SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 1, 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 1, 1997, Boston Capital Tax Credit Fund IV
L.P., a Delaware limited partnership, specifically Series 26
thereof (the "Partnership") completed various agreements
relating to Grandview Apartments Limited Partnership, a
North Dakota limited partnership (the "Operating
Partnership"), including a Second Amended and Restated
Agreement and Certificate of Limited Partnership of the
Operating Partnership dated as of September 1, 1997 (the
"Operating Partnership Agreement"), pursuant to which the
Partnership acquired a limited partner interest in the
Operating Partnership. Capitalized terms used and not
otherwise defined herein have their meanings set forth in
the Operating Partnership Agreement, a copy of which is
attached hereto as Exhibit (2)(a).
The Operating Partnership owns and operates a
newly-constructed apartment complex located at 33rd Street
S.W., Fargo, North Dakota, which is known as Grandview
Apartments (the "Apartment Complex"). The Apartment Complex
is comprised of six buildings containing six (6) 2-bedroom
apartment units and thirty (30) 3-bedroom apartment units,
for a total of thirty-six (36) apartment units. The
Apartment Complex is currently 100% occupied.
The Operating Partnership is currently receiving
permanent mortgage financing in the amount of $1,191,700
(the "Permanent Mortgage") from Federal National Mortgage
Association. The Permanent Mortgage bears interest at the
rate of 8% per annum and is payable based on a thirty year
amortization schedule over an eighteen year term.
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
Gaukler Enterprises, Inc., a North Dakota corporation (the
"General Partner") which is owned by George Gaukler.
Mr. Gaukler has been active in the real estate industry
since 1964 when he formed Valley Realty, Inc., a real estate
development company that now includes management, sales,
development and construction divisions. Valley Realty, Inc.
served as the contractor of the Apartment Complex.
Mr. Gaukler has developed more than 1,500 apartment units in
North Dakota, of which more than 1,350 (including the
Apartment Complex) are now managed by his property
management company, Valley Rental Service.
The Partnership acquired its interest in the Operating
Partnership directly from the Operating Partnership in
consideration of an agreement to make a Capital Contribution
of $1,069,522 to the Operating Partnership in four (4)
Installments as follows:
(1) $534,761 (the "First Installment") on the
latest of (i) the Admission Date, (ii) Tax Credit
Set-Aside, (iii) Closing of the Construction Mortgage;
(iv) Permanent Mortgage Commitment; or (v) Carryover
Certification;
(2) $267,381 (the "Second Installment") on the
latest to occur of (i) State Designation; (ii) the
Completion Date; (iii) Cost Certification; or
(iv) receipt of an updated title policy satisfactory to
the Partnership;
(3) $247,380 (the "Third Installment") on the
latest of (i) the Initial 100% Occupancy Date,
(ii) Permanent Mortgage Commencement; or (iii) Rental
Achievement; and
(4) $20,000 (the "Fourth Installment") upon
receipt of a tax return for the year in which Rental
Achievement occurs.
The total Capital Contribution of the Partnership to the
Operating Partnership is based on the Operating Partnership
receiving $1,742,460 of Tax Credits during the 10-year
period commencing in 1998 of which 99% ($1,725,035) 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 Cash
Operations Transactions Flow
General Partner 1% 50.00% 80%
Partnership 99% 49.99% 20%
Special Limited
Partner 0% .01% 0%
The Partnership used the funds obtained from the
payments of the holders of its beneficial assignee
certificates to make the acquisition of its interest in the
Operating Partnership.
Boston Capital Communications Limited Partnership or an
affiliate thereof will receive an Asset Management Fee
commencing in 1997 from the Operating Partnership for
services in connection with the Operating Partnership's
accounting matters and the preparation of tax returns and
reports to the Partnership in the annual amount of $3,000.
The Asset Management Fee for each fiscal year will be
payable from Cash Flow in the manner and priority set forth
in Section 10.2(a) of the Operating Partnership Agreement;
provided, however, that if in any fiscal year commencing
with 1997, Cash Flow is insufficient to pay the full amount
of the Asset Management Fee, the General Partner shall be
obliged to make Subordinated Loans to the Operating
Partnership to cover $3,000 of the Asset Management Fee in
any such year.
The Operating Partnership shall pay to the General
Partner a non-cumulative fee (the "Annual Partnership
Management Fee") commencing in 1997 for its services in
connection with the administration of the day to day
business of the Operating Partnership in an annual amount of
$3,000. The Annual Partnership Management Fee for each
fiscal year of the Operating Partnership shall be payable
from Cash Flow in the manner and priority set forth in
Section 10.2(a) of the Operating Partnership Agreement to
the extent Cash Flow is available therefor for such year.
In consideration of its consultation, advice and other
services in connection with the construction and development
of the Apartment Complex and as consideration for the
assignment described in Section 6.14 of the Operating
Partnership Agreement, the Operating Partnership shall pay
to the General Partner (or its designee) a construction and
development fee (the "Development Fee") in the principal
amount of $55,000, which fee shall be payable $26,522 from
the proceeds of the Third Installment and $20,000 from the
proceeds of the Fourth Installment with the $8,478 balance
being paid in accordance with Article X of the Operating
Partnership Agreement.
Valley Realty, Inc., as the contractor for the
Apartment Complex, received total compensation of
$1,874,600. Valley Rental Service, as the Management Agent
of the Apartment Complex, is receiving a management fee
equal to 5% of gross monthly collected rent.
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) Second Amended and Restated Agreement and
Certificate of Limited Partnership of
Grandview Apartments Limited Partnership
(2) (b) Certification and Agreement relating to
Grandview Apartments Limited Partnership
(4) (a)<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 15, 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
GRANDVIEW APARTMENTS LIMITED PARTNERSHIP
SECOND AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
Dated as of September 1, 1997
GRANDVIEW APARTMENTS LIMITED PARTNERSHIP
TABLE OF CONTENTS
Page
Preliminary Statement ................................ 5
ARTICLE I Defined Terms ............................. 5
ARTICLE II Name and Business ........................ 17
2.1 Name; Continuation ............................ 17
2.2 Office and Resident Agent ..................... 17
2.3 Purpose ....................................... 18
2.4 Term and Dissolution .......................... 18
ARTICLE III Mortgage, Refinancing and Disposition
of Property ................................... 19
ARTICLE IV Partners; Capital ........................ 20
4.1 Capital and Capital Accounts .................. 20
4.2 General Partners .............................. 21
4.3 Investment Limited Partner, Special Limited
Partner, and Original Limited Partner.......... 21
4.4 Liability of the Limited Partners.............. 21
4.5 Special Rights of the Investment
Limited Partner ............................... 21
4.6 Meetings ...................................... 23
ARTICLE V Capital Contributions of the Investment
Limited Partner and the Special Limited
Partner........................................ 24
5.1 Payments ...................................... 24
5.2 Return of Capital Contributions ............... 28
ARTICLE VI Rights, Powers and Duties of General
Partners ....................................... 30
6.1 Authorized Acts ............................... 31
6.2 Restrictions on Authority ..................... 31
6.3 Personal Services ............................. 33
6.4 Business Management and Control; Tax
Matters Partner ............................... 33
6.5 Duties and Obligations ........................ 34
6.6 Representations and Warranties ................ 37
6.7 Liability on the Permanent Mortgage ........... 41
6.8 Indemnification of the General Partners........ 41
6.9 Indemnification of the Partnership and the
Limited Partners .................... ......... 42
6.10 Operating Deficits ........................... 43
6.11 Obligation to Complete the Construction
of the Apartment Complex ...................... 43
6.12 Certain Payments to the General Partner
and Others .................................... 45
6.13 Delegation of General Partner Authority........ 46
6.14 Assignment to Partnership ..................... 46
ARTICLE VII Withdrawal of a General Partner; New
General Partner ................................ 47
7.1 Withdrawal .................................... 47
7.2 Obligation to Continue ........................ 47
7.3 Withdrawal of All General Partners ............ 47
7.4 Interest of General Partner After
Permitted Withdrawal ........................... 47
7.5 Admission of Additional General Partner(s)
under Certain Circumstances..................... 49
ARTICLE VIII Transferability of Limited Partner
Interests ...................................... 50
8.1 Assignments ................................... 50
8.2 Substituted Limited Partner ................... 50
8.3 Restrictions .................................. 50
ARTICLE IX
Borrowings.......................................... 50
9.1 Borrowings .................................... 50
ARTICLE X Profits, Losses, Tax Credits, Distributions
and Capital Accounts ........................... 52
10.1 Profits, Losses and Tax Credits .............. 52
10.2 Cash Distributions Prior to Dissolution....... 54
10.3 Distributions Upon Dissolution ............... 56
10.4 Special Provisions ........................... 57
10.5 Authority of the General Partners to Vary
Allocations to Preserve and Protect the
Partners' Intent ............................... 60
ARTICLE XI Management Agent ........................ 61
ARTICLE XII Books and Records, Accounting, Tax
Elections, Etc. ................................ 63
12.1 Books and Records ............................ 63
12.2 Bank Accounts ................................ 63
12.3 Auditors ..................................... 63
12.4 Cost Recovery and Elections .................. 64
12.5 Special Basis Adjustments .................... 64
12.6 Fiscal Year .................................. 64
12.7 Information to Partners ...................... 64
12.8 Expenses of the Partnership .................. 67
ARTICLE XIII General Provisions ..................... 69
13.1 Restrictions by Reason of Section 708 of
the Code ............................ 69
13.2 Amendments to Certificate ............. 69
13.3 Notices ............................... 70
13.4 Word Meanings ......................... 70
13.5 Binding Effect ........................ 70
13.6 Applicable Law ........................ 70
13.7 Counterparts .......................... 70
13.8 Financing Regulations ................. 70
13.9 Separability of Provisions ............ 71
13.10 Paragraph Titles.................. 71
13.11 Amendment Procedure............... 71
13.12 Time of Admission ................ 71
Schedule A ....................................... 78
GRANDVIEW APARTMENTS LIMITED PARTNERSHIP
SECOND AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
Preliminary Statement
Grandview Apartments Limited Partnership (the
"Partnership") was formed as a North Dakota limited
partnership pursuant to an Agreement and Certificate of
Limited Partnership (the "Original Agreement") dated October
20, 1994 by and between Gaukler Enterprises, Inc. as General
Partner and James P. Knutson as the Limited Partner (the
"Original Limited Partner"). The Original Agreement was
filed in the Filing Office on October 25, 1994. The
Original Agreement was amended by a Restated Agreement of
Limited Partnership on August 1, 1996.
WHEREAS, the parties hereto now desire to enter into
this Second Amended and Restated Agreement of Limited
Partnership to: (i) continue the Partnership, (ii)
acknowledge the withdrawal of the Original Limited Partner,
(iii) reaffirm the admission of Boston Capital Tax Credit
Fund IV, L.P. to the Partnership as Investment Limited
Partner, (iv) to admit BCTC 94, Inc. as Special Limited
Partner, (v) reassign the Interests in the Partnership and
(vi) set forth all of the provisions governing the
Partnership and the Partners herein.
NOW, THEREFORE, in consideration of mutual agreements
set forth herein, it is agreed and certified, and the
Original Agreement and the Restated Agreement are hereby
amended and restated in their entirety, as follows:
ARTICLE I
Defined Terms
The defined terms used in this Agreement shall have the
meanings specified below:
Actual Credit means, with respect to a particular year,
the total amount of Tax Credit properly allocable by the
Partnership to the Investment Limited Partner for such year.
The Actual Credit shall be retroactively revised if the
amount of Tax Credit properly allocable to the Investment
Limited Partner is revised after audit.
Additional Limited Partner means any holder of an
Interest designated as an Additional Limited Partner
pursuant to Section 4.5(b) or Section 7.4.
Admission Date means the first date on which all
parties hereto shall have executed this Agreement, or, if,
pursuant to the Uniform Act, the Investment Limited Partner shall not be
deemed admitted to the Partnership on such date, then the
next date thereafter on which the Investment Limited Partner
shall be deemed to be admitted to the Partnership under the
Uniform Act.
Affiliate means (A) as to the Investment Limited
Partner, the Investment General Partner or Boston Capital,
(i) such Person; (ii) each member of the Immediate Family of
such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses
(i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii);
or (v) any other Person (a) who directly or indirectly
controls, is controlled by, or is under common control with
such Person, (b) who is an officer of, director of, partner
in or trustee of, or serves in a similar capacity with
respect to, such Person or of which such Person is an
officer, director, partner or trustee, or with respect to
which such Person serves in a similar capacity, (c) who,
directly or indirectly, is the beneficial owner of ten
percent (10%) or more of any class of equity securities of
such Person or of which such Person is directly or
indirectly the owner of ten percent (10%) or more of any
class of equity securities, (d) who is an officer, director,
general partner, trustee or holder of ten percent (10%) or
more of the voting securities or beneficial interests of any
Person referred to in the foregoing clauses (v)(a), (v)(b)
or (v)(c) or (e) who, whatever his title, performs functions
for such Person or any Affiliate of such Person similar to a
Chairman or member of the Board of Directors, or executive
officer such as the President, Executive Vice President or
Senior Vice President, Corporate Secretary, or Treasurer, or
any Person holding a five percent (5%) or more equity
interest in such Person, or any Person having the power to
direct or cause the direction of such Person, whether
through the ownership of voting securities, by contract or
otherwise; and (B) as to any other named Person or Persons
(i) such Person; (ii) each member of the Immediate Family of
such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses
(i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii);
or (v) any other Person (a) who directly or indirectly
controls, is controlled by, or is under common control with
such Person, (b) who owns or controls ten percent (10%) or
more of the outstanding voting securities of such Person,
(c) of which ten percent (10%) or more of the outstanding
voting securities is owned by such Person or any of the
Persons referred to in the foregoing clauses (i) through
(iii), (d) who is an officer, director, partner or trustee
of such Person, or (e) for which such Person acts in the
capacity of officer, director, partner or trustee. An
Affiliate of the Investment Limited Partner or of the
Investment General Partner does not include a Person who is
a partner in a partnership or joint venture with the
Investment Limited Partner or any other Affiliate of the
Investment Limited Partner if such Person is not otherwise
an Affiliate of the Investment Limited Partner or the
Investment General Partner. For purposes of this
definition, the term Affiliate shall not be deemed to
include any law firm (or member or associate thereof)
providing legal services to the Investment Limited Partner,
the Investment General Partner or any Affiliate of either of
them.
Agency means, as applicable, HUD, the Authority, and/or
any other government agency having jurisdiction over the
particular matter to which reference is being made.
Aggregate Cost means the sum of (i) the total Capital
Contributions made or anticipated to be made by the
Investment Limited Partner plus (ii) the proportionate
amount of the mortgage loans on, and other debts related to,
the Apartment Complex, which proportionate amount is equal
to the Investment Limited Partner's initial pro rata
interest in the profits, losses, and tax credits of the
Partnership. The amount of the Aggregate Cost determined
upon payment of the last of the four Installments of the
Capital Contribution of the Investment Limited Partner shall
not thereafter be reduced.
Agreement means this Second Amended and Restated
Agreement of Limited Partnership, including Schedule A, as
amended from time to time.
Annual Partnership Management Fee means the fee payable
to the General Partners pursuant to the provisions of
Section 6.12(a).
Apartment Complex means the real property located in
Fargo, Cass County, North Dakota as more fully described in
the Mortgage, together with (i) all buildings and other
improvements constructed or to be constructed thereon and
(ii) all furnishings, equipment and personal property
covered by the Mortgage.
Applicable Federal Rate means the "applicable federal
rate" as defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in
Section 42(b) of the Code.
Asset Management Fee means the fee payable to Boston
Capital or an Affiliate thereof pursuant to Section 6.12(c).
Auditors means Ludvigson, Braun & Co. or such other
firm of independent certified public accountants as may be
engaged by the General Partners with the consent of Boston
Capital for the purposes of preparing the Partnership income
tax returns, auditing the books and records of the
Partnership and certifying financial reports of the
Partnership.
Authority means the North Dakota Housing Finance
Agency.
BCCLP means Boston Capital Communications Limited
Partnership, a Massachusetts limited partnership, and its
successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, its successors and assigns.
Capital Account has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a
then Partner shall include a Capital Contribution previously
made by any prior Partner for the Interest of such then
Partner.
Capital Transaction means any transaction the proceeds
of which are not includable in determining Cash Flow
including, without limitation, the sale or other disposition
of all or substantially all of the assets of the
Partnership, but excluding the payment of Capital
Contributions.
Carryover Certification means the date upon which the
Investment Limited Partner shall have received, in a form
and in substance satisfactory to the Investment Limited
Partner, the certification of the Auditors that as of a date
no later than December 31, 1994, the Partnership had owned
land or depreciable property constituting part of the
Apartment Complex and had incurred capitalizable costs with
respect to the Apartment Complex of at least ten percent
(10%) of the Partnership's reasonably expected basis in the
Apartment Complex as of December 31, 1996, so that each
building in the Apartment Complex constitutes a "qualified
building" for the purposes of Section 42(h)(1)(E)(ii) of the
Code.
Cash Available Debt For Service Requirements for any
period means the excess of (i) all cash actually received by
the Partnership on a cash basis from normal operations
during such period and funds available in Partnership
reserves to fund the cash requirements of the Partnership,
but shall exclude the proceeds of insurance (other than
business or rental interruption insurance), loans, capital
transactions or capital contributions over (ii) all cash
requirements of the Partnership properly allocable to such
period of time on an accrual basis (not including
distributions to partners out of Cash Flow of the
Partnership or fees payable from Cash Flow) and, on an
annualized basis, the pro rata portion of all projected
expenditures, including those of a seasonal nature, which
might reasonably be expected to be incurred on an unequal
basis during a full annual period of operation, but
specifically excluding all debt service requirements
(including principal payments). For purposes of this
definition, "cash requirements of the Partnership" (as the
term is used in clause (ii) in the preceding sentence),
shall include, to the extent not otherwise covered therein ,
full funding of all partnership reserves, normal repairs,
real estate taxes at fully assessed levels assuming a fully
improved property, and necessary capital improvements.
Cash Flow means the profits or losses of the
Partnership from and after the Commencement Date subject to
any applicable Agency or Lender requirements and to the
following adjustments:
(a) Cost recovery deductions of buildings,
improvements and personal property and amortization of any
financing fees shall not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining
profits and losses but which is not currently payable in
cash shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any Construction Mortgage or
Permanent Mortgage refinancing, any sale, exchange, eminent
domain taking, damage or destruction (whether insured or
uninsured), or other disposition, of all or any part of the
Apartment Complex (other than the proceeds of any business
or rental interruption insurance) shall not be included;
(g) Any rent or interest subsidy payments shall be
included;
(h) The fees set forth in Sections 6.12, any interest
on the Construction and Development Fee, and any fee payable
in connection with any transaction referred to in clause (f)
above shall not be deducted; and
(i) Prior to Permanent Mortgage Commencement, an
amount equal to the amount, if any, of net rental income
applied to complete the construction of the Apartment
Complex pursuant to Section 6.11 shall be deducted.
Certificate means the Original Certificate of Limited
Partnership as amended from time to time.
Class Contribution means the aggregate Capital
Contributions of all members of a particular class of
Partners (i.e., the General Partners, the Investment Limited
Partner, the Special Limited Partner or any Additional
Limited Partner.)
Code means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations (permanent or
temporary) issued thereunder. References herein to any Code
section shall include any successor provisions.
Commencement Date means the first day of the month in
which the Admission Date occurs.
Competitive Real Estate Commission means that real
estate or brokerage commission paid for the purchase or sale
of the Apartment Complex or other Partnership property which
is reasonable, customary and competitive in light of the
size, type and location of the Apartment Complex or other
property.
Completion Date means the date upon which the Apartment
Complex has been completed as evidenced by the issuance by
the inspecting architect and by each governmental agency
having jurisdiction of certificates of substantial
completion or occupancy (or local equivalents) with respect
to all of the 36 apartment units in the Apartment Complex.
Consent of the Investment Limited Partner means the
prior written consent or approval of the Investment Limited
Partner.
Construction and Development Fee means the fee
described in Section 6.12(b).
Construction Lender means First International Bank &
Trust of Fargo, North Dakota, in its capacity as holder of
the Construction Mortgage, or its successors or assigns in
such capacity.
Construction Mortgage means the financing for the
construction of the Apartment Complex provided by the
Construction Lender dated March 21, 1996, in a principal
amount of up to $1,240,000.
Controlling Person has the meaning given to it in the
context of Section 15 of the Securities Act of 1933, as
amended.
Credit Period has the meaning given to it in Section
42(f)(1) of the Code.
Credit Recovery Loan means a constructive interest-
bearing advance of the Investment Limited Partner as more
fully described in Section 5.1(f). Credit Recovery Loans
and interest thereon shall not be treated as loans or
interest, respectively, for accounting, tax or liability
purposes or for the purposes of Section 6.2(a)(1). For the
purposes of Article X, the term Credit Recovery Loan shall
not include any portion of such an advance which shall have
theretofore been paid to the Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section
5.1(f).
Disposition (including the forms Dispose and Disposing)
means, as to a Limited Partner, the assignment, sale,
transfer, exchange or other disposition of all or any part
of its Interest.
89-12 Requirements means the requirements set forth in
Internal Revenue Procedure 89-12 which are prerequisites to
the issuance, assuming that each General Partner is a
corporation, by the Service of an advance ruling that the
Partnership will be taxed as a partnership and not as an
association taxable as a corporation for Federal income tax
purposes.
Entity means any general partnership, limited
partnership, corporation, joint venture, trust, business trust,
cooperative or association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a
court having jurisdiction in respect of such Person or in
respect of any Controlling Person of such Person in a case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or of any Controlling Person of such Person for any
substantial part of such Person's property or of the
property of any Controlling Person of such Person, or the
issuance of an order for the winding-up or liquidation of
such Person's affairs and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60)
consecutive days, or
(ii) the commencement by such Person or by any
Controlling Person of such Person of a proceeding seeking
any decree, order or appointment referred to in clause (i),
the consent by such Person to any such decree, order or the
appointment, or taking of any action by such Person in
furtherance of any of the foregoing.
Filing Office means the Office of the Secretary of
State of the State.
General Partners means the Persons designated as the
General Partners in Schedule A and any Persons who become
General Partners as provided herein, in their capacities as
general partners of the Partnership. At any and all times
where there is only one General Partner, the term General
Partners shall mean such sole General Partner.
Hazardous Material shall have the collective meanings
given to the terms "hazardous material", "hazardous
substances" and "hazardous wastes" in the Federal
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., as
amended, and to the term "radioactive materials" in the
context of the Atomic Energy Act, 28 U.S.C. Sec. 2344, and
also includes any meanings given to such terms in any
similar state or local statutes, ordinances, regulations or
by-laws. In addition, the term Hazardous Material also
includes oil and any other substance known to be hazardous.
HUD means the United States Department of Housing and
Urban Development.
Immediate Family means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants,
nephews, nieces, brothers, sisters, brothers-in-law,
sisters-in-law, children-in-law and grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon
which not less than one hundred percent (100%) of the
apartment units in the Apartment Complex shall have been
leased to and physically occupied by Qualified Tenants .
Installment means an installment of the Investment
Limited Partner's Capital Contribution paid or payable to
the Partnership pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of
such Partner to any and all benefits to which a Partner may
be entitled hereunder and the obligation of such Partner to
comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the Capital Contribution of the
Investment Limited Partner divided by 73% and (ii) as to any
other Partner, an amount equal to its Capital Contribution.
Investment General Partner means Boston Capital
Associates IV L.P., a Delaware limited partnership, in its
capacity as the general partner of the Investment Limited
Partner, and any other Person who may become a successor or
additional general partner of the Investment Limited
Partner.
Investment Limited Partner means Boston Capital Tax
Credit Fund IV L.P., specifically Series 26 thereof, a
Delaware limited partnership, and any Person or Persons who
replace it as Substituted Limited Partner, but shall not
include any Special Limited Partner or Additional Limited
Partner.
Investment Partnership Agreement means the Agreement of
Limited Partnership of the Investment Limited Partner, as
amended from time to time.
Lender means the Construction Lender or Permanent
Lender, each in its capacity as maker of a Mortgage loan, or
its successors and assigns in such capacity.
Limited Partners means the Investment Limited Partner,
the Special Limited Partner and any Additional Limited
Partner.
Management Agent means the management and rental agent
for the Apartment Complex.
Management Agreement means the agreement between the
Partnership and the Management Agent providing for the
management of the Apartment Complex.
Management Fee means the Management Fee to which
reference is made in Article XI.A.
Minimum Set-Aside Test means the set aside test
selected by the Partnership pursuant to Section 42(g) of the
Code whereby at least 40% of the units in the Apartment
Complex must be occupied by individuals with incomes equal
to 60% or less of area median income, as adjusted for family
size.
Mortgage means the mortgage indebtedness of the
Partnership to the Construction Lender and/or the Permanent
Lender; and where the context admits Mortgage shall mean and
include the mortgage note evidencing such indebtedness, the
mortgage or deed of trust and security agreement securing
such indebtedness, the loan agreement and all other
documentation related thereto which evidence and secure such
indebtedness, including any Agency documentation related
thereto.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate of Limited Partnership has the
meaning specified in the Preliminary Statement.
Original Limited Partner has the meaning specified in
the Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership
liability (a) that is considered non-recourse under Treasury
Regulation Section 1.1001-2 or for which the creditor's
right to repayment is limited to one or more assets of the
Partnership and (b) for which any Partner or Related Person
bears the economic risk of loss.
Partner Non-Recourse Debt Minimum Gain means the amount
of partner nonrecourse debt minimum gain and the net
increase or decrease in partner nonrecourse debt minimum
gain determined in a manner consistent with Treasury
Regulations Sections 1.704-2(d) and 1.704(g)(3).
Partnership means the limited partnership continued
pursuant to this Agreement.
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be
realized by the Partnership if it disposed of (in a taxable
transaction) the property subject to such liability in full
satisfaction of such liability, and by then aggregating the
amounts so computed. Such computations shall be made in a
manner consistent with Treasury Regulation Section 1.704-2
(d).
Partnership Non-Recourse Liability means any
Partnership liability (or portion thereof) for which no
Partner or Related Person bears the Economic Risk of Loss.
Permanent Lender means , in its capacity as holder of
the Permanent Mortgage, or its successors and/or assigns in
such capacity.
Permanent Mortgage means the permanent financing
provided, or to be provided, by the Federal National
Mortgage Association for the Apartment Complex following the
completion thereof in the initial principal amount of
$1,191,700.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; (b) the principal amount and maturity date
of the Permanent Mortgage shall have been finally
determined; and (c) amortization of the Permanent Mortgage
shall have commenced.
Permanent Mortgage Commitment means the first date on
which the Partnership receives the written commitment of the
Permanent Lender to make the Permanent Mortgage.
Person means any individual or Entity.
Project Documents means and includes the Construction
Mortgage and the Permanent Mortgage , the Management
Agreement, all other instruments delivered to (or required
by) the Construction Lender and/or the Permanent Lender and
all other documents relating to the Apartment Complex or the
Tax Credit and by which the Partnership is bound, as amended
or supplemented from time to time.
Projected Credit to the Investment Limited Partner
means $155,732 for 1997; $172,504 per annum for the years
1998 through 2006 (inclusive); and $16,771 for 2007;
provided, however, that the Projected Credit for 2007 shall
be reduced by the amount, if any, by which the Actual Credit
for 1997 exceeds $155,732 and provided further that upon the
occurrence of any of the events described in clauses (i),
(ii) and (iii) of Section 5.1(g), the Projected Credit shall
thereafter be the Revised Projected Credit.
Prospectus means the prospectus contained in the
registration statement (File No. 33-70564) filed with the
Securities and Exchange Commission on behalf of the
Investment Limited Partner for the registration of
beneficial assignee certificates and/or limited partnership
interests under the Securities Act of 1933, as amended, in
the final form in which said prospectus is filed with said
Commission and as thereafter amended and/or supplemented
from time to time pursuant to Rule 424 under said Act, or
otherwise.
Qualified Basis has the meaning given to it in Section
42(c) of the Code.
Qualified Income Offset Item means (1) an allocation of
loss or deduction that, as of the end of each year,
reasonably is expected to be made (a) pursuant to Section
704(e)(2) of the Code to a donee of an interest in the
Partnership, (b) pursuant to Section 706(d) of the Code as
the result of a change in any Partner's Interest, or (c)
pursuant to Regulation Section 1.751-1(b)(2)(ii) as the
result of a distribution by the Partnership of unrealized
receivables or inventory items and (2) a distribution that,
as of the end of such year, reasonably is expected to be
made to a Partner to the extent it exceeds offsetting
increases to such Partner's Capital Account which reasonably
are expected to occur during or prior to the Partnership
taxable year in which such distribution reasonably is
expected to occur.
Qualified Tenant means a tenant (i) with income not
exceeding that permitted by the Minimum Set-Aside Test who
leases a Low-Income Apartment Unit in the Project under a
lease having an original term of not less than 6 months at a
rent which satisfies the Rent Restriction Test and (ii)
complying with any other requirements imposed by the Project
Documents.
Related Person means a person related to a Partner
within the meaning of Treasury Regulation Section 1.752-
4(b).
Rent Restriction Test means the test pursuant to
Section 42 of the Code whereby the gross rent charged to
tenants of the low-income units in the Apartment Complex may
not exceed thirty percent (30%) of the qualifying income
levels.
Rental Achievement means the first time, based upon
four consecutive full calendar months of operation after
Permanent Mortgage Commencement, with each month taken
individually, that Cash Available for Debt Service
Requirements (as defined below) equals or exceeds 1.15 times
debt service requirements.
Revised Projected Credit has the meaning given to it in
Section 5.1(g).
Schedule A means Schedule A to this Agreement as
amended from time to time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., as
amended, and shall also include any meaning given to it in
any similar state or local statutes, ordinances, regulations
or by-laws.
Special Limited Partner means BCTC 94, Inc., a Delaware
corporation, and any Person who becomes a Special Limited
Partner as provided herein, in its capacity as a special
limited partner of the Partnership.
State means the State of North Dakota.
State Designation means the date upon which the
Partnership receives the allocation by the authorized agency
of the State of Tax Credit for the building(s) constituting
the Apartment Complex in an annual dollar amount of not less
than $174,246 of Form(s) 8609. For the purposes of
determining State Designation, each building in the
Apartment Complex shall be treated as having received an
allocation of Tax Credit in an amount equal to the lesser of
(i) the amount of Tax Credit carryover allocation received
from the authorized agency of the State as to such building
or (ii) the amount of Tax Credit set forth on the Form 8609
as to such building.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is
admitted to the Partnership as Limited Partner under Section
8.2 or acquires the Interest of a Limited Partner pursuant
to Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman of
Bethesda, Maryland or such other firms of independent
certified public accountants as may be engaged by Boston Capital to
review the Partnership income tax returns.
Tax Credit means the low-income housing tax credit
pursuant to Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the
Partnership receives a preliminary reservation, effective
for the year 1994, the year the Apartment Complex is
expected to receive an allocation of Tax Credit, by the
authorized agency of the State of Tax Credit for the
building(s) constituting the Apartment Complex in an annual
dollar amount of not less than $174,246, which reservation
shall not have expired or been revoked prior to the date on
which the First Installment is paid.
Uniform Act means the Uniform Limited Partnership Act
as adopted by the State.
Vessel has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., as
amended, and shall also include any meaning given to it in
any similar state or local statutes, ordinances, regulations
or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing
and Withdrawn) means, as to a General Partner, the
occurrence of death, adjudication of insanity or
incompetence, Event of Bankruptcy, dissolution, liquidation,
or voluntary or involuntary withdrawal or retirement from
the Partnership for any reason, including whenever a General
Partner may no longer continue as a General Partner by law
or pursuant to any terms of this Agreement. Withdrawal shall
also mean the sale, assignment, transfer or encumbrance by a
General Partner of its interest as a General Partner. A
General Partner which is a corporation, limited liability
company or partnership shall be deemed to have sold,
assigned, transferred or encumbered its interest as a
General Partner in the event (as a result of one or more
transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to
the laws of descent and distribution) of a controlling
interest in a corporate or limited liability company General
Partner or of a general partner interest in a General
Partner which is a partnership. For purposes of this
definition of Withdrawal, "controlling interest" shall mean
the power to direct the management and policies of such
person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Grandview Apartments
Limited Partnership. The Partners agree to continue the
Partnership which was formed pursuant to the provisions of
the Uniform Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 1330
West Main Street, P.O. Box 446, Valley City, North Dakota,
58072 at which office there shall be maintained those
records required by the Uniform Act to be kept by the
Partnership. The Partnership may have such other or
additional offices as the General Partners shall deem
desirable. The General Partners may at any time change the
location of the principal office and shall give due notice
thereof to the Limited Partners.
(b) The resident agent in the State for the Partnership
for service of process is as follows:
James P., Knutson
1330 West Main Street
Valley City, ND 58072
2.3 Purpose
The purpose of the Partnership is to acquire, hold,
invest in, construct, develop, improve, maintain, operate,
lease and otherwise deal with the Apartment Complex. The
Partnership shall operate the Apartment Complex in
accordance with any applicable Agency regulations and
requirements. The Partnership shall not engage in any other
business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect
until December 31, 2044, except that the Partnership shall
be dissolved and its assets liquidated prior to such date
upon:
(a) The sale or other disposition of all or
substantially all of the assets of the Partnership;
(b) A General Partner dying, being adjudicated
bankrupt, insane or incompetent, (if a corporation, limited
liability company or partnership) being dissolved or
liquidated, or voluntarily or involuntarily withdrawing from
the Partnership for any reason, including an inability to
continue serving as a General Partner by law or pursuant to
the terms of this Agreement, if (i) the remaining General
Partner(s), if any, shall fail to continue the business of
the Partnership and reconstitute the Partnership as a
successor limited partnership as provided in Section 7.2 and
(ii) the Investment Limited Partner shall fail to exercise
the right provided in Section 7.3;
(c) The election to dissolve the Partnership made in
writing by the General Partners with the Consent of the
Investment Limited Partner and the approval (if required) of
any Agency ;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of
the Partnership under the Uniform Act if the Partnership is
not reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General
Partners (or for purposes of this paragraph, their trustees,
receivers or successors) shall cause the cancellation of the
Certificate, liquidate the Partnership assets and apply and
distribute the proceeds thereof in accordance with Section
10.3. Notwithstanding the foregoing, if, during
liquidation, the General Partners shall determine that an
immediate sale of part or all of the Partnership's assets
would be impermissible, impractical or cause undue loss to
the Partners, the General Partners may defer liquidation of,
and withhold from distribution for a reasonable time, any
assets of the Partnership except those necessary to satisfy
Partnership debts and obligations (except Subordinated
Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly
and severally, are hereby authorized to incur personal
liability for the repayment of funds advanced by the
Construction Lender (and interest thereon) pursuant to the
Construction Mortgage. However, from and after Permanent
Mortgage Commencement, neither any General Partner nor any
Related Person shall at any time bear, nor shall the General
Partners permit any other Partner or any Related Person to
bear, the Economic Risk of Loss for the payment of any
portion of any Mortgage.
B. The Partnership may decrease, increase or
refinance the Permanent Mortgage and may make any required
transfer or conveyance of Partnership assets for security or
mortgage purposes, provided, however, any such decrease
(except through the thirty year amortization schedule
anticipated at Permanent Mortgage Commencement), increase or
refinancing of the Permanent Mortgage may be made by the
General Partners only with the Consent of the Investment
Limited Partner.
C. The Partnership may sell, lease, exchange or
otherwise transfer or convey all or substantially all the
assets of the Partnership only with the Consent of the
Investment Limited Partner. Notwithstanding the foregoing
and except as set forth in Section 6.2(a)(6), no Consent of
the Investment Limited Partner shall be required for the
leasing of apartments to tenants in the normal course of
operations or the leasing of all or substantially all the
apartments to a public housing authority at rents
satisfactory to each Agency as expressed in writing.
D. The total compensation to all Persons for the sale
of the Apartment Complex shall be limited to a Competitive
Real Estate Commission, not to exceed six percent (6%) of
the contract price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be
as set forth on Schedule A. No interest shall be paid on
any Capital Contribution. No Partner shall have the right
to withdraw its Capital Contribution or to demand and
receive property of the Partnership in return for its
Capital Contribution, except as may be specifically provided
in this Agreement or required by law.
(b) An individual Capital Account shall be established
and maintained on behalf of each Partner, including any
additional or substituted Partner who shall hereafter
receive an interest in the Partnership. In accordance with
Treasury Regulation Section 1.704-1(b), the Capital Account
of each Partner shall consist of (i) the amount of cash such
Partner has contributed to the Partnership plus (ii) the
fair market value of any property such Partner has
contributed to the Partnership net of any liabilities
assumed by the Partnership or to which such property is
subject plus (iii) the amount of profits or income
(including tax-exempt income) allocated to such Partner less
(iv) the amount of losses and deductions allocated to such
Partner less (v) the amount of all cash distributed to such
Partner less (vi) the fair market value of any property
distributed to such Partner net of any liabilities assumed
by such Partner or to which such property is subject less
(vii) such Partner's share of any other expenditures which
are not deductible by the Partnership for Federal income tax
purposes or which are not allowable as additions to the
basis of Partnership property and shall be (viii) subject to
such other adjustments as may be required under the Code.
The Capital Account of a Partner shall not be affected by
any adjustments to basis made pursuant to Section 743 of the
Code but shall be adjusted with respect to adjustments to
basis made pursuant to Section 734 of the Code.
The original Capital Account established for any
Substituted Partner (as hereinafter defined) shall be in the
same amount as, and shall replace, the Capital Account of
the Partner which such Substituted Partner succeeds, and,
for the purposes of this Agreement, such Substituted Partner
shall be deemed to have made the Capital Contribution, to
the extent actually paid in, of the Partner which such
Substituted Partner succeeds. The term "Substituted Partner"
as used in this paragraph, shall mean a Person who shall
become entitled to receive a share of the allocations and
distributions of the Partnership by reason of such Person
succeeding to all or any part of the Interest of a Partner
by assignment of all or any part of a Partner's Interest.
To the extent a Substituted Partner receives less than 100%
of the Interest of a Partner he succeeds, the original
Capital Account of such transferee Substituted Partner and
his Capital Contribution shall be in proportion to the
portion of the transferor Partner's Interest prior to the
transfer which the transferee receives, and the Capital
Account of the transferor Partner who retains a portion of
his former Interest and his Capital Contribution shall
continue, and not be replaced, in proportion to the portion
of the transferor Partner's Interest prior to the transfer
which the transferor Partner retains. Nothing in this
Section 4.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or
Article VIII.
4.2 General Partners
The name, address and Capital Contribution of each General
Partner are as set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
The Original Limited Partner hereby withdraws as a
limited partner of the Partnership and acknowledges that he
no longer has any Interest in, or rights or claims against,
the Partnership as a Limited Partner as of the Admission
Date. The Investment Limited Partner and the Special Limited
Partner are hereby admitted as the sole Limited Partners in
substitution for the Original Limited Partner as of the
Admission Date and agree to be bound by the terms and
provisions of the Project Documents and this Agreement. The
names and addresses of the Investment Limited Partner and
the Special Limited Partner are as set forth on Schedule A.
The General Partners shall have no authority to admit
additional Limited Partners without the Consent of the
Investment Limited Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, the Special
Limited Partner and any Person who becomes an Additional
Limited Partner shall be liable for any debts, liabilities,
contracts or obligations of the Partnership and shall only
be liable to pay their respective Capital Contributions as
and when the same are due hereunder and under the Uniform
Act.
4.5 Special Rights of the Investment Limited Partner
(a) Notwithstanding any other provision herein, to the
extent the law of the State is not inconsistent, the
Investment Limited Partner shall have the right, subject to
the prior written consent of any Agency (if such consent is
required) to:
(i) amend this Agreement in any particular;
(ii) dissolve the Partnership;
(iii) remove any General Partner and elect a new
General Partner (A) on the basis of the performance and
discharge of such General Partner's obligations constituting
fraud, bad faith, negligence, misconduct or breach of
fiduciary duty, or (B) upon the occurrence of any of the
following: (1) such General Partner shall have violated any
provisions of any Project Document or other document
required in connection with any Mortgage, or any provisions
of any Agency regulations applicable to the Apartment
Complex; (2) such General Partner shall have violated any
provision of this Agreement, including, but not limited to,
any obligation to fund any Partnership expense under Section
6.10, or such General Partner shall have violated any
provision of applicable law; (3) any Mortgage shall have
gone into default; or (4) such General Partner shall have
conducted its own affairs or the affairs of the Partnership
in such a manner as would (a) cause the termination of the
Partnership for Federal income tax purposes; or (b) cause
the Partnership to be treated for Federal income tax
purposes as an association taxable as a corporation;
(iv) continue the business of the Partnership with a
substitute General Partner; and
(v) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without
any further action by any Partner, the Special Limited
Partner shall automatically become a General Partner and
acquire in consideration of a cash payment of $100 such
portion of the Interest of the removed General Partner as
counsel to the Investment Limited Partner shall determine is
the minimum appropriate interest in order to assure the
continued status of the Partnership as a partnership under
the Code and under the Uniform Act, (ii) such portion of the
economic Interest as an Additional Limited Partner, (iii)
the economic Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new
status of the Special Limited Partner as a General Partner,
and (iv) the new General Partner (which shall also continue
to be the Special Limited Partner) shall automatically be
delegated all of the powers and duties of the General
Partners pursuant to Section 6.13. The former Special
Limited Partner of any successor General Partner proposed by
the former Special Limited Partner shall have the option,
exercisable in its sole discretion, to acquire the remainder
of the Additional Limited Partner Interest, or any portion
thereof, of any removed General Partner upon payment of the
agreed or then present fair market value of such interest or
portion thereof. 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 or the Investment
Limited Partner, as the case may be, and the third chosen by
the two so chosen. The proceedings of such committee shall
conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall
be final and binding. The expense of arbitration shall be
born equally by the removed General Partner and the
Partnership. The method of payment to the removed General
Partner shall be fair and must protect the solvency and
liquidity of the Partnership. The method of payment will be
deemed presumptively fair where it provides for an interest-
bearing promissory note coming due in no less than five (5)
years with equal installments each year. In addition, upon
removal, the Partnership must promptly pay to the removed
General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that
notwithstanding the language of Section 6.12, Article X,
Article XI and any other provision hereof, no removed
General Partner or any Affiliate thereof shall be entitled
to receive any fee, compensation or other remuneration from
the Partnership, other than (i) the above-described payment
for the Interest, or portion thereof, of the removed General
Partner, and (ii) any such fee, compensation or other
remuneration which had already been earned in full prior the
date of such removal. The Partnership is not authorized to
enter into any arrangement whereby any fee, compensation or
other remuneration could be payable directly or indirectly
to any General Partner or Affiliate thereof in a manner
inconsistent with the immediately preceding sentence unless
the prior written consent of the Special Limited Partner
shall have been obtained to such particular agreement. The
Partnership may offset against any payments to a General
Partner removed under this Section 4.5 any damages suffered
by the Partnership as a result of any breach of the
obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a General Partner
for any obligations of the Partnership after the effective
date of its removal. Each General Partner hereby grants to
the Special Limited Partner an irrevocable (to the extent
permitted by applicable law) power of attorney coupled with
an interest to execute and deliver any and all documents and
instruments on behalf of such General Partner and the
Partnership as the Special Limited Partner may deem to be
necessary or appropriate in order to effect the provisions
of this Section 4.5.
4.6 Meetings
The General Partner or Limited Partners holding more
than ten percent (10%) of the then outstanding Limited
Partner Interests may call meetings of the Partnership for
any matters for which the Limited Partners may vote as set
forth in this Agreement. A list of the names and addresses
of all Limited Partners shall be maintained as part of the
books and records of the Partnership and shall be made
available upon request to any Limited Partner or his
representative at his cost. Upon receipt of a written
request either in person or by certified mail stating the
purpose(s) of the meeting, the General Partners shall
provide all Limited Partners within ten (10) days after
receipt of said request, written notice (either in person or
by certified mail) of a meeting and the purpose of such
meeting to be held on a date not less then fifteen (15) nor
more than sixty (60) days after receipt of said request, at
a time convenient to the Limited Partners. All meetings
shall be held at the principal office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution
of $10 shall be paid in full in cash on the Admission Date.
The Investment Limited Partner's Capital Contribution shall
be paid in cash installments (the "Installments"), as
follows:
(1) $534,761 (the "First Installment") on the latest
of (i) the Admission Date, (ii) Tax Credit Set-Aside, (iii)
Closing of the Construction Mortgage; (iv) Permanent
Mortgage Commitment; or (v) Carryover Certification
(2) $267,381 (the "Second Installment") on the latest
to occur of (i) State Designation; (ii) the Completion date;
(iii) Cost Certification; or (iv) receipt of an updated
title policy satisfactory to the Investment Limited Partner;
and
(3) $247,380 (the "Third Installment") on the latest
of (i) the Initial 100% Occupancy Date, (ii) Permanent
Mortgage Commencement; or (iii) Rental Achievement; and
(4) $20,000 (the "Fourth Installment") upon receipt of
a tax return for the year in which Rental Achievement
occurs;
provided, however, that the General Partner shall give the
Investment Limited Partner not less than twenty-one (21)
days' written notice prior to the due date of each
Installment subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner
to pay each Installment is conditioned upon delivery by the
General Partners to the Investment Limited Partner of a
written certificate (the "Payment Certificate") stating that
as of the date of such certificate (i) all the conditions to
the payment of such Installment have been satisfied and (ii)
all representations and warranties of the General Partner
contained in this Agreement are true and correct. Except as
provided in the final sentence of this Section 5.1(b),
acceptance by the Partnership of any Installment shall
constitute a confirmation that, as of the date of payment,
all such conditions are satisfied and all such
representations and warranties are true and correct. The
obligation of the Investment Limited Partner to pay the
First Installment is also conditioned upon delivery by the
General Partner to the Investment Limited Partner of (i) a
legal opinion of independent counsel to the Partnership,
which opinion must be satisfactory to the Investment Limited
Partner as to form, content and identity of counsel and (ii)
a photocopy of an ATLA Owner's Policy of Title or an
endorsement thereto, issued to the Partnership with respect
to the Apartment Complex with an effective date on or after
the Admission Date, in an insured amount of not less than
the appraised value of the Property, but in no event less
than the sum of all Permanent Mortgage loans and the
Invested Amount of the Investment Limited Partner and the
General Partner from a title insurance company reasonably
satisfactory to the Investment Limited Partner containing,
inter alia, "Fairways", "Non-Imputation", "Date Down" and
"Zoning" endorsements and evidencing the Partnership's
ownership of the Apartment Complex, subject only to such
exclusions, exceptions, conditions and stipulations as shall
be acceptable to the Investment Limited Partner, in its sole
discretion. In no event shall any Installment become due
until all of the conditions for all of the Installments
listed prior to the Installment in question in Section
5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an
Installment becomes due and payable, the Partnership has an
"Operating Deficit" (expenses in excess of revenues which
the General Partners would be required to fund pursuant to
Section 6.10), then the Investment Limited Partner may, at
its option, waive the requirement of the delivery of the
Payment Certificate or any other condition with respect to
part or all of such Installment and pay such part or all of
such Installment, provided that the proceeds of the amount
so paid are used by the Partnership to fully fund such
Operating Deficit; provided, however, that if the proceeds
of such amount so paid are designated in Section 6.12 or
Section 10.2(c) to be used to pay fees or special
distributions, then such proceeds shall be utilized to pay
such fees or special distributions and the recipients
thereof shall be required to, and hereby agree to, utilize
the proceeds of such fees or special distributions to fund
such Operating Deficit, in which case the Investment Limited
Partner is hereby authorized to directly fund such Operating
Deficit with the funds so applied being deemed to have been
paid as aforesaid.
(c) The Payment Certificate for each Installment shall
be dated and delivered not less than ten (10) nor more than
thirty (30) days prior to the due date for such Installment.
(d) If, as of the date when an Installment would
otherwise be due, any statement required to be made in the
Payment Certificate for such Installment cannot be
truthfully made, the General Partners shall notify the
Investment Limited Partner of the reason why such statement
would be untrue if made, and the Investment Limited Partner
shall not be required to pay such Installment; provided,
however, that if (i) any such statement can subsequently be
truthfully made and (ii) the Investment Limited Partner
shall not have irrevocably lost, in the good faith judgment
of the Investment General Partner, any material tax or other
benefits hereunder, then the Investment Limited Partner
shall pay such Installment to the Partnership thirty (30)
days after delivery by the General Partners to the
Investment Limited Partner of the Payment Certificate
together with an explanation of the manner in which each
such statement had become true.
(e) If with respect to any year all or a portion of
which occurs during the 60-month period commencing on the
later of (i) the Admission Date or (ii) the date on which
the first building in the Apartment Complex is placed in
service for the purposes of Section 42 of the Code (a
"Reduction Year") the Actual Credit is or was less than the
Projected Credit, then the General Partners shall pay to the
Investment Limited Partner the Reduction Amount. The
Reduction Amount shall be equal to the sum of (A) the excess
of the Projected Credit for such year over the Actual Credit
for such year multiplied by .81 plus (B) the amount of any
recapture, interest or penalty payable by the limited
partners and/or the holders of beneficial assignee
certificates of the Investment Limited Partner as a result
of such shortfall, assuming that each limited partner and/or
each holder of a beneficial assignee certificate in the
Investment Limited Partner used all of the Tax Credits
allocated to him in the year of allocation. The Auditors
shall make their determination of the amount of the Actual
Credit with respect to each Reduction Year within thirty
(30) days following the end of such year. The Capital
Contribution of the Investment Limited Partner shall be
subject to reduction as hereinabove described with respect
to each Reduction Year. Any reduction in the Capital
Contribution of the Investment Limited Partner shall, at the
option of the Investment Limited Partner, either (i) first
be applied to reduce the Installment next due to be paid by
the Investment Limited Partner, with any portion of such
Reduction Amount in excess of the amount of such Installment
then being applied to reduce succeeding Installments,
provided, that if no further Installments remain to be paid
or if the Reduction Amount shall exceed the sum of the
amounts of the remaining Installments, then the entire
Reduction Amount or the balance of the Reduction Amount, as
the case may be, shall be paid by the General Partners to
the Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty or
(ii) be paid in its entirety by the General Partners to the
Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty.
(f) In the event that, for any reason, at any time
after the end of the year during which there occurs the
sixty (60)-month anniversary of the later of (i) the
Admission Date or (ii) the date on which the first building
in the Apartment Complex is placed in service for the
purposes of Section 42 of the Code, the amount of the Actual
Credit shall be less than the Projected Credit with respect
to any fiscal year of the Partnership (such difference being
hereinafter referred to as a "Credit Shortfall"), the
Investment Limited Partner shall be treated as having made a
constructive advance to the Partnership with respect to such
year (a "Credit Recovery Loan"), which shall be deemed to
have been made on January 1 of such year in an amount equal
to the sum of (i) the Credit Shortfall for such year plus
(ii) the amount of any recapture, interest or penalty
payable by the limited partners and/or the holders of
beneficial assignee certificates of the Investment Limited
Partner as a result of the Credit Shortfall for such year,
assuming that each limited partner and/or holder of a
beneficial assignee certificate in the Investment Limited
Partner used all of the Tax Credits allocated to him in the
year of allocation. Credit Recovery Loans shall be deemed
to bear simple (not compounded) interest from the respective
dates on which such principal advances shall have been
deemed to have been made under this Section 5.1(f) at 9% per
annum. Credit Recovery Loans shall be payable by the
Partnership as provided in Section 10.2(b), Clause Third.
(g) If, as of the Completion Date and based upon the
Cost Certification, it is determined that the Apartment
Complex will be eligible to receive Tax Credits in an annual
amount of less than $174,246, or as of the Completion Date
the product of the Apartment Complex's Eligible Basis and
its Applicable Percentage is determined by the Auditors or
the Service to be such that the Apartment Complex will not
be eligible to receive Tax Credits in an annual dollar
amount of at least $174,246, then there shall be a reduction
in the Investment Limited Partner's Capital Contribution in
an amount equal to the product of (A) difference between (i)
$174,246 and (ii) the annual amount of Tax Credit allocated
and available to the Partnership and (B) 8.1.
(h) In the event that (i) State Designation does not
occur by Admission, or (ii) by Admission, the Limited
Partners shall not have received a written certification of
the Auditors in a form and in substance satisfactory for the
purpose of achieving Cost Certification and indicating that
the product of the Apartment Complex's Eligible Basis and
its Applicable Percentage is such that the Apartment Complex
will be eligible to receive Tax Credit in an annual amount
of at least $174,246 or (iii) at any time after the
Completion Date the product of the Apartment Complex's
Eligible Basis and its Applicable Percentage is determined
by the Auditors, the Tax Accountants or the Service to be
such that the Apartment Complex will not be eligible to
receive Tax Credit in an annual dollar amount of at least
$174,246, then (a) the General Partners shall pay to the
Investment Limited Partner an amount equal to 99% of the
product of (A) difference between (i)$174,246 and (ii) the
total amount of Tax Credit allocated and available to the
Partnership and (B) .81 and (b) the Projected Credit for
each year shall thereafter be redefined to mean 99% of the
total amount of Tax Credit actually so allocated and
available to the Partnership for such year (the "Revised
Projected Credit").
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. If (i) all of the apartment
units in the Apartment Complex shall not have been placed in
service by December 31, 1997 (or any later date fixed by
the General Partners with the Consent of the Investment
Limited Partner) or (ii) by December 31, 1997 (or any later
date fixed by the General Partners with the Consent of the
Investment Limited Partner) less than 100% apartment units
in the Apartment Complex shall have been occupied by
Qualified Tenants, or (iii) Permanent Mortgage Commencement
shall not have occurred prior to December 31, 1997 (or any
later date fixed by the General Partners with the Consent of
the Investment Limited Partner), or (iv) State Designation
shall not have occurred by December 31, 1997 (or any later
date fixed by the General Partner with the Consent of the
Investment Limited Partner), or (v) the Partnership shall
fail to meet the Minimum Set-Aside Test or the Rent
Restriction Test by the close of the first year of the
Credit Period and/or fails to continue to meet either of
those Tests at any time during the sixty (60)-month period
commencing on such date or (vi) prior to Permanent Mortgage
Commencement, (a) foreclosure proceedings shall have
commenced under the Construction Mortgage and such
proceedings shall not have been dismissed within sixty (60)
days, (b) any of the commitments of any Lender or Agency to
provide the Permanent Mortgage and/or any subsidy financing
shall be terminated or withdrawn and not reinstated or
replaced within ninety (90) days with terms equally or more
favorable to the Investment Limited Partner or terms for
which the Consent of the Investment Limited Partner and (if
required) the approval of any Lender or Agency shall have
been obtained, or (c) the Construction Lender shall have
irrevocably refused to make any further advances under the
Construction Mortgage and such decision shall not have been
reversed or the Construction Lender replaced within sixty
(60) days, or (vii) if by Admission (or any later date fixed
by the General Partners with the Consent of the Investment
Limited Partner), the Investment Limited Partner shall not
have received a written certification of the Auditors, in a
form and in substance satisfactory to Boston Capital, as to
the respective amounts of the Qualified Basis and the
Applicable Percentage pertaining to each building in the
Apartment Complex, or (viii) if by June 30, 1998, Rental
Achievement has not been achieved or, (ix) Carryover
Certification has not been achieved by December 31, 1994,
or (x) if at any time it is determined by the Auditors, the
Tax Accountants, or the Service that as of December 31,
1994, the Partnership did not own land or depreciable
property constituting part of the Apartment Complex and/or
had not incurred capitalizable costs with respect to the
Apartment Complex of at least ten percent (10%) of the
Partnership's reasonable expected basis in the Apartment
Complex as of December 31, 1996, then the General Partners
shall, within fifteen (15) days of the occurrence thereof,
send to the Investment Limited Partner and the Special
Limited Partner notice of such event and of the General
Partners' obligation to repurchase the Interests of the
Investment Limited Partner and the Special Limited Partner
by paying to the Investment Limited Partner and the Special
Limited Partner an amount equal to each such Partner's
Invested Amount in the event the Investment Limited Partner
and/or the Special Limited Partner so require. If either
the Special Limited Partner or the Investment Limited
Partner elects to require a repurchase of its Interest and
the payment to it of an amount equal to its Invested Amount,
it shall send notice thereof to the Partnership within
thirty (30) days after the mailing date of the General
Partners' notice (or at any time after the occurrence of any
of the foregoing if the General Partners shall not have sent
such a notice thereof) and the General Partners shall within
thirty (30) days thereafter repurchase the Interest of such
Partner by paying to each such Partner an amount equal to
its Invested Amount plus the amount of any third party costs
incurred by or on behalf of such Partner in implementing
this Section 5.2(a).
(b) Lender Disapproval. If the Construction Lender
and/or the Permanent Lender shall disapprove, or fail to
give any required approval of, the Investment Limited
Partner and/or the Special Limited Partner as a Limited
Partner hereunder within one hundred eighty (180) days of
the Admission Date, then the Partner being disapproved or
not approved shall, effective as of such time or such later
time as may be selected by the Partner being disapproved or
not approved shall, effective as of such time or such later
time as may be selected by the Partner being disapproved or
not approved (or such other time as may be specified by the
Construction Lender and/or the Permanent Lender in its
disapproval),at the option of the Partner being disapproved
or not approved (if not directed by the Construction Lender
and/or the Permanent Lender in to withdraw), cease to be a
Limited Partner. The General Partners shall, within ten
(10) days of the effective date of such cessation, pay to
the Partner being disapproved or not approved an amount
equal to its Invested Amount plus the amount of any third
party costs, incurred by or on behalf of such Partner in
implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon receipt by
the Investment Limited Partner and/or the Special Limited
Partner of the amount due to it pursuant to either Section
5.2(a) or Section 5.2(b) of an amount equal to the sum of
its Investment Amount plus the amount of any third party
costs, the Interest of such Partner shall terminate, and the
General Partners shall indemnify and hold harmless such
Partner from any losses, damages, and liabilities to which
such Partner (as a result of its participation hereunder)
may be subject.
(d) Waiver of Repurchase Right. The Investment
Limited Partner shall have the right to irrevocably waive
its right to have its Interest repurchased pursuant to any
clause or clauses of Section 5.2(a), or any portion thereof,
at any time during which any of such rights shall be in
effect. Such a waiver shall be exercised by delivery to the
General Partner of a written notice stating that the rights
being waived pursuant to any specified clause or clauses of
Section 5.2(a), or any specified portion thereof, are
thereby waived from that date forward.
(e) Additional General Partner. If the General
Partners shall fail to make on the due date therefor any
payment required under Section 5.2(a) or Section 5.2(b),
time being of the essence, at any time thereafter the
Special Limited Partner shall have the option, exercisable
in its sole discretion, to be admitted as an additional
General Partner, with the same collective economic interest
in the Partnership as a General Partner and a Special
Limited Partner as the economic interest in the Partnership
which it formerly held as a Special Limited Partner. Upon
any such admission of the Special Limited Partner as an
additional General Partner, each of the other General
Partners hereby agrees that all of its rights and powers
hereunder as a General Partner shall automatically be
irrevocably delegated to the Special Limited Partner
pursuant to Section 6.13 without the necessity of any
further action by any Partner, except as required by the
Uniform Act. Each Partner hereby grants to the Special
Limited Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest
to take any action and to execute, deliver and file or
record any and all documents and instruments on behalf of
such Partner and the Partnership as the Special Limited
Partner may deem necessary or appropriate in order to
effectuate the provisions of this Section 5.2(e); provided,
however, this power of attorney shall be limited to the
execution, delivery, filing and recording of documents and
instruments pertaining to the Partnership and Partnership
property, and shall not extend to unrelated business affairs
or property of the General Partner. The admission of the
Special Limited Partner as an additional General Partner
shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General
Partner shall fully indemnify and hold harmless the
additional General Partner against any and all losses,
judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3, and all other
provisions of this Agreement, the General Partners for, in
the name and on behalf of the Partnership, are hereby
authorized to do the following in furtherance of the
purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or
otherwise any real or personal property;
(2) To construct, rehabilitate, operate, maintain,
finance and improve, and to own, sell, convey, assign,
mortgage or lease any real estate and any personal property;
(3) To borrow money and issue evidences of indebtedness
and to secure the same by mortgage, pledge or other lien on
the Apartment Complex or any other assets of the
Partnership;
(4) To execute the Construction and Permanent
Mortgages, the other Project Documents and all such other
documents as the General Partners deem necessary or
appropriate in connection with the acquisition, development
and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify
the Construction and Permanent Mortgages or any other
financing affecting the Apartment Complex;
(6) To employ the Management Agent (which may be an
Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To employ their respective Affiliates to perform
services for, or sell goods to, the Partnership;
(8) To execute contracts with the State or any
subdivision or agency thereof or any other government agency
to make apartments or tenants in the Apartment Complex
eligible for any public-subsidy program;
(9) To execute leases of some or all of the apartment
units of the Apartment Complex to a public housing authority
and/or to a non-profit corporation, cooperative or other
non-profit Entity; and
(10) To enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and documents which may be required under the
laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this
Agreement, the General Partners shall have no authority to
perform any act in violation of applicable law, Agency or
other government regulations, requirements of any Lender, or
the Project Documents. In the event of any conflict between
the terms of this Agreement and any applicable Agency or
other government regulations or requirements of any Lender,
the terms of such regulations or requirements shall govern.
Neither shall the General Partners have any authority to do
any of the following acts without the Consent of the
Investment Limited Partner:
(1) To borrow in excess of $10,000 in the aggregate at
any one time outstanding on the general credit of the
Partnership, except borrowings constituting Subordinated
Loans;
(2) To borrow from the Partnership or commingle
Partnership funds with funds of any other Person;
(3) Following the Completion Date, to construct any new
or replacement capital improvements on the Apartment Complex
which substantially alter the Apartment Complex or its use
or which are at a cost in excess of $10,000 in a single
Partnership fiscal year, except (a) replacements and
remodeling in the ordinary course of business or under
emergency conditions or (b) construction paid for from
insurance proceeds;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) Following Permanent Mortgage Commencement, to
increase, decrease (except through the twenty-two-year
amortization provided for in the Permanent Mortgage
Commencement), modify the terms of or refinance the
Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements
of the Minimum Set-Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership;
(8) To terminate any agreement with any Agency;
(9) To execute contracts with any Agency, the State or
any subdivision or agency thereof or any other government
agency to make apartments or tenants in the Apartment
Complex eligible for any public-subsidy program;
(10) To execute leases of some or all of the apartment
units of the Apartment Complex to a public housing authority
and/or to a non-profit corporation, cooperative or other
non-profit Entity;
(11) To amend the Construction Contract, except for
change orders approved by the Lender;
(12) To pledge or assign any of the Capital
Contribution of the Investment Limited Partner or the
proceeds thereof; or
(13) To do any act required to be approved or ratified
by all limited partners under the Uniform Act.
(b) Neither the Investment General Partner nor any
Affiliate thereof shall be given an exclusive right to sell,
or exclusive employment to sell, the Apartment Complex.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive
any salary or other direct or indirect compensation for any
services or goods provided in connection with the
Partnership or the Apartment Complex, except as may be
specifically provided in Section 6.12 and Article XI or as
to which the prior written consent of the Special Limited
Partner shall have been obtained to the precise terms
thereof prior to the commencement of such services or the
provision of such goods. Any Partner may engage
independently or with others in other business ventures of
every nature and description including the ownership,
operation, management, syndication and development of
competing real estate; neither the Partnership nor any other
Partner shall have any rights in and to such independent
ventures or the income or profits derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the
General Partners shall have the exclusive right to control
the business of the Partnership. The Investment Limited
Partner shall have no right to take part in the management
or control of the business of the Partnership or to transact
any business in the name of the Partnership. No provision
of this Agreement which makes the Consent of the Investment
Limited Partner a condition for the effectiveness of an
action taken by the General Partners is intended, and no
such provision shall be construed, to give the Investment
Limited Partner any participation in the control of the
Partnership business. Each of the Special Limited Partner
and the Investment Limited Partner hereby consents to the
exercise by the General Partners of the powers conferred on
them by law and this Agreement, and the General Partners
agree to exercise control of the business of the Partnership
only in accordance with the provisions of this Agreement.
All Partners hereby agree that Prairie West, Inc. shall
serve as the "Tax Matters Partner." In the case of
litigation, the Tax Matters Partner is required to file suit
in the United States Tax Court unless the Consent of the
Investment Limited Partner is obtained to file suit in the
United States Claims Court or the United States District
Court. Nothing herein shall be construed to restrict the
Partnership from engaging the Auditors to assist the Tax
Matters Partner in discharging its duties hereunder.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of
the Partnership to the best of their ability, shall use
their best efforts to carry out the purpose of the
Partnership, and shall devote to the Partnership such time
as may be necessary for the proper performance of their
duties and the business of the Partnership. The General
Partners shall promptly take all action which may be
necessary or appropriate for the proper development,
maintenance and operation of the Apartment Complex in
accordance with the provisions of this Agreement, the
Project Documents and applicable laws and regulations
including, without limitation, funding the Construction and
Development Fee to the extent Capital Contributions and Cash
Flow are insufficient. The General Partners are responsible
for the management and operation of the Partnership,
including the oversight of the rent-up and operational
stages of the Apartment Complex.
(b) The General Partners shall use their best efforts
to cause the Partnership to generate Cash Flow for
distribution to the Partners at the maximum realizable level
in view of (i) any applicable Agency and other regulations,
(ii) the Minimum Set-Aside Test and (iii) the Rent
Restriction Test, and, if necessary, the General Partners
shall also use their best efforts to obtain approvals and
implementation of appropriate adjustments in the rental
schedule of the Apartment Complex.
(c) The General Partners shall cause the Partnership to
obtain and keep in force, during the term of the
Partnership, comprehensive casualty insurance, including,
but not limited to, fire and other risks generally included
under "extended coverage" policies, workmen's compensation
and public liability insurance in favor of the Partnership
(i) with such companies and in such amounts as shall be
satisfactory to the Lenders and any Agency, or, if the
Apartment Complex is no longer subject to Lender or Agency
regulation or requirements, as shall be customary for
apartment complexes similar to the Apartment Complex and
(ii) in amounts which shall be (A) no less than those
amounts which are customary in the area for apartment
complexes similar to the Apartment Complex, (B) no less than
such amounts as may be reasonably requested by the
Investment Limited Partner and/or the Special Limited
Partner from time to time, and (C) in any event, sufficient
to prevent the Partnership from becoming a co-insurer under
any such policies. No deductibles on such policies may
exceed $1,000, without the prior written consent of the
Investment Limited Partner. The Partnership's fire and
other casualty insurance shall be in an amount at least
equal to the full replacement value of the Apartment
Complex. The General Partner shall cause the Partnership
and all Partners to be named as additional insured parties
on a combined single limit bodily injury and property damage
liability insurance policy in the amount of not less than
$6,000,000 (of which up to $5,000,000 may be provided under
an umbrella policy). Through the Completion Date, or such
later date as may be required by the Construction Lender or
any Agency , the General Partners shall also cause the
Partnership to obtain and keep in force a builder's risk
policy in favor of the Partnership in an amount not less
than the greater of (i) the full replacement value of the
Apartment Complex (excluding the value of the underlying
land, the site utilities and the foundations) or (ii) such
other amount as shall be required by any Agency or the
Construction Lender. Throughout the term of the
Partnership, the General Partners shall provide copies of
all such policies (or binders) to the Investment Limited
Partner promptly after their receipt thereof. Upon the
request of the Investment Limited Partner to the General
Partners, the General Partners shall cause the applicable
insurer to name the Investment Limited Partner as an
"additional insured" on each Partnership insurance policy.
(d) The obligations of the General Partners hereunder
shall be the joint and several obligations of each General
Partner. Except as otherwise provided in Sections 4.5(b)
and 7.1, such obligations shall survive any Withdrawal of a
General Partner from the Partnership.
(e)(1) The General Partners shall establish and
maintain reasonable reserves to provide for working capital
needs, improvements, replacements and any other
contingencies of the Partnership. At a minimum, the General
Partners shall cause the Partnership to annually deposit
$9,692 from its Cash Flow into replacement reserves. To the
extent that Cash Flow (as determined before deduction of
this reserve deposit) for any year shall be insufficient to
make such deposit in full, the General Partners shall fund
such shortfall from their own funds as a Subordinated Loan.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be
admitted if he, she or it has not first agreed to be bound
by this Agreement (and assume the obligations of a General
Partner hereunder) and by the Project Documents to the same
extent and under the same terms as the other General
Partners.
(g) The General Partners shall take all actions
necessary to ensure that the Investment Limited Partner
receives the full amount of the Projected Credit, including,
without limitation, the rental of apartments to Qualified
Tenants and the filing of annual certifications as may be
required. In this regard, the General Partners shall, inter
alia, cause (i) the Partnership to satisfy all requirements
imposed from time to time under the Code with respect to
rental levels and occupancy by Qualified Tenants by the
close of the first year of the Credit Period so as to permit
the Partnership to be entitled to the Tax Credit throughout
the compliance period specified in the Code, (ii) all
dwelling units in the Apartment Complex to be leased for
periods of not less than six months to persons satisfying
the Rent Restriction Test, (iii) the Partnership to make all
appropriate Tax Credit elections in a timely fashion, and
(iv) all rental units in the Apartment Complex to be of
equal quality with comparable amenities available to low-
income tenants on a comparable basis without separate fees.
(h) On or before the Admission Date, the General
Partners shall provide to the Investment Limited Partner
either (i) an appraisal of the Apartment Complex prepared by
a competent independent appraiser or (ii) completed FmHA
1924-13 (estimate and certificate of actual cost) and 1930-7
(statement of budget, income and expense) or HUD project
cost and budget analysis on Form 2264, or any successor FmHA
or HUD form, any comparable form of a state or other
governmental agency, including any applicable Tax Credit
allocation agency, setting forth estimates with respect to
construction and mortgage financing costs and initial rental
income and operating expense figures for the Apartment
Complex.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations
pertaining thereto) or dispose of any Hazardous Material at
the Apartment Complex, or at or on any other Site or Vessel
owned, occupied, or operated either by any General Partner,
any Affiliate of a General Partner, or any Person for whose
conduct any General Partner is or was responsible; (ii)
neither directly nor indirectly transport or arrange for the
transport of any Hazardous Material (except in compliance
with all laws, ordinances, and regulations pertaining
thereto); (iii) provide the Investment Limited Partner with
written notice (x) upon any General Partner's obtaining
knowledge of any potential or known release, or threat of
release, of any Hazardous Material at or from the Apartment
Complex or any other Site or Vessel owned, occupied, or
operated by any General Partner, any Affiliate of a General
Partner or any Person for whose conduct any General Partner
is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General
Partner's receipt of any notice to such effect from any
Federal, state, or other governmental authority; and (z)
upon any General Partner's obtaining knowledge of any
incurrence of any expense or loss by any such governmental
authority in connection with the assessment, containment, or
removal of any Hazardous Material for which expense or loss
any General Partner may be liable or for which expense or
loss a lien may be imposed on the Apartment Complex.
6.6 Representations and Warranties
The General Partners represent and warrant to the
Investment Limited Partner and the Special Limited Partner
as follows:
(1) The Partnership is a duly organized limited
partnership validly existing and in good standing under the
laws of the State and has complied with all filing
requirements necessary for its existence and to preserve the
limited liability of the Investment Limited Partner and the
Special Limited Partner.
(2) No event or proceeding has occurred or is pending
or threatened which would (a) materially adversely affect
the Partnership or its properties, or (b) materially
adversely affect the ability of the General Partners or any
of their Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the
Apartment Complex, other than legal proceedings which have
been bonded against without recourse to Partnership assets
in such manner as to stay the effect of the proceedings or
otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation,
the following: (x) legal actions or proceedings before any
court, commission, administrative body or other governmental
authority having jurisdiction over the zoning applicable to
the Apartment Complex; (y) labor disputes; and (z) acts of
any governmental authority.
(3) No default (or event which, with the giving of
notice or the passage of time or both, would constitute a
default) has occurred and is continuing under this Agreement
or under any material provision of the Project Documents,
and the same are in full force and effect.
(4) No Partner or Related Person bears the economic
risk of loss with respect to the Permanent Mortgage. No
General Partner has, either on its own behalf or on behalf
of the Partnership, incurred any financial responsibility
with respect to the Partnership prior to the Admission Date,
other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex will be completed in a timely
manner in conformity with the Project Documents. There is
no violation by the Partnership or the General Partners of
any zoning, environmental or similar regulation applicable
to the Apartment Complex which could have a material adverse
effect thereon, and the Partnership has complied with all
applicable municipal and other laws, ordinances and
regulations relating to such construction and use of the
Apartment Complex. All appropriate public utilities,
including, but not limited to, water, electricity, gas (if
called for in the plans and specifications), and sanitary
and storm sewers, are or will be available and operating
properly for each unit in the Apartment Complex at the time
of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple
title to the Apartment Complex, subject to no material
liens, charges or encumbrances other than those which (a)
are both permitted by the Project Documents and are noted or
excepted in the title insurance policy number delivered to
the Partnership pursuant to section 5.1(b) to the
Partnership, as endorsed through and (b) do not materially
interfere with use of the Apartment Complex (or any part
thereof) for its intended purpose or have a material adverse
effect on the value of the Apartment Complex.
(7) The execution and delivery of all instruments and
the performance of all acts heretofore or hereafter made or
taken pertaining to the Partnership or the Apartment Complex
by each Affiliate of a General Partner which is a
corporation have been or will be duly authorized by all
necessary corporate or other action, and the consummation of
any such transactions with or on behalf of the Partnership
will not constitute a breach or violation of, or a default
under, the charter or by-laws of such Affiliate or any
agreement by which such Affiliate or any of its properties
is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") or a limited liability company ("LLC") has
been duly organized, is validly existing and in good
standing under the laws of its state of incorporation and
has all requisite corporate power to be a General Partner
and to perform its duties and obligations as contemplated by
this Agreement and the Project Documents. Neither the
execution and delivery by any Corporation of this Agreement
nor the performance of any of the actions of any Corporation
contemplated hereby has constituted or will constitute a
violation of (a) the articles of organization; by-laws
operating agreement or other controlling document of such
Corporation or LLC, (b) any agreement by which such
Corporation is bound or to which any of its property or
assets is subject, or (c) any law, administrative regulation
or court decree.
(9) No Event of Bankruptcy has occurred with respect to
any General Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of the Project Documents,
including, but not necessarily limited to, any account for
replacement reserves, are currently funded to the levels
required by the Lenders and/or any Agency .
(11) If the only General Partner(s) are one or more
corporations, then the General Partner(s) have a net worth
which satisfies the 89-12 Requirements.
(12) All payments and expenses required to be made or
incurred in order to complete construction of the Apartment
Complex in conformity with the Project Documents, to fund
any reserves hereunder or under any other Project Document
required to be funded at or prior to the later of the
Admission Date or Permanent Mortgage Commencement, to
satisfy all requirements under the Project Documents and/or
which form the basis for determining the principal sum of
the Permanent Mortgage and to pay the Construction and
Development Fee have been or will be paid or provided for
utilizing only (a) the funds available from the Construction
Mortgage, (b) the Capital Contribution of the Investment
Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as
of the Admission Date, (d) the available net rental income,
if any, earned by the Partnership prior to Permanent
Mortgage Commencement (to the extent that it is permitted to
be used for such purposes by the Lenders and/or any Agency
), (e) any insurance proceeds and (f) the funds furnished by
the General Partners pursuant to Sections 6.5(a) and
6.11(a).
(13) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited
Partner is $155,732 for 1997; $172,504 per annum for the
years 1998 through 2006 (inclusive); and $16,771 for 2007.
(14) The Apartment Complex is being developed in a
manner which satisfies and shall continue to satisfy, all
restrictions, including tenant income and rent restrictions,
applicable to projects generating Tax Credits.
(15) The General Partners have provided the Investment
Limited Partner with a complete copy of "Phase I" hazardous
waste site assessment report for the Apartment Complex. No
General Partner, Affiliate of a General Partner or Person
for whose conduct any General Partner is or was responsible
has ever: (i) owned, occupied, or operated a Site or Vessel
on which any Hazardous Material was or is stored,
transported, or disposed of, except if such storage,
transport or disposition was and is at all times in
compliance with all laws, ordinances, and regulations
pertaining thereto; (ii) directly or indirectly transported,
or arranged for transport, of any Hazardous Material (except
if such transport was or is at all times in compliance with
all laws, ordinances and regulations pertaining thereto);
(iii) caused or was legally responsible for any release or
threat of release of any Hazardous Material; (iv) received
notification from any Federal, state or other governmental
authority of (x) any potential, known, or threat of release
of any Hazardous Material from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any
General Partner, by any Affiliate of a General Partner, or
any Person for whose conduct any General Partner is or was
responsible or whose liability may result in a lien on the
Apartment Complex; or (y) the incurrence of any expense or
loss by any such governmental authority or by any other
Person in connection with the assessment, containment, or
removal of any release or threat of release of any Hazardous
Material from the Apartment Complex or any such Site or
Vessel.
(16) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on,
transported, or disposed of on the land comprising the
Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance with
all laws, ordinances, and regulations pertaining thereto.
(17) The General Partners have fulfilled and will
continue to fulfill all of their duties and obligations
under Section 6.5.
(18) As of the due date of the First Installment and at
all times thereafter, the Construction Mortgage Closing has
occurred, and construction of the Apartment Complex is being
completed (and as of the Completion Date will have been
completed) in conformity with the requirements hereof and of
the Project Documents.
(19) As of the Admission Date, the General Partner
shall have made Capital Contributions to the Partnership in
the amount of $11,000.
(20) As of December 31, 1994, the Partnership had owned
land or depreciable property constituting part of the
Apartment Complex and had incurred capitalizable costs with
respect to the Apartment Complex of at least ten percent
(10%) of the Partnership's reasonably expected basis as of
December 31, 1996 so that each building in the Apartment
Complex constitutes a "qualified building" for purposes of
Section 42 (h)(1)(E)(ii) of the code.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person
shall at any time bear the Economic Risk of Loss for the
payment of any portion of any Mortgage, and the General
Partners shall not permit any other Partner or any Related
Person to bear the Economic Risk of Loss for the payment of
any portion of any Mortgage, except as may be expressly
permitted with respect to the Construction Mortgage pursuant
to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall
have liability to the Partnership or to any Limited Partner
for any loss suffered by the Partnership which arises out of
any action or inaction of any General Partner or Affiliate
thereof if such General Partner or Affiliate thereof in
good faith determined that such course of conduct was in the
best interest of the Partnership and such course of conduct
did not constitute negligence or misconduct of such General
Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership,
provided that all of the following conditions are met: (i)
such General Partner has determined, in good faith, that the
course of conduct which caused the loss, judgment,
liability, expense or amount paid in settlement was in the
best interests of the Partnership; and (ii) such loss,
judgment, liability, expense or amount paid in settlement
was not the result of negligence or misconduct on the part
of the General Partner or Affiliate thereof; and (iii) such
indemnification or agreement to hold harmless is recoverable
only out of the assets of the Partnership, and not from the
Limited Partners.
(c) Notwithstanding the above, no General Partner or
any Affiliate thereof performing services for the
Partnership or any broker-dealer shall be indemnified for
any losses, liabilities or expenses arising from or out of
an alleged violation of Federal or state securities laws
unless (i) there has been a successful adjudication on the
merits of each count involving securities laws violations as
to the particular indemnitee and, the court approves the
indemnification of such litigation costs, (ii) such claims
have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the particular indemnitee
and, the court approves the indemnification of such
litigation costs or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular
indemnitee and the court finds that indemnification of the
settlement and related costs should be made. In any claim
for indemnification for Federal or state securities law
violations, the party seeking indemnification shall, prior
to seeking court approval for such indemnification, place
before the court the positions of the Securities and
Exchange Commission, the Massachusetts Securities Division,
the North Dakota Securities Division, and any other
applicable state securities administrator with respect to
the issue of indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the
portion of any insurance, other than public liability
insurance, which
insures any party against any liability as to which such
party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of the
General Partner under this Section 6.8 only if the loss
involves activity in which such Affiliates acted in the
capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on
behalf of the Partnership who (i) directly or indirectly
controls, is controlled by or is under common control with a
General Partner; (ii) owns or controls ten percent (10%) or
more of the outstanding voting securities of a General
Partner; (iii) is an officer, director, partner or trustee
of a General Partner; or (iv) if a General Partner is an
officer, director, partner or trustee, is any company for
which such General Partner acts in any such capacity.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partners will indemnify and hold the
Partnership and the Limited Partners harmless from and
against any and all losses, damages and liabilities which
the Partnership or any Limited Partner may incur by reason
of the (a) past, present or future actions or omissions of
the General Partner or any of their Affiliates, except acts
undertaken in their capacity as General Partner of the
Partnership or (b) any liabilities to which either the
Partnership or the Apartment Complex is subject; provided,
however, that the foregoing indemnification shall not apply
to (i) any Mortgage or (ii) necessary contractual
obligations incurred pursuant to Agency or Lender
requirements in connection with the operation of the
Apartment Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner
shall be liable to a Limited Partner or the Partnership for
any act or omission for which the Partnership is required to
indemnify such General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and
hold the Investment Limited Partner harmless from and
against any claim brought or threatened against the
Investment Limited Partner or loss (as well as from any and
all attorneys' fees and expenses incurred in connection with
any such claim or loss) on account of the presence of any
Hazardous Material at the Apartment Complex. Any claim or
loss described in the immediately preceding sentence may be
defended, compromised, settled, or pursued by the Investment
Limited Partner with counsel of the Investment Limited
Partners' selection, but at the expense of the General
Partners. Notwithstanding anything else set forth herein,
this indemnification shall survive the withdrawal of any
General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to the prior written consent of any Agency (if
such consent shall be required under applicable Agency
regulations), the General Partners shall be obligated from
the later to occur of (i) Permanent Mortgage Commencement or
(ii) the Admission Date to advance funds to meet operating
expenses, debt service and the Replacement Reserve Fund of
the Partnership which exceed operating income available for
the payment thereof. For Purposes of this Section 6.10,
"operating expenses" shall expressly include the Asset
Management Fee. In the event that the General Partners
shall fail to make any such advance as aforesaid, the
Partnership shall utilize amounts (the "Applied Fees")
otherwise payable to the General Partners or Affiliates
thereof under Section 6.12 and/or Article X to meet the
obligations of the General Partners pursuant to this Section
6.10. Such utilization of Applied Fees shall also
constitute payment and satisfaction of the corresponding
amounts payable to the General Partners or Affiliates
thereof under Section 6.12 and/or Article X, with the
proceeds thereof being applied to such obligations, and the
obligation of the Partnership to make such installment
payments to the General Partners or the Affiliates thereof
pursuant to Section 6.12 and/or Article X being deemed
satisfied to the extent thereof. For the purpose of this
Section 6.10, all expenses shall be paid on a sixty (60)-day
current basis. Moreover, the General Partners may in their
sole discretion at any time advance funds to the Partnership
to pay operating expenses and/or debt service of the
Partnership in order to facilitate the Partnership's
compliance with the Rent Restriction Test. All advances
pursuant to this Section 6.10 (including any Applied Fees)
shall be Subordinated Loans repayable without interest in
accordance with the provisions of Article X. The form and
provisions of all Subordinated Loans shall conform to
applicable rules and regulations.
6.11 Obligation to Complete the Construction and
Rehabilitation of the Apartment Complex
(a) The General Partners shall complete the
construction and rehabilitation of the Apartment Complex
substantially in accordance with the plans and
specifications approved by the Lenders and/or any Agency
and all requirements necessary to obtain the required
certificates of occupancy for dwelling units, or cause the
same to be completed, in a good and workmanlike manner, free
and clear of all mechanics', materialmen's or similar liens,
and shall equip the Apartment Complex or cause the same to
be equipped with all necessary and appropriate fixtures,
equipment and articles of personal property, including
refrigerators and ranges, and shall cause all necessary
certificates of occupancy for all apartment units in the
Apartment Complex to be obtained, all in accordance with the
Project Documents. If the proceeds of the Construction and
Permanent Mortgages, the net rental income, if any, of the
Apartment Complex generated prior to the later of Permanent
Mortgage Commencement or the Admission Date and which is
permitted by the Lenders and/or any Agency to be utilized
for any of the purposes hereinafter set forth, the Capital
Contribution of the Investment Limited Partner, the Capital
Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, and any
insurance proceeds arising out of casualties prior to the
later of Permanent Mortgage Commencement or the Admission
Date as available from time to time are insufficient to (i)
acquire and complete the construction of the Apartment
Complex and satisfy all other obligations, all as provided
in the first sentence of this Section 6.11(a), (ii) make the
special distributions to the General Partners described in
Section 10.2(c), (iii) pay the Construction and Development
Fee, (iv) arrive at Permanent Mortgage Commencement in
conformity with the Project Documents, (v) discharge all
Partnership liabilities and obligations arising out of any
casualty giving rise to any such insurance proceeds, and
(vi) provide for all other payments and expenses required to
be made or incurred through the later of Permanent Mortgage
Commencement or the Admission Date, including the funding of
any reserves required hereunder or under any other Project
Document and the repayment in full of all obligations under
the Construction Mortgage, the General Partners shall be
responsible for and obligated to pay such deficiencies and
shall, to the extent permitted under the Project Documents
and any applicable regulations or requirements of the
Lenders and/or any Agency, be reimbursed at or prior to the
later of Permanent Mortgage Commencement or the Admission
Date only out of the proceeds designated in this sentence
available from time to time after payment of all costs
described in this sentence. Any amounts not reimbursed
through the later of Permanent Mortgage Commencement or
Admission Date only out of the proceeds of the Capital
Contribution of the Investment Limited Partner as provided
in Section 5.1 shall not be reimbursable or otherwise change
the Interest of any Person in the Partnership but shall be
borne by the General Partners; provided, however, that,
notwithstanding the foregoing, to the extent any such
amounts represent items which are properly included in the
Partnership's Qualified Basis for purposes of Section 42 of
the Code and result in an increase in the amount of Tax
Credit allocated and available to the Partnership over and
above the amount of Tax Credit required in order to achieve
State Designation ("Includable Items"), the General Partners
shall make an additional Capital Contribution in the amount
of the Includable Items and the Partnership shall utilize
the proceeds of such additional Capital Contribution to pay
the Includable Items. In the event that the General
Partners shall fail to fund any such deficiency as required
by this Section 6.11, an amount not in excess of the next
installment of the Construction and Development Fee due to
the General Partners or any of their Affiliates under
Section 6.12 or any other provision hereof shall be applied
by the Partnership to meet such obligation of the General
Partners, and, to the extent there may still be a
deficiency, any amounts otherwise payable as the Annual
Partnership Management Fee or distributable to the General
Partners pursuant to Article X shall be so applied. Any
such application of funds as described in the immediately
preceding sentence shall constitute a payment of the amount
of the Fee or such other item which such funds had been
earmarked to pay, and the obligation of the General Partners
to advance such amount under this Section 6.11 shall be
satisfied to the extent of such application.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners,
or their designee, a non-cumulative fee (the "Annual
Partnership Management Fee") commencing in 1997 for services
in connection with the administration of the day to day
business of the Partnership in an annual amount of $3,000.
The Annual Partnership Management Fee for each fiscal year
of the Partnership shall be payable from Cash Flow in the
manner and priority set forth in Section 10.2(a) to the
extent Cash Flow is available therefor for such year.
(b) In consideration of their consultation, advice and
other services in connection with the construction and
development of the Apartment Complex and as consideration
for the assignment described in Section 6.14, the
Partnership shall pay to the General Partners (or their
designee) a construction and development fee (the
"Development Fee") in the principal amount of $55,000 which
fee shall be payable $26,522 from the proceeds of the Third
Installment and $20,000 from the proceeds of the Fourth
Installment. Any portion of the Construction and Development
Fee which shall not have been paid as of the date which is
six months after it shall have been earned shall accrue
interest at the Applicable Federal Rate in effect at the
time earned from the date earned through the date of
payment; any such interest shall be payable in accordance
with the provisions of Article X.
(c) The Partnership shall pay to BCCLP or an Affiliate
thereof a fee (the "Asset Management Fee ") commencing in
1997 for its services in connection with the Partnership's
accounting matters relating to the Investment Limited
Partner and assisting with the preparation of tax returns
and the reports required by Section 12.7 in the annual
amount of $3,000. The Asset Management Fee shall be
payable from Cash Flow in the manner and priority set forth
in Section 10.2(a); provided, however, that if in any fiscal
year commencing with 1997, Cash Flow is insufficient to pay
the full amount of the Asset Management Fee, the General
Partner shall be obligated to make Subordinated Loans to the
Partnership to cover $3,000 of the Asset Management Fee in
any such year.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or
duties hereunder to another General Partner or General
Partners.
Every contract, deed, mortgage, lease and other
instrument executed by any General Partner shall be
conclusive evidence in favor of every Person relying thereon
or claiming thereunder that at the time of the delivery
thereof (a) the Partnership was in existence, (b) this
Agreement had not been amended in any manner so as to
restrict the delegation of authority among General Partners
(except as shown in certificates or other instruments duly
filed in the Filing Office) and (c) the execution and
delivery of such instrument was duly authorized by the
General Partners. Any Person may always rely on a
certificate addressed to him and signed by any General
Partner hereunder:
(1) As to who are the General Partners or Limited
Partners hereunder;
(2) As to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the
General Partners or in any other manner germane to the
affairs of the Partnership;
(3) As to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) As to the authenticity of any copy of this
Agreement, the Certificate, and amendments thereto; or
(5) As to any act or failure to act by the Partnership
or as to any other matter whatsoever involving the
Partnership or any Partner.
6.14 Assignment to Partnership
The General Partners hereby transfer and assign to the
Partnership all of their right, title, and interest in and
to the Apartment Complex and in and to all of the Project
Documents, including, but not limited to, the following:
(i) all contracts with architects, supervising architects,
engineers and contractors with respect to the development of
the Apartment Complex; (ii) all plans, specifications and
working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and
applications therefor, including, but not limited to, those
relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with
respect to any agreements with any Lender; and (vi) any
other work product related to the Apartment Complex and/or
the Partnership.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the
Partnership (other than by reason of death or adjudication
of incompetence or insanity) or sell, assign or encumber its
Interest without the Consent of the Investment Limited
Partner and all the other General Partners, except that if
the Special Limited Partner becomes a General Partner
pursuant to Section 4.5(b), it shall not require the consent
of any other General Partner to transfer all or any portion
of its interest as a General Partner, other than as may be
required under the Uniform Act. In the event of any
Withdrawal by a General Partner in violation of this Section
7.1, such General Partner, in addition to being subject to
any and all other legal remedies which may be pursued by the
Partners, shall forfeit to the Special Limited Partner, such
General Partner's Interest and all unpaid fees from the
Partnership and shall remain liable for all of the
Withdrawing General Partner's obligations under this
Agreement; provided, however, that the Withdrawing General
Partner's liability hereunder shall be limited to
obligations arising prior to his Withdrawal, and shall
include no obligations arising after such Withdrawal. In
addition, upon such Withdrawal and transfer, the Special
Limited Partner or its designee shall automatically become a
General Partner without further action by the Withdrawing
General Partner or any other Partner, and the Investment
Limited Partner hereby consents to such transfer and to the
admission of the Special Limited Partner or its designee as
a General Partner in such a situation. Such transfer shall
occur automatically upon such Withdrawal without further
action by such Withdrawing General Partner.
(b) If at any time the only General Partners shall be
one or more corporations (or partnerships with corporations
as sole general partners), they shall be obligated to have a
net worth which satisfies the 89-12 Requirements. If the
General Partners shall at any time fail to meet the
requirements of this Section 7.1(b), then they shall be
deemed to have withdrawn from the Partnership in violation
of the provisions of this Section 7.1 and shall be subject
to the provisions of Section 7.1(a). Notwithstanding the
foregoing, the provisions of this Section 7.1(b) shall not
apply to the Special Limited Partner in the event it becomes
the sole General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining
General Partners shall have the right and obligation to
continue the business of the Partnership employing its
assets and name, all as contemplated by the Uniform Act.
Within thirty (30) days after they obtain knowledge of the
Withdrawal of a General Partner, the remaining General
Partners shall notify the Investment Limited Partner or its
designee of such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner,
there is no remaining General Partner, the Investment
Limited Partner and the Special Limited Partner may elect to
reconstitute the Partnership and continue the business of
the Partnership for the balance of the term specified in
Section 2.4 by selecting a successor General Partner. If
the Investment Limited Partner and the Special Limited
Partner elect to reconstitute the Partnership pursuant to
this Section 7.3 and admit the designated successor General
Partner, the relationship among the then Partners shall be
governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not
in violation of Section 7.1 and except as otherwise provided
in Section 4.5(b), the Withdrawing General Partner hereby
covenants and agrees to transfer to the remaining General
Partners or to a successor General Partner selected in
accordance with Section 7.3, as the case may be, such
portion of the Withdrawing General Partner's Interest as
such remaining or successor General Partners may designate,
such transfer to be made in consideration of the payment by
the transferee of either the agreed value of such Interest
or, if such value is not agreed to, the fair market value of
such Interest as determined by a committee of three
qualified real estate appraisers, one selected by the
Withdrawing General Partner, one selected by the transferee
and a third selected by the other two. The portion of the
Withdrawing General Partner's Interest designated to be
transferred in accordance with the provisions of this
Section 7.4 shall be sufficient to ensure the continued
treatment of the Partnership as a partnership under the Code
and as a limited partnership under the Uniform Act, and, for
the purposes of Article X, shall be deemed to be effective
as of the date of Withdrawal, but the Partnership shall not
make any distributions to the designated transferee until
the transfer shall have been made. Any holder of any
portion of the Interest of a Withdrawing General Partner
which is not designated to be transferred to the remaining
or successor General Partners pursuant to the provisions of
this Section 7.4 shall become an Additional Limited Partner
but (i) with the same share of the profits, losses, tax
credits, Cash Flow and other distributions to which the
holder of such Interest was entitled when held as a General
Partner Interest, and (ii) shall not participate in the
votes or Consents of the Investment Limited Partner
hereunder. The admission of any successor or additional
General Partner shall be subject to the consent of the
Lenders and any Agency (if required) and the Consent of the
Investment Limited Partner.
7.5 Admission of Additional General Partner(s) under
Certain Circumstances
In the event each of the General Partners is a
corporation and the General Partners at any time, or from
time to time, fail to have a net worth which satisfies the
89-12 Requirements, the Special Limited Partner or its
designee(s) shall be admitted (and each hereby agrees to be
admitted], automatically and without further action by them
or any Partner, as additional General Partner(s),
notwithstanding any other provision of this Agreement. The
General Partners hereby agree to take all action necessary
to implement this Section 7.5. Further, the General
Partners agree in such event to give prompt written notice
thereof to each Lender and Agency. If any Lender or Agency
rejects the admission of any additional General Partner so
admitted as a General Partner, then such additional General
Partner shall withdraw as a General Partner promptly after
an additional General Partner acceptable to each Lender and
Agency is admitted to the Partnership. Simultaneously with
such admission, each of the previously admitted General
Partners shall be deemed to have assigned proportionally to
the additional General Partner(s), automatically and without
further action, such portion of its General Partner Interest
so that the additional General Partner shall receive not
less than a one percent (1%) interest (or such greater
percentage as may be required either (i) in the opinion of
the Tax Accountants, to assure the partnership status of the
Partnership for Federal income tax purposes or (ii) by any
Agency in the profits, losses, tax credits and distributions
of the Partnership in consideration of $1.00 and any other
consideration which may be agreed upon. An additional
General Partner so admitted shall automatically become the
Managing General Partner and be irrevocably delegated all of
the power and authority of all of the General Partners
pursuant to Section 6.13. Each such additional General
Partner shall remain a General Partner until a Lender or
Agency shall object thereto in writing or until such time
as, in the opinion of the Tax Accountants, the Partnership
would continue to be treated as a partnership for Federal
income tax purposes notwithstanding their Withdrawal. At
such time, each such additional General Partner may, at its
option, then Withdraw without the approval of the Limited
Partners upon reassignment of its entire Interest to the
remaining General Partners. Each partner hereby grants to
the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law and coupled with
an interest, to amend the Certificate and this Agreement and
to do anything else which, in the view of the Special
Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 7.5 or to manage the
business of the Partnership. The admission of an additional
General Partner shall not relieve any other General Partner
of any of its obligations hereunder, and each other General
Partner shall fully indemnify and hold harmless the
additional General Partner from and against any and all
losses, judgments liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of
descent and distribution) or Section 8.1(b), no Limited
Partner may assign all or any part of its Interest without
the written consent of the General Partners, the giving or
withholding of which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the
General Partners, may assign to any Person all or any
portion of the economic benefits of the ownership of its
Interest; provided, however, that such assignment shall not
be binding on the Partnership until there shall have been
filed with the Partnership by registered mail certified
copies of an executed and acknowledged assignment and the
written acceptance by the assignee of all the terms and
provisions of this Agreement; if such assignment and
acceptance are not so filed, the Partnership need not
recognize such assignment for any purpose. An assignee of a
Limited Partner who does not become a Substituted Limited
Partner shall have, and shall only have, the right to
receive the share of allocations and distributions of the
Partnership to which the assigning Limited Partner would
have been entitled with respect to the Interest (or portion
thereof) so assigned if no such assignment had been made by
such Limited Partner. Any assigning Limited Partner whose
permitted assignee becomes a Substituted Limited Partner
shall thereupon cease to be a Limited Partner and shall no
longer have any of the rights or privileges of a Limited
Partner. Where the assignee does not become a Substituted
Limited Partner, the Partnership shall recognize such
assignment not later than the last day of the calendar month
following receipt of notice of assignment and all
documentation required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or
any portion thereof) who desires to make a further
assignment of its Interest shall be subject to all the
provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute
an assignee as Limited Partner in its place. Subject to
Section 8.3, the General Partners may, however, in their
sole discretion, permit an assignee to become a Substituted
Limited Partner. The consent of the General Partners to an
assignment of a Limited Partner Interest under Section 8.1
shall not, in and of itself, constitute permission under
this Section 8.2.
Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the
General Partners to signify the agreement of such
Substituted Limited Partner to be bound by all the
provisions of this Agreement and shall pay the Partnership's
reasonable legal fees and filing costs in connection with
its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition
would violate Section 13.1.
(b) In no event shall all or any part of a Limited
Partner Interest be Disposed of to a minor (other than to a
descendant by reason of death) or to an incompetent.
(c) The General Partners may, in addition to any other
requirement they may impose, require as a condition of any
Disposition that the transferor (i) assume all costs
incurred by the Partnership in connection therewith and (ii)
furnish the Partnership and the other Partners with an
opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable
Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition
in contravention of any of the provisions of this Section
8.3 shall be void and ineffectual and shall not bind or be
recognized by the Partnership.
ARTICLE IX
Borrowings
9.1 Borrowings
All Partnership borrowings shall be subject to the
terms of this Agreement, including, but not limited to, the
restrictions of Section 6.2, and may be made from any
source, including Partners and their Affiliates. If any
Partner shall lend any monies to the Partnership, the amount
of any such loan shall not be an increase of such Partner's
Capital Contribution. If any Partner shall so lend monies,
such loans shall be an obligation of the Partnership and
(except for Subordinated Loans) shall be repayable to such
Partner on the same basis and with the same rate of interest
as would be applicable to a comparable loan to the
Partnership from a third party.
ARTICLE X
Profits, Losses, Tax Credits, Distributions
and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4, for
each Partnership fiscal year or portion thereof, all
profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, and tax credits incurred or
accrued on or after the Commencement Date, other than those
arising from a Capital Transaction, shall be allocated 99%
to the Investment Limited Partner and 1% to the General
Partners.
(b) Except as otherwise specifically provided in this
Article, all profits and losses arising from a Capital
Transaction shall be allocated to the Partners as follows:
As to profits:
First, that portion of profits (including any profits
treated as ordinary income for Federal income tax purposes)
shall be allocated to the Partners who have negative Capital
Account balances in proportion to the amounts of such
balances, provided that no profits shall be allocated to a
Partner under this Clause First to increase any such
Partner's Capital Account above zero;
Second, profits in excess of the amounts allocated
under Clause First above shall be allocated to the General
Partners in an amount equal to the amount of cash
distributed or available to be distributed to them pursuant
to Clause Second of Section 10.2(b) as to the particular
Capital Transaction;
Third, profits in excess of the amounts allocated under
Clauses First and Second above shall be allocated to the
Investment Limited Partner in an amount equal to the amount
of cash required to pay to the Investment Limited Partner
the full amount (including interest) of the Credit Recovery
Loans;
Fourth, profits in excess of the amounts allocated
under Clauses First, Second and Third above shall be
allocated (i) to the Investment Limited Partner in an amount
equal to the sum of (a) its Invested Amount plus (b) the
full amount (including interest) of any Credit Recovery
Loans and (ii) to each other Limited Partner in an amount
equal to the amount of its respective Invested Amount,
reduced (but not below zero) in the case of each Limited
Partner (whether under clause (i) or clause (ii)) by the sum
of (A) the total amount of all prior cash made to such
Limited Partner pursuant to Section 10.2(b), Clause Sixth
plus (B) the positive balance in the Capital Account of such
Limited Partner prior to the allocation made pursuant to
this Clause Fourth;
Fifth, profits in excess of the amounts allocated under
Clauses First, Second, Third and Fourth above shall be
allocated to each General Partner in the amount of its
respective paid-in Capital Contribution, reduced (but not
below zero) by the sum of (i) the total amount of
distributions previously made to it pursuant to Section
10.2(b), Clause Eighth to credit amounts distributed under
Clause Second of Section 10.2(b) against amounts
distributable under Clause Eighth of Section 10.2(b) (and
not including the amounts so credited) plus (ii) the
positive balance in such General Partner's respective
Capital Accounts prior to the allocations made pursuant to
this Clause Fifth; and
Sixth, profits in excess of the amounts allocated under
Clauses First, Second, Third, Fourth, and Fifth above shall
be allocated to the Partners in the same percentages as cash
is distributed under Clause Ninth of Section 10.2(b) to
credit amounts distributed under Clause Second of Section
10.2(b) against amounts distributable under said Clause
Ninth (and not including the amounts so credited.)
As to losses:
First, an amount of losses shall be allocated to the
Partners to the extent and in such proportions as shall be
necessary such that, after giving effect thereto, the
respective balances in all Partners' Capital Accounts shall
be in the ratio of 99% for the Investment Limited Partner
and 1% for the General Partners;
Second, an amount of losses shall be allocated to the
Partners until the balance in each Partner's Capital Account
equals the amount of such Partner's Capital Contribution
(after the allocation under Clause First above);
Third, an amount of losses shall be allocated to the
Partners to the extent of and in proportion to such
Partners' Capital Account balances (after the allocations
under Clauses First and Second above); and
Fourth, any remaining amount of losses after the
allocations under Clauses First, Second and Third above
shall be allocated to the Partners in accordance with the
manner in which they bear the Economic Risk of Loss;
provided, however, that in the event that no Partner bears
an Economic Risk of Loss, then any remaining losses shall be
allocated 99% to the Investment Limited Partner and 1% to
the General Partners.
(c) Notwithstanding the foregoing provisions of
Sections 10.1(a) and 10.1(b), in no event shall any losses
be allocated to the Investment Limited Partner or the
Special Limited Partner if an to the extent that such
allocation would cause, as of the end of the Partnership
taxable year, the negative balance in the Investment Limited
Partner's Capital Account to exceed such Partner's share of
Partnership Minimum Gain plus such Partner's share, if any
of Partner Non-Recourse Debt Minimum Gain. Any losses which
are not allocated to a Partner by virtue of the application
of this Section 10.1(c) shall be allocated to the General
Partners. For the purposes of this Section 10.1(c), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required),
Cash Flow for each fiscal year or portion thereof of the
Partnership shall be applied as follows:
First, to the payment of the Asset Management Fee for
such year and for any previous year(s) as to which the Asset
Management Fee shall not yet have been paid in full;
Second, to the payment of any unpaid Construction and
Development Fee;
Third, to the repayment of any Subordinated Loans;
Fourth, to the payment of the Annual Partnership
Management Fee attributable to such year; and
Fifth, the balance thereof, if any, shall be
distributed annually, within seventy-five (75) days after
the end of the fiscal year, 20% to the Investment Limited
Partner and 80% to the General Partners.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall
determine from time to time that cash is available for
distribution from a Capital Transaction, such cash shall be
applied or distributed as follows:
First, to the payment of all matured debts and
liabilities of the Partnership (including, but not limited
to, all expenses of the Partnership incident to the Capital
Transaction), excluding (i) debts and liabilities of the
Partnership to Partners or their Affiliates and (ii) all
unpaid fees owing to the General Partners or their
Affiliates; and to the establishment of any reserves which
the General Partners and the Auditors shall deem reasonably
necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, if the Permanent Mortgage is in place at the
time of such Capital Transaction of if such Capital
Transaction constitutes a refinancing of the Permanent
Mortgage, to the General Partners in an aggregate amount
equal to 5% of the proceeds remaining after the payment of
the items set forth in Clause First of this Section 10.2(b);
Third, to the payment of the Asset Management Fee for
such year and for any previous year as to which the Asset
Management Fee has not been paid in full;
Fourth, to the payment to the Investment Limited
Partner of the full amount (including interest) of any
Credit Recovery Loans;
Fifth, to the repayment of any Subordinated Loans;
Sixth, to the repayment of any then-unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them,
including, but not limited to, accrued and unpaid Annual
Partnership Management Fee for the fiscal year of the
Capital Transaction; provided, however, that any debts or
obligations to be repaid to any Limited Partner or Affiliate
thereof pursuant to this Clause Fifth shall be repaid prior
to the repayment of any such debts or obligations to any
General Partner or Affiliate thereof;
Seventh, to the Investment Limited Partner in an amount
equal to its Invested Amount;
Eighth, to the repayment to the General Partners of
their paid-in Capital Contributions minus any prior
distributions made to them under this Clause Eighth and
Clause Second above, but never an amount less than zero;
Ninth, except in the case of a refinancing, to each
Partner in an amount equal to the positive balance in
his/her/its capital account, after distributions to each
Partner under Clauses First through Eighth, above; and
Tenth, any balance 49.99% to the Investment Limited
Partner, .01% to the Special Limited Partner and 50% to the
General Partners.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of,
or adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall
be distributed to the Partners in accordance with the
positive balances in their Capital Accounts after taking
into account all Capital Account adjustments for the
Partnership taxable year, including adjustments to Capital
Accounts pursuant to Sections 10.1(b) and 10.3(b). In the
event that a General Partner or Additional Limited Partner
has a negative balance in its Capital Account following the
liquidation of the Partnership or such Partner's Interest,
after taking into account all Capital Account adjustments
for the Partnership taxable year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an
amount equal to the negative balance in such Partner's
Capital Account. Such payment shall be made by the end of
such taxable year (or, if later, within 90 days after the
date of such liquidation) and shall, upon liquidation of the
Partnership, be paid to recourse creditors of the
Partnership or distributed to other Partners in accordance
with the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the
Partners in liquidation or otherwise, (i) any unrealized
appreciation or unrealized depreciation in the values of
such assets shall be deemed to be profits and losses
realized by the Partnership immediately prior to the
liquidation or other distribution event; and (ii) such
profits and losses shall be allocated to the Partners in
accordance with Section 10.1(b), and any property so
distributed shall be treated as a distribution of an amount
in cash equal to the excess of such fair market value over
the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered. For the
purposes of this Section 10.3(b), "unrealized appreciation"
or "unrealized depreciation" shall mean the difference
between the fair market value of such assets, taking into
account the fair market value of the associated financing
(but subject to Section 7701(g) of the Code), and the
Partnership's adjusted basis for such assets as determined
under Regulation Section 1.704-1(b). This Section 10.3(b) is
merely intended to provide a rule for allocating unrealized
gains and losses upon liquidation or other distribution
event, and nothing contained in this Section 10.3(b) or
elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair
market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the
Consent of the Investment Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
profits, tax exempt income, losses, non-deductible non-
capitalizable expenditures, tax credits and cash
distributions shared by a class of Partners shall be shared
by each Partner in such class in the ratio of such Partner's
paid-in Capital Contribution to the paid-in Class
Contribution of the class of Partners of which such Partner
is a member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations
or Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses
from extraordinary events which are not recovered from
insurance or otherwise (collectively "Recourse Obligations")
in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations shall be allocated
to the General Partner; and second, the balance of such
deductions shall be allocated as provided in Section
10.1(a).
(ii) If any profit arises from the sale or other
disposition of any Partnership asset which shall be treated
as ordinary income under the depreciation recapture
provisions of the Code, then the full amount of such
ordinary income shall be allocated among the Partners in the
proportions that the Partnership deductions from the
depreciation giving rise to such recapture were actually
allocated. In the event that subsequently-enacted
provisions of the Code result in other recapture income, no
allocation of such recapture income shall be made to any
Partner who has not received the benefit of those items
giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase
money indebtedness in partial payment of the purchase price
of the Apartment Complex and such indebtedness is
distributed to the Partners pursuant to the provisions of
Section 10.2(b) or Section 10.3, the distributions of the
cash portion of such purchase price and the principal amount
of such purchase money indebtedness hereunder shall be
allocated among the Partners in the following manner: On the
basis of the sum of the principal amount of the purchase
money indebtedness and cash payments received on the sale
(net of amounts required to pay Partnership obligations and
fund reasonable reserves), there shall be calculated the
percentage of the total net proceeds distributable to each
class of Partners based on Section 10.2(b) or Section 10.3,
as applicable, treating cash payments and purchase money
indebtedness principal interchangeably for this purpose, and
the respective classes shall receive such respective
percentages of the net cash purchase price and purchase
money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be
distributed in accordance with the respective portions of
principal allocated to the respective classes of Partners in
accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds
shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to
any asset which has a variation between its basis computed
in accordance with Treasury Regulation Section 1.704-1(b)
and its basis computed for Federal income tax purposes shall
be shared among the Partners so as to take account of such
variation in a manner consistent with the principles of
Section 704(c) of the Code and Treasury Regulation Section
1.704-l(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this
Agreement shall mean income and losses, and each item of
income, gain, loss, deduction or credit entering into the
computation thereof, as determined in accordance with the
accounting methods followed by the Partnership and computed
in accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv). Profits and losses for Federal income tax
purposes shall be allocated in the same manner as set forth
in this Article X, except as provided in Section
10.4(b)(iv).
(vi) If there is a net decrease in Partnership Minimum
Gain during a Partnership taxable year, each Partner will be
allocated items of income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain during the year
before any other allocation of Partnership items for such
taxable year. A Partner shall not be subject to this
mandatory allocation of in come or gain to the extent that
any of the exceptions provided in Treasury Regulation
Section 1.704-2(f)(2)-1 applies. All allocations pursuant
to this Section 10.4(b)(vi) shall be in accordance with
Treasury Regulations Section 1.704-2(f). This provision is
a "minimum gain chargeback" within the meaning of Treasury
Regulation Section 1.704-2(f) and shall be construed as
such.
(vii) If there is a net decrease in Partner Non-
Recourse Debt Minimum Gain during a Partnership taxable
year, then each Partner with a share of the minimum gain
attributable to such debt at the beginning of such year will
be allocated items of income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Non-
Recourse Debt Minimum Gain during the year. A Partner is
not subject to this Partner Non-recourse Debt Minimum Gain
chargeback to the extent that any of the exceptions provided
in Treasury Regulations Section 1.704-2(i)(4) applied
consistently with Treasury Regulation Section 1.704-2(f)(2)-
(5) applies. Such allocations shall be made in a manner
consistent with the requirements of Treasury Regulation
Section 1.704 and under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a)
an allocation of loss or deduction or expenditures described
in Section 705(a)(2)(B) of the Code made (1) pursuant to
Section 704(e)(2) of the Code to a donee of an Interest, (2)
pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (3) pursuant to
Regulation Section 1.751-1(b)(2)(ii) as a result of a
distribution by the Partnership of unrealized receivables or
inventory items or (b) a distribution, and such allocation
and/or distribution would cause the negative balance in such
Partner's Capital Account to exceed (i) such Partner's share
of Partnership Minimum Gain plus (ii) the amount of such
Partner's obligation, if any, to restore a negative balance
in such Partner's Capital Account plus (iii) such Partner's
share of Partner Non-recourse Debt Minimum Gain with respect
to which such Partner or a Related Person to such Partner
bears the Economic Risk of Loss, then such Partner shall be
allocated items of income and gain in an amount and manner
sufficient to eliminate such negative balance as quickly as
possible. For purposes of this Section 10.4(b)(viii), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
(ix) In the event that any fee payable to the General
Partner or any Affiliate thereof shall instead be determined
to be a non-deductible, non-capitalizable distribution from
the Partnership to a Partner for Federal income tax
purposes, then there shall be allocated to such General
Partner an amount of gross income equal to the amount of
such distribution.
(x) In applying the provisions of Article X with
respect to distributions and allocations, the following
ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions
of Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions
from Capital Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum
gain chargeback under Section 10.4(b)(vi) or Section
10.4(b)(vii).
(5) Capital Accounts shall be increased by any
qualified income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by allocations
of profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations
of losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations
of losses under Section 10.1(b).
(9) Capital Accounts shall be increased by allocations
of profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that
the Partners' Capital Accounts reflect the amounts they
would have reflected if adjustments required by Sections
10.4(b)(vi), 10.4(b)(vii) and 10.4(b)(viii) had not
occurred.
10.5 Authority of the General Partners to Vary Allocations
to Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each
Partner's distributive share of profits, tax-exempt income,
losses, non-deductible non-capitalizable expenditures and
credits (and items thereof) shall be determined and
allocated in accordance with this Agreement to the fullest
extent permitted by Section 704(b) of the Code. In order to
preserve and protect the determinations and allocations
provided for in this Agreement, the General Partners are
hereby authorized and directed to allocate profits, tax-
exempt income, losses, nondeductible non-capitalizable
expenditures and credits (and items thereof) arising in any
year differently than otherwise provided for in this
Agreement to the extent that allocating profits, tax-exempt
income, losses, nondeductible non-capitalizable expenditures
or credits (or any item thereof) in the manner provided for
herein would cause the determinations and allocations of
each Partner's distributive share of profits, tax-exempt
income, losses, non-deductible non-capitalizable
expenditures, or credits (or any item thereof) not to be
permitted by Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder. Any allocation made
pursuant to this Section 10.5 shall be deemed to be a
complete substitute for any allocation otherwise provided
for in this Agreement, and no amendment of this Agreement or
approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation")
under Section 10.5(a), the General Partners are authorized
to act only after having been advised in writing by the Tax
Accountants that, under Section 704(b) of the Code, (i) the
New Allocation is necessary, and (ii) the New Allocation is
the minimum modification of the allocations otherwise
provided for in this Agreement necessary in order to assure
that, either in the then-current year or in any preceding
year, each Partner's distributive share of profits, tax-
exempt income, losses, non-deductible non-capitalizable
expenditures, and credits (or any item thereof) is
determined and allocated in accordance with this Agreement
to the fullest extent permitted by Section 704(b) of the
Code.
(c) If the General Partners are required by Section
10.5(a) to make any New Allocation in a manner less
favorable to the Limited Partners than is otherwise provided
for herein, then the General Partners are authorized and
directed, only after having been advised in writing by the
Tax Accountants that such an allocation is permitted by
Section 704(b) of the Code, to allocate profits, tax-exempt
income, losses, non-deductible non-capitalizable
expenditures, and credits (and any item thereof) arising in
later years in such manner so as to bring the allocations of
profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, and credits (and each item
thereof) to the Limited Partners as nearly as possible to
the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partners under
Section 10.5(a) and Section 10.5(c) in reliance upon the
advice of the Tax Accountants shall be deemed to be made
pursuant to the fiduciary obligation of the General Partners
to the Partnership and the Limited Partners, and no such
allocation shall give rise to any claim or cause of action
by any Limited Partner.
ARTICLE XI
Management Agent
A. The General Partner shall engage the Management
Agent to manage the Apartment Complex pursuant to the
Management Agreement. The Management Agent shall receive a
Management Fee of those amounts payable from time to time by
the Partnership to the Management Agent for management
services in accordance with a management contract approved
by the Agency (if such approval is required) or, when the
Apartment Complex is not subject to Agency regulation, in
accordance with a reasonable and competitive fee
arrangement. From and after the Admission Date, the
Partnership shall not enter into any Management Agreement or
modify or extend any Management Agreement unless the General
Partners shall have obtained the prior written consent of
the Special Limited Partner to the identity of the
Management Agent and the terms of the Management Agreement
or the modification or extension thereof.
B. Notwithstanding the foregoing, however, should the
Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property
management, rent-up or leasing fees shall be paid to the
Investment General Partner or such Affiliate only for
services actually rendered and shall be in an amount equal
to the lesser of (i) fees competitive in price and terms
with those of non-affiliated Persons rendering comparable
services in the locality where the Apartment Complex is
located and which could reasonably be available to the
Partnership, or (ii) five percent (5%) of the gross revenues
of the Apartment Complex. No duplicate property management
fees shall be paid to any Person.
C. If (i) the Management Agent is the General Partner
or an Affiliate of the General Partner, and (a) the
Apartment Complex shall be subject to a substantial building
code violation which shall not have been cured within six
months after notice from the applicable governmental agency
or department or (b) the Partnership shall not have Cash
Flow of at least $1,000 each during year after 1997, or (ii)
an Event of Bankruptcy shall occur with respect to the
Management Agent, or (iii) the Management Agent shall commit
willful misconduct or gross negligence in its conduct of its
duties and obligations under the Management Agreement, then
upon request by the Special Limited Partner and subject to
Agency approval, if required, the General Partners must
cause the Partnership to promptly terminate the Management
Agreement with the Management Agent and appoint a new
Management Agent selected by the Special Limited Partner,
which new Management Agent shall not be not an Affiliate of
a General Partner. Each General Partner hereby grants to
the Special Limited Partner an irrevocable (to the extent
permitted by applicable law) power of attorney coupled with
an interest to take any action and to execute and deliver
any and all documents and instruments on behalf of such
General Partner and the Partnership as the Special Limited
Partner may deem to be necessary or appropriate in order to
effectuate the provisions of this Article XI.C. Subject to
Agency approval, if required, the Partnership shall not
enter into any future management arrangement or renew or
extend any existing management arrangement unless such
arrangement is terminable without penalty upon the
occurrence of the events described in this Article XI.
D. The Management Agent shall receive reasonable
compensation in accordance with the Management Agreement
submitted to, and approved by, the Investment Limited
Partner and the Special Limited Partner. Provided, however,
that for any period during which the Partnership fails to
generate Cash Flow, the Management Agent shall receive
compensation in an amount not to exceed one half the
ordinary compensation provided for in the Management
Agreement.
E. The General Partners shall have the duty to manage
the Apartment Complex during any period when there is no
Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records
which are required under the Uniform Act under the Code for
the Tax Credit, or by any governmental agency having
jurisdiction and may maintain such other books and records
as the General Partners in their discretion deem advisable.
Every Limited Partner, or its duly authorized
representatives, shall at all times have access to the
records of the Partnership at the principal office of the
Partnership at any reasonable times, and may inspect and
copy any of such records. A list of the names and addresses
of all of the Limited Partners shall be maintained as part
of the books and records of the Partnership and shall be
mailed to any Limited Partner upon request. A reasonable
charge for copy work may be charged by the Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be
maintained in the Partnership's name with such financial
institutions as the General Partners shall determine.
Withdrawals shall be made only in the regular course of
Partnership business on such signature or signatures as the
General Partners may determine. All deposits (including
security deposits and other funds required to be escrowed by
any Lender ) and other funds not needed in the operation of
the business shall be deposited, if required by applicable
law and to the extent permitted by applicable Agency or
Mortgage requirements, in interest-bearing accounts or
invested in United States Government obligations maturing
within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the
General Partners, all tax returns of the Partnership. Prior
to the filing of the Partnership tax returns, and in no
event later than February 1 of each year, the Auditors shall
deliver the tax returns for such year to the Tax Accountants
for their review and comment. If a dispute arises between
the Auditors and the Tax Accountants over the proper
preparation of the tax returns and such dispute cannot be
resolved by the Auditors and the Tax Accountants by March 1
of such year, then the Tax Accountants shall make the final
decision on whether any changes are necessary. The
Partnership shall reimburse BCCLP for all reasonable costs
and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall audit and certify all annual
financial reports to the Partners in accordance with
generally accepted auditing standards.
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which
cost recovery deductions are permitted, the Partnership
shall elect to use, so far as permitted by the provisions of
the Code, accelerated cost recovery methods. However, the
Partnership may change to another method of cost recovery if
such other method is, in the opinion of the Auditors, more
advantageous to the Investment Limited Partner and the
Limited Partners and/or holders of beneficial assignee
certificates thereof.
(b) Subject to the provisions of Section 12.5, all
other elections required or permitted to be made by the
Partnership under the Code shall be made by the General
Partners in such manner as will, in the opinion of the
Auditors, be most advantageous to the Investment Limited
Partner and the limited partners and/or holders of
beneficial assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the
Interest of the Investment Limited Partner or a transfer of
all or any part of an interest of a partner and/or holders
of beneficial assignee certificates of the Investment
Limited Partner, the Partnership shall elect, upon the
request of the Investment Limited Partner, pursuant to
Section 754 of the Code, to adjust the basis of the
Partnership property. Any adjustments made pursuant to said
Section 754 shall affect only the successor in interest to
the transferring Partner or partner or holder of beneficial
assignee certificate thereof. Each Partner will furnish the
Partnership all information necessary to give effect to such
election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the
calendar year. The books of the Partnership shall be kept
on an accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and
distributed to all Persons who were Partners at any time
during a fiscal year of the Partnership:
(i) Within sixty (60) days after the end of each fiscal
year of the Partnership, (A) a balance sheet as of the end
of such fiscal year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for
the year then ended, all of which, except the statement of
cash flows, shall be prepared in accordance with generally
accepted accounting principles and accompanied by a report
of the Auditors containing an opinion of the Auditors, and
(B) a report of the activities of the Partnership during the
period covered by the report. With respect to any
distribution to the Investment Limited Partner, the report
called for shall separately identify distributions from (1)
Cash Flow from operations during the period, (2) Cash Flow
from operations during a prior period which had been held as
reserves, (3) proceeds from disposition of property and
investments, (4) lease payments on net leases with builders
and sellers, (5) reserves from the gross proceeds of the
Capital Contribution of the Investment Limited Partner, (6)
borrowed monies, and (7) transactions outside of the
ordinary course of business with a description thereof.
(ii) Within thirty (30) days after the end of each
fiscal year of the Partnership, all information relating to
the Partnership and/or the Apartment Complex which is
necessary, in the view of the Tax Accountants, for the
preparation of the Limited Partners' Federal income tax
returns.
(iii) Within thirty (30) days after the end of each
quarter of a fiscal year of the Partnership, a report
containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended,
which may be unaudited;
(C) a statement of cash flows for the quarter then
ended, which may be unaudited;
(D) all other information which would be
pertinent to a reasonable investor regarding the Partnership
and its activities during the quarter covered by the report.
(b) Within sixty (60) days after the end of each fiscal
year of the Partnership a copy of the annual report to be
filed with the United States Treasury concerning the status
of the Apartment Complex as low-income housing and, if
required, a certificate to the appropriate state agency
concerning the same.
(c) Upon the written request of the Investment Limited
Partner for further information with respect to any matter
covered in item (a) or item (b) above, the General Partners
shall furnish such information within thirty (30) days of
receipt of such request.
(d) Prior to October 15 of each year, the Partnership
shall send to the Investment Limited Partner an estimate of
the Investment Limited Partner's share of the tax credits,
profits and losses of the Partnership for Federal income tax
purposes for the current fiscal year. Such estimate shall
be prepared by the General Partners and the Auditors.
(e) Within fifteen (15) days after the end of any
calendar quarter during which:
(i) there is a material default by the Partnership
under the Project Documents or in payment of any mortgage,
taxes, interest or other obligation on secured or unsecured
debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited
Partner, or
(iv) any Partner has pledged or collateralized its
Interest in the Partnership,
the General Partners shall send the Investment Limited
Partner a detailed report of such event.
(f) After the Admission Date, the Partnership shall
send to the Investment Limited Partner, on or before the
tenth day of each month, the monthly housing credit
monitoring form, and copies of all applicable periodic
reports covering the status of project operations from the
previous period, as may be required by any Agency or the
Authority .
(g) Within fifteen (15) days after the end of each
quarter of the Partnership's fiscal year, the Partnership
shall send to the Investment Limited Partner a report on
operations, in the form supplied by the Investment Limited
Partner.
(h) The General Partners shall cause the Partnership to
send to the Investment Limited Partner a copy of each
Construction Mortgage draw requisition and any notification
or correspondence from the Construction Lender indicating
that any such draw will not be paid as requisitioned. Upon
receipt, the Partnership shall send to the Investment
Limited Partner copies of the Form(s) 8609 evidencing the
Tax Credit allocation.
(i) If the earlier of (A) the Completion Date or (B)
the date upon which tenants first occupied apartment units
in the Apartment Complex shall have occurred six months or
more prior to the date upon which the Investment Limited
Partner acquired its Interest in the Partnership, then the
General Partners shall cause to be prepared and delivered to
the Investment Limited Partner within sixty (60) days of the
Admission Date the following items:
(i) An unaudited statement of income of the Partnership
for the year (or such shorter period as there may be from
the date of the most recent audited statement of income of
the Partnership) ended on the date upon which the Investment
Limited Partner acquired its Interest in the Partnership;
and
(ii) An audited statement of income of the Partnership
for any fiscal year of the Partnership ending between (A)
the earlier of (1) the Completion Date or (2) the date upon
which tenants first occupied apartment units in the
Apartment Complex and (B) the date upon which the Investment
Limited Partner acquired its Interest in the Partnership.
(j) If the General Partners do not cause the
Partnership to fulfill its obligations under Section
12.7(a)(i) and/or Section 12.7(a)(ii) within the time
periods set forth therein, the General Partners may be
required by the Investment Limited Partner to pay as damages
the sum of $100 per day (plus interest at a rate equal to
the general base rate of interest established by The First
National Bank of Boston or its successors and assigns and
announced by it as the rate charged by it to its prime
commercial customers on short-term unsecured borrowings as
its "base rate" from time to time in effect plus 3%) to the
Investment Limited Partner until such obligations shall have
been fulfilled; provided, however, that said penalty shall
not be applied should the failure to provide such reports
and information be beyond the control of the General
Partner. Such damages shall be paid forthwith by the
General Partners, and failure to so pay shall constitute a
material default of the General Partners hereunder. In
addition, if the General Partners shall so fail to pay, the
General Partners and their Affiliates shall forthwith cease
to be entitled to the Annual Partnership Management Fee, and
to the payment of any Cash Flow or Capital Transaction
proceeds to which they may otherwise be entitled hereunder.
Such payments of the Annual Partnership Management Fee, Cash
Flow and Capital Transaction proceeds shall be restored only
upon the payment of such damages in full, and any amount of
such damages not so paid shall be deducted against payments
of the Annual Partnership Management Fee, Cash Flow and
Capital Transaction proceeds otherwise due to the General
Partners or their affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed
directly to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall
be permitted to contract or otherwise deal with the
Partnership for the sale of goods or services or the lending
of money to the Partnership or the General Partners, except
for (i) management services, subject to the restrictions set
forth in Article XI.B., (ii) loans made by, or guaranteed
by, the Investment General Partner or any of its Affiliates,
and (iii) those dealings, contracts or provision of services
described in the Investment Partnership Agreement or in the
Prospectus. Extraordinary circumstances shall only be
presumed to exist where there is an emergency situation
requiring immediate action and the services required are not
immediately available from unaffiliated parties. All
services rendered under such circumstances must be rendered
pursuant to a written contract which must contain a clause
allowing termination without penalty on sixty (60) days'
notice. Goods and services provided under such
circumstances must be provided at the lesser of actual cost
or the price charged for such goods or services by
independent parties.
(c) In the event extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment
Complex. Neither the Investment General Partner nor any of
its Affiliates shall provide such services unless it
believes it has an adequate staff to do so and unless such
provision of goods and construction services is part of its
ordinary and ongoing business in which it has previously
engaged, independent of the activities of the Investment
Limited Partner. Any such services must be reasonable for
and necessary to the Investment Limited Partner, actually
furnished to the Investment Limited Partner, and provided at
the lower of ten percent (10%) of the construction contract
rate with respect to the Apartment Complex or ninety percent
(90%) of the competitive price charged for such services by
independent parties for comparable goods and services in the
same geographic location (except that in the case of
transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at
the lesser of costs or the compensation, price or fee of any
other Person rendering comparable services as aforesaid).
Cost of services as used herein means the pro rata cost of
personnel, including an allocation of overhead directly
attributable to such personnel, based on the amount of time
such personnel spent on such services or other method of
allocation acceptable to the accountants for the Investment
Limited Partner.
(d) All services provided by the Investment General
Partner or any Affiliate thereof pursuant to Section 12.8(c)
must be rendered pursuant to the Investment Partnership
Agreement or a written contract which precisely describes
the services to be rendered and all compensation to be paid
and shall contain a clause allowing termination without
penalty upon sixty (60) days' notice to the Investment
General Partner by a vote of a majority in interest of the
limited partners and assignees of beneficial interests in
the Investment Limited Partner.
(e) No compensation or fees may be paid by the
Partnership to the Investment General Partner or its
Affiliates except as described in the Investment Partnership
Agreement or in the Prospectus.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months
prior to the proposed date of the Disposition, could, in the
opinion of tax counsel to the Partnership, result in the
termination of the Partnership under Section 708 of the
Code. This Section 13.1 shall have no application to any
required repurchase of the Investment Limited Partner's
Interest. Any Disposition in contravention of any of the
provisions of this Section 13.1 shall be void ab initio and
ineffectual and shall not bind or be recognized by the
Partnership. Notwithstanding the foregoing provisions of
this Section 13.1, however, the Investment Limited Partner
may waive the provisions of this Section 13.1 at any time as
to a Disposition or series of Dispositions, and in the event
of such a waiver, this Section 13.1 shall have no force or
effect upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of
any Partnership fiscal year in which the Investment Limited
Partner shall have received any distributions under Article
X, the General Partners shall file an amendment to the
Certificate reducing by the amount of its allocable share of
such distribution the amount of Capital Contribution of the
Investment Limited Partner as stated in the last previous
amendment to the Certificate if such Amendment is required
under the Uniform Act to reduce any liability of the
Investment Limited Partner to partnership creditors.
However, Schedule A shall not be amended on account of any
such distribution.
The Partnership shall amend the Certificate at least
once each calendar quarter to effect the substitution of
Substituted Limited Partners, although the General Partners
may elect to do so more frequently. In the case of
assignments, where the assignee does not become a
Substituted Limited Partner, the Partnership shall recognize
the assignment not later than the last day of the calendar
month following receipt of notice of assignment and all
documentation required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this
Section 13.2, no such amendments to the Certificate need be
filed by the General Partners if the Certificate is not
required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in
writing and shall be deemed adequately given if actually
delivered or if sent by registered or certified mail,
postage prepaid, to the party for whom such notice is
intended at such party's last address of record on the
Partnership books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not
merely to a subdivision in which such words appear unless
the context otherwise requires. The singular shall include
the plural, and vice versa, and each gender (masculine,
feminine and neuter) shall include the other genders, unless
the context requires otherwise. Each reference to a
"Section" or an "Article" refers to the corresponding
Section or Article of this Agreement, unless specified
otherwise. References to Treasury Regulations (permanent or
temporary) or Revenue Procedures shall include any successor
provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the
respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in
accordance with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts
and all so executed shall constitute one agreement binding
on all parties hereto, notwithstanding that all the parties
have not signed the original or the same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect,
(a) each of the provisions of this Agreement shall be
subject to, and the General Partners covenant to act in
accordance with, the Project Documents; (b) the Project
Documents shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successors
and assigns to the extent expressly provided therein; (c)
upon any dissolution of the Partnership or any transfer of
the Apartment Complex, no title or right to the possession
and control of the Apartment Complex and no right to collect
the rent therefrom shall pass to any Person who is not, or
does not become, bound by the Project Documents and other
Project Documents in a manner satisfactory to the Lender or
any Agency ; (d) no amendment to any provision of the
Project Documents shall become effective without the prior
written consent of the Lender or any Agency (if required);
and (e) the affairs of the Partnership shall be subject to
Agency regulation and no action shall be taken which would
require the consent or approval of any Agency unless the
same is first obtained. No new Partner shall be admitted to
the Partnership, and no Partner shall withdraw from the
Partnership or be substituted for without the consent of the
Lender or any Agency (if such consent is then required).
No amendment to this Agreement relating to matters governed
by Agency regulations or requirements shall become
effective until the prior written consent of the Agency (if
required) to such amendment shall have been obtained.
Any conveyance or transfer of title to all or any
portion of the Apartment Complex required or permitted under
this Agreement shall in all respects be subject to all
conditions, approvals and other requirements of Agency rules
and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered
separable and (a) if for any reason any provision is
determined to be invalid, such invalidity shall not impair
the operation of or affect those portions of this Agreement
which are valid, and (b) if for any reason any provision
would cause the Investment Limited Partner to be bound by
the obligations of the Partnership (other than the rules and
regulations of any Lender and the requirements of any other
Lender), such provision or provisions shall be deemed void
and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are
for convenience of reference only and are not intended to
qualify the meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners
only with the Consent of the Investment Limited Partner and
the prior written consent of the Special Limited Partner.
13.12 Time of Admission
The Investment Limited Partner shall be deemed to have
been admitted to the Partnership as of the Commencement Date
for all purposes of this Agreement, including Article X
hereof; provided, however, that if regulations are issued
under the Code or an amendment to the Code is adopted which
would require, in the opinion of the Auditors, that the
Investment Limited Partner be deemed admitted on a date
other than as of the Commencement Date, then the General
Partners shall select a permitted admission date which is
most favorable to the Investment Limited Partner.
WITNESS the execution hereof under seal as of the 1st
day of July, 1997.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER(S): GENERAL PARTNER(S):
GAUKLER ENTERPRISES, INC.
/s/James P. Knutson By:/s/George Gaukler
James P. Knutson George Gaukler, its
President
INVESTMENT LIMITED PARTNER: SPECIAL LIMITED PARTNER:
BOSTON CAPITAL BCTC 94, INC.
TAX CREDIT FUND IV L.P.,
a Delaware
limited partnership
By:/s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-in-Factfor
John P. Manning,its
duly authorized
President
By: Boston Capital Associates IV,
L.P., a Delaware limited
partnership, its general
partner
By:/s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact for
John P. Manning,
a general partner
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the
sole purpose of agreeing to the provisions of Article XI of
the foregoing Second Amended and Restated Agreement and
Certificate of Limited Partnership notwithstanding any
provision of the Management Agreement to the contrary.
Management Agent
VALLEY RENTAL SERVICE
By:/s/
, its
GUARANTY
The undersigned unconditionally guarantees the
performance by the General Partner of all of its obligations
under Sections 5.1, 5.2, 6.5, 6.10, 6.11(a) and 12.7(j) of
this Second Amended and Restated Agreement and Certificate
of Limited Partnership and hereby waive any right to require
that any action be brought against any other Person or to
require that resort be made to any security prior to
enforcement of this guaranty. The obligations of the
undersigned hereunder shall be binding upon the respective
heirs, executors and legal representatives of the
undersigned. Execution of this Agreement by the undersigned
is solely for the purposes of undertaking this guaranty and
shall not be deemed to make the undersigned a partner of the
partnership.
/s/George Gaukler
George Gaukler,
Individually
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
BEFORE ME, the undersigned Notary Public in and for
said County and State, personally appeared the above-named
James P. Knutson, known to me to be the person who executed
the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein contained are true
and that he did sign the same as his free act and deed.
WITNESS my hand and official seal this ______ day of
_________, 19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
BEFORE ME, the undersigned Notary Public in and for
said County and State, personally appeared the above-named
George Gaukler, known to me to be the President of Gaukler
Enterprises, Inc., who being duly sworn, acknowledged that
the statements therein contained are true and that he did
sign the same as his free act and deed and that the same is
the duly authorized free act and deed of Prairie West, Inc.
WITNESS my hand and official seal this ______ day of
_________, 19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
BEFORE ME, the undersigned Notary Public in and for
said County and State, personally appeared the above-named
________________, known to me to be the -
_______________________of Valley Rental Service, who, being
duly sworn, acknowledged that the statements therein
contained are true and that he did sign the same as his free
act and deed and that the same is the duly authorized free
act and deed of Valley Rental Service.
WITNESS my hand and official seal this ______ day of
_________, 19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
BEFORE ME, the undersigned Notary Public in and for
said County and State, personally appeared the above-named
George Gaukler, known to me to be the person who executed
the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein contained are true
and that he did sign the same as his free act and deed.
WITNESS my hand and official seal this ______ day of
_________, 19__.
_________________________
Notary Public
_________________________
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
Personally appeared before me, the undersigned
authority in and for said County and State, on this _______
day of ____________, 19__, within my jurisdiction, the
within named Bonnie Kate Fox, Attorney in Fact for John P.
Manning, who acknowledged that he is a general partner of
Boston Capital Associates, which is the general partner of
Boston Capital Associates, and the President of Boston
Capital Partners Corporation, which are the general partners
of Boston Capital Tax Credit Fund IV, L.P., and that in said
representative capacity she executed the above and foregoing
instrument, after first having been duly authorized to do
so.
______(Notary
Public)
My Commission Expires:
___________________________
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
Personally appeared before me, the undersigned
authority in and for said County and State, on this _______
day of ____________, 19__, within my jurisdiction, the
within named Bonnie Kate Fox, Attorney in Fact for John P.
Manning, who acknowledged that he is the President of BCTC
94, Inc., a Massachusetts corporation, and that for and on
behalf of the said corporation, and as its act and deed she
executed the above and foregoing instrument, after first
having been duly authorized by said corporation to do so.
___ __ (Notary
Public)
My Commission Expires:
___________________________
Grandview Apartments Limited Partnership
Schedule A
As of
September 1, 1997
General Partners Capital Contribution
Gaukler Enterprises, Inc. $11,000
1330 West Main Street
Valley City, ND 58072
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, MA 02108
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution
Boston Capital $1,069,522 $534,761
Tax Credit Fund IV, L.P.
A Limited Partnership
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
____________________________
*Paid-in Capital Contribution as of the date of this
Schedule A. Future Installments of Capital Contribution are
subject to adjustment and are due at the times and subject
to the conditions set forth in the Agreement to which this
Schedule is attached.
BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
GRANDVIEW APARTMENTS LIMITED PARTNERSHIP
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of September
1, 1997, by, GRANDVIEW APARTMENTS LIMITED PARTNERSHIP, a
North Dakota limited partnership (the "Operating
Partnership"); GAUKLER ENTERPRISES, INC. (the "Operating
General Partner) and JAMES P. KNUTSON AND MICHAEL H. GODWIN
(the "Original Limited Partners") for the benefit of BOSTON
CAPITAL TAX CREDIT FUND IV, L.P., a Delaware limited
partnership (the "Investment Partnership"), BCTC 94, INC.
(the "Special Limited Partner") (the Investment Partnership
and the Special Limited Partner may be collectively referred
to as "Boston Capital"), PERKINS, SMITH & COHEN, LLP and
certain other persons or entities described herein.
WHEREAS, the Operating Partnership proposes to admit
the Investment Partnership as a limited partner thereof
pursuant to the Second Amended and Restated Agreement and
Certificate of Limited Partnership of the Operating
Partnership dated as of MarchSeptember 1, 1997 (the
"Operating Partnership Agreement"), in accordance with which
the Investment Partnership will make substantial capital
contributions to the Operating Partnership;
WHEREAS, the Investment Partnership and Boston Capital
have relied upon certain information and representations
described herein in evaluating the merits of investment by
the Investment Partnership in the Operating Partnership; and
WHEREAS, PERKINS, SMITH & COHEN, LLP, as counsel for
the Investment Partnership, will rely upon such information
and representations in connection with its delivery of
certain opinions with respect to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to
enter into the Operating Partnership Agreement and become a
limited partner of the operating Partnership, and for $1.00
and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Operating
Partnership, the Operating General Partner and the Original
Limited Partner hereby agree as follows for the benefit of
the Investment Partnership, Boston Capital, PERKINS, SMITH &
COHEN, LLP and certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership, the Operating General
Partner and the Limited Partner
The Operating Partnership, the Operating General
Partner and the Original Limited Partner jointly and
severally represent, warrant and certify to the Investment
Partnership, Boston Capital, and PERKINS, SMITH & COHEN, LLP
that, with respect to the Operating Partnership, as of the
date hereof:
1.01 The Operating Partnership is duly
organized and in good standing as a limited partnership
pursuant to the laws of the state of its formation with full
power and authority to own its apartment complex (the
"Apartment Complex") and conduct its business; the Operating
Partnership, the Operating General Partner and the Original
Limited Partner have the power and authority to enter into
and perform this Certification and Agreement; the execution
and delivery of this Certification and Agreement by the
Operating Partnership, the Operating General Partner and the
Original Limited Partner have been duly and validly
authorized by all necessary action; the execution and
delivery of this Certification and Agreement, the
fulfillment of its terms and consummation of the
transactions contemplated hereunder do not and will not
conflict with or result in a violation, breach or
termination of or constitute a default under (or would not
result in such a conflict, violation, breach, termination or
default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which
the Operating Partnership or any Operating General Partner
or Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Operating
Partnership or any Operating General Partner or the Original
Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and
binding agreement of the Operating Partnership, the
Operating General Partner and the Original Limited Partner,
enforceable against each of them in accordance with its
terms.
1.02 The Operating General Partner has
delivered to the Investment Partnership, Boston Capital or
their affiliates all documents and information which would
be material to a prudent investor in deciding whether to
invest in the Operating Partnership. All factual
information, including without limitation the information
set forth in Exhibit A hereto, provided to the Investment
Partnership, Boston Capital or their affiliates either in
writing or orally, did not, at the time given, and does not,
on the date hereof, contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under
which they are made. Since the date of the financial
statements for the Operating General Partner previously
delivered, there has been no material adverse change in the
financial position of the Operating General Partner. The
estimates of occupancy rates, operating expenses,
depreciation and tax credits set forth on Exhibit A are
reasonable in light of the knowledge and experience of the
Operating General Partner.
1.03 As of the date hereof, each of the
representations contained in Exhibit B attached hereto is
true, accurate and complete as to each of the Operating
Partnership, the Operating General Partner and the Original
Limited Partner and as to any of their affiliates, any of
their predecessors and their affiliates' predecessors, any
of their directors, officers, general partners and/or
beneficial owners of ten per cent (10%) or more of any class
of their equity securities (beneficial ownership meaning the
power to vote or direct the vote and/or the power to dispose
or direct the disposition of such securities), as the case
may be, and any promoters presently connected with them in
any capacity.
1.04 Each of the representations and
warranties contained in the Operating Partnership Agreement
is true and correct as of the date hereof.
1.05 Each of the covenants and agreements of
the Operating Partnership and the Operating General Partner
contained in the Operating Partnership Agreement has been
duly performed to the extent that performance of any
covenant or agreement is required on or prior to the date
hereof.
1.06 All conditions to admission of the
Investment Partnership as the investment limited partner of
the Operating Partnership contained in the Operating
Partnership Agreement have been satisfied.
1.07 No default has occurred and is
continuing under the Operating Partnership Agreement or any
of the Project Documents (as said term is defined in the
Operating Partnership Agreement) for the Operating
Partnership.
1.08 The Operating General Partner agrees to
take all actions necessary to claim the Projected Credit,
including, without limitation, the filing of Form(s) 8609
with the Internal Revenue Service.
1.09 No person or entity other than the
Operating Partnership holds any equity interest in the
Apartment Complex.
1.10 The Operating Partnership has the sole
responsibility to pay all maintenance and operating costs,
including all taxes levied and all insurance costs,
attributable to the Apartment Complex.
1.11 The Operating Partnership, except to the
extent it is protected by insurance and excluding any risk
borne by lenders, bears the sole risk of loss if the
Apartment Complex is destroyed or condemned or there is a
diminution in the value of the Apartment Complex.
1.12 No person or entity except the Operating
Partnership has the right to any proceeds, after payment of
all indebtedness, from the sale, refinancing, or leasing of
the Apartment Complex.
1.13 No Operating General Partner is related
in any manner to the Investment Partnership, nor is the
Operating General Partner acting as an agent of the
Investment Partnership.
1.14 The Apartment Complex contains no
substance known to be hazardous, such as hazardous waste,
lead-based paint, asbestos, methane gas, urea formaldehyde
insulation, oil, toxic substances, underground storage
tanks, polychlorinated biphenyls (PCBs), and radon; the
Apartment Complex is not affected by the presence of oil,
toxic substances, or other pollutants that could be a
detriment to the Apartment Complex nor is the Operating
Partnership in violation of any local, state, or federal law
or regulation; and no violation of the Clean Air Act, Clean
Water Act, Resource Conservation and Recovery Act, Toxic
Substance Control Act, Safe Drinking Water Control Act,
Comprehensive Environmental Resource Compensation and
Liability Act, or Occupational Safety and Health Act has
occurred or is continuing. Neither the Operating
Partnership nor any Operating General Partner or Original
Limited Partner has received any notice from any source
whatsoever of the existence of any such hazardous condition
relating to the Apartment Complex or of any violation of any
local, state or federal law or regulation with respect to
the Apartment Complex.
1.15 The fair market value of the Apartment
Complex exceeds the total amount of indebtedness encumbering
the Apartment Complex and is expected to continue to do so
throughout the term of such indebtedness.
2. Indemnification
2.01 The Operating General Partner (for
purposes of this Section 2.01, the "Indemnifying Parties"
or, individually, an "Indemnifying Party") agree to
indemnify and hold harmless the Investment Partnership and
Boston Capital (for purposes of this Section 2.01, the
"Indemnified Parties" or, individually, an "Indemnified
Party") and each officer, director, employee and person, if
any, who controls any party against any losses, claims,
damages or liabilities (collectively, "Liabilities"), joint
or several, to which any Indemnified Party or such officer,
director, employee or controlling person may become subject,
insofar as such Liabilities or actions in respect thereof
arise out of or are based upon (i) a breach by such
Indemnifying Party of any of his representations, warranties
or covenants to such Indemnified Party or any such of its
officers, directors, employees or controlling persons under
this Certification and Agreement or (ii) liability under any
statute, regulation, ordinance, or other provision of
federal, state, or local law or any civil action pertaining
to the protection of the environment or otherwise pertaining
to public health or employee health and safety, including,
without limitation, protection from hazardous waste,
leadbased paint, asbestos, methane gas, urea formaldehyde
insulation, oil, toxic substance, underground storage tanks,
polychlorinated biphenyls (PCBs), and radon; and to
reimburse each such Indemnified Party and each such officer,
director, employee or controlling person for any legal or
other expenses reasonably incurred by it or them in
connection with investigating or defending against any such
Liability or action; provided, however, that the
Indemnifying Party shall not be required to indemnify any
Indemnified Party or any such officer, director, employee or
controlling person for any payment made to any claimant in
settlement of any Liability or action unless such payment is
approved by the Indemnifying Party or by a court having
jurisdiction of the controversy. This indemnity agreement
shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the
termination of any agreement which refers to this indemnity
and shall be in addition to any liability which the
Indemnifying Party may otherwise have.
2.02 No Indemnifying Party shall be liable
under the indemnity agreements contained in Section 2.01
unless the Indemnified Party shall have notified the
Indemnifying Party in writing within forty-five (45)
business days after the summons or other first legal process
giving information of the nature of the claim shall have
been served upon the Indemnified Party or any such of its
officers, directors, employees or controlling persons, but
failure to notify an Indemnifying Party of any such claim
shall not relieve it from any liability which it may have to
the Indemnified Party or any such of its officers,
directors, employees or controlling persons against whom
action is brought otherwise than on account of its indemnity
agreement contained in Section 2.01. In case any action is
brought against any Indemnified Party or any such of its
officers, directors, employees or controlling persons upon
any such claim, and it notifies the Indemnifying Party of
the commencement thereof as aforesaid, the Indemnifying
Party shall be entitled to participate at its own expense in
the defense, or, if it so elects, in accordance with
arrangements satisfactory to the other Indemnifying Party or
parties similarly notified, to assume the defense thereof,
with counsel who shall be satisfactory to such Indemnified
Party or any such of its officers, directors, employees or
controlling persons and any other Indemnified Parties who
are defendants in such action; and after notice from the
Indemnifying Party to such Indemnified Party or any such of
its officers, directors, employees or controlling persons of
its election so to assume the defense thereof and the
retaining of such counsel by the Indemnifying Party, the
Indemnifying Party shall not be liable to such Indemnified
Party or any such of its officers, directors, employees or
controlling persons for any legal or other expenses
subsequently incurred by such Indemnified Party or any such
of its officers, directors, employees or controlling persons
in connection with the defense thereof, other than the
reasonable costs of investigation.
3. Miscellaneous
3.01 This Certification and Agreement is made
solely for the benefit of the Operating Partnership, the
Operating General Partner, the Original Limited Partner,
Boston Capital, Perkins, Smith & Cohen, LLP, and the
Investment Partnership (and, to the extent provided in
Section 2, the officers, directors, partners, employees and
controlling persons referred to therein), and their
respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this
Agreement.
3.02 This Certification and Agreement may be
executed in several counterparts, each of which shall be
deemed to be an original, all of which together shall
constitute one and the same instrument.
3.03 Terms defined in the Operating
Partnership Agreement and used but not otherwise defined
herein shall have the meanings given to them in the
Operating Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their
hands and seals as of the date first above written.
OPERATING PARTNERSHIP:
GRANDVIEW APARTMENTS LIMITED PARTNERSHIP
By: GAUKLER ENTERPRISES, INC.,
its General Partner
By:/s/George Gaulker
George Gaukler,
its President
OPERATING GENERAL PARTNERS:
GAUKLER ENTERPRISES, INC.,
its General Partner
By:/s/George Gaukler
George Gaukler,
its President
ORIGINAL LIMITED PARTNERS:
/s/James P. Knutson
James P. Knutson
Exhibit A
GRANDVIEW APARTMENTS LIMITED PARTENRSHIP
FACT SHEET
1. Sources and Uses of Funds
A. Sources
Permanent Mortgage - $1,191,700 ( 52%)
G. P. Capital - $ 11,000 ( 1%)
Defferred Development Fee - $ 8,478 ( 1%)
I.L.P. Capital - $1,069,522 ( 46%)
Total - $2,280,700 (100%)
B. Uses
Total Construction Cost - $1,874,600 ( 82%)
Total Soft Costs - $ 171,100 ( 7%)
Construction and
Development Fee - $ 55,000 ( 2%)
Land - $ 180,000 ( 8%)
Total - $2,280,700 (100%)
1. Construction Financing
A. Lender First International Bank &
Trust
B. Mortgage Amount: $1,240,000
C. Note Date: March 21, 1996
D. Interest Rate: 9.25% variable
E. Term: May 1, 1997
F. Amortization: 1 year
2. Permanent Financing
A. Lender Federal National Mortgage
Association
B. Mortgage Amount: $1,191,700
C. Note Date: TBD
D. Interest Rate: 8%
E. Term: 18 Years
F. Amortization: 30 Years
3. Eligible Basis: $2,034,600
4. Qualified Basis: $2,034,600
5. Operating General Partner
Capital Contribution: $11,000
6. Working Capital Loan
Amount: $0
7. Type of Credit: 8.6%
8. Rent-up Schedule:
44% occupancy by February 1, 1998
66% occupancy by March 1, 1998
80% occupancy by April 1, 1998
91% occupancy by May 1, 1998
100% occupancy by June 1, 1998
9. Projected Credit to the
Investment Partnership (99%) $1,725,035
A. $155,732 for 1997;
B. $172,504 per annum for each of the
years 1998 through 2006;
C. $16,771 for 2007 (provided, however,
that the projected credit for 2007
shall be reduced by the amount, if
any, by which the Actual Credit for
1997 exceeds $155,732).
10. Total Projected Credit to the
Operating Partnership (100%) $1,742,460
A. $157,035 for 1997;
B. $174,246 per annum for each of the
years 1998 through 2006;
C. $16,941 for 2007.
11. Tax Credit Approval:
A. Application
1. Date: August 14, 1994
2. Amount requested: $ 180,549
B. Reservation
1. Date: November 15, 1994
2. Amount Reserved: $ 176,938
12. Apartment Complex:
A. Name: Grandview Apartments
B. Address: 33rd Street SW
Fargo, ND 52801
C. County: Cass
D. Type of Project: __________
13. Area Median Income: $42,100
14. Type of Apartments:
Uni Basic Utility
Number Sq. Ft. Rent Allowance
2-Bedroom 4 ___ $475 $16
2-Bedroom 2 ___ $460 $16
3-Bedroom 21 ___ $625 $17
3-Bedroom 9 ___ $530 $17
15. Annual Operating Expenses
(beginning 1998): $99,960 (plus approx.3%
annual increase)
16. Reserve Account
A. Annual: $ 9,692
B. Total: $96,920
17. Amount of Annual Asset Management
Fee to Boston Capital $ 3,000
(beginning 1997):
18. Amount of Annual Partnership
Management Fee
(beginning 1997): $ 3,000
19. Amount of Total Depreciable
Base Allocated to Personal
Property: $66,771 (3.28%)
20. Completion Date: ________________
21. Total Capital Contribution of
Investment Partnership: $1,069,522
22. Schedule of Capital Contributions
A. $534,761 on the latest to occur of (i) Admission
Date, (ii) Tax Credit Set Aside, or(iii) receipt of
Permanent Mortgage Commitment acceptable to the
Investment Limited Partner.
B. $267,381 on the latest to occur of (i) Completion
Date, (ii) Cost Certification, (iii) State
Designation, (iv) receipt of an updated title
insurance policy satisfactory to the Investment
Limited Partner and its counsel;
C. $247,380 on the latest to occur of (i) the
Initial 95% Occupancy Date, (ii) Permanent Mortgage
Commencement, (iii) Breakeven Point or, (iv) receipt
of a payoff letter from the contractor stating that
all amounts payable to the contractor have been
paid in full and that the Partnership is not in
violation of the construction contract or (v)
State Designation; and
D. $20,000 on the to occurrence of (i) receipt of a
tax return and an audited financial statement
for the year in which the Breakeven Point occurred.
23. Fees and Other Items to be paid from Capital
Contributions
Financing Shortfall: $1,023,000
Construction and Development Fee: $ 55,000
24. Operating General Partners: Gaukler Enterprises,
Inc.
Address: P.O. Box 446
Valley City, ND 58072
Telephone: (701) 845-1291
25. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
Operating General Partner: 1% 50% 80%
Investment Partnership: 99% 49.99% 20%
Special Limited Partner: 0% 0.001% 0%
26. Management Agent: Valley Rental Service
Contact Person: James P. Knutson
Address: P.O. Box 446
Valley City, ND 58072
Telephone Number: (701) 845-1291
Amount of Fees: 5% of gross monthly rent
collected
27. Builder: Valley Realty, Inc.
Address: P.O. Box 446
Valley City, ND 58072
Amount of Compensation: $1,874,600
Builder's Profit: $_______________
28. Auditor and Tax Return Preparer: Ludvigson, Braun &
Co.
Contact Person:
Address: 117 NW 3rd Street
P.O. Box 845
Valley City, ND 58072
Telephone Number: (701) 845-1457
Fax Number: (701) 845-8003
29. Federal Taxpayer ID Number: 45-0437508
30. Building Breakdown:
A. # of Units 36
B. # of Building 6
C. BIN # ND-94-00009 ND-94-00012
ND-94-00010 ND-94-00013
ND-94-00011 ND-94-00014
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partner and Original Limited
Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General
Partner and its Original Limited Partner (as identified on
the Certification and Agreement to which this Certificate is
attached as Exhibit B) hereby represent to you that neither
(i) the Operating Partnership, (ii) any predecessor of the
Operating Partnership, (iii) any of the Operating
Partnership's affiliates ("affiliate" meaning a person that
controls or is controlled by, or is under common control
with, the Operating Partnership), (iv) any sponsor (meaning
any person who (1) is directly or indirectly instrumental in
organizing the Operating Partnership or (2) will directly or
indirectly manage or participate in the management of the
Operating Partnership or (3) will regularly perform, or
select the person or entity who will regularly perform, the
primary activities of the Operating Partnership), (v) any
officer, director, principal or general partner of the
Operating Partnership or of any sponsor, (vi) any officer,
director, principal, promoter or general partner of the
Operating General Partner, (vii) any beneficial owner of ten
per cent or more of any class of the equity securities of
the Operating Partnership or of any sponsor (beneficial
ownership meaning the power to vote or direct the vote
and/or the power to dispose or direct the disposition of
such securities), (viii) any promoter of the Operating
Partnership (meaning any person who, acting alone or in
conjunction with one or more other persons, directly or
indirectly has taken, is taking or will take the initiative
in founding and organizing the business of the Operating
Partnership or any person who, in connection with the
founding and organizing of the business or enterprise of the
Operating Partnership, directly or indirectly receives in
consideration of services or property, or both services and
property, ten per cent or more of any class of securities of
the Operating Partnership or ten per cent or more of the
proceeds from the sale of any class of such securities;
provided, however, a person who receives such securities or
proceeds either solely as underwriting commissions or solely
in consideration of property shall not be deemed a promoter
if such person does not otherwise take part in founding and
organizing the enterprise) presently connected with the
Operating Partnership in any capacity:
(1) Has filed a registration statement which is the
subject of any pending proceeding or examination under the
securities laws of any jurisdiction, or which is the subject
of any refusal order or stop order thereunder entered within
five years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere to
a misdemeanor or felony or, within the last ten years, been
held liable in a civil action by final judgment of a court
based upon conduct showing moral turpitude in connection
with the offer, purchase or sale of any security, franchise
or commodity (which term, for the purposes of this
Certificate shall hereinafter include commodity futures
contracts) or any other aspect of the securities or
commodities business, or involving racketeering, the making
of a false filing or a violation of Sections 1341, 1342 or
1343 of Title 18 of the United States Code or arising out of
the conduct of the business of an issuer, underwriter,
broker, dealer, municipal securities dealer, or investment
adviser, or involving theft, conversion, misappropriation,
fraud, breach of fiduciary duty, deceit or intentional
wrongdoing including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny
fraudulent conversion or misappropriation of property or
conspiracy to defraud, or which is a crime involving moral
turpitude, or within the last five years of a misdemeanor or
felony which is a criminal violation of statutes designed to
protect consumers against unlawful practices involving
insurance, securities, commodities, real estate, franchises,
business opportunities, consumer goods or other goods and
services;
(3) Is subject to (a) any administrative order,
judgment or decree entered within five years prior to the
date hereof entered or issued by or procured from a state
securities commission or administrator, the Securities and
Exchange Commission ("SEC"), the Commodities Futures Trading
Commission or the U.S. Postal Service, or to (b) any
administrative order or judgment, arising out of the conduct
of the business of an underwriter, broker, dealer, municipal
securities dealer, or investment adviser, or involving
deceit, theft, fraud or fraudulent conduct, or breach of
fiduciary duty, or which is based upon a state banking,
insurance, real estate or securities law or (c) has been the
subject of any administrative order, judgment or decree in
any state in which fraud, deceit, or intentional wrongdoing,
including, but not limited to, making untrue statements of
material fact or omitting to state material facts, was
found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of
any security or offering, or to any order, judgment or
decree in which registration violations were found or which
prohibits, denies or revokes the use of any exemption from
registration in connection with the offer, purchase or sale
of securities, or to an SEC censure or other order based on
a finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction
entered within five years prior to the date hereof,
temporarily, preliminary or permanently restraining or
enjoining such persons from engaging in or continuing any
conduct or practice in connection with any aspect of the
securities or commodities business or involving the making
of any false filing or arising out of the conduct of the
business of an underwriter, broker, dealer, municipal
securities dealer, or investment adviser, or which restrains
or enjoins such person from activities subject to federal or
state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance,
banking, commodities, real estate, franchises, business
opportunities, consumer goods and services, or is subject to
a United States Postal Service false representation order
entered within five years prior to the date hereof, or is
subject to a temporary restraining order or preliminary
injunction with respect to conduct alleged to have violated
section 3005 of Title 39, United States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an
exchange registered as a national securities exchange, an
association registered as a national securities association,
or any self-regulatory organization registered pursuant to
the Securities Exchange Act of 1934, or a Canadian
securities exchange, or association or self-regulatory
organization operating under the authority of the Commodity
Futures Trading Commission, or is subject to any currently
effective order or order entered within the past five years
of the SEC, the Commodity Futures Trading Commission or any
state securities administrator denying registration to, or
revoking or suspending the registration of, such person as a
broker-dealer, agent, futures commission merchant, commodity
pool operator, commodity trading adviser or investment
adviser or associated person of any of the foregoing, or
prohibiting the transaction of business as a broker-dealer
or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding
before the SEC or any state securities commission or any
regulatory authority willfully made or caused to be made any
statement which was at the time and in the light of the
circumstances under which it was made false or misleading
with respect to any material fact, or has willfully omitted
to state in any such application, report or proceeding any
material fact which is required to be stated therein or
necessary in order to make the statements made, in the light
of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the
Securities Act of 1933, the Securities Exchange Act of 1934,
the Trust Indenture Act of 1939, the Investment Advisers Act
of 1940, the Investment Company Act of 1940, the Commodity
Exchange Act of 1974 or the securities laws of any state, or
any predecessor law, or of any rule or regulation under any
of such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any
of the statutes or rules or regulations referred to in
subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if
he is a broker-dealer, or his employees, if he is an
investment adviser, but no person shall be deemed to have
failed in such supervision if there have been established
procedures, and a system for applying such procedures, which
would reasonably be expected to prevent and detect, insofar
as practicable, any violation of statutes, rules or orders
described in subsection (8) and if such person has
reasonably discharged the duties and obligations incumbent
upon him by reason of such procedures and system without
reasonable cause to believe that such procedures and system
were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state
securities administrator within five years prior to the date
hereof or is subject to a currently effective United States
Postal Service fraud order or has engaged in dishonest or
unethical practices in the securities business or has taken
unfair advantage of a customer or is the subject of
sanctions imposed by any state or federal securities agency
or self-regulatory agency;
(12) Is insolvent, either in the sense that his
liabilities exceed his assets or in the sense that he cannot
meet his obligations as they mature, or is in such financial
condition that he cannot continue his business with safety
to his customers, or has not sufficient financial
responsibility to carry out the obligations incident to his
operations or has been adjudged a bankrupt or made a general
assignment for the benefit of creditors; or
(13) Is selling or has sold, or is offering or has
offered for sale, in any state securities through any
unregistered agent required to be registered under any State
Securities Act or for any broker-dealer or issuer with
knowledge that such broker-dealer or issuer had not or has
not complied with any such Act.
If the Operating Partnership is subject to the
requirements of Section 12, 14 or 15(d) of the Securities
Exchange Act of 1934, then the Operating Partnership has
filed all reports required by those Sections to be filed
during the 12 calendar months preceding the date hereof (or
for such shorter period that the Operating Partnership was
required to file such reports).
