified Income Offset Amount"
(as defined below). As used herein, the term "Qualified Income
Offset Amount" for a Partner means the deficit balance, if any,
in such Partner's Capital Account as of the end of the relevant
fiscal year after giving effect to the following adjustments:
(i) credit to such Capital Account an amount equal to (a) the
Partner's Share of Minimum Gain immediately prior to the
allocation or distribution and (b) the sum of such Partner's
allocable share of any recourse indebtedness of the Partnership
as determined under Section 752 of the Code and any unconditional
obligation of such Partner to contribute additional amounts to
the capital of the Partnership in the future (to the extent not
previously taken into account in determining such Partner's share
of recourse liabilities of the Partnership) and (ii) debit to
such Capital Account the allocations or distributions described
in Section 11.06(i) that, as of the end of the taxable year, are
reasonably expected to be made to such Partner. All Tax Losses
in excess of the limitation set forth in this Section 11.06(ii)
shall be allocated to the General Partner.
Section 11.07. Minimum Gain Allocations.
A. Notwithstanding any other provisions of this Article
XI, if in any year there is a net decrease in the amount of the
Partnership's Minimum Gain, each Partner will be allocated items
of Taxable Income and gain for such year equal to that Partner's
share of the net decrease in Minimum Gain, within the meaning of
Treasury Regulation 1.704-2(g)(2), and subject to the exceptions
set forth in Treasury Regulation 1.704-2(f).
Allocations of Taxable Income and gain (hereinafter referred
to as a "Minimum Gain Chargeback") required pursuant to this
Section 11.07 shall consist first of gains recognized from the
disposition of items of Partnership property subject to one or
more nonrecourse liabilities of the Partnership to the extent of
the decrease in Minimum Gain attributable to the disposition of
such items of property (or if such gains exceed the amount of the
Minimum Gain Chargeback required for such taxable year, the
Minimum Gain Chargeback shall consist of a proportionate share of
each such gain), and the remainder of such Minimum Gain
Chargeback shall consist of a pro-rata portion of the other items
of Taxable Income and gain of the Partnership for that year. If
the amount of the Minimum Gain Chargeback requirement exceeds the
Partnership's Taxable Income and gains for the taxable year, the
excess shall carry over to subsequent years.
B. If in any year there is a net decrease (within the
meaning of Treasury Regulations Section 1.704-2(i)(3) in Partner
Nonrecourse Debt Minimum Gain, any Partner with a share of that
Member Nonrecourse Debt Minimum Gain (determined under Treasury
Regulation 1.704-2(i)(5)) as of the beginning of the year shall
be allocated items of profits and gains for that year (and if
necessary, subsequent years) equal to that Partner's share of the
net decrease in Member Nonrecourse Debt Minimum Gain in
accordance with Treasury Regulation Section 1.704-2(i)(4).
Section 11.08 Regulatory Allocations. The allocations set
forth in Sections 11.01B, 11.01C, 11.06 and 11.07 (the
"Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulation Section 1.704-1(b). It is
the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items
of Taxable Income, Tax Losses and items of income, gain, loss, or
deduction pursuant to this Section 11.08. Therefore,
notwithstanding any other provision of this Article (other than
the Regulatory Allocations), the General Partner shall make such
offsetting special allocations of Taxable Income, Tax Losses, and
items of income, gain, loss, or deduction in whatever manner it
determines appropriate so that, after such offsetting allocations
are made, each Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the
Agreement and all items were allocated pursuant to Sections
11.01A and 11.02. In exercising its discretion under this
Section 11.08, the General Partner shall take into account future
Regulatory Allocations under Section 11.07 that, although not yet
made, are likely to offset other Regulatory Allocations
previously made under Sections 11.01B and 11.01C.
Section 11.09 Partners' Partnership Non-recourse
Liabilities. For purposes of Code Section 752, each Partner's
share of Partnership non-recourse liabilities shall be determined
in accordance with Treasury Regulation 1.752-3(a) or successor
regulation. In this connection, for purposes of determining each
Partner's proportionate share of the excess non-recourse
liabilities of the Partnership pursuant to Treasury Regulation
1.752-3(a), the Investment Partnership shall have a 99% interest
in Partnership Taxable Income or profits and the General Partner
shall have a 1% interest in Partnership Taxable Income or
profits.
Section 11.10 Tax Allocations: Code Section 704(c). In
accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall be
allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial Gross
Asset Value (computed in accordance with Section 11.12 hereof).
In the event the Gross Asset Value of any Partnership prop-
erties is adjusted pursuant to Section 11.12 hereof, subsequent
allocations of income, gain, loss, and deduction with respect to
such asset shall take into account any variation between the
adjusted basis of such asset for federal income tax purposes and
its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such
allocations shall be made by the General Partner with the Consent
of the Limited Partner, in any manner that reasonably reflects
the purpose and intention of this Agreement. Allocations
pursuant to this Section are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be
taken into account in computing, any Partner's Capital Account or
share of Book Profits and Losses, other items, or distributions
pursuant to any provision of this Agreement.
11.11. Tax Matters Partner.
A. The General Partner is hereby designated as Tax Matters
Partner of the Partnership, and shall engage in such undertakings
as are required of the Tax Matters Partner of the Partnership, as
provided in regulations pursuant to Section 6231 of the Code.
Each Partner, by its execution of this Agreement, Consents to
such designation of the Tax Matters Partner and agrees to
execute, certify, acknowledge, deliver, swear to, file and record
at the appropriate public offices such documents as may be
necessary or appropriate to evidence such Consent.
B. The Tax Matters Partner is hereby authorized, but not
required:
(a) to enter into any settlement with the Internal
Revenue Service or the Secretary with respect to any tax audit or
judicial review, in which agreement the Tax Matters Partner may
expressly state that such agreement shall bind the other
Partners, except that such settlement agreement shall not bind
any Partner who (within the time prescribed pursuant to the Code
and regulations thereunder) files a statement with the Secretary
providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on behalf of such
Partner;
Balanced Housing Development Corp.;
(b) in the event that a notice of a final
administrative adjustment at the Partnership level of any item
required to be taken into account by a Partner for tax purposes
(a "final adjustment") is mailed to the Tax Matters Partner, to
seek judicial review of such final adjustment, including the
filing of a petition for readjustment with the Tax Court, the
District Court of the United States for the district in which the
Partnership's principal place of business is located, or the
United States Claims Court;
(c) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(d) to file a request for an administrative adjustment
with the Internal Revenue Service at any time and, if any part of
such request is not allowed by the Internal Revenue Service, to
file a petition for judicial review with respect to such request;
(e) to enter into an agreement with the Internal
Revenue Service to extend the period for assessing any tax which
is attributable to any item required to be taken into account by
a Partner for tax purposes, or an item affected by such item; and
(f) to take any other action on behalf of the Partners
or the Partnership in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable law
or regulations.
C. The Partnership shall indemnify and reimburse the Tax
Matters Partner for all expenses, including legal and accounting
fees, claims, liabilities, losses and damages incurred in
connection with any administrative or judicial proceeding with
respect to the tax liability of the Partners. The payment of all
such expenses shall be made before any distributions are made or
any discretionary reserves are set aside by the General Partner.
In the event that funds are not available from the Partnership
for such expenses, the General Partner shall have the obligation
to provide funds for such purpose. The taking of any action and
the incurring of any expense by the Tax Matters Partner in
connection with any such proceeding, except to the extent
required by law, is a matter in the sole discretion of the Tax
Matters Partner and the provisions on limitations of liability of
the General Partner and indemnification set forth in Section 8.07
of this Agreement shall be fully applicable to the Tax Matters
Partner in its capacity as such.
11.12 Capital Accounts
A. A Capital Account shall be maintained on the books of
the Partnership for each Partner, which shall be (i) credited
with its Capital Contributions and the amount of any Partnership
liabilities that are assumed by such Partner or that are secured
by any Partnership property distributed to such Partner; (ii)
credited with its distributive share of Taxable Income and any
income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Taxable Income;
(iii) charged with its distributive share of Tax Losses and any
nondeductible expenditures of the Partnership (including
Syndication Expenses) described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account under this Section 11.12; and (iv)
charged with any distributions to it and with the amount of any
liabilities of such Partner that are assumed by the Partnership
or that are secured by any property contributed by such Partner
to the Partnership.
In the case of property other than cash contributed to the
Partnership or distributed to a Partner, each Partner's Capital
Account will be credited with the Gross Asset Value of property
contributed to the Partnership (net of liabilities assumed by the
Partnership and liabilities to which such contributed property is
subject) and shall be debited with the cash and the Gross Asset
Value of property distributed to it (net of liabilities assumed
by such Partner and liabilities to which such distributed
property is subject). In the event the Gross Asset Values of
Partnership assets are adjusted pursuant to Section 11.12B
hereof, the Capital Accounts of all Partners shall be adjusted
simultaneously to reflect the aggregate net adjustment as if the
Partnership recognized gain or loss equal to the amount of such
aggregate net adjustment.
Upon the sale, exchange or other transfer of an Interest, or
the assignment of such Interest to a new Partner, the Capital
Account of the transferor Partner shall carry over to the
transferee Partner.
B. For purposes of determining and maintaining the
Partners' Capital Accounts, the Gross Asset Value of Partnership
assets shall be adjusted as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset, as determined by the
contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets
shall be adjusted to equal their respective gross fair market
values, as determined by the General Partner, as of the following
times: (a) the acquisition of an additional Interest in the
Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) upon liquidation of
the Partnership, or upon the distribution by the Partnership to a
Partner of more than a de minimis amount of money or other
Partnership property to a retiring or continuing Partner as
consideration for an Interest in the Partnership or (c) under
generally accepted industry accounting practices, provided
substantially all of the Partnership's property (excluding money)
consists of stock, securities, commodities, options, warrants,
futures, or similar instruments that are readily tradable on an
established securities market; and
(iii) If the Gross Asset Value of an asset has been
determined or adjusted pursuant to subsection (i) or (ii) of this
Section 11.12B, such Gross Asset Value shall thereafter be
adjusted by the Book Depreciation taken into account with respect
to such asset for purposes of computing Book Profits and Losses,
as set forth in Section 11.12B.
C. For purposes of determining and maintaining the
Partners' Capital Accounts and the computation of Book Profits
and Losses only, the following adjustments shall be made to the
calculation of Taxable Income and Tax Losses reflected in the
Partners' Capital Accounts:
(i) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value; and
(ii) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing
such Taxable Income or Tax Losses, there shall be taken into
account Book Depreciation for such fiscal year or other period,
computed as hereinafter set forth.
(iii) For this purpose, "Book Depreciation" means, for
each fiscal year or other period, an amount equal to the
depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning
of such year or other period, Book Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or
other cost recovery deductions for such year or other period
bears to such beginning adjusted tax basis.
(iv) Allocations of Book Profits and Losses among the
Partners shall be made in accordance with the provisions of this
Article XI respecting allocations of Taxable Income and Tax
Losses among the Partners.
11.13. Authority of General Partner to Vary Allocations
to Preserve and Protect Partner's Intent.
(a) It is the intent of the Partners that each Partner's
distributive share of income, gain, loss, deduction, or credit
(or item thereof) shall be determined and allocated in accordance
with this Article XI to the fullest extent permitted by Section
704(b) of the Code. In order to preserve and protect the
determinations and allocations provided for in this Article XI,
the General Partner hereby are authorized and directed to
allocate income, gain, loss, deduction, or credit (or item
thereof) arising in any year differently than otherwise provided
for in this Article XI to the extent that allocating income,
gain, loss, deduction or credit (or item thereof) in the manner
provided for in Article XI would cause the determinations and
allocations of each Partner's distributive share of income, gain,
loss, deduction, or credit (or item thereof) not to be permitted
by Section 704 (b) of the Code and Treasury Regulations
promulgated thereunder. Any allocation made pursuant to this
Section 11.13 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Article XI and no
amendment of this Agreement or approval of any Partner shall be
required.
(b) In making any allocation (the "new allocation") under
Section 11.13(a), the General Partner is authorized to act only
after having been advised by the Accountants and at the option of
the General Partner its attorneys that, under Section 704(b) of
the Code and the Treasury Regulations thereunder, (i) the new
allocation is necessary, and (ii) the new allocation is the
minimum modification of the allocations otherwise provided for in
this Article XI necessary in order to assure that, either in the
then current year or in any preceding year, each Partner's
distributive share of income, gain, loss, deduction, or credit
(or item thereof) is determined and allocated in accordance with
this Article XI to the fullest extent permitted by Section 704(b)
of the Code and the Treasury Regulations thereunder.
(c) If the General Partner is required by Section 11.13(a)
to make any new allocation in a manner less favorable to any
Partner than is otherwise provided for in this Article XI, then
the General Partner are authorized and directed, only after
having been advised by the Accountants that it is permitted by
Section 704(b) of the Code, to allocate income, gain, loss,
deduction, or credit (or item thereof) arising in later years in
such manner so as to bring the allocations of income, gain, loss,
deduction, or credit (or item thereof) to such Partner as nearly
as possible to the allocations thereof otherwise contemplated by
this Article XI.
(d) New allocations made by the General Partner under
Section 11.13(a) and Section 11.13(c) in reliance upon the advice
of the Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partner to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
ARTICLE XII
SALE, DISSOLUTION AND LIQUIDATION
12.01. Dissolution of The Partnership. The Partnership
shall be dissolved upon the earlier
of expiration of the terms of the Partnership, or upon:
(a) subject to Section 6.03, the withdrawal, Bankruptcy,
death, dissolution or adjudication of incompetency of a General
Partner who is at that time the sole General Partner;
(b) the sale or other disposition of all or substantially
all of the assets of the Partnership;
(c) the election by the General Partner, with the Consent
of BCTC 94, Inc.; or
(d) any other event causing the dissolution of the
Partnership under the laws of the State.
12.02. Winding Up and Distribution.
(a) In the event of dissolution and termination of the
Partnership, a full accounting of the assets and liabilities
shall be taken, and the assets shall be distributed in accordance
with this Section 12.02 as follows, after taking into account all
other allocations and distributions under this Agreement for the
Fiscal Year, including, without limitation, the allocations under
Article XI hereof;
(A) To the payment of all debts and liabilities of the
Partnership then due (including fees and loans payable to
Partners);
(B) To the setting up of any reserves that the
Liquidator may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership;
(C) To the Partners, in an amount equal to the
positive balances in their Capital Accounts.
If a General Partner has a negative Capital Account balance
following the liquidation of the Partnership or of a General
Partner's Interest in the Partnership within the meaning of
Treasury Regulation Section 1.704-1(b)(ii)(g), excluding from
such General Partner's negative Capital Account balance, (a) such
General Partner's Share of Minimum Gain, and (b) any other amount
that such General Partner is deemed to be obligated to restore to
the Partnership under Treasury Regulation Section 1.704-
1(b)(2)(ii)(c) or otherwise under the Treasury Regulations
promulgated under Code Section 704(b), and after taking into
account all Capital Account adjustments (including adjustments
arising from the liquidation) for the Partnership taxable year
during which such liquidation occurs, other than those made
pursuant to this Section, such General Partner shall be
unconditionally obligated to restore the amount of such negative
Capital Account balance to the Partnership by the end of such
taxable year (or, if later, within 90 days after the date of
liquidation). Amounts contributed to the Partnership in respect
of the General Partner' obligation to restore negative Capital
Account balances shall be paid to creditors of the Partnership or
distributed to the other Partners in accordance with their
positive Capital Account balances, if any, as of the date of
liquidation.
(b) The Liquidator shall file all certificates and notices
of the dissolution of the Partnership required by law. The
Liquidator shall proceed without any unnecessary delay to sell
and otherwise liquidate the Partnership's property and assets;
provided, however, that if the Liquidator shall determine that an
immediate sale of part or all of the Partnership property would
cause undue loss to the Partners, then in order to avoid such
loss, the Liquidator may, except to the extent provided by the
Act, defer the liquidation as may be necessary to satisfy the
debts and liabilities of the Partnership to Persons other than
the Partners. Upon the complete liquidation and distribution of
the Partnership assets, the Partners shall cease to be Partners
of the Partnership, and the Liquidator shall execute, acknowledge
and cause to be filed all certificates and notices required by
the law to terminate the Partnership.
(c) Upon the dissolution of the Partnership pursuant to
Section 12.01, the Accountants shall promptly prepare, and the
Liquidator shall furnish to each Partner, a statement setting
forth the assets and liabilities of the Partnership upon its
dissolution. Promptly following the complete liquidation and
distribution of the Partnership property and assets, the
Accountants shall prepare, and the Liquidator shall furnish to
each Partner, a statement showing the manner in which the
Partnership assets were liquidated and distributed.
ARTICLE XIII
BOOKS AND RECORDS, ACCOUNTING TAX ELECTIONS, ETC.
13.01 Books and Records. The books and records of the
Partnership shall be maintained on an accrual basis in accordance
with sound federal income tax accounting principles. These and
all other records of the Partnership, including information
relating to the status of the Apartment Complex, information with
respect to the sale by the General Partner or any Affiliate of
goods or services to the Partnership, and any information
required to be maintained by the Act or any governmental agencies
having jurisdiction, shall be kept at the principal office of the
Partnership and shall be available for examination there by any
Partner, or his duly authorized representative, at any and all
reasonable times. Any Partner, or his duly authorized
representative, upon paying the costs of collection, duplication
and mailing, shall be entitled to a copy of the list of names and
addresses of the Limited Partners and of any of the books and
records of the Partnership.
13.02. Bank Accounts. All funds of the Partnership not
otherwise invested shall be deposited in one or more accounts
maintained in such banking institutions as the General Partner
shall determine, and withdrawals shall be made only in the
regular course of Partnership business on such signature or
signatures as the General Partner may, from time to time,
determine. No funds of the Partnership shall be deposited in any
financial institution in which any Partner is an officer,
director or holder of any proprietary interest.
13.03. Accountants. The Accountants shall annually
prepare for execution by the General Partner all tax returns of
the Partnership, shall annually audit the books of the
Partnership, and shall certify, in accordance with generally
accepted accounting principles, a balance sheet, a profit and
loss statement, and a cash flow statement. With respect to each
fiscal year during the Partnership's operations, at such time as
the Accountants shall have prepared the proposed tax return for
such year, the Accountants shall provide copies of such proposed
tax return to the Investment Partnership and to its accountants,
Reznick, Fedder & Silverman, of Bethesda, Maryland, or such other
accountant as approved by the Investment Partnership or their
review and comment. Any comments and/or changes in such proposed
tax return reasonably recommended by the Investment Partnership's
accountants shall be taken into account and made by the
Accountants prior to the completion of such tax return for
execution by the General Partner. The Partnership shall
reimburse Boston Capital Communications Limited Partnership, an
affiliate of the Investment Partnership, for its expenses
incurred in causing the Partnership's proposed tax return to be
reviewed by the Investment Partnership's accountants, if and to
the extent that such review results in material modifications to
such proposed tax return. A full detailed statement shall be
furnished to all Partners, showing such assets, properties, and
net worth and the profits and losses of the Partnership for the
preceding fiscal year. All Partners shall have the right and
power to examine and copy, at any and all reasonable times, the
books, records and accounts of the Partnership.
13.04. Reports to Partners.
(a) Within 30 days of the date of Substantial Completion,
the General Partner shall cause to be prepared and distributed to
the Investment Partnership, a Credit Basis Worksheet for each
building, and in the form specified by Boston Capital.
(b) The General Partner shall cause to be prepared and
distributed to all persons who were Partners at any time during a
fiscal year of the Partnership:
(i) By March 1 of the year after the end of
each fiscal year of the Partnership, (A) an audited
financial statement which includes a balance sheet as
of the end of such fiscal year and statements of
income, Partners' equity, and changes in financial
position and a Cash Flow statement, for the year then
ended, all of which, except the Cash Flow statement,
shall be prepared in accordance with generally accepted
accounting principles and accompanied by an auditor's
report containing an opinion of the Accountants, and
(B) a report of the activities of the Partnership
during the period covered by the report. Such report
shall set forth distributions to Limited Partners for
the period covered thereby and shall separately
identify distributions from: (1) Cash Flow from
operations during the period, (2) Cash Flow from
operations during a prior period which had been held as
reserves, (3) proceeds from disposition of the
Apartment Complex or any other investments of the
Partnership, (4) lease payments on net leases with
builders and sellers, and (5) reserves. With respect
to any distribution to the Investment Partnership, the
report called for shall separately identify
distributions from (A) Cash Flow from operations during
the period, (B) Cash Flow from operations during a
prior period which had been held as reserves, (C)
proceeds from disposition of property and investments,
(D) lease payments on net leases with builders and
sellers, (E) reserves from the gross proceeds of the
offering originally obtained from the Investment
Partnership, (F) borrowed monies, (G) loans or
contributions from the Investment Partnership, and (H)
transactions outside of the ordinary course of business
with a description thereof. If the Completion Date had
not yet occurred as of December 31 in the year which is
the subject of the report, then this Section
13.04(a)(i) shall require only the balance sheet for
the year then ended.
(ii) By February 15 of the year after the
end of each fiscal year of the Partnership, all
information necessary for the preparation of the
Limited Partners' federal income tax returns, together
with a draft of the Partnership's federal income tax
return for such fiscal year.
(iii) Within thirty (30) days after the end
of each calendar quarter of a fiscal year of the
Partnership, a report containing:
(A) A balance sheet, which may be
unaudited; and
(B) a statement of income for the
quarter then ended, which may be unaudited; and
(C) A Low Income Housing Credit
Monitoring form, Rent Rolls, Statement of Income and
Expenses, Operating Statement and Occupancy Rental
Report, all in the form specified by Boston Capital;
and
(D) A certification that the Apartment
Complex and its tenants are in compliance with all
applicable federal and state laws and regulation; and
(E) other pertinent information
regarding the Partnership and its activities during the
quarter covered by the report.
(c) Within ninety (90) days after the end of each fiscal
year of the Partnership the General Partner shall provide to the
Investment Partnership:
(i) A certification by the General Partner
that (A) all Loans payments and taxes and insurance
payments with respect to the Apartment Complex are
current as of the date of the year-end report, (B) to
the best of the General Partner's knowledge and belief
there is no default under the Project Documents or this
Agreement, or if there is any default, a description
thereof, and (C) to the best of the General Partner's
knowledge and belief there is no building, health or
fire code violation or similar violation of a
governmental law, ordinance or regulation against the
Apartment Complex or, if there is any violation, a
description thereof;
(ii) the information specified in Section
13.04(b);
(iii) to the extent not previously disclosed
in a report required hereunder a descriptive statement
of all transactions during the fiscal year between the
Partnership and the General Partner and/or any
Affiliate, including the nature of the transaction and
the payments involved (including accrued cash or other
payments);
(iv) a Cash Flow statement; and
(v) if required, 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 Agency
concerning the same.
(d) Upon the written request of the Investment Partnership
for further information with respect to any matter covered in
items (a) or (b) above, the General Partner shall utilize its
best efforts to furnish such information within 30 days of
receipt of such request.
(e) Prior to November 1 of each year, the General Partner,
on behalf of and at the expense of the Partnership, shall send to
the Investment Partnership an estimate of the Investment
Partnership's share of the Tax Credits, identified by building,
and of profits and losses of the Partnership for federal income
tax purposes for the current fiscal year, all in the form
specified by Boston Capital. Such estimate shall be prepared by
the General Partner and the Accountants.
(f) Within 15 days after the end of any calendar month
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 Partner has received any
notice of a material fact which may substantially
affect further distributions, or
(iv) any Partner has pledged or
collateralized his Interest in the Partnership, the
General Partner shall send the Investment Partnership a
detailed report of such event.
(g) On or before the Admission Date, the General Partner,
on behalf of the Partnership, shall send to the Investment
Partnership a copy of all requests for disbursements or other
extensions of credit under any of the Loans which have been
submitted to any of the Lenders prior to the Admission Date.
After the Admission Date, the General Partner, on behalf of the
Partnership, shall send to the Investment Partnership, on or
before the tenth day of each month, a copy of (i) all reports
required by the Agency, filed the previous month, if any, and
covering the status of project operations and (ii) each request
for a disbursement or other extensions of credit under any of the
Loans submitted to the Lenders during the previous month, if
applicable. In addition, within thirty (30) days after the
occurrence of Substantial Completion, the General Partner, on
behalf of the Partnership, shall prepare and send to the
Investment Partnership a Credit Basis Worksheet for each building
within the Apartment Complex, in the format provided by Boston
Capital. The General Partner shall provide to the Investment
Partnership such other reports from time to time as may be
reasonably required by the Investment Partnership with the
reasonable consent of the General Partner or by federal or state
agencies having jurisdiction.
(h) (i) In the event that the reports or information
provided for in Sections 13.04 (b)(i) and/or 13.04(b)(ii) above
are, at any time, not provided within the time period(s)
specified in such Sections, the General Partner shall be
obligated to pay to the Investment Partnership the sum of $100
per day, as liquidated damages, for each day from the date upon
which such reports or information is (are) due pursuant to the
provisions of the aforesaid Sections until the date upon which
such reports or information is (are) provided.
(ii) In the event that the reporting requirements
set forth in any of the above provisions of this Section 13.04
are not met, or are met with unreasonable or unnecessary delay,
the Investment Partnership, in its reasonable discretion, may
direct the General Partner to dismiss the Accountants, and to
designate successor Accountants before the next reporting period,
subject to the approval of the Investment Partnership; provided,
however, that if the General Partner and the Investment
Partnership cannot agree on the designation of successor
Accountants within said time frame, the successor Accountants
shall be designated by the Investment Partnership in its sole
discretion. Provided that the cost of the successor Accountant
shall not exceed the average of three bids from qualified
Accountants obtained by the General Partner. The Investment
Partnership shall give the General Partner at least 60 days'
Notice of any material change in the reporting requirements set
forth herein.
13.05. Section 754 Elections. In the event of a transfer
of all or any part of the Interest of a General Partner or of a
Limited Partner, the Partnership may elect, pursuant to Sections
743 and 754 of the Code (or any corresponding provision of
succeeding law), to adjust the basis of the Partnership property
if, in the opinion of the Investment Partnership, based upon the
advice of the Accountants, such election would be most
advantageous to the Investment Partnership. Each Partner agrees
to furnish the Partnership with all information necessary to give
effect to such election.
13.06. Fiscal Year and Accounting Method. The fiscal
year of the Partnership shall be the calendar year. All
Partnership accounts shall be determined on the accrual basis.
ARTICLE XIV
AMENDMENTS
14.01. Proposal and Adoption of Amendments. This
Agreement may be amended, after giving 20 days' Notice to the
Partners and the City (the "Amendment Notice Period") hereunder
(a) by the General Partner with the Consent of the Investment
Partnership, which Consent (except in the case of any proposed
amendment which the Investment Partnership reasonably determines
to be adverse to their interests as Partners) shall not be
unreasonably withheld or (b) by the Investment Partnership with
the consent of the General Partner which Consent (except in the
case of any proposed amendment which the General Partner
reasonably determine to be adverse to their interests as
Partners) shall not be unreasonably withheld or delayed. In
determining whether or not to give its Consent to an amendment
prepared by the Investment Partnership, the General Partner
agrees to take into account the investment objectives of the
Investment Partnership. In the event that the City has not
provided a written response to the Partnership as to its Consent
within the Amendment Notice Period, then said non-responding
party shall be deemed to have given its Consent to such proposed
amendment.
ARTICLE XV
CONSENTS, VOTING AND MEETINGS
15.01 Method of Giving Consent. Any Consent required by
this Agreement may be given by a written Consent given by the
consenting Partner and received by the General Partner at or
prior to the doing of the act or thing for which the Consent is
solicited.
15.02. Submissions to Limited Partners. The General
Partner shall give the Limited Partners Notice of any proposal or
other matter required by any provision of this Agreement or by
law to be submitted for consideration and approval of the Limited
Partners. Such Notice shall include any information required by
the relevant provision or by law.
15.03. Meetings; Submission of Matter for Voting.
Subject to the provisions of Section 10.01, a majority in
Interest of the Limited Partners shall have the authority to
convene meetings of the Partnership and to submit matters to a
vote of the Partners.
ARTICLE XVI
GENERAL PROVISIONS
16.01. Burden and Benefit. The covenants and agreements
contained herein shall be binding upon and inure to the benefit
of the heirs, executors, administrators, successors and assigns
of the respective parties hereto.
16.02. Applicable Law. This Agreement shall be construed
and enforced in accordance with the laws of the State.
16.03. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original copy and all of which together shall constitute one
agreement binding on all parties hereto, notwithstanding that all
the parties shall not have signed the same counterpart.
16.04. Separability of Provisions. Each provision of
this Agreement shall be considered separable and if for any
reason any provision which is not essential to the effectuation
of the basic purposes of this Agreement is determined to be
invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those
provisions of this Agreement which are valid.
16.05. Entire Agreement. This Agreement and the
ancillary agreements executed in connection herewith set forth
all (and is intended by all parties to be an integration of all)
of the representations, promises, agreements and understandings
among the parties hereto with respect to the Partnership, the
Partnership business and the property of the Partnership, and
there are no representations, promises, agreements or
understandings, oral or written, express or implied, among them
other than as set forth or incorporated herein.
16.06. Liability of the Investment Partnership.
Notwithstanding anything to the contrary contained herein,
neither the Investment Partnership nor any of its partners,
general or limited, shall have any personal liability to any of
the parties to this Agreement with regard to the representations
and covenants extended, or the obligations undertaken, by the
Investment Partnership under this Agreement. In the event that
the Investment Partnership shall be in default under any of the
terms of this Agreement, the sole recourse of any party hereto
for any indebtedness due hereunder, or for any damages resulting
from any such default by the Investment Partnership, shall be
against the capital contributions of the investor limited
partners of the Investment Partnership allocated to, and
remaining for investment in, the Partnership; provided however,
that under no circumstances shall the liability of the Investment
Partnership for any such default be in excess of the aggregate
of: (a) the amount of Capital Contribution payable by the
Investment Partnership to the Partnership, under the terms of
this Agreement, at the time of such default, and (b) an amount
equal to reasonable attorneys' fees reasonably and necessarily
incurred by the General Partner in obtaining payment of any
Installment(s) not made by the Investment Partnership when due
and payable pursuant to the provisions of this Agreement,
provided that if the Investment Partnership wrongfully does not
make its required Capital Contribution when due, as provided
hereunder, its allocation of Tax Credits, Losses and
distributions shall be proportionately reduced in favor of the
General Partner.
16.07. Environmental Protection.
(a) Except as otherwise expressly disclosed to the Limited
Partners, the General Partner represents and warrants that (i) it
has no actual knowledge of any deposit, storage, disposal,
burial, discharge, spillage, uncontrolled loss, seepage or
filtration of any Hazardous Substances at, upon, under or within
the Land or any contiguous real estate, and (ii) it has not
caused, nor permitted to occur, and it shall not permit to exist,
any condition which may cause a discharge of any Hazardous
Substances at, upon, under or within the Land or on any
contiguous real estate.
(b) The General Partner further represents and warrants
that neither it nor any of its Affiliates (i) has been, or will
be involved in operations at or, pursuant to its best efforts,
near the Land, which operations could lead to (A) the imposition
of liability under the Hazardous Waste Laws on the Partnership or
on any other subsequent or former owner of the Land or (B) the
creation of a lien on the Land under the Hazardous Waste Laws or
under any similar laws or regulations; and (ii) has permitted, or
will permit, any tenant or occupant of the Apartment Complex to
engage in any activity that could impose liability under the
Hazardous Waste Laws on such tenant or occupant, on the Land or
on any other owner of the Apartment Complex.
(c) The General Partner shall comply strictly and in all
respects with the requirements of the Hazardous Waste Laws and
related regulations and with all similar laws and regulations.
(d) The General Partner shall at all times indemnify and
hold harmless the Investment Partnership against and from any and
all claims, suits, actions, debts, damages, costs, charges,
losses, obligations, judgments, and expenses, of any nature
whatsoever, suffered or incurred by the Investment Partnership,
under or on account of the Hazardous Waste Laws or any similar
laws or regulations, including the assertion of any lien
thereunder, except for claims, suits, actions, debts, damages,
costs, charges, losses, obligations, judgments, or expenses
arising from the Investment Partnership's own negligence,
misconduct or fraud.
(e) For purposes of this Section 16.07, "Hazardous
Substances" means oil, petroleum or chemical liquids or solids,
liquid or gaseous products or any hazardous wastes or hazardous
substances, as those terms are used in the Hazardous Waste Laws;
and "Hazardous Waste Laws" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, and any other
federal, state or local law governing Hazardous Substances, as
such laws may be amended from time to time.
16.08. Notices to the Investment Partnership. Any Notice
required by the provisions of this Agreement to be given to the
Investment Partnership shall be addressed as follows:
Boston Capital Tax Credit Fund IV, L.P.
c/o Boston Capital Partners, Inc.
One Boston Place, 21st Floor
Boston, Massachusetts 02108
ATTN: Joseph A. Briganti, Vice President,
Acquisitions
And a copy to:
Hinckley, Allen & Snyder
One Financial Center
Suite 4600
Boston, MA 02111-2625
ATTN: Kristin A. DeKuiper, Esq.
16.09. Notices to the General Partner. Any Notice
required by the provisions of this Agreement to be given to the
General Partner shall be addressed as follows:
ESCHER SRO PROJECT, L.P.
c/o Balanced Housing Development Corporation
P. O. Box 23
Livingston, NJ 07039
ATTN: Ronald Brown
And a copy to: Brach, Eichler, Rosenberg, Silver, Bernstein,
Hammer & Gladstone, A Professional Corporation
101 Eisenhower Parkway
Roseland, NJ 07068-1067
ATTN: David Ritter, Esq.
16.10. Withdrawal of Initial Limited Partner Confirmed.
Ronald Brown, individually as Initial Limited Partner of the
Partnership hereby confirms his withdrawal as such from the
Partnership.
IN WITNESS WHEREOF, the parties have affixed their
signatures and seals to this Amended and Restated Agreement of
Limited Partnership of ESCHER SRO PROJECT, L.P., as of the date
first written above.
WITNESS: GENERAL PARTNER:
BALANCED HOUSING DEVELOPMENT
CORPORATION, a New Jersey
corporation
By: /s/ Ronald Brown
Witness Name: Ronald Brown
Title: President
LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND IV,
L.P., a Delaware limited
Partnership
By: Boston Capital Associates IV,
L.P., a Massachusetts limited
partnership its
general partner
By: C&M Associates d/b/a
Boston Capital Associates, its
general partner
By: /s/Bonnie Kate Fox
Witness Bonnie Kate Fox, as
Attorney-in-Fact for
John P. Manning, Partner
SPECIAL LIMITED PARTNER:
BCTC 94, INC.,
a Delaware corporation
/s/ Bonnie Kate Fox
Witness: By: Bonnie Kate Fox,
Attorney-in-Fact
for John P. Manning, President
GUARANTOR:
/s/ Ronald Brown
By: Ronald Brown
WITHDRAWING LIMITED
PARTNER:
By: /s/ Ronald Brown
Witness Name: Ronald Brown
COUNTY OF SUFFOLK, ss )
COMMONWEALTH OF MASSACHUSETTS )
Before me, the undersigned Notary Public in and for the
aforesaid County and State, then personally appeared Bonnie Kate
Fox, in her capacities as (i) Attorney-in-Fact of John P.
Manning, in his capacity as a general partner of C&M Associates
d/b/a Boston Capital Associates and President of Boston Capital
Partners Corporation, as the general partner of Boston Capital
Tax Credit Fund IV, L.P. as Limited Partner of ESCHER SRO
PROJECT, L.P., and (ii) Attorney-in-Fact for John P. Manning of
BCTC 94, Inc., as a Special Limited Partner of ESCHER SRO
PROJECT, L.P., and being duly sworn, acknowledged the execution
of the foregoing Amended and Restated Agreement of Limited
Partnership.
Witness my hand and notarial seal this ____ day of
________________, 1997.
______________________
Notary Public
My Commission Expires:
COUNTY OF SUFFOLK, ss )
COMMONWEALTH OF MASSACHUSETTS )
Before me, the undersigned Notary Public in and for the
aforesaid County and State, then personally appeared Ronald
Brown, (i) in his individual capacity as the Withdrawing Initial
Limited Partner of ESCHER SRO PROJECT, L.P., and (ii) as
President of Balanced Housing Development Corporation, and (iii)
in his individual capacity as Guarantor, being duly sworn,
acknowledged the execution of the foregoing Amended and Restated
Agreement of Limited Partnership.
Witness my hand and notarial seal this _____ day of
_____________, 1997.
_______________________
Notary Public
My Commission Expires:
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
_______________________________________
CERTIFICATION AND AGREEMENT
for
ESCHER SRO PROJECT, L.P.
_______________________________________
CERTIFICATION AND AGREEMENT made as of September __, 1997 by
ESCHER SRO PROJECT, L.P., a Massachusetts limited partnership
(the "Operating Partnership"); Balanced Housing Development
Corp., as General Partner (the "General Partner") for the benefit
of BOSTON CAPITAL TAX CREDIT FUND IV L.P. (Series 26), a Delaware
limited partnership (the "Investment Partner"), BCTC 94, INC., a
Delaware corporation (the "Special Limited Partner") and
Hinckley, Allen & Snyder and certain other persons or entities
described herein. The Investment Partner and the Special Limited
Partner shall hereinafter be referred to as the "Limited
Partners."
WHEREAS, the Operating Partnership proposes to admit the
Limited Partners as members thereof pursuant to a Restated
Agreement and Certificate of Limited Partnership of the Operating
partnership and proposed to confirm the Limited Partners, the
withdrawal of the Initial Limited Partner and amend the terms of
the Operating Partnership pursuant to the Amended and Restated
Partnership Agreement of Limited Partnership of the Operating
Partnership dated as of September __, 1997 (the "Partnership
Agreement"), in accordance with which the Special Limited Partner
will make a capital contribution of $10 to the Operating
Partnership and the Investment Partner will make certain capital
contributions to the Operating Partnership.
WHEREAS, the Limited Partners have relied upon certain
information and representations described herein in evaluating
the merits of investment by the Limited Partners in the Operating
Partnership;
WHEREAS, Hinckley, Allen & Snyder, as counsel for the
Limited Partners will rely upon such information and
representations in connection with its delivery of certain
opinions with respect to this transaction; and
WHEREAS, Brach, Eichler, Rosenberg, Silver, Bernstein,
Hammer & Gladstone, A Professional Corporation , as counsel for
the Operating Partnership and the General Partner, will rely on
such information and representations in connection with its
delivery of certain opinions with respect to this transaction.
NOW, THEREFORE, to induce the Limited Partners to enter into
the Partnership Agreement and confirm their interest in the
Operating Partnership and for $1.00 and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Operating Partnership and the General Partner
hereby agree as follows for the benefit of the Limited Partners
and Hinckley, Allen & Snyder and certain other persons
hereinafter described.
1. Representations, Warranties and Covenants of the Operating
Partnership and the General Partners.
The Operating Partnership and the General Partner jointly
and severally represent, warrant and certify to the Limited
Partners and Hinckley, Allen & Snyder 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
Escher Street SRO (the "Project") and conduct its business; the
Operating Partnership and the General Partner have the power and
authority to enter into and perform this Certification and
Agreement; the execution and delivery of this Certification and
Agreement by the Operating Partnership or the General Partner has
been duly and validly authorized by all necessary action; the
execution and delivery of this Certification and Agreement, the
fulfillment of its terms and consummation of the transactions
contemplated hereunder do not and will not conflict with or
result in a violation, breach or termination of or constitute a
default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or
passage of time or both) any other agreement, indenture or
instrument by which the Operating Partnership or the General
Partner is bound or any law, regulation, judgment, decree or
order applicable to the Operating Partnership, the General
Partner any of their respective properties; this Certification
and Agreement constitutes the valid and binding agreement of the
Operating Partnership and the General Partner enforceable against
each of them in accordance with its terms.
1.02 All factual information, including without limitation
the information set forth in Exhibit A hereto, provided to the
Limited Partners or their affiliates either in writing or orally,
did not, at the time given, and does not, on the date hereof,
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances under which they are made. The General Partner has
also delivered to the Limited Partners or their affiliates all
documents and other information which has been requested by such
parties. Since the date of the financial statements for the
General Partner previously delivered, there has been no material
adverse change in the financial position of said General Partner.
The estimates of occupancy rates, operating expenses and tax
credits set forth on Exhibit A are reasonable in light of the
knowledge and experience of the 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 General
Partner and as to any of their affiliates, any of their
predecessors and their affiliates' predecessors, any of their
directors, officers, general partners and/or beneficial owners of
ten per cent (10%) or more of any class of their equity
securities (beneficial ownership meaning the power to vote or
direct the vote and/or the power to dispose or direct the
disposition of such securities), as the case may be, and any
promoters presently connected with them in any capacity.
1.04 Each of the representations and warranties contained in
the 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 General Partner contained in the Partnership
Agreement has been duly performed to the extent that performance
of any covenant or agreement is required on or prior to the date
hereof.
1.06 All conditions to admission of the Limited Partners as
members of the Operating Partnership contained in the Partnership
Agreement have been satisfied.
1.07 No default has occurred and is continuing under the
Partnership Agreement or any of the Project Documents (as such
term is defined in the Partnership Agreement) for the Operating
Partnership.
1.08 The General Partner agrees to take all actions
necessary to claim the Projected Credit, including, without
limitation, satisfying the conditions to the Carryover Allocation
Agreement with the Agency dated as of December 5, 1995 (the
"Carryover Allocation Agreement"), placing the Project in service
no later than December 31, 1997, filing of Forms 8609 with the
Internal Revenue Service, incurring the requisite threshold
amount of rehabilitation expenses consisting of the greater of
(i) $3,000 per unit or (ii) 10% of the adjusted basis in the
project as of the first day of the twenty-four month period
ending or projected to end on December 31, 1997 and providing to
Boston Capital an accountant's certification as to items (i) and
(ii) herein.
1.09 No person or entity other than the Operating
Partnership holds any equity interest in the Project.
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 Project.
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 Project is destroyed or
condemned or there is a diminution in the value of the Project.
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 Project.
1.13 The General Partner is not related in any manner to the
Limited Partners, nor is the General Partner acting as an agent
of the Limited Partners.
1.14 To the best of the undersigned's current knowledge
after due inquiry, and except as expressly disclosed to the
Limited Partners of which the Limited Partners have actual
knowledge, the Project does not contain in a level above that
deemed safe by all applicable governmental agencies, any
substance known to be hazardous, such as hazardous waste, lead-
based paint, asbestos, methane gas, urea formaldehyde insulation,
oil, toxic substances, underground storage tanks, polychlorinated
biphenals (PCBs), and radon; the Project is not affected by the
presence of oil, toxic substances, or other pollutants that could
be a detriment to the Project except for those conditions
expressly disclosed to the Limited Partners and of which the
Limited Partners have actual knowledge nor is the Operating
Partnership in violation of any local, state, or federal law or
regulation; and no violation of the Clean Air Act, Clean Water
Act, Resource Conservation and Recovery Act, Toxic Substance
Control Act, Safe Drinking Water Control Act, Comprehensive
Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing.
Neither the Operating Partnership nor the General Partner has
received any notice from any source whatsoever of the existence
of any such hazardous condition relating to the Project or of any
violation of any local, state or federal law or regulation with
respect to the Project except for those notices expressly
disclosed to the Limited Partners of which the Limited Partners
have actual knowledge.
1.15 At the time of completion of rehabilitation of the
Project, the Project will not contain in a level above that
deemed safe by all applicable governmental agencies, any
substance known to be hazardous, such as hazardous waste, lead-
based paint, asbestos, methane gas, urea formaldehyde insulation,
oil, toxic substances, underground storage tanks, polychlorinated
biphenals (PCBs), and radon; the Project is not affected by the
presence of oil, toxic substances, or other pollutants that could
be a detriment to the Project nor will 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 shall be present or continuing. Neither the Operating
Partnership nor the General Partner shall be in receipt of any
notice from any source whatsoever of the existence of any such
hazardous condition relating to the Project or of any violation
of any local, state or federal law or regulation with respect to
the Project which such hazardous condition or violation has not
been cured.
1.16 To the best of the undersigned's belief, based on the
undersigned's current knowledge of property values in the area
where the Project is located, and based upon the level of
permanent debt financing for the Project reflect in Exhibit A,
and that certain Appraisal of the Project prepared by National
Westminster Bank, NJ dated as of February 27, 1996, the fair
market value of the Operating Partnership's building(s) as of the
closing date, taking into account value attributable to a
reservation of low income housing tax credits and/or below market
financing, as well as the use restrictions imposed on the
Project, will be greater than the total amount of the Operating
Partnership's liabilities, including accrued interest on such
liabilities as of the Closing Date.
1.17 The General Partner of the Operating Partnership is not
a tax-exempt entity.
1.18 If any shareholder or other affiliate of the General
Partner is a tax-exempt entity and the General Partner is a
"controlled entity" in relation to such tax-exempt entity, a
timely election will be made under Code Section 168(h)(6)(F) so
that no portion of the Project will be treated as "tax exempt use
property" as defined in Code Section 168(h).
1.19 All representations made by the General Partner in the
Partnership Agreement are incorporated herein by reference and
are confirmed.
1.20 There is a reasonable expectation that the Operating
Partnership will be able to repay, as due, the principal and
interest on the projected loans to the Operating Partnership
based on the projected value of the Operating Partnership's
property and building(s) and the projection of income and
expenses reflected in the pro-forma attached as Exhibit A-1.
1.21 An Extended Use Commitment (as defined in the
Partnership Agreement) within the meaning of Code Section
42(h)(6) will be in effect with respect to the building(s) not
later than the end of the taxable year in which any credit is
taken with respect to any building.
1.22 As of December 5, 1995, the date of the Carryover
Allocation Agreement, and as of the date hereof, the Project was
and is located in a qualified census tract which qualifies the
Project for the 130% basis boost pursuant to Code Section 42.
The Project meets all other requirements for satisfying the 130%
basis boost, and any HOME funding being loaned to the Partnership
bears interest at no less than the "applicable federal rate" so
that it does not meet the definition of a "below market federal
loan" under Code Section 42 and will therefore not prohibit the
Partnership from taking advantage of the 130% basis boost.
1.23 The amounts payable in development and property
management fees to Balanced Housing Development Corp. and Emet
Property Management Company, respectively, are fair in light of
the value and magnitude of the services rendered in consideration
for such fees, and the services performed in consideration for
the development fees relate solely to the acquisition or
construction of the Project.
1.24 For any building(s) not placed in service prior to
December 31, 1995, (i) the Operating Partnership's basis in such
building (including its respective lot) as of the close of 1995
was at least 10% of the Operating Partnership's reasonably
expected basis in such building as of the close of calendar year
1997 and (ii) the Operating Partnership entered into a Carryover
Allocation Agreement with the Agency dated as of December 5,
1995.
1.25 The Operating Partnership shall elect to defer the
start of the Credit Period pursuant to Code Section 42(f) until
1998 and include in eligible basis those additional
rehabilitation expenses incurred in the first year of the Credit
Period.
1.26 Each of the representations made by the General Partner
in the Conditional Reservation of Low Income Housing Tax Credits
between the Agency and the Operating Partnership dated as of June
26, 1995 (the "Credit Reservation Agreement") and the Carryover
Allocation Agreement is true and correct as of the date hereof.
1.27 Each of the covenants, agreements, and conditions
contained in the Credit Reservation Agreement and the Carryover
Allocation Agreement has been duly performed or satisfied by the
Operating Partnership or its General Partner, as applicable, to
the extent that performance of any such covenant or agreement or
satisfaction of any condition is required on or prior to the date
hereof, and the General Partner has no reason to believe that the
covenants, agreements, and conditions of such Credit Reservation
Agreement and the Carryover Agreement required to be performed or
satisfied after the date hereof will not be performed or
satisfied in a timely manner.
1.28 The General Partner has not received from the Agency
any notice of default or of withdrawal or cancellation of the Tax
Credit reservation or allocation to the Operating Partnership as
described in the Credit Reservation Agreement and the Carryover
Allocation Agreement.
1.29 The General Partner will undertake any and all actions
necessary under the Code and the regulations promulgated
thereunder, including any future amendments to such regulations,
to ensure that the Partnership will be classified as a
partnership for federal income tax purposes. The General Partner
will file or cause to be filed any elections that may be required
(but only if required) under the Code and the regulations
promulgated thereunder, including any future amendments to such
regulations, in order to ensure that the Partnership will be
classified as a partnership for federal income tax purposes. The
General Partner will not change its classification status or
election without the consent of BCTC 94, Inc.
1.30 The General Partner and any entity that is related to
such General Partner, or to the Operating Partnership and that
receives a fee from the Operating Partnership, directly or
indirectly, is on the cash-basis method of accounting for tax
purposes.
1.31 Balanced Housing Development Corp. is the developer of
the Project pursuant to the Development Agreement by and between
the Operating Partnership and Balanced Housing Development Corp.
dated as of September __, 1997 (the "Development Agreement"),
and is on a cash-basis method of accounting for tax purposes.
1.32 The General Partner will be actively involved in the
management and operation of the Operating Partnership, will
devote substantial and continuing attention to the activities of
the Operating Partnership, and will provide substantial services
to the Operating Partnership.
1.33 The development and leasing activity in which the
Operating Partnership will engage will not contain any material
personal or recreational benefit for the members of the Operating
Partnership.
1.34 The Operating Partnership will keep active records and
carry out the proposed activity in a manner consistent with
profitable businesses in the same activity.
1.35 The Operating Partnership will have an objective to
carry on business for profit and divide the gains therefrom.
1.36 The Operating Partnership may earn a profit, including
profit from appreciation in the value of the Project.
1.37 The Mortgage Loans and all other debt financing of the
Project requires the noncontingent repayment of principal on or
before a fixed maturity date, and will be considered and treated
as a loans by Lenders.
1.38 None of the Operating Partnership's Lenders is a party
from whom the Operating Partnership acquired any portion of the
Project, and none of the financing was issued in exchange for any
portion of the Project. None of the Operating Partnership's
Lenders will receive a fee with respect to the Operating
Partnership's investment in the Apartment.
1.39 Following is a description of any and all existing or
proposed financing of the Project that involves any direct or
indirect grant or federal subsidy (including without limitation
federal grants, below-market interest rate loans, and tax-exempt
bonds):
a) $419,956.00 loan from Balanced Housing Development
Corp. at the applicable federal rate of interest.
Proceeds of this loan were received by Balanced
Housing as a grant from Sovereign Bank, F.S.B. under
the Federal Home Loan Bank Board AHP Program.
b) $1,590,000 loan from the City of Trenton accruing
interest at nine percent (9%) per annum with a pay
rate of 7.5% per annum. Loan made available under
Section 108 program.
1.40 The Project will not receive moderate rehabilitation
assistance under Section 8(e)(2) of the United States Housing Act
of 1937 other than that pursuant to the Stewart B. McKinney
Homeless Assistance Act of 1988.
1.41 If the Project is a scattered site project within the
meaning of Code Section 42, 100% of the rental units in the
Project will be rent-restricted within the meaning of Code
Section 42.
1.42 The projects consists of 104 units, of which 100 are
SRO, or single room occupancy residential rental Units; the
remaining Units are for use by the Project superintendent, the
manager and the maintenance staff, and therefore considered a
facility reasonably required by the Project. All residential
rental Units in the Project are to be of equal quality and all
Project amenities are to be made available to all tenants on a
comparable basis without separate fees.
2. Indemnification
2.01 The General Partner (for purposes of this Section 2.01,
an "Indemnifying Party") agrees to indemnify and hold harmless
the Limited Partners (for purposes of this Section 2.01, the
"Indemnified Parties" or, individually, an "Indemnified Party")
and each officer, director, employee and person, if any, who
controls any Indemnified Party against and from any and all
claims, suits, actions, debts, damages, costs, charges, losses,
obligations, judgments, and expenses, of any nature whatsoever,
suffered or incurred by the Investment Partner, under or on
account of the Hazardous Waste Laws or any similar laws or
regulations, including the assertion of any lien thereunder,
except for claims, suits, actions, debts, damages, costs,
charges, losses, obligations, judgments, or expenses arising from
the Investment Partner's own negligence, misconduct or fraud.
For purposes of this Certification and Agreement, "Hazardous
Substances" means oil, petroleum or chemical liquids or solids,
liquid or gaseous products or any hazardous wastes or hazardous
substances, as those terms are used in the Hazardous Waste Laws;
and "Hazardous Waste Laws" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, and any other
federal, state or local law governing Hazardous Substances, as
such laws may be amended from time to time.
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 herein 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 herein. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so
elects, in accordance with arrangements satisfactory to any other
Indemnifying Party or parties similarly notified, to assume the
defense thereof, with counsel who shall be reasonably
satisfactory to such Indemnified Party or any such of its
officers, directors, employees or controlling persons and any
other Indemnified Parties who are defendants in such action; and
after notice from the Indemnifying Party to such Indemnified
Party or any such of its officers, directors, employees or
controlling persons of its election so to assume the defense
thereof and the retaining of such counsel by the Indemnifying
Party, the Indemnifying Party shall not be liable to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons for any legal or other expenses
subsequently incurred by such Indemnified Party or any such of
its officers, directors, employees or controlling persons in
connection with the defense thereof.
3. Miscellaneous
3.01 This Certification and Agreement is made solely for the
benefit of the Operating Partnership, the General Partner,
Hinckley, Allen & Snyder and the Limited Partners (and, to the
extent provided in Section 2, the officers, directors, partners,
employees and controlling persons referred to therein), and their
respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement.
3.02 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original, all of which together shall constitute one and the same
instrument.
3.03 Terms defined in the Partnership Agreement but not
otherwise defined herein shall have the meanings given them in
the Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
Operating Partnership:
ESCHER SRO PROJECT, L.P.
By: Balanced Housing Development
Corp.,
its general partner
By: /s/ Ronald Brown
Name: Ronald Brown
Title: President
EXHIBIT A
ESCHER SRO PROJECT, L.P.
FACT SHEET
1. Projected Sources and Uses of Funds
Sources of Funds
Perm. City Mort. Loan - BBOC 1,590,000.00
Balanced Housing Development Corp. 419,956.00
Boston Capital Loan 263,170.00
Boarding House Grant 399,791.00
Additional City Loan (conditional loan) 100,000.00
Deferred Development Fee Obligation 328,225.00
Capital Contributions:
General Partner 100.00
Investment Partner 3,748,125.00
$6,849,367.00
Application of Funds
Total Construction Cost 3,044,590.00
Architectural Fees 131,178.00
Survey & Permits/Engineering 83,410.00
Land Cost or Value 525,000.00
Interest During Construction 500,000.00
Loan Fees & Costs 32,875.00
Legal/Accounting 235,968.00
Marketing/Rent Up/Start Up 45,000.00
Construction and Soft Costs Contingency 100,000.00
Constr. Insurance 167,989.00
Tax Credit Fees 72,505.00
Environmental Consultant & Clearance 36,401.00
Operating Reserve 200,000.00
Development Fee 964,774.00
Boston Capital Loan 263,170.00
Title Insurance 20,933.00
Real Estate Taxes 94,671.00
Appraisal Fees 4,850.00
Site Security 11,696.00
$6,849,367.00
2. Construction/Permanent Financing
(i) First Mortgage
A. Lender: The City of Trenton ("City")
B. Mortgage Amount: $1,590,000.00
C. Note Date: _______ ___, 1997
D. Interest Rate: 9%
E. Term: 198 months
(ii) Second Loan
A. Lender: Balanced Housing Development Corp.
B. Loan Amount: $419,956.00
C. Note Date: May 31, 1995
D. Interest Rate: Applicable Federal Rule
E. Term: 360 months
3 Eligible Basis: $5,724,370.00
4. Qualified Basis: $7,441,681.00
5. General Partner Capital Contribution: $100
6. Type of Credit: Rehabilitation
7. Rent-up Schedule:
100% by April 30, 1998 100 units
8. Projected Credit to the Investment Partner (99.99%):
A. $446,160.00 for 1998
B. $594,880.00 per annum for each of the years 1999
through 2007
C. $148,720.00 for 2008
9. Tax Credit Approval:
A. Application:
1. Date: ___________, 1995
2. Credit Amount Requested: $595,000 (annual)
B. Credit Reservation (Conditional)
1. Date: June 26, 1995
2. Credit Amount Reserved: $594,940.00 (annual)
C. Carryover Allocation:
1. Date: December 5, 1995
2. Credit Amount Allocated: $594,940.00
D. Credit Rate Lock-in Agreement
1. Date: Executed November 29, 1995, dated as of
December 5, 1995
2. Rate locked-in: 8.48%
E. Form 8609
1. Date: Post Construction
2. Credit Amount Allocated:
10. Project:
A. Name: Escher Street SRO
B. Address: 50 Escher Street, Trenton, New Jersey
C. County: Mercer
D. Type of Project: One Hundred-Four (104) Units Total
with One Hundred (100) efficiency-type single-room-
occupancy (SRO) units
11. 199__ _____________ Metropolitan Area (Mercer County) Median
Income: $__________
12. Type of Apartments: Singe Room Occupancy
Unit Utility Total
Number Square Ft. Basic Rent Allowance Monthly Rent
Single Room 100 Approx.___ $472.00 $0 $472.00
13. Difference between rents allowed by FMHA and rents allowed
under the Rent Restriction Test: ____________________
14. Rental Assistance: Stewart B. McKinney Homeless Assistance
Act of 1988
15. Annual Operating Expenses: $361,262.00 (1999 first full
year)
16. Replacement Reserve Account: $150/unit = $15,000.00
17. Operating Reserve Account: $200,000.00
18. Amount of Annual Asset Management Fee to Boston Capital
Communications Limited Partnership: $7,500.00
19. Amount of Annual Incentive Partnership Management Fee:
$7,500.00
20. Amount of Total Depreciable Basis Allocated to Personal
Property: $4,527,066.00
21. Completion Date: December 31, 1997
22. Total Capital Contribution of Investment Partner:
$3,748,125.00
23. Schedule of Capital Contributions:
A. $1,992,618.00 on latest to occur of:
(i) Tax Credit Set Aside,
(ii) Initial Closing,
(iii) Receipt by Boston Capital of acceptable commitment
from City regarding City Loan restructure,
(iv) Admission Date, or
(v) Receipt by Boston Capital of acceptable commitment
for title insurance
B. $805,507.00 on the latest to occur of:
(i) 75% Completion Date,
(ii) Receipt of updated title insurance policy,
(v) Compliance with due diligence recommendations,
(vi) Receipt of payoff letter from contractor,
(vii) Receipt of estoppel letter from lender, or
(viii) Satisfaction of all prior conditions.
C. $400,000.00 on latest to occur of:
(i) Substantial Completion,
(ii) State Designation,
(iii) Cost Certificate,
(iv) Satisfaction of all prior conditions.
D. $220,000.00 on the latest to occur of:
(i) Initial 95% Occupancy Date,
(ii) Final Closing,
(iii) Rental Achievement,
(iv) Satisfaction of all prior conditions.
E. $320,000.00 on the latest to occur:
(i) Second Rental Achievement,
(ii) Satisfaction of all prior conditions.
F. $10,000.00 on the latest to occur of:
(i) Receipt of tax return and audited financial,
statements for the year in which rental
achievement occurs, and
(ii) Satisfaction of all prior conditions.
24. Fees, Special Distributions and Other Items to be paid from
Capital Contributions
A. Development Fee: $964,774.00 ($328,225.00 of which is
a Deferred Development Fee)
B. Special Return of General Partner Capital N/A
25. Consulting Fee to Boston Capital Partners, Inc. N/A
26. General Partner: Balanced Housing Development Corp.
Address: 66 North Hillside Avenue
Livingston, NJ 07039
Telephone Number: (201) 597-1447
27. Developer: Balanced Housing Development Corp.
Contact Person: Ronald Brown
Address: 66 North Hillside Avenue
Livingston, NJ 07039
Telephone Number: (201) 597-1447
28. Ownership Interests
Tax Credit Capital Operating
Allocations Transactions Cash Flow
General Partner: 00.01% 50.00% 80.00%
Investment Partner: 99.99% 50.00% 20.00%
Special Limited
Partner: 0.00% 0.00% 0.00%
29. Management Agent: Fela, Inc., d/b/a Emet Realty Management
and Development Company, Inc.
Contact Person: Ronald Brown
Address: c/o Emet Realty Management and Development
Company, Inc.
P.O. Box 23
Livingston, NJ 07039
Telephone Number: (201) 597-1447
Amount of Fee: 8.5% of Total Operating Revenue with
potential increase to maximum 10% of Total Operating Revenue
30. Builder: Allied Construction Services, II, Inc.
Contact Person: Brett Altman
Address: 115 New Street
Glenside, PA 19038
Telephone Number: (215) 884-0500
Amount of Compensation: Outstanding Contract sum of
$1,925,000.00 subject to additions and deductions as
provided in the Contract Documents
31. Architect: Michael Mostoller-Fred Travisano Architects
Contact Person: Michael Mostoller
Address: 179 Nassua Street
Princeton, NJ 08540
Telephone Number: (609) 924-8778
Amount of Fee: $124,273.00
32. Auditor: Rothstein, Kass & Co.
Contact Person: Stuart Bender
Address: 280 Corporate Center
85 Livingston Avenue
Roseland, NJ 07068-1785
Telephone Number: (201) 994-6666
33. Tax Return Preparer: Rothstein, Kass & Co.
Contact Person: Stuart Bender
Address: 280 Corporate Center
85 Livingston Avenue
Roseland, NJ 07068-1785
Telephone Number: (201) 994-6666
34. Federal Taxpayer ID Number for Escher SRO Project,
L.P.: 22- 320658
Federal Taxpayer ID Number for Balanced Housing Development
Corp.: 22-2925408
35. State Housing Credit Agency: New Jersey Housing and
Mortgage Finance Agency
36. State Housing Agency LIHTC Number: 304
37. Operating Deficit Guaranty The General Partner shall have
an unlimited operating deficit guarantee; additionally the
General Partner shall provide funds as necessary to pay
Operating Deficits; but in the event that such loans are not
made, the Operating Partnership shall utilize amounts
otherwise payable to the Developer as installments of the
Development Fee, as applicable.
38. Guarantor(s): Ronald Brown guarantees all obligations and
duties of the General Partner as set forth on that certain
Guaranty dated as of the date hereof.
cc: Boston Capital Communications Limited Partnership Accounting
Department
Exhibit B
Certificate of Operating Partnership
and General Partner
Re: Lack of Disqualifications
The Operating Partnership and its General Partner (as identified
on the Amended and Restated Certification and Agreement to which
this Certificate is attached as Exhibit B) hereby represent to
you that none of (i) the Operating Partnership, (ii) any
predecessor of the Operating Partnership, (iii) any of the
Operating Partnership's affiliates ("affiliate" meaning a person
that controls or is controlled by, or is under common control
with, the Operating Partnership), (iv) any sponsor (meaning any
person who (1) is directly or indirectly instrumental in
organizing the Operating Partnership or (2) will directly or
indirectly manage or participate in the management of the
Operating Partnership or (3) will regularly perform, or select
the person or entity who will regularly perform, the primary
activities of the Operating Partnership), (v) any General
Partner, manager, officer, director, principal or general partner
of the Operating Partnership or of any sponsor, (vi) the officer,
director, principal, promoter or general partner of any General
Partner or Manager, (vii) any beneficial owner of ten percent 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 percent or more of
any class of securities of the Operating Partnership or ten
percent 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 en joins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to
conduct alleged to have violated Section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or suspended or
barred from association with a member of, an exchange registered
as a national securities exchange, an association registered as a
national securities association, or any self-regulatory
organization registered pursuant to the Securities Exchange Act
of 1934, or a Canadian securities exchange, or association or
self-regulatory organization operating under the authority of the
Commodity Futures Trading Commission, or is subject to any
currently effective order or order entered within the past five
years of the SEC, the Commodity Futures Trading Commission or any
state securities administrator denying 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
Operating Partnership Act of 1940, the Commodity Exchange Act of
1974 or the securities laws of any state, or any predecessor law,
or of any rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded, induced
or procured the violation by any other person of any of the
statutes or rules or regulations referred to in subsection (8)
hereof;
(10) Has failed reasonably to supervise his agents, if he is a
broker-dealer, or his employees, if he is an investment adviser,
but no person shall be deemed to have failed in such supervision
if there have been established procedures, and a system for
applying such procedures, which would reasonably be expected to
prevent and detect, insofar as practicable, any violation of
statutes, rules or orders described in subsection (8) and if such
person has reasonably discharged the duties and obligations
incumbent upon him by reason of such procedures and system
without reasonable cause to believe that such procedures and
system were not being complied with;
(11) Is subject to a currently effective state administrative
order or judgment procured by a state securities administrator
within five years prior to the date hereof or is subject to a
currently effective United States Postal Service fraud order or
has engaged in dishonest or unethical practices in the securities
business or has taken unfair advantage of a customer or is the
subject of sanctions imposed by any state or federal securities
agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his
obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his
customers, or has not sufficient financial responsibility to
carry out the obligations incident to his operations or has been
adjudged a bankrupt or made a general assignment for the benefit
of creditors; or
(13) Is selling or has sold, or is offering or has offered for
sale, in any state securities through any unregistered agent
required to be registered under the New Jersey Securities Law, as
amended (the "New Jersey Act") or for any broker-dealer or issuer
with knowledge that such broker- dealer or issuer had not or has
not complied with the New Jersey 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).
