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) March 11, 1998
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 March 11, 1998, Boston Capital Tax Credit Fund IV L.P.,
a Delaware limited partnership, specifically Series 28 thereof
(the "Partnership") completed various agreements relating to
Neighborhood Restorations Limited Partnership, VII, a
Pennsylvania limited partnership (the "Operating Partnership"),
including the First Amended and Restated Agreement of Limited
Partnership of the Operating Partnership dated as of March 11,
1998 (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 scattered
site project located in Philadelphia, Pennsylvania (the "Apartment
Complex"). The Apartment Complex consists of 44 different sites
containing 72 newly constructed or extensively renovated units.
There are five (5) 1-bedroom units, twenty (20) 2-bedroom units,
forty-six (46) 3-bedroom units and one (1) 4-bedroom unit. The
Apartment Complex was recently completed and is currently 100%
occupied.
The Operating Partnership is currently receiving
construction financing in the amount of $4,100,000 (the
"Construction Loan") from Royal Bank of Pennsylvania. The
Construction Loan matures in July 1998 and bears interest at
the prime rate plus 2.5% with a cap of 10.75%. The Operating
Partnership expects to receive permanent mortgage financing in
the amount of $2,600,000 (the "Permanent Loan") from
Collaborative Lending Initiative, Inc. The Permanent Loan will
be payable over a fifteen-year term based on a fifteen-year
amortization schedule and will bear interest at the 10-year
treasuries rate plus 2.75%. The Operating Partnership also
received a direct subsidy grant in the amount of $216,000 which
was made by Keystone Bank, N.A. from the Affordable Housing
Program as administered by the Federal Home Loan Bank of
Pittsburgh.
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 WPB
II, L.P., a Pennsylvania limited partnership (the "General
Partner") whose general partner is WPB II, Inc., a Pennsylvania
corporation ("WPB II") which also serves as the Developer of the
Apartment Complex. WPB II is equally-owned by James Levin and
Scott Mazo. Mr. Levin, a Certified Public Accountant, has been
involved with the development and syndication of tax credit
projects since 1990. Mr. Mazo has been involved in the
development of the tax credit projects since 1990 and commercial
rental properties since the mid 1980's. Since forming a
partnership in 1992, Mr. Levin and Mr. Mazo have developed over 350 units
of affordable housing.
Mr. Levin and Mr. Mazo are also the sole owners of Prime Property
Management, Inc., a property management company which is serving
as the Management Agent for the Apartment Complex.
The Partnership acquired its interest in the Operating
Partnership directly from the Operating Partnership in
consideration of an agreement to make a Capital Contribution of
$3,816,835 to the Operating Partnership in four (4) Installments
as follows:
I. $202,094 (the "First Installment") on the Admission Date;
II. $3,226,741 (the "Second Installment") on the latest
of (A) the Completion Date, (B) Cost Certification,
(C) receipt of an updated Title Policy in form and substance
satisfactory to the Special Limited Partner, (D) receipt by
the Partnership of the Contractor Pay-Off Letter,
(E) receipt by the Partnership of an Estoppel Letter from
each Lender or (F) satisfaction of the Due Diligence
Recommendations;
III. $380,500 (the "Third Installment") on the latest of
(A) the Initial 100% Occupancy Date, (B) Permanent
Mortgage Commencement, (C) State Designation or (D) Rental
Achievement; and
IV. $7,500 (the "Fourth Installment") upon the receipt
by the Partnership of a copy of the property filed Operating
Partnership federal income tax return and an audited Operating
Partnership financial statement 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 $5,269,870 of Tax Credits during the 10-year period
commencing in 1998 of which 99.9% ($5,264,600) amount 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 Class A Limited Partner of the Operating
Partnership is Neighborhood Economic Support Foundation, a
Pennsylvania non-profit corporation.
The Partnership believes that the Apartment Complex is
adequately insured.
Ownership interests in the Operating Partnership are
as follows, subject in each case to certain priority
allocations and distributions as set forth in the Operating
Partnership Agreement:
Normal Capital Cash
Operations Transactions Flow Tax Credits
General Partner 0.9% 89.999% 90% 0.1%
Partnership 99.9% 9.999% 10% 99.9%
Special Limited
Partner 0% .001% 0% 0%
Class A Limited
Partner 0.1% .001% 0% 0%
The Partnership used the funds obtained from the payments
of the holders of its beneficial assignee certificates to make
the acquisition of its interest in the Operating Partnership.
The Special Limited Partner or an affiliate thereof will
receive an Asset Management Fee 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 $7,500. The Asset
Management Fee shall begin to accrue as of the Admission Date and
shall be pro rated in 1998 for the portion of the year that the
Special Limited Partner was a Partner of the Operating
Partnership. 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, Cash Flow is insufficient to
pay the full amount of the Asset Management Fee, the unpaid
portion thereof shall accrue and be payable on a cumulative basis
in the first Fiscal Year in which there is sufficient Cash Flow
or Capital Proceeds as provided in Article X of the Operating
Partnership Agreement.
The Operating Partnership shall pay to the General
Partner an annual non-cumulative fee (the "Partnership Management
Fee") for its services in connection with the administration of
the day to day business of the Operating Partnership in an annual
amount of $7,500. The Partnership Management Fee shall begin to
accrue as of the Admission Date and shall be pro rated in 1998
for the portion of the year that the Special Limited Partner was
a Partner of the Operating Partnership. The 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 Fiscal
Year.
As a reimbursement for certain advances and as
compensation for the Developer's services in connection with the
development and construction of the Apartment Complex, the
Operating Partnership shall pay to the Developer a Development
Fee in the amount of $575,000 in accordance with the terms of the
Amended and Restated Development Agreement. The Developer will
also be entitled to a Disposition Fee equal to 6% of the gross
sales proceeds of the Apartment Complex in accordance with the
terms of the Capital Disposition Agreement.
The Management Agent for the Apartment Complex is
receiving a management fee equal to 8% of collected rents. The
Class A Limited Partner will receive an expense reimbursement of
$7,000 which will be paid at the time of closing of the Permanent
Loan.
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) First Amended and Restated Agreement of Limited
Partnership of Neighborhood Restorations Limited
Partnership, VII
(2) (b) General Partner's Payment Certificate relating to
Neighborhood Restorations Limited Partnership, VII
(2) (c) Development Agreement relating to Neighborhood
Restorations Limited Partnership, VII
(2) (d) Capital Disposition Agreement relating to
Neighborhood Restorations Limited Partnership, VII
(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 28, 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
NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP, VII
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of March 11, 1998
TABLE OF CONTENTS
Preliminary Statement 1
ARTICLE I 1
Defined Terms 1
ARTICLE II 20
Name and Business 20
2.1 Name; Continuation 20
2.2 Office and Resident Agent 21
2.3 Purpose 21
2.4 Term and Dissolution 21
ARTICLE III 22
Mortgage, Refinancing and Disposition of Property 22
3.1 Personal Liability 22
3.2 Refinancings 22
3.3 Sale of Assets 23
3.4 Real Estate Commissions 23
ARTICLE IV 23
Partners; Capital 23
4.1 Capital and Capital Accounts 23
4.2 General Partner 24
4.3 Limited Partners 24
4.4 Liability of the Limited Partners 25
4.5 Special Rights of the Special Limited Partner 25
4.6 Meetings 27
4.7 Class A Limited Partner 27
ARTICLE V 29
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner 29
5.1 Payments 29
5.2 Return of Capital Contributions 32
ARTICLE VI 35
Rights, Powers and Duties of General Partner 35
6.1 Authorized Acts 35
6.2 Restrictions on Authority 37
6.3 Personal Services; Other Business Ventures 39
6.4 Business Management and Control 39
6.5 Duties and Obligations 40
6.6 Representations and Warranties 43
6.7 Liability on Mortgages 46
6.8 Indemnification of the General Partner 47
6.9 Indemnification of the Partnership and the Limited Partners 48
6.10 Operating Deficits 48
6.11 Obligation to Complete the Construction of the Apartment Complex 49
6.12 Certain Payments to the General Partner and Others 49
6.13 Delegation of General Partner Authority 50
6.14 Assignment to Partnership 51
6.15 Contracts with Affiliates 51
6.16 Tax Matters Partner 51
ARTICLE VII 53
Withdrawal of a General Partner; New General Partners 53
7.1 Voluntary Withdrawal 53
7.2 Reconstitution 53
7.3 Successor General Partner 53
7.4 Interest of Predecessor General Partner 54
7.5 Amendment of Certificate; Approval of Certain Events 55
7.6 Designation of New General Partners 55
ARTICLE VIII 56
Transferability of Limited Partner Interests 56
8.1 Assignments 56
8.2 Substituted Limited Partner 56
8.3 Restrictions 57
ARTICLE IX 57
Borrowings 57
ARTICLE X 58
Profits, Losses, Tax Credits, Distributions and Capital Accounts 58
10.1 Profits, Losses and Tax Credits 58
10.2 Cash Distributions Prior to Dissolution 59
10.3 Distributions Upon Dissolution 60
10.4 Special Provisions 61
10.5 Authority of the General Partner to Vary Allocations to Preserve and
Protect the Partners' Intent 65
10.6 Recapture Amount 66
ARTICLE XI 67
Management Agent 67
11.1 General 67
11.2 Fees 67
11.3 Removal and Replacement 67
11.4 Lack of Management Agent 68
ARTICLE XII 68
Books and Records, Accounting, Tax Elections, Etc. 68
12.1 Books and Records 68
12.2 Bank Accounts 68
12.3 Auditors 69
12.4 Cost Recovery and Elections 69
12.5 Special Basis Adjustments 70
12.6 Fiscal Year 70
12.7 Information to Partners 70
12.8 Expenses of the Partnership 73
ARTICLE XIII 74
General Provisions 74
13.1 Restrictions by Reason of Section 708 of the Code 74
13.2 Amendments to Certificates 75
13.3 Notices 75
13.4 Word Meanings 75
13.5 Binding Effect 76
13.6 Applicable Law 76
13.7 Counterparts 76
13.8 Financing Regulations 76
13.9 Separability of Provisions 76
13.10 Paragraph Titles 77
13.11 Amendment Procedure 77
13.12 Extraordinary Limited Partner Expenses 77
13.13 Extraordinary General Partner Expenses 77
13.14 Time of Admission 78
13.15 Arbitration 78
NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP, VII
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Neighborhood Restorations Limited Partnership, VII (the
"Partnership") was formed as a Pennsylvania limited partnership
pursuant to an Agreement of Limited Partnership dated January
12, 1996 (as amended the "Original Agreement") by and between
WPB II, L.P., a Pennsylvania limited partnership ("WPB"), as
general partner (the "General Partner") and as attorney-in-fact
for any additional limited partners and JAMES H. LEVIN as the
limited partner (the "Original Limited Partner") as amended by
the Amendment to Agreement of Limited Partnership dated August
1, 1997 which admitted NEIGHBORHOOD ECONOMIC SUPPORT FOUNDATION,
a Pennsylvania nonprofit corporation ("NESF") as a limited
partner, and a Certificate of Limited Partnership (the
"Certificate") filed in the Filing Office on January 12, 1996.
The parties desire to amend and restate the Original
Agreement to (i) provide for the withdrawal from the Partnership
of the Original Limited Partner, (ii) provide for the conversion
of NESF's interest to that of a Class A Limited Partner, (iii)
confirm that no limited partners other than NESF and the
Original Limited Partner were ever admitted to the Partnership
prior to the date hereof, (iv) provide for the admission of
BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited
partnership ("BCTCF"), as the Investment Limited Partner, (v)
provide for the admission of BCTC 94, INC., a Delaware
corporation as the Special Limited Partner, and (vi) more fully
set forth the rights and obligations of the Partners.
In consideration of the mutual agreements set forth
herein, it is agreed and certified, and the Original Agreement
is hereby amended and restated in its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the
meanings specified below:
"Act" means the Revised Uniform Limited Partnership Act
as in effect in the State.
"Actual Credit" means, with respect to a particular Fiscal
Year, the total amount of Tax Credit properly allocable by the
Partnership to the Investment Limited Partner for such Fiscal
Year. The Actual Credit shall be retroactively revised if the
amount of Tax Credit properly allocable to the Investment Limited
Partner is revised as the result of an audit or is recaptured.
"Adjusted Capital Account Deficit" means, with respect to
any Partner, the deficit balance, if any, in such Partner's
Capital Account as of the end of the relevant Fiscal Year, after
giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts
which such Partner is obligated to restore pursuant to
any provisions of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.7042(g)(1) and 1.704-2(i)(5), respectively;
and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the
Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-
1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.
"Admission Date" means the first date on which all
parties hereto shall have executed this Agreement.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, reasonable amounts paid in
settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and reasonable attorneys'
fees and expenses.
"Affiliate" means as to a specified Person, (i) such
Person; (ii) each member of the Immediate Family of such Person;
(iii)
each legal representative, successor or assignee of any Person
referred to in the preceding clauses (i) or (ii); (iv) each trustee
of a trust for the benefit of any Person referred to in the
preceding clauses (i) or (ii); or (v) any other Person (a)
who directly or indirectly controls, is controlled by, or is
under common control with such Person, (b) who is an officer
of, director of, partner in or trustee of, or serves in a
similar capacity with respect to, such Person or of which such
Person is an officer, director, partner or trustee, or with
respect to which such Person serves in a similar capacity, (c)
who, directly or indirectly, is the beneficial owner of ten
percent (10%) or more of any class of equity securities of such
Person or of which such Person is directly or indirectly the
owner of ten percent (10%) or more of any class of equity
securities, (d) who is an officer,
director, general partner, trustee or holder of ten percent
(10%) or more of the voting securities or beneficial interests
of any Person referred to in the foregoing clauses (v) (b) or
(v) (c), or (e) who, whatever such Person's title, performs
functions for such Person or any Affiliate of such Person
similar to a Chairman or member of the Board of Directors, or
executive officer such as the President, Executive Vice
President or Senior Vice President, Corporate Secretary, or
Treasurer, or any Person holding a five percent (5%) or more
equity interest in such Person, or any Person having the power
to direct or cause the direction of such Person whether through
the ownership of voting securities, by contract or otherwise.
An Affiliate of any Investment Limited Partner or of any
Investment General Partner does not include a Person who is a
partner in a Partnership or joint venture with any Investment
Limited Partner or any other Affiliate of any Investment Limited
Partner if such Person is not otherwise an Affiliate of any
Investment Limited Partner or any Investment General Partner.
For purposes of this definition, the term Affiliate shall not be
deemed to include any law firm (or member or associate thereof)
providing legal services to any
Investment Limited Partner, any Investment General Partner, the
General Partner or any Affiliate of any of them.
"AFR" means the "applicable federal rate" as defined and
determined in the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency or any other
Governmental Authority with jurisdiction over the Apartment
Complex, or the business and operations of the Partnership.
"Agreement" means this First Amended and Restated
Agreement of Limited Partnership, including Schedule A, as
amended from time to time.
"Allocation Regulations" means the Treasury Regulations
issued under Sections 704(b) and 752 of the Code, as the same may
be modified or amended from time to time. In the event that the
Allocation Regulations are revised or amended subsequent to the
date of this Agreement, references herein to sections or
paragraphs of the Allocation Regulations shall be deemed to be
references to the applicable sections or paragraphs of the
Allocation Regulations as then in effect.
"Apartment Complex" means the various tracts of real
property located in West Philadelphia, Pennsylvania, as more
fully described in Exhibit A attached hereto, together with (i)
all buildings and other improvements constructed or to be
constructed thereon and (ii) all furnishings, equipment and
personal property located thereon or otherwise covered by the
Mortgages.
"Applicable Percentage" has the meaning set forth in
Section 42(b) of the Code.
"Applied Amounts" shall have the meaning set forth in
Section 6.10.
"Arbitration" shall have the meaning set forth in Section
13.15.
"Asset Management Fee" means the fee payable to BCTCF or
an Affiliate thereof pursuant to the provisions of Section
6.12(b). "Assignee" shall have the meaning set forth in Section
4.1(c).
"Auditors" means Cogan Sklar LLP of Bala Cynwyd,
Pennsylvania, or such other firm of independent certified public
accountants as may be engaged by the General Partner with the
Consent of the Special Limited Partner for the purposes of
preparing the Partnership's income tax returns, auditing the
books and records of the Partnership and certifying financial
reports of the Partnership.
"BCTC 94" means BCTC 94, Inc., a Delaware corporation,
and its successors.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a
Delaware limited partnership, and its successors.
"Best Knowledge" shall mean and include, in the case of
a specified Person, (i) actual knowledge and (ii) that knowledge
which a prudent businessperson (including, in the case of an
Entity, the general or managing partners, officers, directors
and key employees of such Entity) should have obtained in the
management of his or her business affairs after making due
inquiry and exercising due diligence with respect thereto. In
connection therewith, the knowledge (both actual and
constructive) of any general or managing partner, director,
officer or key employee of an Entity shall be deemed to be the
knowledge of the Entity.
"Capital Account" has the meaning set forth in Section
4.1(b).
"Capital Contribution" means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as set forth in Schedule A. Any
reference in this Agreement to the Capital Contribution of a then
Partner shall include a Capital Contribution previously made by
any prior Partner for the Interest of such then Partner.
"Capital Disposition Agreement" means the agreement dated
March 11, 1998, by and between the Partnership and the General
Partner, which sets forth the terms on which the Disposition Fee
shall be paid, as amended.
"Capital Proceeds" means the proceeds of a Capital
Transaction.
"Capital Transaction" means a refinancing of any
Partnership indebtedness or a sale, exchange, eminent domain
taking, damage or destruction (whether insured or uninsured),
insured title defect or other disposition of all or any portion of
the Apartment Complex (other than an event generating proceeds of
any business or rental interruption insurance), but excluding the
payment of Capital Contributions.
"Carryover Certification" means the date on which the
Investment Limited Partner shall have received, in a form and in
substance satisfactory to the Investment Limited Partner, the
certification of the Auditors that, with respect to the carryover
allocation of 1996 Tax Credits, as of a date no later than
December 31, 1996, the Partnership had incurred capitalizable
costs with respect to the Apartment Complex of at least ten per
cent (10%) of the Partnership's reasonably expected basis in the
Apartment Complex as of December 31, 1998, so that each building
in the Apartment Complex constitutes a "qualified building" for
the purposes of Section 42(h)(1)(E)(ii) of the Code.
"Cash Available for Debt Service Requirements" for any
period, means the excess of (i) all cash actually received by the
Partnership on a cash basis from normal operations during such
period plus any subsidy payments due but not yet received, but
specifically excluding the proceeds of insurance (other than
business or rental interruption insurance), loans, Capital
Transactions or Capital Contributions over (ii) all cash
requirements of the Partnership properly allocable to such period
of time on an accrual basis (not including distributions to
Partners out of Cash Flow of the Partnership or fees payable from
Cash Flow) and, on an annualized basis, all projected
expenditures, including those of a seasonal nature, which might
reasonably be expected to be incurred on an unequal basis during a
full annual period of operation as determined by the Auditors but
specifically excluding Debt Service Requirements. For purposes of
this definition, (i) cash requirements of the Partnership shall
include to the extent not otherwise covered above, full funding of
reserves (including, without limitation, funding of the Operating
Reserve), normal repairs, real estate taxes taking into account
any abatements which have then been secured by the Partnership and
necessary capital improvements and (ii) if free rent or other
rental concessions shall have been granted to tenants, the
calculation of rental revenues under clause (i) of the preceding
sentence shall be adjusted so that the effect of such concessions
is amortized equally over the term of all leases (excluding
renewal periods) to which it applies.
"Cash Expenditures" means all disbursements of cash during
a specified Fiscal Year (other than distributions to Partners),
including, without limitation, payment of operating expenses,
payment of principal and interest on any Partnership indebtedness
(other than payments of principal and interest on any Subordinated
Loans or Voluntary Loans), the cost of repairs to the Apartment
Complex, amounts allocated to reserves by the General Partner and
the payment of any fees other than the Asset Management Fee, the
Partnership Management Fee and the Development Fee. In addition,
the net increase during such Fiscal Year in any escrow account or
reserve maintained by or for the Partnership shall be considered a
Cash Expenditure during such Fiscal Year. The term Cash
Expenditures shall not include Development Costs. Cash
Expenditures payable to Partners or Affiliates of Partners shall
be paid after Cash Expenditures payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash
Expenditures. Cash Flow shall be determined separately for each
Fiscal Year or portion thereof.
"Cash Receipts" means all cash receipts of the Partnership
from whatever source derived other than from a Capital
Transaction, including, without limitation, rental revenues,
government subsidy payments. In addition, the net reduction in
any Fiscal Year in the amounts of any escrow account or reserve
maintained by or for the Partnership (including, without
limitation, the Operating Reserve) shall be considered a cash
receipt of the Partnership for such Fiscal Year. Notwithstanding
the foregoing, at the election of the General Partner, Cash
Receipts received near the end of a Fiscal Year and intended for
use in meeting the Partnership's obligations (including the cost
of acquiring assets or paying debts or expenses) in the subsequent
Fiscal Year shall not be deemed to be received until such
following Fiscal Year.
"Certificate" shall have the meaning set forth in the
Preliminary Statement.
"Class A Limited Partner" means NESF, or any other
qualified nonprofit organization admitted as a Class A Limited
Partner with the Consent of the Special Limited Partner and
the General Partner.
"Class Contribution" means the aggregate Capital
Contributions of all members of a particular class of Partners
(i.e., the General Partner, the Investment Limited Partner,
the Special Limited Partner, the Class A Limited Partner or
any Substituted Limited Partner).
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations (permanent and
temporary) issued thereunder. References herein to any Code
section shall include any successor provisions.
"Commencement Date" means the first day of the month
in which the Admission Date occurs.
"Competitive Real Estate Commission" means that real estate
or brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size, type
and location of the Apartment Complex or other property.
"Completion Date" means the date the Investment Limited
Partner shall have received copies of all requisite certificates
or permits permitting occupancy of 100% of the apartments units
in the Apartment Complex as issued by each Agency having
jurisdiction; provided, however, that if such certificates or
permits are of a temporary nature, the Completion Date shall not be
deemed to have occurred unless the General Partner certifies
to the Investment Limited Partner that any work remaining to be
completed is for so-called "punch list items" and the General
Partner knows of no reason why permanent certificates of occupancy
will not be issued upon completion of such "punch list items". Any
representation by the General Partner under this Agreement that the
Completion Date has occurred shall be subject to confirmation by
the Special Limited Partner pursuant to a physical inspection of
the Apartment Complex; provided, however,
that in the event that the Special Limited Partner does not make
such physical inspection of the Apartment Complex within ten (10)
business days after having received a written representation of the
General Partner that the Completion Date has occurred, then the
Special Limited Partner will be deemed to have waived the physical
inspection requirement.
"Compliance Period" means the fifteen (15)-year period
commencing with the first year of the Credit Period.
"Consent of the Investment Limited Partner" means the prior
written consent or approval of the Investment Limited Partner
which, unless otherwise specifically provided herein, may be given
or withheld in its sole discretion. The Consent of the Investment
Limited Partner shall be exercised by and through the Investment
General Partner, acting in the name and on behalf of the Investment
Limited Partner.
"Consent of the Special Limited Partner" means the prior
written consent or approval of the Special Limited Partner which,
unless otherwise specifically provided herein, may be given or
withheld in its sole discretion.
"Construction Contract" means, collectively, the
construction contract dated as of April 10, 1997, by and between
WPB II, Inc. and the Partnership, as amended, and the construction
contract dated as of April 28, 1997, by and between Dale Corp. and
the Partnership, as amended.
"Construction Lender" means Royal Bank of Pennsylvania or
any other Lender providing construction financing for the Apartment
Complex.
"Construction Loan" means the construction loan, in
the amount of $4,100,000 provided by the Construction Lender to
the Partnership pursuant to the terms of the Construction Loan
Documents.
"Construction Loan Documents" means the Construction Note,
the Construction Mortgage, and all other documents executed and/or
delivered in connection with the Construction Loan.
"Construction Mortgage" means the Mortgage dated April 15,
1997 securing the Partnership's obligations under the Construction
Note.
"Construction Note" means the promissory note dated April
15, 1997 executed by the Partnership to evidence its obligations
with respect to the Construction Loan, which note is secured by
the Construction Mortgage.
"Contractor" means collectively, WPB II, Inc., a
Pennsylvania corporation, and Dale Corp., a Pennsylvania
corporation, and each of their successors.
"Contractor Pay-Off Letter" means a letter in
substantially the form set forth in Exhibit E attached hereto
delivered by the Contractor to the Partnership which certifies
that (i) all amounts due to the Contractor from the Partnership
have been paid, (ii)
the Partnership is not in default under the Construction Contract
and (iii) the Contractor has paid in full each materialman and
subcontractor who performed work on the Apartment Complex.
"Controlling Person" has the meaning set forth in Section
15 of the Securities Act of 1933, as amended.
"Cost Certification" means the date upon which each
Limited Partner shall have received the written certification of
the Auditors, in a form and in substance satisfactory to the
Special Limited Partner, as to the itemized amounts of the construction and
development costs of the Apartment Complex and the Actual Credit
pertaining to each building in the Apartment Complex.
"Credit Agency" means Pennsylvania Housing Finance Agency,
and its successors.
"Credit Period" has the meaning set forth in Section
42(f)(1) of the Code.
"Credit Recovery Loan" means a constructive interest-
bearing advance of the Investment Limited Partner, as more fully
described in Section 5.1(g). Credit Recovery Loans and interest
thereon shall not be treated as loans or interest, respectively,
for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(i). For the purposes of Article X, the term Credit
Recovery Loan shall not include any portion of such a deemed
advance which shall have theretofore been paid to the Investment
Limited Partner.
"Credit Shortfall" shall have the meaning set forth in
Section 5.1(g).
"Debt Service Coverage Ratio" means, for any period with
each month considered individually, a fraction, the numerator of
which is the Cash Available for Debt Service Requirements with
respect to such period and the denominator of which is the Debt Service
Requirements for such period. The achievement by the Partnership
of a specified Debt Service Coverage Ratio shall be confirmed by
the Auditors and shall be subject to the approval of the Special
Limited Partner, which shall not be unreasonably withheld,
provided, however, that no objection by the Special Limited
Partner to the determination of the Auditors shall be valid unless
the General Partner is notified of such objection, and the
specific reasons therefor, within seven (7) business days
following the receipt by the Special Limited Partner of the
Auditor's determination letter and in the event that the Special
Limited Partner does not so notify the General Partner within such
seven business day period, the Special Limited Partner will be
deemed to have waived its right to object to such determination.
"Debt Service Requirements" means for any period, all debt
service, reserve, mortgage insurance premium, tax and insurance
escrows and/or other cash requirements imposed with respect to
the Mortgage or any other indebtedness (except for Subordinated
Loans and Voluntary Loans) properly allocable to such period of
time on an annualized accrual basis as determined by the Auditors.
To the extent the relevant period includes any period prior to
Permanent Mortgage Commencement, Debt Service Requirements for
such period shall be computed by adding to the foregoing amounts
the amount (if any) by which the debt service on such Permanent
Loan for such period beginning after principal amortization has
commenced exceeds the actual debt service on such Permanent Loan
(and any previous Mortgage Loan which may have then been in place)
for the relevant period.
"Deficit Restoration Obligation" means, for each Partner,
the sum of (i) any amounts which such Partner is obligated to
restore to the Partnership in accordance with the provisions of
Sections 1.704-1(b)(2)(ii)(c), 1.704-1(b)(2)(ii)(h) or any other
applicable provisions of the Allocation Regulations, (ii) such
Partner's
Share of Partnership Minimum Gain if any, and (iii) such Partner's
Share of Partner Nonrecourse Debt Minimum Gain, if any.
"Designated Net Worth Requirements" means as of the date
of determination, such standards or criteria (relating to net
worth or other characteristics) as may be sufficient to support
the issuance by tax counsel approved by the Investment Limited
Partner of an opinion to the same effect, provided, however, that
the conditions of this definition shall be deemed to be satisfied
if the General Partner maintains at all times a net worth of not
less than $300,000.
"Developer" means WPB II, Inc., and its successors.
"Development Agreement" means the Amended and Restated
Development Agreement, dated as of March 11, 1998, by and between
the Developer and the Partnership.
"Development Costs" means any and all costs and expenses
necessary to (i) cause the construction of the Apartment Complex
to be completed, in a good and workmanlike manner, free and clear
of all mechanics', materialmen's or similar liens, in accordance
with the Plans and Specifications, (ii) equip the Apartment
Complex with all necessary and appropriate fixtures, equipment
and articles of personal property (including, without limitation,
ranges), (iii) obtain all required certificates of occupancy for
the apartment units and other space in the Apartment Complex,
(iv) pay the Development Fee, (v) finance the construction of the
Apartment Complex and achieve Rental Achievement in accordance
with the provisions of the Project Documents, (vi) discharge all
Partnership liabilities and obligations arising out of any
casualty generating insurance proceeds for the Partnership, (vii)
fund any Partnership reserves required hereunder or under any of
the Project Documents, (viii) repay and discharge the
Construction Loan, and (ix) pay any other costs or expenses
necessary to achieve the Completion Date and Rental Achievement.
"Development Fee" means the fees and overhead payable by
the Partnership to the Developer pursuant to the terms of the
Development Agreement for its services in connection with the
development and construction of the Apartment Complex.
"Disposition" (including the forms Dispose and Disposing)
means, as to a specified Partner, the assignment, sale, transfer,
exchange or other disposition of all or any part of its Interest.
"Disposition Fee" means the fee payable pursuant to the
terms of the Capital Disposition Agreement as compensation for
services rendered in connection with the sale or refinancing of
the Apartment Complex.
"Due Diligence Recommendations" means those developmental
recommendations set forth on Exhibit C hereto.
"Economic Risk of Loss" has the meaning set forth in
Treasury Regulation Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section
42(d) of the Code.
"Entity" means any Person, general partnership, limited
partnership, limited liability company, corporation, joint
venture, trust, business trust, cooperative or association.
"Estoppel Letter" means an estoppel letter in
substantially the form set forth in Exhibit F delivered to the
Partnership from each Lender which certifies as to each Mortgage
Loan (i) that there is no default ongoing pursuant to the Mortgage
Loan Documents, (ii) the amounts of interest and principal paid on
such Mortgage Loan to date and (iii) the outstanding principal
balance of such Mortgage Loan.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for
relief by a court having jurisdiction in respect of
such Person in an involuntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any
substantial part of his property, or ordering the
winding-up or liquidation of his affairs and the
continuance of any such decree or order unstayed and
in effect for a period of sixty (60) consecutive
days;
(ii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as
now constituted
or hereafter amended, or any other applicable federal
or state bankruptcy, insolvency or other similar law,
or the consent by him to the appointment of or taking
possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or similar
official) of such Person or for any substantial part
of his property, or the making by him of any
assignment for the benefit of creditors, or the
taking of corporate action by the Person in
furtherance of any of the foregoing; or
(iii) the commencement against such Person of an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, which has not been vacated,
discharged or bonded within sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in
Section 5.1(h).
"Extended Use Agreement" means the extended use
housing commitment to be executed by the Partnership in
accordance with the requirements of the Credit Agency and the
provisions of Section 42(h)(6)(A) of the Code.
"Filing Office" means the Office of the Secretary of State
of the Commonwealth of Pennsylvania.
"Fiscal Year" means the twelve (12)-month period which
begins on the first day of January and ends on the thirty-first
day of December of each calendar year (or ends on the date of
final dissolution for the year in which the Partnership is wound
up or dissolved).
"General Partner" means WPB and any Person who becomes a
General Partner as provided herein, in its capacity as a general
partner of the Partnership. At any and all times where there is
more than one General Partner, the term General Partner shall mean
such General Partners.
"Governmental Authority" means the Credit Agency or any
other federal, state or local governmental authority having
jurisdiction over the particular matter to which reference is
being made.
"Grant" means the Direct Subsidy Grant in the amount of
$216,000 made to the Partnership by Keystone Bank, N.A. from the
Affordable Housing Program as administered by the Federal Home
Loan Bank of Pittsburgh.
"Grant Agreement" means the Federal Home Loan Bank Grant
Agreement dated August 29, 1997 by and between the Partnership and
Keystone Bank, N.A.
"Grant Note" means the promissory note dated August 29,
1997 executed by the Partnership in favor of Keystone Bank, N.A.
which evidences the Grant and the terms under which it is to be
forgiven.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset, as determined by the
contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets
shall be adjusted to equal their respective gross fair market
values, as determined by the General Partner, as of
the following times: (a) the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (b) the distribution by
the Partnership to a Partner of more than a de
minimis amount of Partnership property as
consideration for an interest
in the Partnership; and (c) the liquidation of the
Partnership within the meaning of Section 1.704-
1(b)(2)(ii)(g) of the Allocation Regulations;
provided, however, that the adjustments pursuant to
clauses (a) and (b) above shall be made only if the
General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect
the relative economic interests of the Partners in
the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair
market value of such asset on the date of distribution;
and
(iv) The Gross Asset Values of Partnership assets shall
be increased (or decreased) to reflect any adjustments to
the adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts
pursuant to Section 1.704-1(b)(2)(iv)(m) of the Allocation
Regulations and Section 4.1 hereof; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this clause (iv) to
the extent that the General Partner determines that an adjustment
pursuant to clause (ii) hereof is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment pursuant to this clause (iv).
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Section (i), (ii) or (iv) hereof, such Gross
Asset Value shall thereafter be adjusted by the depreciation taken
into account with respect to such asset for purposes of computing
Profits or Losses.
"Guarantors" means James H. Levin and Scott Mazo, and each
of their successors.
"Guaranty" means the Guaranty, dated as of March 11, 1998,
of the Guarantors of all of the obligations of the General Partner
hereunder and of the Developer as set forth in the Development
Agreement, as amended.
"Hazardous Material" has the collective meanings given to
the terms "hazardous material", "hazardous substances", "hazardous
wastes", "toxic substances" and analogous terms, in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the
term "radioactive materials" in the context of the Atomic Energy
Act, 28 U.S.C. Sec. 2344, and also includes any meanings given to
such terms in any similar state or local statutes, ordinances,
regulations or by-laws. The term Hazardous Material also includes
oil and any other substance known to be hazardous.
"Immediate Family" means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
children, children-in-law, grandchildren and grandchildren-in-law.
"Initial Adjustment Date" shall have the meaning set forth
in Section 5.1(e).
"Initial 100% Occupancy Date" means the first date on which
not less than 100% of the 72 apartment units in the Apartment
Complex shall have been leased to and shall be physically occupied
by tenants on such date meeting the terms of the Minimum Set-Aside
Test under executed leases at rentals meeting the requirements of
the Rent Restriction Test.
"Initial Operating Period" means the period commencing upon
Cost Certification and ending on the fifth (5th) anniversary of the
Completion Date.
"Installment" means an installment of the Investment
Limited Partner's Capital Contribution paid or payable to the
Partnership pursuant to Section 5.1.
"Insurance Requirements" means the insurance which the
General Partner is required to cause the Partnership to maintain
during the term of the Partnership which shall be in the forms set
forth in Exhibit D and in amounts not less than those amounts set
forth in the insurance certificates attached as Exhibit D hereto
(allowing for increases corresponding to increases in the
replacement value and rental values).
"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 0.85085 and (ii) as to any
other Partner, an amount equal to its paid-in Capital Contribution.
"Investment General Partner" means Boston Capital
Associates IV L.P., a Delaware limited partnership], in its
capacity as the general partner of the Investment Limited Partner,
and any other Person who may become a successor or additional
general partner of the Investment Limited Partner.
"Investment Limited Partner" means BCTCF and any Person or
Persons who replace it as Substituted Limited Partner.
"Investment Partnership Agreement" means the Agreement of
Limited Partnership of the Investment Limited Partner, as amended
from time to time.
"Lender" means any Person (other than the General Partner
or its Affiliates) who makes a loan to the Partnership, whether or
not such loan is secured by a Mortgage, or the successors and
assigns of such Person in such capacity.
"Limited Partners" means the Investment Limited Partner,
the Special Limited Partner and any Substituted Limited Partner.
The Class A Limited Partner shall be a Limited Partner for purposes
of the Act, but shall not be a Limited Partner under this Agreement
with respect to consent rights provided for herein of any Limited
Partner or the Limited Partners collectively unless expressly noted
otherwise.
"Liquidating Event" shall have the meaning set forth in Section 2.4.
"Managing General Partner" means any Person designated as
such pursuant to the provisions of Section 6.4.
"Management Agent" means Prime Property Management, Inc.,
a Pennsylvania corporation in its capacity as the initial
management and rental agent for the Apartment Complex, and any successor
management and rental agent designated or appointed at any time.
"Management Agreement" means the agreement between the
Partnership and the Management Agent providing for the management
of the Apartment Complex.
"Management Fee" means the Management Fee to which
reference is made in Section 11.1.
"Material Agreement" means any agreement to which the Partnership
is a party or to which the Apartment Complex is subject, the
termination of which would have a material adverse
impact on the Apartment Complex or the business and operations of
the Partnership.
"Material Event" means the occurrence of any of the
following events:
(i) a material breach by a General Partner (or
any of its Affiliates) in the performance of any of its
obligations under this Agreement, or any of the
Material Agreements, which material breach has or may have a
material adverse effect on the Partnership or the Apartment
Complex;
(ii) a Terminating Event as to any General
Partner
or an Event of Bankruptcy as to the Partnership;
(iii) a material violation by any General Partner
of its fiduciary duties as a General Partner of the
Partnership;
(iv) a violation by any General Partner of any
law, regulation or order applicable to the General
Partner or the Partnership which has or may have a material
adverse effect on the Partnership or the Apartment Complex;
(v) a material breach by the Partnership or any
General Partner (or any of their respective
Affiliates) under any Project Document or other material
agreement or document affecting the Partnership or the Apartment
Complex, which material breach has or may have a material adverse
effect on the Partnership or the Apartment Complex;
(vi) the failure to achieve the Completion Date by December 31, 1998;
(vii the failure to begin the Credit Period by June 1, 1998;
(viii) the commencement of foreclosure
proceedings with respect to any Mortgage, which have
not been withdrawn or dismissed within forty five (45)
days after the date of such commencement;
(ix) the failure of the General Partner to make
any payment required to be made to the Investment
Limited Partner pursuant to the provisions of
Section 5.1(e) or (f);
(x) the fraud, bad faith, gross negligence, or
willful misconduct by a General Partner; or
(xi) a determination by the Service or the
Tax Accountants that for any reason the Investment Limited
Partner shall be properly allocated less than 70% of the Projected
Credit during the Credit Period.
"Minimum Set-Aside Test" means the set aside test selected
by the Partnership pursuant to Section 42(g) of the Code whereby
at least 40% of the units in the Apartment Complex must be
occupied by individuals with incomes equal to 60% or less of area median
income, as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the
Partnership evidenced by any Note and secured by any mortgage on
the Apartment Complex from the Partnership to any Lender; and,
where the context admits, the term "Mortgage" shall mean and
include any of the mortgages securing said indebtedness and any
other documents pertaining to said indebtedness which were
required by the Lender as a condition to making such Mortgage
Loan. In case any Mortgage is replaced by any subsequent mortgage
or mortgages, such term shall refer to any such subsequent
mortgage or mortgages. The term "mortgage" means any mortgage,
mortgage deed, deed of trust, deed to secure debt or any similar
security instrument, and "foreclose" and words of like import
include the exercise of a power of sale under a mortgage or
comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by
any Lender and secured by a Mortgage.
"Mortgage Loan Documents" means the Construction Loan
Documents and/or the Permanent Loan Documents, as the context may
require.
"NESF" means Neighborhood Economic Support Foundation, a
Pennsylvania nonprofit corporation, and its successors.
"New Allocation" shall have the meaning set forth in
Section 10.5(b).
"Nonrecourse Debt" or "Nonrecourse Liability" means any
indebtedness for which none of the Partners has any Economic
Risk of Loss other than through his or its interest in the
Partnership Property securing such indebtedness, as defined in
Section 1.7521(a)(2) of the Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to
a Lender evidencing a Mortgage Loan, and shall also mean and
include any Note supplemental to said original Note issued to a
Lender or any Note issued to a Lender in substitution for any such
original Note.
"Operating Deficit" means, for any specified period of
time, the amount by which the Cash Receipts of the Partnership are
less than the amount necessary to pay all Cash Expenditures of the
Partnership.
"Operating Profits or Losses" means, with respect to any
Fiscal Year, the Profits or Losses of the Partnership for such
Fiscal Year other than Profits or Losses from a Capital
Transaction.
"Operating Reserve" shall have the meaning set forth in
Section 6.5(e).
"Original Agreement" has the meaning set forth in the
Preliminary Statement.
"Original Limited Partner" has the meaning set forth in
the Preliminary Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Sections 1.704-2(i)(2) and (3) of the Allocation
Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth
in Section 1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued
pursuant to this Agreement.
"Partnership Items" shall have the meaning set forth in
Section 10.4(b)(xvi).
"Partnership Management Fee" shall have the meaning
set forth in Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in
Section 1.704-2(d) of the Allocation Regulations.
"Payment Certificate" shall have the meaning set forth in
Section 5.1(b)
"Percentage Interests" means the interests of the Partners
in Profits and Losses, tax-exempt income, non-deductible, non-
capitalizable expenditures and Tax Credits, as set forth in
Schedule A.
"Permanent Lender" means Collaborative Lending Initiative,
Inc. or any other Lender providing permanent financing for the
Apartment Complex who has been approved by the Special Limited
Partner and the General Partner, except as otherwise provided in
Section 3.2.
"Permanent Loan" means the permanent loan to be provided by
the Permanent Lender to the Partnership in an amount not to exceed
$2,600,000 pursuant to the terms of the Permanent Loan Documents
and approved by the Special Limited Partner.
"Permanent Loan Documents" means the Permanent Note, the
Permanent Mortgage and all other documents executed and/or
delivered in connection with the Permanent Loan.
"Permanent Mortgage" means the Mortgage securing the
Partnership's obligations under the Permanent Note.
"Permanent Mortgage Commencement" means the payment and
discharge of the Construction Loan and the execution and delivery
of the Permanent Loan Documents.
"Permanent Note" means the Note to be executed by the
Partnership to evidence its obligations with respect to the
Permanent Loan, which Note shall be secured by the Permanent
Mortgage.
"Person" means any individual or Entity.
"Plans and Specifications" means the plans and
specifications for the construction of the Apartment Complex,
including, without limitation, specifications for materials, and
all properly
approved amendments and modifications thereof.
"Prime Rate" means the rate of interest announced from time
to time by The Wall Street Journal as its base rate.
"Profits or Losses" shall have the meaning set forth in
Section 10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan
Documents, this Agreement, the Development Agreement, the
Extended Use Agreement, the Guaranty, the Grant Agreement, the
Grant Note, the Capital Disposition Agreement, the Management
Agreement, all other instruments delivered to (or required by)
any Lender and all other documents relating to the Apartment
Complex and by which the Partnership is bound, as amended or
supplemented from time to
time.
"Projected Credit" means $438,717 for 1998, $526,460 per
annum for each of the Fiscal Years 1999 through 2007 (inclusive)
and $87,743 for 2008, provided, however, that the Projected Credit
for 2008 shall be reduced by the amount, if any, by which the
Actual Credit for 1998 exceeds $438,717 and provided further that
upon the occurrence of any of the events described in Section
5.1(e), the Projected Credit shall thereafter be the Revised
Projected Credit.
"Projected Rents" means the rents described in Exhibit B
attached hereto and made a part hereof.
"Qualified Basis" has the meaning set forth in Section
42(c) of the Code.
"Qualified Income Offset Item" means (1) an allocation of
loss or deduction that, as of the end of each year, reasonably is
expected to be made (a) pursuant to Section 704(e)(2) of the Code
to a donee of an interest in the Partnership, (b) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Treasury Regulation Section
1.751-1(b)(2)(ii) as the result of a distribution by the
Partnership of unrealized receivables or inventory items and (2) a
distribution that, as of the end of such year, reasonably is
expected to be made to a Partner to the extent it exceeds
offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the
Partnership taxable year in which such distribution reasonably is
expected to occur.
"Recapture Amount" shall have the meaning set forth in
Section 10.6.
"Recapture Event" shall have the meaning set forth in
Section 10.6(a).
"RECD" means the Rural Economic Community and Development
office of the United States Department of Agriculture.
"Reconstitution Period" shall have the meaning set forth
in Section 7.2(b).
"Recourse Obligations" shall have the meaning set forth in
Section 10.4(b)(i).
"Reduction Amount" shall have the meaning set forth in
Section 5.1(f).
"Reduction Year" shall have the meaning set forth in
Section 5.1(f).
"Regulations" means the rules and regulations applicable
to the Apartment Complex or the Partnership of the Credit Agency,
the City of Philadelphia and any other Governmental Authority
having jurisdiction over the Partnership and/or the Apartment
Complex.
"Related Person" means a Person related to a Partner
within
the meaning of Treasury Regulation Section 1.752-4(b).
"Remaining Interest" shall have the meaning set forth in
Section 7.4(d).
"Rent Restriction Test" means the test pursuant to
Section 42 of the Code whereby the gross rent charged to tenants
of the lowincome units in the Apartment Complex may not exceed
thirty percent (30%) of the qualifying income levels.
"Rental Achievement" means the first time following three
(3) consecutive full calendar months of operations after
Permanent Mortgage Commencement (with each month considered
individually) that
the Apartment Complex generates a 1.15 to 1.00 Debt Service
Coverage Ratio.
"Repurchase Amount" shall have the meaning set forth in
Section 5.2(a).
"Requisite Approvals" means any required approvals of
each Lender and Agency to an action proposed to be taken by the
Partnership.
"Revised Projected Credit" has the meaning set forth in
Section 5.1(e).
"Schedule A" means Schedule A to this Agreement, as
amended from time to time.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means,
for each Partner an amount equal to his or its "share of partner
nonrecourse debt minimum gain" as determined in accordance with
Section 1.704-2(i)(5) of the Allocation Regulations.
"Share of Partnership Minimum Gain" means for each
Partner, an amount equal to his or its "share of partnership
minimum gain" as determined in accordance with Section 1.704-2(g)
of the Allocation Regulations.
"Site" has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
"Special Limited Partner" means BCTC 94, and any Person
who becomes a Special Limited Partner as provided herein, in its
capacity as a special limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage
Loans, (ii) the net rental income, if any, generated by the
Apartment Complex prior to Rental Achievement which is permitted
by the Lenders to be applied to the payment of Development Costs,
(iii) the Capital Contributions of the Limited Partners, (iv) the
Capital Contributions of the General Partner in the amounts set
forth in Schedule A as of the Admission Date and (v) any
insurance proceeds arising out of casualties occurring prior to
Rental Achievement.
"State" means the Commonwealth of Pennsylvania.
"State Designation" means the date on which the
Partnership receives an allocation in proper form pursuant to
Section 42 of the Code from the Credit Agency of 1996 Tax
Credits, as evidenced by the execution by or on behalf of the
Credit Agency of one or more Form(s) 8609. For the purposes of
determining State Designation, each building in the Apartment
Complex shall be treated as having received an allocation of Tax
Credit in an amount equal to the lesser of (i) the amount of Tax
Credit carryover allocation received from the Credit Agency as to
such building or (ii) the amount of Tax Credits set forth on the
Form 8609 as to such building.
"Subordinated Loan" means any loan made by the General
Partner to the Partnership pursuant to Section 6.5(e), Section
6.10 or any other provision of this Agreement which specifies
advances to be made as a Subordinated Loan.
"Subordinated Loan Period" shall have the meaning set
forth in 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.
"Syndication Expenses" means all expenditures classified
as syndication expenses pursuant to Treasury Regulation Section
1.709-2(b). Syndication Expenses shall be taken into account
under this Agreement at the time they would be taken into
account under the Partnership's method of accounting if they
were deductible expenses.
"Tax Accountants" means Reznick, Fedder & Silverman of Bethesda,
Maryland or such other firms of independent certified public
accountants as may be engaged by the Special Limited Partner to
review the Partnership income tax returns.
"Tax Credit" means the low-income housing tax credit
described in Section 42 of the Code.
"Terminating Event" means the death or permanent
disability of, or a Final Determination of insanity or
incompetence as to, an individual General Partner (unless the
Consent of the Special Limited Partner to a substitute General
Partner is received, and such substitute General Partner is
admitted to the Partnership by the first to occur of (i) the
sixtieth day following such event or (ii) such earlier date as is
necessary to prevent a dissolution of the Partnership under the
Act), the [Bankruptcy] or dissolution of a General Partner, the
transfer of all of its Partnership Interest by a General Partner,
or the voluntary or involuntary withdrawal of the General Partner
from the Partnership. For purposes of the foregoing, an
individual General Partner shall be deemed to be permanently
disabled if he or she becomes disabled during the term of this
Agreement through any illness, injury, accident or condition of
either a physical or psychological nature and, as a result, is
unable to perform substantially all of his or her
duties and responsibilities hereunder for one hundred twenty
(120) days during any period of three hundred sixty-five (365)
consecutive calendar days. Involuntary withdrawal shall occur
whenever a General Partner may no longer continue as a General
Partner by law or pursuant to the acts of a party other than the
Limited Partner or the Special Limited Partner. In the case of a
General Partner which is an Entity, a transfer of a majority of
the voting stock (or other beneficial interest) of the General
Partner to a Person who is not an Affiliate of the General
Partner or any Entity constituting the General Partner shall be
deemed to be a transfer by the General Partner of its Partnership
Interest.
"Title Policy" means the owner's title insurance policy,
or at the option of the Special Limited Partner an endorsement
thereto, with an effective date on or after the Admission Date,
in the amount of not less than $6,632,835, issued by Matz Land
Transfer Co. Inc. to the Partnership, evidencing the
Partnership's ownership of the Apartment Complex subject only to
such exclusions, exceptions, conditions and stipulations as may
be approved by the Special Limited Partner in its sole discretion
and endorsed with an endorsement insuring against all zoning
defects relating to the Apartment Complex, a Fairway endorsement
and a non-imputation endorsement.
"Vessel" has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in
Article IX.
"Withdrawal" (including the forms Withdraw, Withdrawing
and Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or involuntary
withdrawal or retirement from the Partnership for any reason,
including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement.
Withdrawal also shall mean the sale, assignment, transfer or
encumbrance by a General Partner of its interest as a General
Partner other than a pledge or assignment by a General Partner of
its Interest required pursuant to the terms of the Construction
Loan Documents and as approved in writing by the Special Limited
Partner. A General Partner which is a corporation, limited
liability company or partnership shall be deemed to have sold,
assigned, transferred or encumbered its interest as a General
Partner in the event (as a result of one or more transactions) of
any sale, assignment or other transfer (but specifically
excluding any transfer occurring pursuant to the laws of descent
and distribution) or encumbrance of a controlling interest in a
corporate or limited liability company General Partner or of a
general partner interest in a General Partner which is a
partnership to a Person who is not an Affiliate of the General
Partner. For purposes of this definition of Withdrawal, the term
"controlling interest" shall mean the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise.
"WPB" means WPB II, L.P., a Pennsylvania limited
partnership, and its successors.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is "Neighborhood
Restorations Limited Partnership, VII". The Partners agree to
continue the Partnership which was formed pursuant to the
provisions of the Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 11
Mayo Place, Dresher, Pennsylvania 19025, at which office there shall
be maintained those records required by the Act to be kept by
the Partnership. The Partnership may have such other or
additional offices as the General Partner shall deem desirable.
The General Partner may at any time change the location of the
principal office and shall give due notice thereof to the
Limited Partners, provided that doing so shall not adversely
affect the Investment Limited Partner for tax purposes.
(b) The resident agent for the Partnership in the
State for service of process is as follows:
WPB II, L.P.
11 Mayo Place
Dresher, PA 19025
2.3 Purpose
The purpose of the Partnership is to acquire, hold,
invest in, secure financing for, construct, rehabilitate,
develop, improve, maintain, operate, lease and otherwise deal
with the Apartment Complex. The Partnership shall operate the
Apartment Complex in accordance with any applicable Regulations.
The Partnership shall not engage in any other business or
activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and
effect
until December 31, 2048, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon the
first to occur of the following events ("Liquidating Events"):
(i) The sale or other disposition of all or
substantially all of the assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless
the Partnership is continued as provided in Section 7.2;
(iii) The election to dissolve the Partnership made
in writing by the General Partner with the Consent of the
Investment Limited Partner and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of
the Partnership by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution
of the Partnership under the Act if the Partnership is not
reconstituted pursuant to the provisions of Section 7.2 or
Section 7.3.
(b) Upon the dissolution of the Partnership, the General Partner
(or for purposes of this paragraph, its trustees, receivers or
successors) shall cause the cancellation of the Certificate and shall
liquidate the Partnership assets and apply
and distribute the proceeds thereof in accordance with the
provisions of Section 10.3, unless the Investment Limited Partner
elects to reconstitute the Partnership and continue its business
as provided in Section 7.2 or 7.3, in which case the Partnership
assets shall be transferred to the new Partnership as provided
in such Section. Notwithstanding the foregoing, if, during
liquidation, the General Partner shall determine that an
immediate sale of part or all of the Partnership's assets would
be impermissible, impractical or cause undue loss to the
Partners, the General Partner may defer liquidation of, and
withhold from distribution for a reasonable time, any assets of
the Partnership except those necessary to satisfy Partnership
debts and obligations (other than Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The Partnership shall be authorized to obtain the Construction
Loan to finance the acquisition, development and construction of
the Apartment Complex and has secured the Construction Loan by
the Construction Mortgage. The General Partner and its
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 Loan Documents. However, from and
after the date of Permanent Mortgage Commencement, neither the
General Partner nor any Related Person shall at any time bear,
nor shall the General Partner permit any other Partner or any
Related Person to bear, the Economic Risk of Loss for the payment
of any portion of any Mortgage Loan unless, prior to the
effectiveness of the transaction in which such Economic Risk of
Loss is created or assumed, the General Partner shall have
obtained, at the expense of the Partnership, an opinion from
reputable tax counsel, in form and substance reasonably
satisfactory to the Special Limited Partner, to the effect that
such Economic Risk of Loss will not result in the reallocation of
Tax Credits or Losses from the Investment Limited Partner and the
Special Limited Partner to the General Partner. The General
Partner shall cause the Partnership to elect promptly, to the
extent permitted and in the manner prescribed by any Agency or
Lender having jurisdiction, that all debt service payments made
by the Partnership to the holder of the Permanent Mortgage shall
be applied first to interest determined at the stated rate set
forth in the Permanent Note, and then to principal due with
respect to the Permanent Note.
3.2 Refinancings
The Partnership may decrease, increase or refinance any
Mortgage Loan and may make any required transfer or conveyance of
Partnership assets for security or mortgage purposes, provided,
however, any such decrease, increase or refinancing of any
Mortgage Loan (except for the discharge of the Construction Loan
in accordance with the Construction Loan Documents and the
borrowing of the original principal amount of the Permanent Loan)
may be made by the General Partner only with the Consent of the
Special Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise
transfer or convey all or substantially all the assets of the
Partnership only with the Consent of the Special Limited Partner.
Notwithstanding the foregoing and except as set forth in Section
6.2(a)(vi), no Consent of the Special Limited Partner shall be
required for the execution and delivery of the Construction Loan
Documents, the leasing of apartments to tenants in the normal
course of operations or the leasing of all or substantially all
the apartments to a public housing authority at rents
satisfactory to any Agency or Lender as expressed in writing,
provided (subject to the Rent Restriction Test) that such rents
are not less than the Projected Rents.
3.4 Real Estate Commissions
The total compensation to all Persons, including, without
limitation, the Disposition Fee, for the sale of the Apartment
Complex shall be limited to a Competitive Real Estate Commission,
which in no event shall exceed six percent (6%) of the contract
price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the
aggregate amount of the cash and the Gross Asset Value of property
contributed by the General Partner and by the Limited Partners as set
forth in Schedule A. No interest shall be paid by the Partnership on any
Capital Contribution to the Partnership. Schedule A shall be
amended from time to time to reflect the withdrawal or admission of
Partners, any changes in the
Partnership Interests held by a Partner arising from the transfer of
an Interest to or by such Partner and any change in the amounts to
be contributed or agreed to be contributed by any Partner. No
Partner shall have the right to withdraw or receive a return of any
of its Capital Contributions except as set forth in this Agreement.
(b) An individual Capital Account shall be established
and maintained for each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in the
Partnership. The Capital Account of each Partner shall be
maintained in accordance with the following provisions:
(i) To each Partner's Capital Account there
shall be credited such Partner's Capital Contributions, such
Partner's distributive share of Profits, and any items in the nature
of income or gain that are specially allocated pursuant to Section 10.4
hereof, and the amount of any Partnership liabilities that are
assumed by such Partner or that are secured by any Partnership
Property distributed to such Partner;
(ii) To each Partner's Capital Account there shall
be debited the amount of cash and the Gross Asset Value of any
Partnership Property distributed to such Partner pursuant to
any provision of this Agreement, such Partner's distributive share of
Losses, and any items in the nature of expenses or losses that are
specially allocated pursuant to Section 10.4 hereof, and the amount
of any liabilities of such Partner that are assumed by the
Partnership or that are secured by any property contributed by such
Partner to the Partnership.
In the event that the Gross Asset Values of
Partnership assets are adjusted pursuant to this Agreement, the
Capital Accounts of all Partners shall be adjusted simultaneously to
reflect the aggregate net adjustment as if the Partnership
recognized gain or loss equal to the amount of such aggregate
net adjustment.
(c) The original Capital Account established for any
Assignee (as hereinafter defined) shall be in the same amount
as, and shall replace, the adjusted Capital Account of the
Partner which such Assignee succeeds, and, for the purpose of
the Agreement, such Assignee shall be deemed to have made the
Capital Contribution, to the extent actually paid in, of the
Partner which such Assignee succeeds. The term "Assignee," as
used in this paragraph, shall mean a Person who shall become
entitled to receive a share of the Profits, Losses, Tax Credits
and distributions of the Partnership by reason of such Person
succeeding to the Interest of a Partner by assignment of all or
any part of an Interest. To the extent an Assignee receives
less than 100% of the Interest of a Partner, such Assignee's
Capital Account and Capital Contribution shall be in proportion
to the Partnership Interest such Assignee receives, and the
Capital Account and Capital Contribution of the Partner who
retains a partial interest in the Partnership shall continue,
and not be replaced, in proportion to the Partnership Interest
such Partner retains.
(d) The foregoing provisions and other provisions of
this Agreement relating to the maintenance of the Capital Accounts
are intended to comply with the Allocation Regulations, and
shall be interpreted and applied in a manner consistent with
such Allocation Regulations.
4.2 General Partner
The name, address and Capital Contribution of the
General Partner are as set forth on Schedule A.
4.3 Limited Partners
(a) The Original Limited Partner hereby withdraws as a
limited partner of the Partnership and acknowledges that it no
longer has any Interest in, or rights or claims against, the
Partnership as a Partner as of the Admission Date. WPB hereby
acknowledges that no limited partners other than the Original
Limited Partner have been admitted to the Partnership prior to
the date hereof.
(b) Each of the Special Limited Partner, the
Investment Limited Partner and the Class A Limited Partner is hereby
admitted to the Partnership as a Limited Partner in substitution
for the Original Limited Partner as of the Admission Date and
agrees to be bound by the terms and provisions of the Project
Documents and this Agreement. The name and address of the
Investment Limited Partner, the Special Limited Partner and the
Class A Limited Partner are as set forth on Schedule A.
(c) Except as otherwise specifically set forth in
Sections 4.5 or 7.4, the General Partner shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partner.
4.4 Liability of the Limited Partners
Neither the Investment Limited Partner, the Special
Limited Partner, the Class A Limited Partner nor any Person who
becomes a Substituted Limited Partner shall be liable for any
debts, liabilities, contracts or obligations of the Partnership;
such Persons shall be liable only to pay their respective Capital
Contributions as and when the same are due hereunder and under the
Act. After its Capital Contribution shall be fully paid, no
Limited Partner shall, except as otherwise required by the Act, be
required to make any further capital contributions or payments or
lend any funds to the Partnership.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other
than Section 13.8), to the extent the law of the State is not
inconsistent, the Special Limited Partner shall have the right,
subject to any Requisite Approvals, to:
(i) dissolve the Partnership provided, however, that
such dissolution shall not be caused by the Special Limited
Partner unless the General Partner has violated a material provision
of any Project Document, which violation has not been cured within any
applicable cure period specified;
(ii) remove any General Partner and elect a new General
Partner upon the occurrence of a Material Event;
(iii) continue the business of the Partnership with
a substitute General Partner, provided that the General Partner
has been removed pursuant to Section 4.5(a)(ii) above; and
(iv) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner for cause
pursuant to Section 4.5(a)(ii),
(i) without any further action by any Partner, the
Special Limited Partner shall cause an Affiliate
automatically to become a General Partner (the "Substitute General
Partner") and acquire in consideration of a cash payment of $100 such
portion of the Interest of the removed General Partner as counsel to
the Special Limited 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 Act;
(ii) the remaining portion of the economic Interest of
the removed General Partner shall be converted to that of a
special Limited Partner and shall be transferred to the
Limited Partner or a designee of the Limited Partner to the extent
necessary to compensate on a present value basis the Limited Partners
for the action of such General Partner leading to its removal, or for
the fact of its violation of the terms of this Agreement (including the
cost, if any, of locating and retaining a new General Partner), not as
a penalty but as damages to compensate the Partnership, provided,
however, that the parties hereto agree that for events set forth in
clauses (ii) (except if caused due to the Bankruptcy of the General
Partner), (vi) or (viii) of the definition of Material Event herein,
the entire remaining economic Interest of the removed General Partner
shall be forfeited to the Partnership and for all other applicable
events, the size of the transferred interest shall be determined by
arbitration. Such arbitration shall be conducted in accordance with the
Rules of Commercial Arbitration of the American Arbitration Association
by a single arbitrator appointed pursuant to those rules. The
arbitration shall take place in the City of Philadelphia, Pennsylvania;
and
(iii) the Substitute General Partner shall automatically
be irrevocably delegated all of the powers and duties of the General
Partners pursuant to Section 6.13. A General Partner so removed or
converted to a special Limited Partner will not be liable as a general
partner for any obligations of the Partnership incurred after the
effective date of its removal, but shall remain liable for all
obligations incurred prior to its removal or damages flowing from its
acts or omissions prior to its removal. Such a special Limited Partner
shall have no rights other than the right to receive the allocable
share of any Profits, Losses, Tax Credits or distributions of the
Partnership to which the General Partner would have been entitled with
respect to the Interest (or portion thereof) that was converted into a
special Limited Partner interest if no such conversion had occurred,
and shall not be considered to be a Special Limited Partner for the
purpose of exercising any rights reserved to the Special Limited
Partner under this Agreement or sharing the benefits allocated to the
Special Limited Partner under Article X hereof and shall not
participate in the votes or consents of the Limited Partners hereunder.
Each General Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to execute and deliver any and all
documents and instruments on behalf of such General Partner and the
Partnership as the Special Limited Partner may deem to be necessary or
appropriate in order to effect the provisions of this Section 4.5 and
to enable the new General Partner to manage the business of the
Partnership.
(c) The General Partner is hereby required, within five
(5) days after its receipt of any offer to purchase the Apartment
Complex or all of the Interests in the Partnership, to send a
copy of such offer (or a written description of any such oral
offer) to each of the Limited Partners. In connection with any
proposed sale of the Apartment Complex, the Special Limited
Partner (or its designee) shall have the right to (i) receive
and review copies of all documents relating to the proposed
sale, (ii) participate in the negotiations of the terms and
conditions
of the proposed sale, (iii) meet with the proposed purchaser,
(iv) solicit proposals for alternative offers for the Apartment
Complex, and (v) provide such other services in connection with
the proposed sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more
than ten percent (10%) of the then outstanding Limited Partner
Interests may call meetings of the Partnership for any matters for which
the Limited Partners may vote as set forth in this Agreement. A
list of the names and addresses of all Limited Partners shall be
maintained as part of the books and records of the Partnership
and shall be made available upon request to any Limited Partner
or his representative at his cost. Upon receipt of a written
request either in person or by certified mail stating the
purpose(s) of the meeting, the General Partner shall provide all
Limited Partners within ten (10) days after receipt of said
request, written notice of a meeting , which meeting shall be
held in Philadelphia, Pennsylvania, and the purpose of such
meeting to be held on a date not less than fifteen (15) nor more
than sixty (60) days after receipt of said request, at a time
and place convenient to the Limited Partners.
4.7 Class A Limited Partner
(a) The Partnership and the General Partner
represent that the Tax Credits were not allocated to the Partnership as part
of the non-profit set aside set forth in Section 42(h)(5)(c) of the
Code. Notwithstanding the foregoing, the Class A Limited Partner
acknowledges that the Credit Agency allocated Tax Credits to the
Partnership in part because the Class A Limited Partner is a non-
profit organization and participates in the Partnership.
Notwithstanding any provision of this Agreement to the contrary,
during the Compliance Period, the Class A Limited Partner (or its
successor) shall participate in the development and operation of
the Apartment Complex to the extent required by the Credit Agency
to qualify for the Tax Credits. The Class A Limited Partner shall
devote such time and effort as necessary to assist the General
Partner in the development and operation of the Apartment Complex.
During the development of and throughout the Compliance Period for
the Apartment Complex, the Class A Limited Partner shall maintain
its federal tax exempt status and take such other actions to the
extent required by the Credit Agency to qualify for the Tax
Credits. The Class A Limited Partner acknowledges that the
General Partner and the Investment Limited Partner are relying on
the Class A Limited Partner's participation and involvement to
accomplish the development and operation of the Apartment Complex.
(b) The Class A Limited Partner, acting through its
employees or affiliates or through volunteers contributing their
time on its behalf, shall perform such services as it and the
General Partner shall determine to be appropriate, including but
not limited to, the following services on behalf of the
Partnership:
(i) assist the General Partner in the choice
of consultants with respect to the Apartment Complex;
(ii) coordinate with local service agencies,
including housing authorities, welfare and social
services departments, churches and other organizations operating
for the purpose of assisting the needy, to advise such agencies
about the availability of the Apartment Complex as desirable
housing for low-income families, and promote and encourage such
agencies to refer potential tenants to the Apartment Complex;
(iii) advise the Administrative General
Partner concerning ways in which the availability of the
Apartment Complex as suitable housing for low income families
may be made more widely known in the community;
(iv) obtain information from and consult with
low income tenants in the Apartment Complex as to services which
might be provided to such tenants by the
Partnership;
(v) obtain information from, consult with
and train tenants concerning social and educational
services from the community which might be provided to
tenants at the Apartment Complex; and
(vi) assist the identification of
eligible, qualified tenants, and providing tenant
qualification services, including without limitation, income
determination and certification and preference
determination.
(c) The Class A Limited Partner shall provide
certificates
and documentary evidence of its compliance with Sections 4.7(a)
and (b) above at such times as the General Partner or the Special
Limited Partner shall request.
(d) The Class A Limited Partner hereby represents an
warrants that it is a nonprofit organization in compliance with
rules of the Credit Agency.
(e) The General Partner hereby covenants to develop and
operate the Apartment Complex in a manner which involves the
Class A Limited Partner to the extent necessary to comply with the
requirements of the Credit Agency.
(f) If at any time during the Compliance Period, there
is no Partner which is a qualified non-profit organization, then to
the extent required by the Credit Agency the Partners shall use
their best efforts to cause a Partner to be admitted which is a
qualified non-profit organization and shall furnish counsel to the
Partnership with evidence to demonstrate such status in accordance
with the requirements of the Credit Agency.
(g) The Class A Limited Partner shall receive an
expense reimbursement fee of $7,000 to be paid at the closing of the
Permanent Loan.
(h) The General Partner reserves the right to remove
the Class A Limited Partner as the Class A Limited Partner in the
Partnership for "cause" only. "Cause" is defined as follows:
(i) Any event occurs to the Class A Limited
Partner that would disqualify the Partnership for the
Tax Credits; and
(ii) The occurrence of a Material Event as to
the Class A Limited Partner.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) Each of the Special Limited Partner's and the
Class A 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 in the aggregate amount of
$3,816,835 shall be paid in cash installments (the
"Installments"), as follows:
(i) $202,094 (the "First Installment")
on the Admission Date;
(ii) $3,226,741 (the "Second
Installment") on the latest of (A) the Completion Date, (B)
Cost Certification,
(C) receipt of an updated Title Policy in form and substance
satisfactory to the Special Limited Partner, (D) receipt by
the Investment Limited Partner of the Contractor Pay-Off
Letter, (E) receipt by the Investment Limited Partner of an
Estoppel Letter from each Lender or (F) satisfaction of the
Due Diligence Recommendations;
(iii) $380,500 (the "Third Installment") on the
latest of (A) the Initial 100% Occupancy Date, (B) Permanent
Mortgage Commencement, (C) State Designation or (D) Rental
Achievement; and
(iv) $7,500 (the "Fourth Installment") upon the
receipt by the Investment Limited Partner of a copy of the
properly
filed Partnership federal income tax return and an audited
Partnership financial statement for the year in which Rental
Achievement occurs;
provided, however, that (x) the General Partner shall give the
Investment Limited Partner not less than fourteen (14) days'
written notice prior to the due date of each Installment
subsequent to the First Installment, and (y) no Installment shall
be due unless and until all conditions to the payment of all prior
Installments have been satisfied.
(b) The obligation of the Investment Limited Partner
to pay each Installment is conditioned upon delivery by the
General
Partner to the Investment Limited Partner of a written certificate
(the "Payment Certificate") stating that as of the date of such
certificate (i) all the conditions to the payment of such
Installment and each prior Installment have been satisfied, (ii)
all representations and warranties of the General Partner
contained in this Agreement are true and correct and (iii) no
event has occurred which suspends or terminates the obligations of
the Investment Limited Partner to pay Installments under this
Agreement which has not been cured as herein provided, (iv) no
event has occurred which, with the giving of notice, would oblige
the General Partner to repurchase the Interests of the Investment
Limited Partner pursuant to Section 5.2(a). Except as provided in
the final sentence of this Section 5.1(b), acceptance by the
Partnership of any Installment shall constitute a confirmation
that, as of the date of payment, all such conditions are satisfied
and all such representations and warranties are true and correct.
The obligation of the Investment Limited Partner to pay the First
Installment is also conditioned upon delivery by the General
Partner to the Investment Limited Partner of (x) a legal opinion
of independent counsel to the Partnership, the General Partner,
the Developer and the Guarantors, which opinion(s) must be
satisfactory to the Investment Limited Partner as to form, content
and identity of counsel and (y) a photocopy of a binding
commitment, in form and substance satisfactory to
the Special Limited Partner, to issue the Title Policy and
endorsements thereto in form and substance satisfactory to the
Special Limited Partner including a Fairway endorsement and a non-
imputation endorsement. In no event shall any Installment become
due until all of the conditions for all of the Installments listed
prior to the Installment in question in Section 5.1(a) shall have
been satisfied and all of such prior Installments shall have become
due. Notwithstanding the foregoing, however, if at any time prior
to the date when an Installment becomes due and payable, the
Partnership has an Operating Deficit which the General Partner would
be required to fund pursuant to Section 6.10, then the Investment
Limited Partner may, at its option, waive the requirement of the
delivery of the Payment Certificate or any other condition with
respect to part or all of such Installment and pay such part or all
of such Installment, provided that the proceeds of the amount so
paid are used by the Partnership to fully fund such Operating
Deficit; provided, however, that if the proceeds of such amount so
paid are designated in Section 6.12 to be used to pay fee(s), then
such proceeds shall be utilized to pay such fee(s) and the
recipient(s) thereof shall be required to, and hereby agree to,
utilize the proceeds of such fee(s) to fund such Operating Deficit,
in which case the Investment Limited Partner is hereby authorized to
directly fund such Operating Deficit, with the funds so applied
being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall
be dated and delivered not less than ten (10) nor more than thirty
(30) days prior to the due date for such Installment.
(d) If, as of the date when an Installment would
otherwise be due, any statement required to be made in the Payment
Certificate for such Installment cannot be truthfully made, the
General Partner shall notify the Investment Limited Partner of
the reason why such statement would be untrue if made, and the
Investment Limited Partner shall not be required to pay such
Installment; provided, however, that if (i) any such statement
can subsequently be truthfully made and (ii) the Investment
Limited Partner shall not have irrevocably lost, in the good
faith judgment of the Investment General Partner, any material
tax or other benefits hereunder (other than tax benefits for
which the Investment Limited Partner has been fully compensated
pursuant to the provisions of paragraphs (e), (f) and (g) of
this Section 5.1), then the Investment Limited Partner shall pay
such Installment to the Partnership thirty (30) days after
delivery by the General Partner to the Investment Limited
Partner of the Payment Certificate together with an explanation
of the manner in which each such statement had become true.
(e) In the event that as of or any time prior to
Cost Certification (the "Initial Adjustment Date"), the
Investment Limited Partner shall receive a written certification
of the Auditors indicating that for any reason, including
without limitation, a determination by the Service whereby the
allocations to the Investment Limited Partner set forth in
Article X are not respected, the aggregate Actual Credit during
the Credit Period will be less than the aggregate Projected
Credit during the Credit Period, then (i) the next succeeding
Installments of the Capital Contributions of the Investment
Limited Partner shall be reduced by an amount equal to the
product of (X) the difference between (1) the aggregate
Projected Credit during the Credit Period and (2) the aggregate
Actual Credit during the Credit Period and
(Y) 0.838, provided, however, that if such a Tax Credit
shortfall occurs solely by reason of the Credit Agency reducing
the amount of Tax Credits allocated to the Partnership such figure
shall be 0.725, and (ii) the Projected Credit for each Fiscal Year shall
thereafter be redefined to mean the Actual Credit, as so
determined (the "Revised Projected Credit"). Any such reduction
pursuant to this Section 5.1(e) shall be made first to the
Installment, if any, next due to be paid by the Investment
Limited Partner, and any balance of such amount payable by the
General Partner in excess of the amount of such Installment
shall be applied to succeeding Installments, if any, provided
that if the amount of any such reductions exceeds the sum of the
remaining Installments, if any, then an amount equal to the
amount of such excess shall be paid by the General Partner to
the Investment Limited Partner within ten (10) business days
after demand is made therefor, as a payment of damages for
breach of warranty, regardless of the reason for the occurrence
of such event (unless such reduction was caused by an act or
omission of the Investment Limited Partner or its Affiliates, in
which event no such reduction or payment shall be required). No
reduction of any Installment or any payment by the General
Partner pursuant to this Section 5.1(e) shall be deemed to be a
Capital Contribution by the General Partner to the Partnership,
nor shall any such payment constitute a return of capital to the
Investment Limited Partner.
(f) If, for any reason, including without
limitation, a determination by the Service whereby the
allocations to the Investment Limited Partner set forth in
Article X are not respected, with respect to any Fiscal Year all
or a portion of which occurs during the Initial Operating
Period, the Actual Credit is or was less than the Projected
Credit (or the Revised Projected Credit, if applicable) for such
Fiscal Year (a "Reduction Year"), then the General Partner shall
pay to the Investment Limited Partner the Reduction Amount. The
Reduction Amount shall be equal to the sum of (A) the excess of
the Projected Credit (or the Revised Projected Credit, if
applicable) for such Fiscal Year over the Actual Credit for such
Fiscal Year multiplied by 0.838 plus (B) the Recapture Amount as
determined pursuant to Section 10.6 and, to the extent not
already accounted for, any interest or penalties payable by the
limited partners and/or holders of beneficial assignee
certificates of the Investment Limited Partner as a result of
such shortfall or Recapture Event, assuming that each limited
partner and/or holder of a beneficial assignee certificate in
the Investment Limited Partner used all of the Tax Credits
allocated to it in the Fiscal Year of allocation. The Auditors
shall make their determination of the amount of the Actual
Credit with respect to each Reduction Year within thirty (30)
days following the end of such Fiscal Year. The Investment
Limited Partner shall be eligible to be paid a Reduction Amount
as hereinabove described with respect to each Reduction Year.
Any Reduction Amount shall first be applied to the Installment
next due to be paid by the Investment Limited Partner, with any
portion of such Reduction Amount in excess of the amount of such
Installment then being applied to succeeding Installments,
provided that if no further Installments remain to be paid or if
the Reduction Amount shall exceed the sum of the amounts of the
remaining Installments, then the entire Reduction Amount or the
balance of the Reduction Amount, as the case may be, shall be
paid by the General Partner to the Investment Limited Partner
within ten (10) business days after demand is made therefor, as
a payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event (unless such reduction
was caused by an act or omission of the Investment Limited
Partner or its Affiliates, in which event no Reduction Amount
shall be payable). No payment by the General Partner pursuant
to this Section 5.1(f) shall be deemed to be a Capital
Contribution to the Partnership nor shall any such payment
constitute a return of capital to the Investment Limited Partner.
(g) In the event that, for any reason, including
without limitation, a determination by the Service whereby the
allocations to the Investment Limited Partner set forth in Article
X are not respected, at any time after the end of the Initial
Operating Period, the amount of the Actual Credit shall be less
than the Projected Credit (or the Revised Projected Credit, if
applicable) with respect to any Fiscal Year of the Partnership
(such difference being hereinafter referred to as a "Credit
Shortfall"), the Investment Limited Partner shall be treated as
having made a constructive advance to the Partnership with respect
to such Fiscal Year (a "Credit Recovery Loan"), which shall be
deemed to have been made on January 1 of such Fiscal Year in an
amount equal to the sum of (A) the Credit Shortfall for such
Fiscal Year plus (B) the Recapture Amount as determined pursuant
to Section 10.6 and, to the extent not already accounted for, any
interest or penalties payable by the limited partners and/or the
holders of beneficial assignee certificates of the Investment
Limited Partner as a result of the Credit Shortfall for such
Fiscal Year, assuming that each limited partner and/or holder of a
beneficial assignee certificate in the Investment Partnership used
all of the Tax Credits allocated to him in the Fiscal Year of
allocation. Credit Recovery Loans shall be deemed to bear simple
(not compounded) interest from the respective dates on which such
principal advances shall have been deemed to have been made under
this Section 5.1(g) at a rate of nine percent (9%) per annum.
Credit Recovery Loans shall be payable by the Partnership as
provided in Section 10.2(b), Clause Third.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. Upon the occurrence of any of the
events (a "Repurchase Event") listed below in this Section 5.2(a),
within five (5) days of the occurrence thereof, the General
Partner shall send to the Investment Limited Partner notice of
such event and of the General Partner's obligation to repurchase
the Interests of the Investment Limited Partner by paying to the
Investment Limited Partner an amount in cash (the "Repurchase
Amount") equal to each such Partner's Invested Amount minus the
portion, if any, of such Partner's Capital Contribution which
shall not yet have been paid (or deemed to have been paid) to the
Partnership plus the outstanding principal and accrued interest in
respect of the Interim Loan and the amount of any third-party
costs, including, without limitation, attorney's fees incurred by
or on behalf of such Partner in implementing this Section 5.2(a)
in the event the Investment Limited Partner requires such a
repurchase plus interest thereon at the AFR commencing on the
fifth (5th) day after delivery of the notice referred to in the
next sentence. If the Investment Limited Partner elects to
require a repurchase of its Interest and the payment to it of an
amount equal to its Repurchase Amount, it shall send notice
thereof to the Partnership within thirty (30) days after the
mailing date of the General Partner's notice, or at any time after
the occurrence of any of the foregoing if the General Partner
shall not have sent a notice thereof, and the General Partner
shall within ten (10) days after the Partnership receives any such
notice from a Partner requesting the purchase of its Interest
repurchase the Interest of such Partner by paying to such Partner
an amount equal to its Repurchase Amount. If, following receipt
of the General Partner's notice, the Investment Limited Partner
fails to send notice to the General Partner by the end of such 30-
day period requesting the General Partner to
purchase its Interest, the Investment Limited Partner, as the
case may be, shall be deemed to have waived its right to cause
the General Partner to purchase its Interest as a result of the
event described in the General Partner's notice. No such
waiver, however, shall affect the right of the Investment
Limited Partner to cause the General Partner to purchase its
Interest upon the occurrence of any other event described in
this Section 5.2(a), or upon any subsequent occurrence of the
event described in the General Partner's notice. The Repurchase
Events are as follows:
(i) each of the buildings in the Apartment
Complex shall not have been placed in service by
December 31, 1998 (for purposes of satisfying the requirements
of Section 42(h)(1)(E)(i) of the Code with respect to the 1996
Tax Credit allocation); or
(ii) by December 31, 1998, the Completion Date
shall not have occurred; or
(iii) construction or operation of the
Apartment Complex shall have been enjoined by a final order
(from which no further appeals are possible) of a court having
jurisdiction and such injunction shall continue for a period of
ninety (90) days; or
(iv) Permanent Mortgage Commencement shall not
have been achieved prior to December 31, 1998; or
(v) if at any time it shall be determined by
the Service or by the Tax Accountants that a Carryover
Certification could not be issued or was issued in
error; or
(vi) State Designation shall not have occurred
by March 1, 1999 (or any later date fixed by the General
Partner with the Consent of the Investment Limited Partner) and
by said date the General Partner shall not have made any payment
as described in the next to last sentence of Section 5.1(e) or,
if the Investment Limited Partner shall have elected to have all
or a portion of any payment under Section 5.1(e) applied toward
future Installment obligations of the Investment Limited
Partner, amendments to this Agreement shall not have been
adopted and filed in the Filing Office, reflecting such event;
or
(vii) if by the date which is twelve (12)
months following the Completion Date, Rental Achievement
shall not have been achieved; or
(viii) the Partnership shall fail to meet the
Minimum Set-Aside Test or the Rent Restriction Test by
the close of the first year of the Credit Period and/or fails
to continue to meet either of such tests at any time during
the sixty (60)-month period commencing on such date; or
(ix) (A) foreclosure proceedings shall
have commenced under any Mortgage and such proceedings shall
not have been dismissed within thirty (30) days, (B) any of
the commitments of a Lender to provide a Mortgage Loan and/or
any subsidy financing shall be terminated or withdrawn and not
reinstated or replaced within sixty (60) days with terms at
least as favorable to the Partnership or terms for which the
Consent of the Investment Limited Partner and any Requisite
Approvals shall have been obtained, or (C) the Construction
Lender, acting in good faith and in accordance with the
provisions of the Construction Loan Documents, shall have
irrevocably refused to make any further advances under the
Construction Loan Documents and such decision shall not have
been reversed or the Construction Lender replaced within
thirty (30) days; or
(x) at any time the General Partner fails
to advance Subordinated Loans and such failure continues
for ten (10) days; or
(xi) any action is commenced to foreclose
any mechanics, or any other lien (other than the lien of a
Mortgage) against the Apartment Complex and such action
has not within thirty (30) days been either bonded against in
such a manner as to preclude the holder of such lien from having
any recourse to the Apartment Complex or to the Partnership for
payment of any debt secured thereby, or affirmatively insured
against by the title insurance policy or an endorsement thereto
issued to the Partnership by a reputable title insurance company
(which insurance company will not have indemnity from or
recourse against Partnership assets by reason of any loss it may
suffer by reason of such insurance) in an amount satisfactory to
the Investment Limited Partner; or
(xii) a casualty occurs resulting in
substantial destruction of all or a portion of the Apartment
Complex, and the insurance proceeds (if any) are
insufficient to restore the Apartment Complex or the
Apartment Complex is not so restored within twenty-four (24)
months following such casualty; or
(xiii) at any time the Service determines
that the Investment Limited Partner is not a Partner of the
Partnership for federal tax purposes or the allocations
to the Investment Limited Partner set forth in Article X are not
respected, resulting in the allocation to the Investment Limited
Partner of less than 70% of the Projected Credit during the
Credit Period.
(b) Lender/Agency Disapproval. If any Agency or
Lender shall disapprove, or fail to give any required approval of, the
Investment Limited Partner and/or the Special Limited Partner as
a Limited Partner hereunder within one hundred eighty (180) days
of the Admission Date, then the Partner being disapproved or not
approved shall, effective as of such time or such later time as
may be elected by the Partner being disapproved or not approved
as may be specified by such Agency or Lender in its disapproval,
at the option of the Partner being disapproved or not approved
(if not directed by such Agency or Lender to withdraw), cease to
be a Limited Partner. The General Partner shall, within ten (10)
days of the effective date of such cessation, pay to the Partner
being disapproved or not approved an amount equal to its Invested
Amount minus the amount, if any, of such Partner's Capital
Contribution which shall not yet have been paid (or deemed to
have been paid) to the Partnership plus the amount of any third
party costs, including, but not limited to attorney's fees,
incurred by or on behalf of such Partner in implementing this
Section 5.2(b).
(c) Substitution and Indemnification. Upon the
receipt by the Investment Limited Partner and/or the Special Limited Partner
of the amount due to it pursuant to either Section 5.2(a) or
Section 5.2(b), the Interest of such Partner shall terminate, and
the General Partner shall indemnify and hold harmless such
Partner from and against any Adverse Consequences to which such
Partner (as a result of its participation hereunder) may be
subject, provided that such Adverse Consequences do not result
from such Partner's acts or omissions.
(d) Waiver of Repurchase Right. Each of the Investment
Limited Partner and the Special Limited Partner shall have the
right to irrevocably waive its right to have its Interest
repurchased pursuant to any clause or clauses of Section 5.2(a),
or any portion thereof, at any time during which any of such
rights shall be in effect. Such a waiver shall be exercised by
delivery to the General Partner of a written notice stating that
the rights being waived pursuant to any specified clause or
clauses of Section 5.2(a), or any specified portion thereof, are
thereby waived for a specified period of time.
(e) Additional General Partner. If the General Partner
shall fail to make on the due date therefor any payment required
under Section 5.2(a) or Section 5.2(b), time being of the
essence, at any time thereafter the Special Limited Partner shall
have the option, exercisable in its sole discretion, to cause
itself or its designee to be admitted as an additional General
Partner, receiving from the existing General Partner, in
consideration of the payment of ten dollars ($10.00), a one per
cent (1%) interest in the Profits, Losses, Tax Credits and
distributions of the Partnership, with the Special Limited
Partner retaining its status as such and its economic interest in
the Partnership as the Special Limited Partner (or its designee
as an additional General Partner). If the Special Limited
Partner exercises the option described in this Section 5.2(e),
each of the other General Partner hereby agrees that all of its
rights and powers hereunder as a General Partner shall
automatically be irrevocably delegated
to the Special Limited Partner pursuant to Section 6.13 without
the necessity of any further action by any Partner. Each Partner
hereby grants to the Special Limited Partner an irrevocable (to
the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute, deliver and
file or record any and all documents and instruments on behalf of
such Partner and the Partnership as the Special Limited Partner
may deem necessary or appropriate in order to effectuate the
provisions of this Section 5.2(e) and to allow the additional
General Partner to manage the business of the Partnership. The
admission of the Special Limited Partner or its designee as an
additional General Partner shall not relieve any other General
Partner of any of its economic obligations hereunder, and each
other General Partner shall fully indemnify and hold harmless the
additional General Partner on an after-tax basis from and against
any and all Adverse Consequences sustained by such additional
General Partner in connection with its status as a General
Partner (other than Adverse Consequences arising solely from the
negligence or misconduct of such additional General
Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3,
Section 6.15 and all other provisions of this Agreement, the
General Partner for, in the name and on behalf of the
Partnership, is hereby authorized, in furtherance of the purposes
of the Partnership:
(i) to acquire by purchase, lease, exchange
or otherwise any real or personal property;
(ii) to construct, rehabilitate, operate, maintain,
finance and improve, and to own, sell, convey, assign,
mortgage or lease any real estate and any personal
property;
(iii) to borrow money and issue evidences
of indebtedness and to secure the same by mortgage, pledge or
other lien on the Apartment Complex or any other assets of
the Partnership;
(iv) to execute the Mortgage Loan Documents and
the other Project Documents and all such other documents as the
General Partner deems to be necessary or appropriate in connection
with the acquisition, development, construction and financing of the
Apartment Complex;
(v) subject to Section 3.2, to prepay in whole or
in part, refinance or modify any Mortgage Loan or other
financing affecting the Apartment Complex;
(vi) to employ the Management Agent (which may be
an Affiliate of the General Partner) and, subject to the
provisions of Article XI, to pay reasonable compensation for
its services;
(vii) to employ its Affiliates to perform services
for, or sell goods to, the Partnership provided that (except with
respect to any contract specifically authorized by this
Agreement) the terms of any such transaction with an Affiliate
shall not be less favorable to the Partnership than would be
arrived at by unaffiliated parties dealing at arms' length;
(viii) to execute contracts with any Agency,
the State or any subdivision or agency thereof or any other
Governmental Authority to make apartments or tenants in the
Apartment Complex eligible for any public-subsidy program;
(ix) to execute leases of some or all of the
apartment units of the Apartment Complex to individuals and/or to a
public housing authority and/or to a non-profit corporation,
cooperative or other non-profit Entity;
(x) to employ or engage such engineers,
architects, technicians, accountants, attorneys and other Persons, as may
be necessary, convenient or incidental to the accomplishment
of the purposes of the Partnership; and
(xi) to enter into any kind of activity and to perform and carry out
contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and document which may be required under
the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this
Agreement, the General Partner shall have no authority to perform any
act in violation of the Act, any other applicable law, Agency or other
government regulations, the requirements of any Lender, or the
Project Documents. In the event of any conflict between the terms
of this Article VI and any applicable Regulations or requirements
of any Lender, the terms of such Regulations or the requirements
of such Lender, as the case may be, shall govern. Subject to the
provisions of Section 6.2(b), the General Partner, acting in its
capacity as General Partner, shall not have the authority, without
the Consent of the Special Limited Partner:
(i) to have unsecured borrowings in excess of ten thousand dollars
($10,000.00) in the aggregate at any one
time outstanding, except borrowings constituting Subordinated
Loans or Credit Recovery Loans;
(ii) to borrow from the Partnership or commingle
Partnership funds with the funds of any other Person;
(iii) following the Completion Date, to construct any
new or replacement capital improvements on the Apartment
Complex which substantially alter the character or use of the Apartment
Complex or which cost in excess of ten thousand dollars ($10,000.00) in
a single Fiscal Year, except (x) replacements and remodeling in the
ordinary course of business or under emergency conditions or (y)
construction paid for from insurance proceeds;
(iv) to acquire any real property in addition to the
Apartment Complex;
(v) to increase, decrease or modify the terms of or
refinance any Mortgage Loan;
(vi) to rent apartments in the Apartment Complex
such that the Apartment Complex would not meet the requirements of
the Minimum Set-Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or
transfer the Apartment Complex or substantially all the assets of the
Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a
proceeding seeking any decree, relief, order or appointment in respect
to the Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state bankruptcy,
insolvency or similar law, or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) for the Partnership or for any other substantial part of the
Partnership's business or property, or to cause the Partnership to
consent to any such decree, relief, order or appointment initiated by any
Person other than the Partnership;
(x) to execute contracts with any Agency, the State or
any subdivision or agency thereof or any other Governmental
Authority to make apartments or tenants in the Apartment
Complex eligible for any public housing subsidy program;
(xi) to amend any construction or rehabilitation contract;
(xii) to pledge or assign any of the Capital
Contributions of the Investment Limited Partner or the
proceeds thereof (except to the extent required by the
terms of the Construction Loan Documents and agreed to in
writing by the Special Limited Partner);
(xiii) to amend any Project Document, or
to permit any party thereunder to waive any provision
thereof, to the extent that the effect of such
amendment or waiver would be to eliminate, diminish or defer
any obligation or undertaking of the Partnership, the General
Partner or its Affiliates which accrues, directly or
indirectly, to the benefit of, or provides additional
security or protection to, the Investment Limited Partner
(notwithstanding that the Investment Limited Partner is
neither a party to nor express beneficiary of such provision
or was not a partner when such provision became effective);
(xiv) to approve any changes to the Plans
and Specifications for the Apartment Complex which would
result, either individually or in the aggregate, in an
overall development cost increase or decrease in excess of
$25,000;
(xv) to permit the merger, termination or dissolution of the Partnership; or
(xvi) to do any act required to be approved or
ratified by all limited partners under the Act.
(b) In the event that any General Partner violates
any provision of Section 6.2(a), the Special Limited Partner in its
sole discretion and without prejudice to its rights under
Sections 4.5(b) and 7.4(d), may cause itself or its designee to
be admitted as an additional General Partner without any further
action by any other Partner. Upon any such admission of an
additional General Partner, each existing General Partner shall
be deemed to have assigned proportionally to the additional
General Partner, automatically and without further action, such
portion of its General Partnership Interest so that the
additional General Partner shall receive not less than a one
percent (1%) interest in the Profits, Losses, Tax Credits and
distributions of the Partnership in consideration of one dollar ($1.00)
and any other consideration which may be agreed upon. An additional General
Partner so admitted shall automatically become the Managing
General Partner and shall be irrevocably delegated all of the
power and authority of all of the General Partner pursuant to
Section 6.13. Any such additional General Partner shall have the
right to withdraw as a General Partner at any time, leaving the
prior General Partner once again as the only General Partner,
the provisions of Article VII notwithstanding. Each Partner
hereby grants to the Special Limited Partner a special power of
attorney, irrevocable to the extent permitted by law and coupled
with an interest, to amend this Agreement and to do anything
else which, in view of the Special Limited Partner, may be
necessary or appropriate to accomplish the purposes of this
Section 6.2(b) or to enable any additional General Partner
admitted pursuant to this Section 6.2(b) to manage the business
of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of
its economic obligations hereunder, and each other General
Partner on an after-tax basis shall fully indemnify and hold
harmless the additional General Partner from and against any and
all Adverse Consequences sustained by the additional General
Partner in connection with its status as a General Partner
(other than Adverse Consequences arising solely from the
negligence or misconduct of such additional General Partner).
(c) Neither the Investment General Partner nor any
Affiliate thereof shall be given an exclusive right to sell, or
exclusive employment to sell, the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive
any salary or other direct or indirect compensation for any
services or goods provided in connection with the Partnership or
the Apartment Complex, except as may be specifically provided in
Section 6.12, Section 6.15 and Article XI or as to which the
Consent of the Special Limited Partner shall have been obtained
to the precise terms thereof prior to the commencement of such
services or the provision of such goods. Any Partner may engage
independently or with others in other business ventures of every
nature and description, including the ownership, operation,
management, syndication and development of real estate; neither
the Partnership nor any other Partner shall have any rights in
and to such independent ventures or the income or profits
derived therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the
General Partner shall have the exclusive right to control the
business of the partnership. If at any time there is more than
one General Partner, the powers and duties of the General
Partners hereunder shall be exercised in the first instance by a
Managing General Partner who, subject to the terms and
provisions of this Agreement, shall manage the business and
affairs of the Partnership. The Managing General Partner may
bind the Partnership by executing and delivering, in the name
and on behalf of the Partnership, any documents which this
Agreement authorizes the General Partners to execute hereunder
without the requirement that any other General Partner execute
such documents. The initial Managing General Partner shall be
WPB; if it is unwilling or unable to serve in such capacity or
shall cease to be a General Partner, the remaining General
Partners may from time to time designate a new Managing General
Partner. If for any reason no designation is in effect, the
powers of the Managing General
Partner shall be exercised by a majority in interest of the
General Partners. Any action required or permitted to be taken
by a corporate General Partner hereunder may be taken by such of
its proper officers or agents as it shall validly designate for
such purpose.
(b) The Managing General Partner shall have control
over the business of the Partnership and shall have all rights,
powers and authority conferred by law as necessary, advisable or
consistent in connection therewith. Without limiting the generality of the
foregoing, the Managing General Partner shall have the right, power
and authority to execute any documents relating to the acquisition,
financing, construction, operation and sale of all or any portion
of the Apartment Complex with the prior approval of the other
General Partners, if any. The Managing General Partner shall be
responsible for administering any construction loan draw requests
for the development of the Apartment Complex.
(c) Neither the Investment Limited Partner nor the
Special Limited Partner shall have any right to take part in the
management or control of the business of the Partnership or to
transact any business in the name of the Partnership. No provision
of this Agreement which makes the Consent of the Investment Limited
Partner or the Consent of the Special Limited Partner a condition
for the effectiveness of an action taken by the General Partner is
intended, and no such provisions shall be construed, to give the
Investment Limited Partner or the Special Limited Partner, as the
case may be, any participation in the control of the Partnership
business. Each of the Special Limited Partner, the Investment
Limited Partner and the Class A Limited Partner hereby consents to
the exercise by the General Partner of the powers conferred on it
by law and this Agreement, and the General Partner agrees to
exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement. Notwithstanding
the foregoing, in no event may the provisions of this Section 6.4
be invoked by any General Partner or by any other Person as a
defense against or as an impediment
to the ability of either the Investment Limited Partner or the
Special Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of
the Partnership to the best of its ability, shall use its 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 its duties and the business of the
Partnership. The General Partner shall promptly take all action
which may be necessary or appropriate for the proper
development, construction, maintenance and operation of the
Apartment Complex in accordance with the provisions of this
Agreement, the Project Documents and any applicable laws and
Regulations. The General Partner is responsible for the
management and operation of the Partnership, including the
oversight of the rent-up and operational stages of the Apartment
Complex.
(b) Subject to the provisions of Section 6.5(g), the
General Partner shall use its diligent good faith efforts to
cause the Partnership to generate Cash Flow for distribution to
the Partners at the maximum realizable level in view of (i) any
applicable Regulations, (ii) the Minimum Set-Aside Test, (iii)
the Rent Restriction Test and (iv) the Projected Rents, and, if
necessary, the General Partner also shall use its best efforts to
obtain approvals and implementation of appropriate adjustments in
the rental schedule of the Apartment Complex.
(c) The General Partner shall cause the Partnership
to obtain and keep in force, during the term of the Partnership,
insurance policies in accordance with the Insurance Requirements
set forth on Exhibit D hereto. Throughout the term of the
Partnership, the General Partner shall provide copies of all such
policies (or binders) to the Investment Limited Partner within
thirty (30) days after their receipt thereof. The General
Partner shall cause the applicable insurer to name the Investment
Limited Partner as an "additional insured" on each Partnership
insurance policy. Each Partnership insurance policy shall include
a provision requiring the insurance company to notify the
Investment Limited Partner in writing no less than thirty (30)
days prior to any cancellation, non-renewal or material change in
the terms and conditions of coverage. The General Partner shall
review regularly all of the Partnership and Apartment Complex
insurance coverage to insure that it is adequate and continuing.
In particular, the General Partner shall review at least annually
the insurance coverage required by this Section 6.5(c) to insure
that it is in an amount at least equal to the then current full
replacement value of the Apartment Complex.
Without limitation of the foregoing, the General Partner
shall deliver to the Investment Limited Partner on or before the
Admission Date one or more certificates or memoranda of insurance,
in form reasonably acceptable to the Investment Limited Partner,
evidencing, (i) the existence of the insurance policies and
coverages specified on Exhibit D, (ii) that the Partnership and
its Partners (including the Investment Limited Partner) are named
insured on such policies, and (iii) that such insurance policies
will not be cancelled by the insurers except within thirty (30)
days' written notice to the Investment Limited Partner. From time
to time following the Admission Date, the General Partner shall
deliver to the Investment Limited Partner such further
certificates or memoranda of insurance as the Investment Limited
Partner may reasonably require to confirm that such insurance and
notice provisions with respect to insurance under this Agreement
have been complied with.
(d) If at any time there is more than one General
Partner, the obligations of the General Partners hereunder shall
be the joint and several obligations of each General Partner. Except as
otherwise provided in Sections 4.5(b) and 7.1, such obligations
shall survive any Withdrawal of a General Partner from the
Partnership.
(e) The General Partner shall on and after the
Permanent Loan Commencement establish and maintain a reserve (the
"Operating Reserve") to provide for working capital needs,
improvements, Operating Deficits and any other contingencies of
the Partnership. The General Partner (or its designee) shall,
upon the Permanent Loan Commencement, initially fund the Operating
Reserve in the amount of $7,000. Thereafter, the General Partner
shall fund the Operating Reserve by monthly deposits of $1,913 (4%
of the Effective Gross Income as such term is defined in the
Permanent Loan Documents) up to a maximum balance, when combined
with the Replacement Reserve, of $216,000.
(f) Commencing on the Permanent Loan Commencement, the
General Partner shall establish a reserve for Capital replacements
(the "Replacement Reserve"), which account shall be funded by
monthly deposits of $1,200 ($200 per unit per year) up to a
maximum balance, when combined with the Operating Reserve, of
$216,000. Withdrawals from such Replacement Reserve shall be
utilized solely to fund capital repairs and improvements deemed
necessary by the General Partner and approved by the Permanent
Lender and the Special Limited Partner. Notwithstanding the
foregoing, the General Partner may make withdrawals from the
Replacement Reserve totaling up to $14,400 during any one-year
period without the prior approval of the Special Limited Partner.
(g) The General Partner shall, on the Permanent Loan
Commencement, establish a reserve (the "Recourse Reserve") that
shall be pledged to collateralize the Permanent Loan in an amount
equal to $130,000 (5% of the Permanent Loan). Withdrawals from
the Recourse Reserve shall be utilized solely to pay any demand
under the Guaranty of Payment between the Permanent Lender and
the Local Initiatives Managed Assets Corporation (the "Guaranty
of Payment"). When the Guaranty of Payment is released by Local
Initiatives Management Assets Corporation, the Recourse Reserve
shall be transferred into the Replacement Reserve to the extent
necessary to fund it up to a maximum, when combined with the
Operating Reserve, of $216,000, and any amount in excess of such
amount will be released to the Partnership.
(h) The General Partner shall, on and after the
Permanent Loan Commencement establish and maintain a reserve for
debt service (the "Debt Service Reserve") in an amount equal to
$77,726.85 (three months of debt service). Withdrawals from the
Debt Service Reserve shall be utilized solely to fund debt
service on the Property. To the extent any withdrawal is made
from the reserve, the General Partner shall replenish the
reserve upon demand by either the Permanent Lender or the
Special Limited Partner.
(i) Each General Partner shall be bound by the
provisions of the Project Documents, and no additional General
Partner shall be admitted if he, she or it has not first agreed to
be bound by this Agreement (and assume the obligations of a General
Partner hereunder) and by the Project Documents to the same extent
and under the same terms as each of the other General Partners.
(j) The General Partner shall take all actions
appropriate to ensure that the Investment Limited Partner receives
the full amount of the Projected Credit, including, without
limitation, the rental of apartments to appropriate tenants and the
filing of annual certifications as may be required. In this regard, the
General Partner shall, inter alia, cause (i) the Partnership to
satisfy the Minimum Set-Aside Test, the Rent Restriction Test and
all other requirements imposed from time to time under the Code with
respect to rental levels and occupancy by qualified tenants by the
close of the first year of the Credit Period and throughout the
Compliance Period so as to permit the Partnership to be entitled to
the maximum available Tax Credit (ii) the Partnership to comply with
all Tax Credit monitoring procedures of the State, (iii) all
dwelling units in the Apartment Complex to be leased for initial
periods of not less than six months to individuals satisfying the
Rent Restriction Test, (iv) the Partnership to make all appropriate
Tax Credit elections in a timely fashion, and (v) all rental units
in the Apartment Complex to be of equal quality with comparable
amenities available to low-income tenants on a comparable basis
without separate fees.
(k) On or before the Admission Date, the General Partner
shall provide to the Special Limited Partner either (i) an appraisal
of the Apartment Complex prepared by a competent independent
appraiser or (ii) completed RECD Forms 1924-13 (estimate and
certificate of actual cost) and 1930-7 (statement of budget, income
and expense) or HUD project cost and budget analysis on Form 2264,
or any successor RECD or HUD form, any comparable form of a state or
other Governmental Authority, including any applicable Credit
Agency, setting forth estimates
with respect to construction, rehabilitation and mortgage financing
costs and initial rental income and operating expense figures for
the Apartment Complex.
(l) The General Partner shall (i) not store or dispose
of (except in compliance with all laws, ordinances, and regulations
pertaining thereto) any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a General
Partner, or any Person for whose conduct any General Partner is or
was responsible; (ii) neither directly nor indirectly transport or
arrange for the transport of any Hazardous Material (except in
compliance with all laws, ordinances, and regulations pertaining
thereto); (iii) provide the Investment Limited Partner with
written notice (x) upon any General Partner's obtaining knowledge
of any potential or known release, or threat of release, of any
Hazardous Material at or from the Apartment Complex or any other
Site or Vessel owned, occupied, or operated by any General Partner,
any Affiliate of a General Partner or any Person for whose conduct
any General Partner is or was responsible or whose liability may
result in a lien on the Apartment Complex; (y) upon any General
Partner's receipt of any notice to such effect from any federal,
state, or other Governmental Authority; and (z) upon any General
Partner's obtaining knowledge of any incurrence of any expense or
loss by any such government authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for
which expense or loss a lien may be imposed on the Apartment
Complex.
(m) The General Partner shall promptly request in
writing of the Permanent Lender that the Permanent Lender cause the
Special Limited Partner to be named as an "interested party" in the
Permanent Mortgage Loan Documents, so that the Permanent Lender
will notify the Special Limited Partner of any default under the
Permanent Mortgage or the General Partner shall itself notify the
Special Limited Partner of any such default.
(n) The General Partner shall provide the Special
Limited Partner with a true and accurate copy of each Construction Loan
requisition and any supporting documents and information which has
been submitted for approval by the Construction Lender (whether
submitted before or after the Admission Date).
(o) The General Partner shall have a fiduciary
responsibility for the safekeeping and use of all funds and assets
of the Partnership, whether or not in its immediate possession or
control. The General Partner shall not employ, or permit another
to employ, such funds or assets in any manner except for the
exclusive benefit of the Partnership. No General Partner shall
contract away the fiduciary duty owed at common law to the Limited
Partners.
6.6 Representations and Warranties
The General Partner represents and warrants to the
Investment Limited Partner and the Special Limited Partner as
follows:
(a) The Partnership is a duly organized limited
partnership validly existing and in good standing under the laws of the State
and has complied with all filing requirements necessary for its
existence and to preserve the limited liability of the Investment
Limited Partner and the Special Limited Partner.
(b) No event or proceeding has occurred or is pending
or, is to the Best Knowledge of the General Partner, threatened which
would (i) materially adversely affect the Partnership or its
properties, or (ii) materially adversely affect the ability of the
General Partner or any of its Affiliates to perform their
respective obligations hereunder or under any other agreement with
respect to the Apartment Complex, other than legal proceedings
which have been bonded against without recourse to Partnership
assets in such manner as to stay the effect of the proceedings or
otherwise have been adequately provided for. This subparagraph
shall be deemed to include, without limitation, the following: (x)
legal actions or proceedings before any court, commission,
administrative body or other Governmental Authority having
jurisdiction over the zoning applicable to the Apartment Complex;
(y) labor disputes; and (z) acts of any Governmental Authority.
(c) No default (or event which, with the giving of
notice or the passage of time or both, would constitute a default)
has occurred and is continuing under this Agreement or under any
material provision of the Project Documents, and the Project
Documents are in full force and effect.
(d) Except as specifically permitted under Section
3.1, no Partner or Related Person bears (or will bear) the Economic
Risk of Loss with respect to the Permanent Mortgage Loan. No General
Partner has, either on its own behalf or on behalf of the
Partnership, incurred any financial obligation with respect to
the Partnership prior to the Admission Date, other than as
disclosed in writing to the Special Limited Partner prior to the
Admission Date.
(e) The Apartment Complex will be, is being or has
been constructed in a timely manner in conformity with the
Project Documents. There is no violation by the Partnership or
the General Partner of any zoning, environmental or similar
regulation applicable to the Apartment Complex which could have a
material adverse effect thereon, and the Partnership has complied
and will comply with all applicable municipal and other laws,
ordinances and regulations relating to such construction and use
of the Apartment Complex. All appropriate public utilities,
including, but not limited to, water, electricity, gas (if
called for in the Plans and Specifications), and sanitary and
storm sewers, are or will be available and operating properly for
each unit in the Apartment Complex at the time of the initial
occupancy of such unit.
(f) The Partnership owns good and marketable fee
simple title to the Apartment Complex, subject to no material
liens, charges or encumbrances other than those which (i) are
both permitted by the Project Documents and are noted or excepted
in the Title Policy, (ii) do not materially interfere with use of
the Apartment Complex (or any part thereof) for its intended
purpose or, other than the permitted Mortgages, have a material
adverse effect on the value of the Apartment Complex, or (iii)
have been bonded or insured against in such a manner as to
preclude the holder of such lien or such surety or insurer from
having any recourse to the Apartment Complex or the Partnership
for payment of any debt secured thereby, which bond(s) or
insurance have been approved by the Lenders.
(g) The execution and delivery of all instruments and
the performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or limited
liability company have been or will be duly authorized by all
necessary corporate or other actions, and the consummation of
any such transactions with or on behalf of the Partnership will
not constitute a breach or violation of, or a default under, the
charter or by-laws of such Affiliate or any agreement by which
such Affiliate or any of its properties is bound, nor constitute
a violation of any law, administrative regulation or court
decree.
(h) Any General Partner (or partner or member of a
General Partner) which is a corporation or limited liability
company (a "Corporation/LLC") has been duly organized, is
validly existing
and in good standing under the laws of its state of organization
and has all requisite corporate and other power to be a General
Partner and to perform its duties and obligations as
contemplated by this Agreement and the Project Documents.
Neither the execution and delivery by any Corporation/LLC of
this Agreement nor the performance of any of the actions of any
Corporation/LLC contemplated hereby has constituted or will
constitute a violation of (a) the articles of incorporation,
operating agreement, bylaws and any other organizational
documents of such Corporation/LLC, (b) any agreement by which
such Corporation/LLC is bound or to which any of its property or
assets is subject, or (c) any law, administrative regulation or
court decree.
(i) No Event of Bankruptcy has occurred with
respect to the Partnership, any General Partner or the
Developer.
(j) All accounts of the Partnership required to be
maintained under the terms of the Project Documents,
including, but not necessarily limited to, any account for replacement
reserves, are currently funded to the levels required by any
Agency or Lender.
(k) If the only General Partner(s) are one or more
corporation(s) or limited liability company(ies), then the
General Partner(s) have a combined net worth which satisfies
the Designated Net Worth Requirements.
(l) All anticipated payments and expenses required to be
made or incurred in order to complete the construction of the
Apartment Complex in conformity with the Project Documents, to fund
any reserves hereunder or under any other Project Document required
to be funded at or prior to the later of the Admission Date or
Permanent Mortgage Commencement, to satisfy all requirements under
the Project Documents and to pay the Development Fee and all other
fees, have been or will be paid or provided for utilizing only (i)
the funds available from the Construction Loan, (ii) the Capital
Contributions of the Investment Limited Partner, (iii) the Capital
Contributions of the General Partner in the amounts set forth on
Schedule A as of the Admission Date, (iv) the available net rental
income, if any, earned by the Partnership prior to Permanent Mortgage
Commencement (to the extent that it is permitted to be used for such
purposes by any Agency or Lender), (v) any Cash Flow generated
subsequent to Permanent Mortgage Commencement (to the extent provided
in Section 10.2(a)), (vi) any insurance proceeds and (vii) any funds
furnished by the General Partner pursuant to Sections 6.5(e) and
6.11(a).
(m) The aggregate amount of Tax Credit which is expected
to be allocated by the Partnership to the Investment Limited Partner
is $438,717 for 1998, $526,460 per annum for each of the years
1999 through 2007 (inclusive) and $87,743 for 2008, provided,
however, that the General Partner shall have no liability to the
Investment Limited Partner or the Special Limited Partner for any
breach of the representation contained in this paragraph (m) if
(but only to the extent that) the adjuster provisions set forth in
Sections 5.1(e), (f) and (g) have become operative and all required
payments or adjustments have been made thereunder in accordance
with the terms thereof.
(n) The Apartment Complex will be, is being or has been
constructed and operated in a manner which satisfies Section 42 of
the Code and shall continue to satisfy all existing and anticipated
restrictions applicable to projects generating Tax Credits.
(o) No General Partner, Affiliate of a General Partner
or Person for whose conduct any General Partner is or was responsible
has ever: (i) owned, occupied, or operated a Site or Vessel on
which any Hazardous Material was or is stored, transported, or
disposed of, except if such storage, transport or disposition was
and is at all times in compliance with all laws, ordinances, and
regulations pertaining thereto; (ii) directly or indirectly
transported, or arranged for transport, of any Hazardous Material
(except if such transport was and is at all times in compliance
with all laws, ordinances and regulations pertaining thereto);
(iii) caused or was legally responsible for any release or threat
of release of any Hazardous Material; (iv) received notification
from any federal, state or other Governmental Authority of (x) any
potential, known, or threat of release of any Hazardous Material
from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, by any Affiliate of
a General Partner, or by any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a
lien on the Apartment Complex; or (y) the incurrence of any expense
or loss by any such Governmental Authority or by any
other Person in connection with the assessment, containment, or
removal of any release or threat of release of any Hazardous
Material from the Apartment Complex or any such Site or Vessel.
(p) Except as disclosed in the various Limited
Environmental Inspection and Phase I Environmental Assessment
reports prepared by Liebergott Engineering Company in respect
of the Apartment Complex and delivered to the Investment
Limited Partner as of the date hereof, to the Best Knowledge of
the General Partner, no Hazardous Material was ever or is now
stored on, transported, or disposed of on the land comprising
the Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance with
all laws, ordinances, and regulations pertaining thereto.
(q) The General Partner has fulfilled and will
continue to fulfill all of its duties and obligations under Section 6.5.
(r) The Partnership's basis in the Apartment Complex
as of December 31, 1996 was greater than 10% of the Partnership's
reasonably expected basis in the Apartment Complex as of
December 31, 1998 and all conditions set forth in Section 42
of the Code, the Treasury Regulations, Service notices,
rulings or releases and any other authorities to the validity
of the allocation of tax credit have been or will be
satisfied in a timely manner.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall
at any time bear the Economic Risk of Loss for the payment of
any portion of any Mortgage Loan, and the General Partner shall
not permit any other Partner or any Related Person to bear the
Economic Risk of Loss for the payment of any portion of any
Mortgage Loan, except as may be expressly permitted pursuant to
the provisions of Article III with the Consent of the Special
Limited Partner.
6.8 Indemnification of the General Partner
(a) Except as provided by Article V, no General
Partner or any Affiliate thereof shall have liability to the
Partnership or to any Limited Partner for any loss suffered by the
Partnership which arises out of any action or inaction of any General Partner
or Affiliate thereof if such General Partner or Affiliate thereof
in good faith determined that such course of conduct was in the
best interest of the Partnership and such course of conduct did
not constitute gross negligence or willful misconduct of such
General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof shall
be indemnified by the Partnership from and against any Adverse
Consequences sustained in connection with the business and
operations of the Partnership, provided that all of the following
conditions are met: (i) such General Partner has determined, in
good faith, that the course of conduct which caused the loss,
judgment, liability, expense or amount paid in settlement was in
the best interests of the Partnership; and (ii) such Adverse
Consequences were not the result of gross negligence or willful
misconduct on the part of such General Partner or Affiliate
thereof; and (iii) such indemnification or agreement to hold
harmless is recoverable only out of the assets of the
Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no Partner or any
Affiliate thereof performing services for the Partnership or any
broker-dealer shall be indemnified for any Adverse Consequences arising
from or out of an alleged violation of federal or state
securities laws unless there has been a successful adjudication
on the merits of each count involving securities laws violations
as to the particular indemnitee and the court finds that
indemnification of the settlement and related costs should be
made. In any claim for indemnification for federal or state
securities law violations, the party seeking indemnification
shall, prior to seeking court approval for such indemnification,
place before the court the positions of the Securities and
Exchange Commission, the Massachusetts Securities Division and
any other applicable state securities administrator with respect
to the issue of indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the
portion of any insurance, other than public liability insurance
or course of construction insurance, which insures any party against any
liability as to which such party is herein prohibited from being
indemnified.
(e) The Partnership may indemnify Affiliates of a
General Partner under this Section 6.8 only if the loss involves an
activity in which such Affiliates acted in the capacity of a General
Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean (i) any Person performing services on
behalf of the Partnership who (x) directly or indirectly
controls, is controlled by or is under common control with a
General Partner; (y) owns or controls ten percent (10%) or more
of the outstanding voting securities of a General Partner or (z)
is an officer, director, partner, member, manager or trustee of
a General Partner; and (ii) any Person for whom the General
Partner acts as an officer, director, partner or trustee. For
purposes of this Section 6.8 only, the term "controls" and any
form of such term shall mean the power to direct the management
and policies of a Person, directly or indirectly, whether
through ownership of voting securities, by contract or
otherwise.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partner will indemnify and hold the
Partnership and the Limited Partners harmless from and against
any and all Adverse Consequences which the Partnership or any
Limited Partner may incur by reason of (i) the past, present or
future actions or omissions of the General Partner or any of its
Affiliates constituting gross negligence or willful misconduct,
or (ii) any liabilities to which either the Partnership or the
Apartment Complex is subject other than (x) any Mortgage or (y)
necessary contractual obligations incurred pursuant to the
requirements of any Agency or Lender in connection with the
operation of the Apartment Complex in the ordinary course of
business.
(b) Notwithstanding the foregoing, no General
Partner shall be liable to a Limited Partner or the Partnership for any
act or omission for which the Partnership is required to indemnify
such General Partner under Section 6.8, except as provided by
Article V.
(c) The General Partner shall indemnify, defend, and
hold the Limited Partners harmless on an after-tax basis from and
against any Adverse Consequences related to or arising out of the
presence of any Hazardous Material at the Apartment Complex (other
than any Adverse Consequences resulting from the acts or omissions
of the Limited Partners). Any claim or loss described in the
immediately preceding sentence may be defended, compromised,
settled, or pursued by the Limited Partners with counsel of the
Limited Partners' selection, but at the expense of the General
Partner. Notwithstanding anything else set forth herein, this
indemnification shall survive the withdrawal of any General
Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner
shall be obligated during the period from Rental Achievement until
the fifth (5th) anniversary of Rental Achievement (the
"Subordinated Loan Period"), to promptly advance funds to eliminate
any Operating Deficit, provided however, that the General Partner shall
not be obligated to have Subordinated Loans outstanding at any one
time between Rental Achievement and the third anniversary of Rental
Achievement in excess of $575,000 or in excess of $250,000 between
the third anniversary of Rental Achievement and the end of the
Subordinated Loan Period. In any case in which
the General Partner otherwise would be required to advance funds
under this Section 6.10, any amounts then held in the Operating
Reserve may be released and disbursed for the purpose of
eliminating the Operating Deficit before the General Partner
shall be required to advance their own funds. In the event that
the General Partner shall fail to make any such advance as
aforesaid, (a) the Partnership shall utilize amounts (the
"Applied Amounts") otherwise payable to the General Partner or
its Affiliates under Section 6.12 and/or Article X to meet the
obligations of the General Partner pursuant to this Section
6.10, with such utilization of Applied Amounts constituting
payment and satisfaction of the corresponding amounts payable to
the General Partner or its Affiliates under Section 6.12 and/or
Article X, with the proceeds thereof being applied to such
obligations, and with the obligation of the Partnership to make
such payments to the General Partner or its Affiliates pursuant
to Section 6.12 and/or Article X being deemed to have been
satisfied to the extent thereof and (b) the Special Limited
Partner shall have the option, exercisable in its sole
discretion, to cause it or one or more of
its designees to be admitted to the Partnership as additional
General Partner(s). An additional General Partner so admitted
shall automatically, without the need for any further action by
any Partner, become the Managing General Partner and shall be
delegated all of the powers and authority of all of the General
Partners pursuant to Section 6.13, and each Partner hereby
grants to any such additional General Partner a power of
attorney, coupled with an interest and irrevocable to the extent
permitted by law, to execute and deliver any and all instruments
and documents which it believes to be necessary or appropriate
in order to accomplish the purposes of this Section 6.10 and to
manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General
Partner of any of its economic obligations hereunder, and each
other General Partner shall indemnify and hold harmless the
additional General Partner from and against any and all Adverse
Consequences sustained in connection with the additional General
Partner's status as a General Partner (other than Adverse
Consequences arising solely out of the negligence or misconduct
of such additional General Partner). For the purpose of this
Section 6.10, all expenses shall be paid on a sixty (60)-day
current basis. Moreover, the General Partner may in its sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in
order to facilitate the Partnership's compliance with the Rent
Restriction Test. All advances pursuant to Section 6.5(e) and
this Section 6.10 (including any Applied Amounts), except
advances from the Operating Reserve, shall constitute non-
interest-bearing Subordinated Loans. Subordinated Loans shall
be repaid in accordance with the provisions of Article X. The
form and provisions of all Subordinated Loans shall conform to
any applicable Regulations.
6.11 Obligation to Complete the Construction of the Apartment Complex
(a) The Developer, in its capacity as the Developer
and not as a General Partner, and the General Partner shall be
obligated to complete the construction of the Apartment Complex and pay
all costs necessary to achieve Rental Achievement in the manner
set forth in this Agreement and the Development Agreement.
(b) The completion of the Apartment Complex shall be
secured by a completion bond in an amount at least equal to the
full amount of the Construction Contract for the Apartment
Complex and by the Guaranty.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as
compensation for the Developer's services in connection with the
development and construction of the Apartment Complex, the
Partnership shall pay to the Developer a development fee (the
"Development Fee") in the amount and at the times set forth in
the Development Agreement. If the Development Fee has not been
fully paid by the tenth (10th) anniversary of the Completion
Date, the General Partner shall make a Capital Contribution to
the Partnership in an amount sufficient to enable the Partnership
to pay any unpaid portion of the Development Fee.
(b) The Partnership shall pay to the Special Limited
Partner or an Affiliate thereof a fee (the "Asset Management
Fee") 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 $7,500. The
Asset Management Fee shall be begin to accrue as of the Admission Date and
shall be pro rated in 1998 for the portion of the year that the Special
Limited Partner was a Partner of the Partnership. 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
for any reason the Asset Management Fee is not paid in any Fiscal
Year, the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first Fiscal Year in which there is
sufficient Cash Flow or Capital Proceeds as provided in Article X.
(c) In consideration of the services of the General
Partner in managing the day-to-day business and affairs of the
Partnership, the Partnership shall pay to the General Partner an
annual fee (the "Partnership Management Fee") in the amount of
$7,500, payable from Cash Flow in the manner set forth in Section
10.2(a). The Partnership Management Fee shall be begin to accrue
as of the Admission Date and shall be pro rated in 1998 for the
portion of the year that the Special Limited Partner was a
Partner of the Partnership. The Partnership Management Fee shall
be noncumulative so that if there is not sufficient Cash Flow in
any Fiscal Year to pay the amount of the Partnership Management
Fee specified for such use in Section 10.2(a), the Partnership
shall have no obligation to pay such shortfall in any future
Fiscal Year.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner
serving hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or
duties hereunder to another General Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other
instrument executed by any General Partner shall be conclusive
evidence in favor of every Person relying thereon or claiming
thereunder that at the time of the delivery thereof (i) the
Partnership was in existence, (ii) this Agreement had not been
amended in any manner so as to restrict the delegation of
authority among General Partners (except as shown in certificates or
other instruments duly filed in the Filing Office) and (iii) the
execution and delivery of such instrument was duly authorized by the
General Partners. Any Person may always rely on a certificate
addressed to him and signed by any General Partner hereunder:
(1) as to who are the General Partners or Limited
Partners hereunder;
(2) as to the existence or nonexistence of any
fact which constitutes a condition precedent to acts by the
General Partners or in any other manner germane to the
affairs of the Partnership;
(3) as to who is authorized to execute and
deliver any instrument or document of the Partnership;
(4) as to the authenticity of any copy of this
Agreement and any amendments thereto; or
(5) as to any act or failure to act by the
Partnership or as to any other matter whatsoever involving the
Partnership or any Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and
assign to the Partnership all of their right, title and interest
in and to the Apartment Complex and in and to all of the Project
Documents, including, but not limited to, the following: (i) all
contracts with architects, supervising architects, engineers and
contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings
heretofore prepared or obtained in connection with the Apartment
Complex; (iii) all governmental commitments and approvals obtained,
and applications therefore, including, but not limited to those
relating to planning, zoning, building permits and Tax Credits;
(iv) any and all commitments with respect to any Mortgage(s); and
(v) any and all contracts or rights with respect to any agreements
with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may
act as Management Agent upon the terms and conditions set forth in Article
XI.
(b) The General Partner or any Affiliates thereof shall
have the right to contract or otherwise deal with the Partnership
for the sale of goods or services to the Partnership in addition to
those set forth herein, if (i) compensation paid or promised for
such goods or services is reasonable (i.e., at fair market value)
and is paid only for goods or services actually furnished to the
Partnership, (ii) the goods or services to be furnished shall be
reasonable for and necessary to the Partnership, (iii) the fees,
terms and conditions of such transaction are at least
as favorable to the Partnership as would be obtainable in an
arm'slength transaction, and (iv) no agent, attorney, accountant or
other independent consultant or contractor who also is employed on a
full-time basis by the General Partner or any Affiliate shall be
compensated by the Partnership for his services. Any contract covering
such transactions shall be in writing and shall be terminable without
penalty on sixty (60) days written notice. Any payment made to the
General Partner or any Affiliate for such goods or services shall be
fully disclosed to all Limited Partners in the reports required under
Article XII. Neither the General Partner nor any Affiliate shall, by
the making of lump-sum payments to any other Person for disbursement
by such other Person, circumvent the provisions of this Section
6.15(b).
6.16 Tax Matters Partner
(a) The General Partner hereby is designated as Tax
Matters Partner of the Partnership, and shall engage in such undertakings
as are required of the Tax Matters Partner of the Partnership as
provided in treasury regulations pursuant to Section 6231 of the Code.
Each Partner, by the execution of this Agreement, consents to such
designation of the Tax Matters Partner and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) The Tax Matters Partner hereby is authorized, but not
required:
(i) to enter into any settlement agreement with the
Service with respect to any tax audit or judicial review, in
which agreement the Tax Matters Partner may expressly state that such
agreement shall bind the other Partners, except that such settlement
agreement shall not bind any Partner who (within the time prescribed
pursuant to the Code and treasury regulations thereunder) files a
statement with the Service providing that the Tax Matters Partner shall
not have the authority to enter into a settlement agreement on the behalf
of such Partner;
(ii) in the event that a notice of final
administrative adjustment at the Partnership level of any item required
to be taken into account by a Partner for tax purposes (a "Final
Adjustment") is mailed to the Tax Matters Partner, to seek judicial
review of such Final Adjustment, including the filing of a petition for
readjustment with the Tax Court, the District Court of the United
States for the district in which the Partnership's principal place of
business is located, or the United States Claims Court;
(iii) to intervene in any action brought by any other
Partner for judicial review of a Final Adjustment;
(iv) to file a request for an administrative
adjustment with the Service at any time and, if any part of such
request is not allowed by the Service, to file an appropriate
pleading (petition or complaint) for judicial review with
respect to such request;
(v) to enter into an agreement with the Service
to extend the period for assessing any tax which is attributable
to any item required to be taken into account by a Partner
for tax purposes, or an item effected by such item; and
(vi) to take any other action on behalf of the
Partners or the Partnership in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable
law or Regulations.
(c) The Partnership shall indemnify and reimburse the
Tax Matters Partner for all expenses, including legal and accounting
fees, claims, liabilities, losses and damages incurred in
connection with any administrative or judicial proceeding with
respect to the tax liability of the Partners. The payment of all
such expenses shall be made before any distributions are made from
Cash Flow or any discretionary reserves are set aside by the
General Partner. The General Partner shall have the obligation to
provide Partnership funds for such purpose, but only to the extent
of available Partnership resources. The taking of any action and
the incurring of any expense by the Tax Matters Partner in
connection with any such proceeding, except to the extent required
by law, is a matter in the sole discretion of the Tax Matters
Partner and the provisions on limitations of liability of the
General Partner and indemnification set forth in Section 6.8 of
this Agreement shall be fully applicable to the Tax Matters
Partner in its capacity as such.
ARTICLE VII
Withdrawal of a General Partner; New General
Partners 7.1 Voluntary Withdrawal
No General Partner shall have the right to Withdraw
voluntarily from the Partnership or to sell, assign or encumber
its Interest without the Consent of the Investment Limited
Partner and each of the other General Partners (if any) and, if
required, any Requisite Approvals.
7.2 Reconstitution
In the event of the Withdrawal of a General Partner, the
Partnership shall not be dissolved or required to be wound up if
(i) at the time of such Withdrawal there is at least one
remaining General Partner and that General Partner carries on
the business of the Partnership (any such remaining General
Partner being hereby authorized to carry on the business of the
Partnership), or (ii) within ninety (90) days after such
Withdrawal all remaining Partners agree in writing to continue
the business of the Partnership and to the appointment,
effective as of the date of such Withdrawal, of one or more
additional General Partners. Within ten (10) days after the
occurrence of such Withdrawal, the remaining General Partners,
if any, shall notify the Investment Limited Partner thereof:
(i) The reconstituted limited partnership
shall continue until the occurrence of a Liquidating Event as
provided in Section 2.4;
(ii) If the successor General Partner is not a
former General Partner, then the provisions of Section
7.4(d) shall apply; and
(iii) All necessary steps shall be taken to
cancel this Agreement and the Certificate and to enter into a
new partnership agreement and certificate of limited
partnership, and the successor General Partner shall
be obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the
remaining General Partners may designate a Person to become a successor
General Partner to the Withdrawing General Partner. Any Person so
designated, subject to any Requisite Approvals, the Consent of the
Investment Limited Partner and, if required by the Act or any
other applicable law, the consent of any other Partner so
required, shall become a successor General Partner upon his
written agreement to be bound by the Project Documents and by the
provisions of this Agreement.
(b) If any Withdrawal shall occur at a time when there
is no remaining General Partner and the Partners do not unanimously
elect to continue the business of the Partnership in accordance
with the provisions of clause (ii) of Section 7.2(a) above, then
the Investment Limited Partner shall have the right, subject to
any Requisite Approvals, to designate a Person to become a
successor General Partner upon his written agreement to be bound by
the Project Documents and by the provisions of this Agreement.
(c) If the Investment Limited Partner elects to
reconstitute the Partnership and admit a successor General
Partner pursuant to this Section 7.3, the relationship of the
Partners in the reconstituted Partnership shall be governed by
this Agreement.
7.4 Interest of Predecessor General Partner
(a) No assignee or transferee of all or any part of
the Interest as a General Partner of a General Partner shall have
any automatic right to become a General Partner. Until the
acquisition of the Interest of a Withdrawing General Partner
pursuant to Section 7.4(d), such Interest shall be deemed to be
that of an assignee and the holder thereof shall be entitled
only to such rights as an assignee may have as such under the
laws of the State.
(b) Anything herein contained to the contrary
notwithstanding, any General Partner who Withdraws voluntarily
in violation of Section 7.1 shall remain liable for all of its
obligations under this Agreement, for all its other obligations
and liabilities hereunder incurred or accrued prior to the date
of its Withdrawal and for any loss or damage which the
Partnership or any of its Partners may incur as a result of such
Withdrawal (except as provided in Section 6.8(a)).
(c) The estate (which term, for purposes of this
Section 7.4(c), shall include the heirs, distributees, estate,
executors, administrators, guardian, committee, trustee or other
personal representative) of a Withdrawn General Partner shall be
liable for all his liabilities and obligations hereunder, except
as provided in this Section 7.4(c). In the event of the death,
insanity or incompetency of a General Partner, his estate shall
remain liable for all of his obligations and liabilities
hereunder incurred or accrued prior to the date of such event,
and for any damages arising out of any breach of this Agreement
by him, but his estate shall not have any obligation or
liability on account of the business of the Partnership or the
activities of the other General Partners after his death,
insanity or incompetency unless it becomes a General Partner
pursuant to Section 7.3(a).
(d) The Disposition of the General Partner Interest
of a General Partner who or which Withdraws voluntarily in
compliance with this Agreement shall be accomplished in such
manner as shall be acceptable to the remaining General Partners
and shall be approved by Consent of the Investment Limited
Partner. Except as provided in the preceding sentence, upon the
Withdrawal of a General Partner (other than a General Partner
who or which is removed as such pursuant to Section 4.5), such
Withdrawn General Partner shall be deemed to have automatically
transferred to the remaining General Partners, in proportion to their
respective General Partner Interests, or, if there shall be no
remaining General Partner, then to the Partnership for the benefit of
the remaining Partners, all or such portion of the General Partner
Interest of such Withdrawn General Partner which, when aggregated
with the existing General Partner Interests of all such remaining
General Partners, will be sufficient to assure such remaining General
Partners a 1% interest in all Profits, Losses, Tax Credits and
distributions of the Partnership under Article X. No documentation
shall be necessary to effectuate such transfer, which shall be
automatic, and no consideration shall be payable therefor. For the
purposes of Article X, the effective date of the transfer pursuant to
the provisions of this Section 7.4(d) of the General Partner Interest
of a Withdrawn General Partner shall be deemed to be the date on
which such Withdrawal occurs. That portion of the General Partner
Interest (the "Remaining Interest") of the Withdrawing General
Partner which shall not have been transferred pursuant to this
Section 7.4(d) (except in respect of a removed General Partner),
shall be retained by such Withdrawing General Partner (or pass to
legal representatives thereof) who or which shall have the status of
a special Limited Partner, but with the right to receive only that
share of the Profits, Losses, Tax Credits and distributions of the
Partnership to which the Withdrawing General Partner, as such, would
have been entitled had he or it remained, reduced to the extent of
the General Partner Interest transferred hereunder, but such
Withdrawing Partner (or his or its legal representatives, as the case
may be) shall not be considered to be a Special Limited Partner for
the purpose of exercising any rights reserved to the Special Limited
Partner under this Agreement or sharing the benefits allocated to the
Special Limited Partner under Article X hereof and shall not
participate in the votes or consents of the Limited Partners
hereunder; provided, however, that a portion of such Remaining
Interest shall be transferred to the Limited Partner or a designee of
the Limited Partner to the extent necessary to compensate on a
present value basis the Limited Partner and the Partnership for the
damages caused to the Partnership or Limited Partner due to such
Withdrawal of the General Partner (including the cost, if any, of
locating and retaining a new General Partner). The size of the
transferred interest shall be determined by arbitration. Such
arbitration shall be conducted in accordance with the Rules of
Commercial Arbitration of the American Arbitration Association by a
single arbitrator appointed pursuant to those rules. The arbitration
shall take place in the City of Philadelphia, Pennsylvania.
7.5 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant
to the preceding provisions of this Article VII, Schedule A shall be
amended to reflect such admission and an amendment to the
Certificate, also reflecting such admission, shall be filed as
required by the Act.
(b) Each Partner hereby consents to and authorizes any
admission or substitution of a General Partner or any other
transaction, including, without limitation, the continuation of
the Partnership business, which has been authorized under the
provisions of this Agreement, and hereby ratifies and confirms
each amendment of this Agreement necessary or appropriate to
give effect to any such transaction.
7.6 Designation of New General Partners
The General Partner may, with the written consent of all
Partners, at any time designate new General Partners, each with
such Interest as a General Partner in the Partnership as the
General Partner may specify, subject to any Requisite Approvals.
Any new General Partner shall, as a condition of
receiving any interest in the Partnership property, agree to be
bound by the Project Documents and any other documents required
in connection therewith and by the provisions of this Agreement,
to the same extent and on the same terms as any other General
Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws
of descent and distribution) or pursuant to the provisions of
Section 8.1(b), no Limited Partner may assign all or any part of
its Interest without the written consent of the General Partner,
the giving or withholding of which is exclusively within its
discretion.
(b) A Limited Partner, without the consent of the
General Partner, may assign to any Person all or any portion of the
economic benefits of the ownership of such Limited Partner's
Interest; provided, however, that such assignment shall not be
binding on the Partnership until there shall have been filed with
the Partnership by registered mail certified copies of an executed
and acknowledged assignment and the written acceptance by the
assignee of all the terms and provisions of this Agreement; if
such assignment and acceptance are not so filed, the Partnership
need not recognize such assignment for any purpose. An assignee of
a Limited Partner who does not become a Substituted Limited Partner
shall have the right to receive the allocable share of
any Profits, Losses, Tax Credits or distributions of the
Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof) so
assigned if no such assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges
of a Limited Partner. Where the assignee does not become a
Substituted Limited Partner, the Partnership shall recognize such
assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith.
(c) Each assignee of a Limited Partner Interest (or
any portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to
substitute an assignee as Limited Partner in its place. Subject to the
provisions of Section 8.3, the General Partner may, in its sole
discretion, permit an assignee to become a Substituted Limited
Partner. The consent of the General Partner to an assignment of
a Limited Partner's Interest under Section 8.1 shall not, in and
of itself, constitute its consent to the admission of the assignee as
a Substituted Limited Partner under this Section 8.2.
(b) Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General
Partner to signify the agreement of such Substituted Limited
Partner to be bound by all the provisions of this Agreement and
shall pay the Partnership's reasonable legal fees and filing costs
in connection with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be
made if such Disposition would violate the provisions of
Sections 8.1, 8.2 or 13.1.
(b) In no event shall all or any part of a Limited
Partner Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partner may, in addition to any other
requirement it may impose, require as a condition of any
Disposition of a Limited Partner Interest that the transferor (i)
assume all costs incurred by the Partnership in connection
therewith and (ii) furnish the Partnership and the other Partners
with an opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable federal
and state securities laws.
(d) Any sale, exchange, transfer or other Disposition
of a Limited Partner Interest in contravention of any of the provisions
of this Section 8.3 shall be void and ineffectual and shall not
bind or be recognized by the Partnership.
(e) Notwithstanding any other provision contained in
this Article VIII, if at any time there is more than one Investment
Limited Partner, each Investment Limited Partner shall have a
right of first refusal to purchase the Interest of any other
Investment Limited Partner who wishes to sell or otherwise
transfer its Interest at a price equal to and on terms identical
to those of the prospective purchaser thereof, to the extent
reasonably practical, and shall have at least fifteen (15)
business days in which to exercise such right after receiving
notice thereof. If there shall be more than two non-selling or
transferring Investment Limited Partners, each of which desires
to exercise such a right of first refusal, they may do so pro
rata or, to the extent one does not so desire to exercise such
right, to the extent of the entire Interest being so sold or
transferred.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms
of this Agreement and the Project Documents and may be made from
any source, including Partners and their Affiliates. Any
Partnership borrowings from any Partner shall be subject to any
Requisite Approvals. If any Partner shall lend any monies to the
Partnership, the amount of any such loan shall not increase such
Partner's Capital Contribution. If any Partner shall so lend
monies, each such loan (a "Voluntary Loan") shall be an
obligation of the Partnership and (except for Subordinated Loans)
shall be repayable to such Partner on the same basis and with the same
rate of interest as would be applicable to a comparable loan to
the Partnership from a third party. Funds advanced by the
General Partner to the Partnership as Subordinated Loans shall
not constitute borrowings for the purposes of this Article IX or
for any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and
Section 10.4, for each Partnership Fiscal Year or portion thereof,
all Operating Profits and Losses, tax-exempt income, losses,
nondeductible non-capitalizable expenditures and Tax Credits incurred
or accrued on or after the Commencement Date shall be allocated 99.9%
to the Investment Limited Partner, 0.01% to the Class A Limited
Partner and 0.09% to the General Partner, provided,
however, that in any Fiscal Year in which Operating Profits are
generated, such Operating Profits shall be allocated to and
among the Partners in the same percentages as distributions of
Cash Flow are made pursuant to Clause Sixth of Section 10.2(a).
(b) Except as otherwise specifically provided in this Article, all Profits and
Losses arising from a Capital Transaction shall be allocated to the
Partners as follows:
As to Profits:
First, that portion of Profits (including any Profits treated
as ordinary income for federal income tax purposes) shall be allocated
to the Partners who have negative Capital Account balances in proportion
to the amounts of such balances, provided that noProfits shall be allocated
to a Partner under this Clause First to increase any such Partner's Capital
Account above zero; and
Second, Profits in excess of the amounts allocated under Clause First
above shall be allocated to and among the Partners 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 89.999% for the General Partner, .001% for the
Special Limited Partner, .001% for the Class A Limited Partner and 9.999%
for the Investment Limited Partner;
As to Losses:
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 89.999% for the General Partner, .001% for the Special Limited
Partner, .001% for the Class A Limited Partner and 9.999% for the
Investment Limited Partner;
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals, Cash Flow for each
Fiscal Year or portion thereof shall be applied as follows:
First, to the payment of the Asset Management
Fee for such Fiscal Year and for any previous Fiscal
Year(s) as to which the Asset Management Fee shall not
yet have been paid in full;
Second, to the payment of any unpaid portion
of the Development Fee;
Third, to the repayment of any Subordinated
Loans;
Fourth, to the distribution to the General
Partner (or its designee) of any portion of the Operating
Reserve which may be released and disbursed in
accordance with the provisions of Section 6.5(e);
Fifth, to the payment of the Partnership
Management Fee for such Fiscal Year; and
Sixth, the balance thereof, if any, shall
be distributed annually, seventy-five (75) days after the
end of the Fiscal Year, 10% to the Investment Limited
Partner and 90% to the General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution, if Capital Proceeds are
available for distribution from a Capital Transaction, such Capital
Proceeds shall be applied or distributed as follows:
First, to the payment of all matured debts and
liabilities of the Partnership (including, but not
limited to, all expenses of the Partnership incident to such Capital
Transaction), excluding (i) debts and liabilities of the Partnership
to Partners or their Affiliates and (ii) all unpaid fees owing to the
General Partner or its Affiliates; and to the establishment of any
reserves which the General Partner and the Auditors shall deem
reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, to the payment of any accrued and
unpaid Asset Management Fees;
Third, to the payment to the Investment
Limited Partner of the full amount (including interest) of any
Credit Recovery Loans;
Fourth, to the repayment of any Subordinated
Loans;
Fifth, to the repayment of any remaining
unpaid debts and liabilities owed to Partners or Affiliates
thereof by the Partnership for Partnership obligations (exclusive of
Credit Recovery Loans and Subordinated Loans) to any of them,
including, but not limited to, accrued and unpaid amounts due in
respect of any and all fees (including but not limited to the
Development Fee) due and payable to the General Partner or its
Affiliates as set forth in Section 6.12; provided, however, that any
debts or obligations to be repaid to any Limited Partner or Affiliate
thereof pursuant to this Clause Fifth shall be repaid prior to the
repayment of any such debts or obligations to any General Partner
or Affiliate thereof;
Sixth, to the payment of the Disposition Fee;
and
Seventh, subject to the provisions of Section
10.3(a), any balance 9.999% to the Investment Limited
Partner, .001% to the Special Limited Partner, .001%
to the Class A Limited Partner and 89.999% to the
General Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment
of, or adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall be
distributed to the Partners in accordance with the positive
balances in their Capital Accounts after taking into account all
Capital Account adjustments for the Partnership Fiscal Year,
including adjustments to Capital Accounts pursuant to Sections
10.1(b) and 10.3(b). In the event that a General Partner has a
negative balance in its Capital Account following the
liquidation of the Partnership or such Partner's Interest, after
taking into account all Capital Account adjustments for the
Partnership Fiscal Year in which such liquidation occurs, such
Partner shall pay to the Partnership in cash an amount equal to
the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such Fiscal Year (or, if
later, within ninety (90) days after the date of such
liquidation) and shall, upon liquidation of the Partnership, be
paid to recourse creditors of the Partnership or distributed to
other Partners in accordance with the positive balances in their
Capital Accounts.
(b) With respect to assets distributed in kind to
the Partners in liquidation or otherwise, (i) any unrealized
appreciation or unrealized depreciation in the values of such
assets shall be deemed to be Profits and Losses realized by the
Partnership immediately prior to the liquidation or other
distribution event; and (ii) such Profits and Losses shall be
allocated to the Partners in accordance with the provisions of
Section 10.1(b), and any property so distributed shall be
treated as a distribution of an amount in cash equal to the
excess of such fair market value over the outstanding principal
balance of and accrued interest on any debt by which the
property is encumbered. For the purposes of this Section
10.3(b), the terms "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market
value of such assets, taking into account the fair market value
of the associated financing (but subject to the provisions of Section
7701(g) of the Code), and the Partnership's adjusted basis for such
assets as determined under the applicable provisions of the Allocation
Regulations. This Section 10.3(b) is merely intended to provide
a rule for allocating unrealized gains and losses upon
liquidation or other distribution event, and nothing contained
in this Section 10.3(b) or elsewhere herein is intended to treat
or cause such distributions to be treated as sales for value.
The fair market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the Consent
of the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement,
all Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures, Tax Credits and cash distributions
shared by a class of Partners shall be shared by each Partner
in such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of
Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of
this Article X:
(i) If (a) the Partnership incurs recourse obligations or Partner
Nonrecourse Debt (including, without limitation,Voluntary Loans or
Subordinated Loans) or (b) the Partnership incurs Losses from extraordinary
events which are not recovered from insurance or otherwise (collectively
"Recourse Obligations") in respect of any Partnership
Fiscal Year, then the calculation and allocation of Profits
and Losses shall be adjusted as follows: first, an amount
of deductions attributable to the Recourse Obligations
shall be allocated to the General Partner; and second, the
balance of such deductions shall be allocated as provided
in Section 10.1(a).
(ii) If any Profits arise from the sale
or other disposition of any Partnership asset which shall
be treated as ordinary income under the depreciation recapture
provisions of the Code, then the full amount of such
ordinary income shall be allocated among the Partners in
the proportions that the Partnership deductions from the
depreciation giving rise to such recapture were actually
allocated. In the event that subsequently-enacted
provisions of the Code result in other recapture income, no
allocation of such recapture income shall be made to any
Partner who has not received the benefit of those items
giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase money indebtedness
in partial payment of the purchase price of the Apartment Complex and
such indebtedness is distributed to the Partners pursuant to the provisions
of Section 10.2(b) or Section 10.3, the distributions of the
cash portion of such purchase price and the principal
amount of such purchase money indebtedness hereunder shall
be allocated among the Partners in the following manner:
On the basis of the sum of the principal amount of the
purchase money indebtedness and cash payments received on
the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds
distributable to each class of Partners based on Section
10.2(b) or Section 10.3, as applicable, treating cash
payments and purchase money indebtedness principal
interchangeably for this purpose, and the respective classes shall
receive such respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated to the
respective classes of Partners in accordance with the preceding
sentence, and if any such purchase money indebtedness shall be sold,
the sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respectto any asset
which has a variation between its basis computed in
accordance with the applicable provisions of the Allocation
Regulations and its basis computed for federal income tax
purposes shall be shared among the Partners so as to take account of
such variation in a manner consistent with the principles of Section
704(c) of the Code and Section 1.7041(b)(2)(iv)(g) of the Allocation
Regulations.
(v) The terms "Profits" and "Losses" used in this
Agreement shall mean income and losses, and each item of
income, gain, loss, deduction or credit entering into the computation
thereof, as determined in accordance with the accounting methods
followed by the Partnership and computed in accordance with Treasury
Regulation Section 1.7041(b)(2)(iv). Profits and Losses for federal
income tax purposes shall be allocated in the same manner as set forth
in this Article X, except as provided in Section 10.4(b)(iv).
(vi) Nonrecourse Deductions shall be allocated 0.1% to
the General Partner and 99.9% to the Investment Limited
Partner.
(vii) Partner Nonrecourse Deductions shall be allocated
to and among the Partners in the manner provided in the
Allocation Regulations.
(viii) Subject to the provisions of Section 10.4(b)(xix),
if there is a net decrease in Partnership Minimum Gain for a
Partnership Fiscal Year, the Partners shall be allocated items
of Partnership income and gain in accordance with
the provisions of Section 1.704-(2)(f) of the Allocation
Regulations.
(ix) Subject to the provisions of Section 10.4(b)(xix),
if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain for a Partnership Fiscal Year then any Partner with a
Share of such Partner Nonrecourse Debt Minimum Gain shall be allocated
items of Partnership income and gain in accordance with the provisions
of Section 1.704-2(i)(4) of the Allocation Regulations.
(x) Subject to the provisions of 10.4(b)(vi) through
10.4(b)(ix) above, in the event that any Limited Partner
unexpectedly receives any adjustments, allocations or distributions
described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the
Allocation Regulations, items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Allocation
Regulations, the Adjusted Capital Account Deficit of such Limited
Partner as quickly as possible. This Section 10.4(b)(x) is intended
to constitute a "qualified income offset" provision within the meaning
of the Allocation Regulations and shall be interpreted consistently
therewith.
(xi) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(x) above, in no event shall any Limited
Partner be allocated Losses which would cause it to have an Adjusted
Capital Account Deficit as of the end of any Partnership Fiscal Year.
Any Losses which are not allocated to a Limited Partner by reason of
the application of the provisions of this Section 10.4(b)(xi) shall be
allocated to the General Partner.
(xii) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(xi) above, in the event that any Limited
Partner has an Adjusted Capital Account Deficit at the end of any
Partnership Fiscal Year, items of Partnership income and gain shall be
specially allocated to each such Limited Partner in the amount of such
Adjusted Capital Account Deficit as quickly as possible.
(xiii) Syndication Expenses for any Fiscal Year or
other period shall be specially allocated to the Investment
Limited Partner.
(xiv) For purposes of determining the Profits, Losses,
Tax Credits or any other items allocable to any period,
Profits, Losses, Tax Credits and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the
General Partner using any permissible method under Code Section 706 and
the Treasury Regulations thereunder.
(xv) To the extent that interest on loans (or other
advances which are deemed to be loans) made by a General
Partner to the Partnership is determined to be deductible
by the Partnership in excess of the amount of interest actually
paid by the Partnership, such additional interest deduction(s)
shall be allocated solely to such General Partner.
(xvi) [Reserved]
(xvii) For purposes of determining each Partner's
proportionate share of the excess Nonrecourse Liabilities of
the Partnership pursuant to Section 1.752-3(a)(3) of the
Allocation Regulations, the Investment Limited Partner shall be
deemed to have a 99.9% interest in Profits and the General Partner
shall be deemed to have a 0.1% interest in Profits.
(xviii) Any recapture of any Tax Credit shall be
allocated to and among the Partners in the same manner in which
the Partners share the expenditures giving rise to such Tax
Credit.
(xix) If for any Fiscal Year the application of the
minimum gain chargeback provisions of Section 10.4(b)(viii)
or Section 10.4(b)(ix) of this Agreement would cause distortion in the
economic arrangement among the Partners and it is not expected that
the Partnership will have sufficient other income to correct that
distortion, the General Partner may request a waiver from the
Commissioner of the Service of the application in whole or in part of
Section 10.4(b)(viii) or Section 10.4(b)(ix) in accordance with
Section 1.7042(f)(4) of the Allocation Regulations. Furthermore, if
additional exceptions to the minimum gain chargeback requirements of
the Allocation Regulations have been provided through revenue rulings
or other Service pronouncements, the General Partner is authorized to
cause the Partnership to take advantage of such exceptions if to do
so would be in the best interest of a majority in interest of the Partners.
(xx) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined
to be a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for federal income tax purposes, then there
shall be allocated to such General Partner an amount of gross income
equal to the amount of such distribution.
(xxi) In applying the provisions of Article X with
respect to distributions and allocations, the following
ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by Qualified Income
Offset Items.
(2) Capital Accounts shall be reduced by distributions of Cash Flow
under Clause Sixth of Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions of Capital Proceeds under Clause Seventh of Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain chargeback
under Section 10.4(b)(viii) or Section 10.4(b)(ix).
(5) Capital Accounts shall be increased by any qualified income offset
required under Section 10.4(b)(x).
(6) Capital Accounts shall be increased by allocations of Operating
Profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of Operating
Losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of Losses under
Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of Profits under
Section 10.1(b).
(xxii) To the maximum extent permitted under the
Code, allocations of Profits and Losses shall be modified so
that the Partners' Capital Accounts reflect the amount they would
have reflected if adjustments required by Sections 10.4(b)(x),
10.4(b)(xi) and 10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations
to Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (and
items thereof) shall be determined and allocated in accordance
with this Agreement to the fullest extent permitted by Section
704(b) of the Code and the Allocation Regulations. In order to
preserve and protect the determinations and allocations provided
for in this Agreement, the General Partner is hereby authorized
and directed to allocate Profits, tax-exempt income, Losses,
non-deductible non-capitalizable expenditures and credits (and items
thereof) arising in any Fiscal Year differently than otherwise
provided for in this Agreement to the extent that allocating
Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures or credits (or any item thereof) in
the manner provided for herein would cause the determinations
and allocations of each Partner's distributive share of Profits,
taxexempt income, Losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be
permitted by Section 704(b) of the Code. Any allocation made
pursuant to this Section 10.5 shall be deemed to be a complete
substitute for any allocation otherwise provided for in this
Agreement, and no amendment of this Agreement or approval of any
Partner shall be required.
(b) In making any allocation (the "New Allocation")
under Section 10.5(a), the General Partner is authorized to act
only after having been advised in writing by the Tax Accountants
that, under Section 704(b) of the Code and/or the Allocation
Regulations, (i) the New Allocation is necessary, and (ii) the
New Allocation is the minimum modification of the allocations
otherwise provided for in this Agreement necessary in order to
assure that, either in the then-current Fiscal Year or in any
preceding Fiscal Year, each Partner's distributive share of
Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures and Tax Credits (or any item thereof)
is determined and allocated in accordance with this Agreement to
the fullest extent permitted by Section 704(b) of the Code and
the Allocation Regulations.
(c) If the General Partner is required by Section
10.5(a) to make any New Allocation in a manner less favorable to
the Limited Partners than is otherwise provided for herein, then
the General Partner is authorized and directed, only after
having been advised in writing by the Tax Accountants that such
an allocation is permitted by Section 704(b) of the Code and the
Allocation Regulations, to allocate Profits, tax-exempt income,
Losses, nondeductible 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,
nondeductible non-capitalizable expenditures and credits (and
each item thereof) to the Limited Partners as nearly as possible
to the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partner
under Section 10.5(a) and Section 10.5(c) in reliance upon the advice
of the Tax Accountants shall be deemed to be made pursuant to
the fiduciary obligation of the General Partner to the
Partnership and the Limited Partners, and no such allocation
shall give rise to any claim or cause of action by any Limited
Partner.
10.6 Recapture Amount
(a) If at any time during the "compliance period"
(as defined in Section 42(i)(1) of the Code), the Apartment
Complex ceases to be a "qualified low income housing project"
(as defined in Section 42(g)(1) of the Code) or any Low-Income
Unit in the Apartment Complex ceases to be a "low income unit"
(as defined in Section 42(i)(3) of the Code), and as a result
thereof all or any portion of credits allowed to the Partnership
and its Partners under Section 42 of the Code are subject to
recapture pursuant to Section 42(j) of the Code (such an
occurrence being referred to herein as a "Recapture Event"), the
Investment Limited Partner shall become entitled to additional
cash distributions equal to the "Recapture Amount".
(b) The Recapture Amount is an amount that, after deduction
of all federal income taxes payable by the Investment Limited
Partner (or its partners) as computed under Section 10.6(d) below,
is equal the sum of (i) the "credit recapture amount" allocable to
the Investment Limited Partner as defined in Section 42(j) of the
Code plus (ii) the amount of credits allocable to the Investment
Limited Partner which are disallowed in the year of the Recapture
Event and in each subsequent year.
(c) Any Recapture Amount distributable to the
Investment Limited Partner pursuant to the foregoing provisions
shall be distributed as funds become available for such
distributions, but such distributions shall not be made prior to
(i) in the case of the "credit recapture amount", the year of the
Recapture Event and (ii) in the case of any credits disallowed
with respect to any year subsequent to the Recapture Event, in
each such subsequent year.
(d) Determination of the Recapture Amount shall be made
on the assumption that receipt or accrual by each partner of the
Investment Limited Partner of any amounts distributable to such
partner under Subsection (c) above will currently be subject to
United States federal income tax at the highest marginal rate
applicable to corporations for the year(s) in question (and
assuming the non-applicability of the alternative minimum tax).
(e) All computations required under this Section 10.6
shall be made reasonably by the Investment Limited Partner, and the
results of such computations, together with a statement describing in
reasonable detail the manner in which such computations were made,
shall be delivered to the Managing General Partner in
writing. Within fifteen (15) days following receipt of such
computation, the Managing General Partner may request that the
Auditors determine whether such computations are reasonable and
are not erroneous. If the Auditors determine that such
computations are unreasonable or contain errors, then the Auditors
shall determine what they believe to be the appropriate
computations. If the Investment Limited Partner does not agree
with the determination of the Auditors, then another accounting
firm other than the Auditors to be selected jointly by the
Investment Limited Partner and the Managing General Partner or, if
they cannot agree, by the American Arbitration Association, from
among the ten largest national accounting firms, shall make such
computations. The computations of the Investment Limited Partner,
the Auditors, or the other accounting firm so selected, whichever
is applicable, shall be final, binding and conclusive upon the
parties. All fees and expenses payable to an accounting firm
other than the Auditors under this paragraph shall be borne solely
by the Managing General Partner. All fees and expenses payable to
the American Arbitration Association shall be borne equally by the
General Partner and the Investment Limited Partner.
ARTICLE XI
Management Agent
11.1 General
The General Partner shall engage the Management Agent to
manage the Apartment Complex pursuant to the Management Agreement.
The Management Agent shall receive a Management Fee of those
amounts payable from time to time by the Partnership to the
Management Agent for management services in accordance with a
management contract approved by any Agency or Lender with the
right to approve the same, or, when any such management contract
is not subject to the approval of any Agency or Lender, in
accordance with a reasonable and competitive fee arrangement. The
initial Management Agent shall be Prime Property Management, Inc.
From and after the Admission Date, the Partnership shall not
enter into any Management Agreement or modify or extend any
Management Agreement unless (i) the General Partner shall have
obtained the prior Consent of the Special Limited Partner to the
identity of the Management Agent and the terms of the Management
Agreement or the modification or extension thereof and (ii) such
new Management Agreement or modified or extended Management
Agreement provides that it is terminable by the Partnership on
thirty (30) days' notice by the Partnership in the event of any
change in the identity of the General Partner. The Management
Agent shall maintain insurance in accordance with the applicable
Insurance Requirements set forth in Exhibit D. Copies of such
policies (or binders) shall be provided to the Partnership and
the Investment Limited Partner within thirty (30) days after the
effective date of the Management Agreement and annually
thereafter.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however,
should the Investment General Partner or an Affiliate thereof
perform property management services for the Partnership,
property management, rent-up or leasing fees shall be paid to the
Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser
of (i) fees competitive in price and terms with those of non-
affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably
be available to the Partnership, or (ii) five percent (5%) of the
gross revenues of the Apartment Complex. No duplicate property
manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a
substantial building code violation which shall not have been
cured within six (6) months after notice from a Governmental
Authority or (ii) the Partnership shall not have achieved a 1.15
to 1.00 Debt Service Coverage Ratio during any Fiscal Year
commencing on January 1, 1999, or (iii) an Event of Bankruptcy
shall occur with respect to the Management Agent, or (iv) the
Management Agent shall commit willful misconduct or gross
negligence in its conduct of its duties and obligations under the
Management Agreement or (v) there is any change in the Persons
acting as General Partners (to which the Special Limited Partner
has not consented), or (vi) the Management Agent is cited by the
Credit Agency or any other Tax Credit monitoring or compliance
agency of the State or any other Governmental Authority for a
violation or alleged violation of any applicable rules,
regulations or requirements, including, without limitation, non-
compliance with the Minimum Set-Aside Test, the Rent Restriction
Test or any other Tax Credit-related provision which citation is
not removed within six months of its issuance, then, upon request
by the Special Limited Partner and subject to Agency and Lender
approval, if required, the General Partner shall cause the
Partnership to promptly terminate the Management Agreement with
the Management Agent and appoint a new Management Agent selected
by the Special Limited Partner, which new Management Agent shall
not be an Affiliate of a General Partner. Each General Partner
hereby grants to the Special Limited Partner an irrevocable (to
the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute and deliver
any and all documents and instruments on behalf of such General
Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI. Subject to any
Requisite Approvals, the Partnership shall not enter into any
future management arrangement or renew or extend any existing
management arrangement unless such arrangement is terminable
without penalty upon the occurrence of the events described in
this Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the
Apartment Complex during any period when there is no Management
Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records
which are required under the Act or by any Governmental Authority
and may maintain such other books and records as the General
Partner in its discretion deems advisable. Each Limited Partner,
or its duly authorized representatives, shall have access to the
records of the Partnership at the principal office of the
Partnership at any and all reasonable times, and may inspect and
copy any of such records. A list of the name and addresses of
all of the Limited Partners shall be maintained as part of the
books and records of the Partnership and shall be mailed to any
Limited Partner upon request. The Partnership may require
reimbursement for any out of pocket expenses which it incurs as a
result of the exercise by any Limited Partner of its rights under
this Section 12.1, including, without limitation, photocopying
expenses. The General Partner shall cause the Partnership to
maintain at all times all informational and qualification files
of each tenant of the Apartment Complex in fire proof storage
facilities (whether paper files or micro fiche or film) and in a
secure location controlled 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 Partner shall determine. Withdrawals shall be made only
in the regular course of Partnership business on such signature
or signatures as the General Partner may determine. All deposits
(including security deposits and other funds required to be
escrowed by any Lender or Agency) and other funds not needed in
the operation of the business shall be deposited, if required by
applicable law and to the extent permitted by applicable Agency
or Lender requirements, in interest bearing accounts or invested
in United States Government obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the
General Partner, all tax returns of the Partnership. Prior to
the filing of the Partnership tax returns, and in no event later
than February 15 of each Fiscal Year, the Auditors shall deliver
the tax returns for the prior Fiscal Year to the Tax Accountants
for their review and comment. If a dispute arises between the
Auditors and the Tax Accountants over the proper preparation of
the tax returns and such dispute cannot be resolved by the
Auditors and the Tax Accountants by March 1 of such Fiscal Year,
then the Tax Accountants shall make the final decision with
respect to whether any changes are necessary. The Partnership
shall reimburse the Investment Limited Partner and its Affiliates
for all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports
to the Partners in accordance with generally accepted auditing
standards.
(c) If the Partnership fails to fulfill any of its
obligations under Section 12.7(a)(i) and/or Section 12.7(a)(ii)
within the time periods set forth therein, at any time thereafter
upon written notice from the Special Limited Partner, the General
Partner shall appoint replacement Auditors. If no such notice
from the Special Limited Partner is delivered, the Consent of the
Special Limited Partner must be received to the appointment of
replacement Auditors. If the General Partner fails to appoint
replacement Auditors within thirty (30) days of the notice from the
Special Limited Partner to replace the Auditors, then the Special
Limited Partner shall appoint replacement Auditors of its own
choosing, the cost of which shall be borne by the Partnership as a
Partnership expense. All of the Partners hereby grant to the Special
Limited Partner a special power of attorney, irrevocable to the
extent permitted by law, coupled with an interest, to so appoint
replacement Auditors and to anything else which in the judgment of
the Special Limited Partner may be necessary or appropriate to
accomplish the purposes of this Section 12.3(c).
(d) On or prior to the date which is thirty (30) days after
the Admission Date, the General Partner shall cause the
Partnership (i) in writing, to engage the Auditors to perform
the services required herein and (ii) to deliver to the Investment
Limited Partner copies of all such engagement letters and
agreements.
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to
use, so far as permitted by the provisions of the Code,
accelerated cost recovery methods. However, the Partnership may
change to another method of cost recovery if such other method is,
in the opinion of the Auditors, more advantageous to the
Investment Limited Partner (and the limited partners and/or
holders of beneficial assignee certificates thereof).
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partner in such manner
as will, in the opinion of the Auditors, be most advantageous to
the Investment Limited Partner and the limited partners and/or
holders of beneficial assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the
Interest of the Investment Limited Partner or a transfer of all or
any part of an interest of a partner and/or a holder of a
beneficial assignee certificate of the Investment Limited Partner,
the Partnership shall elect, upon the request of the Investment
Limited Partner, pursuant to Section 754 of the Code, to adjust
the basis of the Partnership property. Any adjustments made
pursuant to said Section 754 shall affect only the successor in
interest to the transferring Partner or partner or holder of a
beneficial assignee certificate thereof. Each Partner will
furnish the Partnership all information necessary to give
effect to any such election.
12.6 Fiscal Year
Unless otherwise required by law, the Fiscal Year and tax
year of the Partnership shall be the calendar year. The books of
the Partnership shall be maintained on an accrual basis.
12.7 Information to Partners
(a) The General Partner shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
Fiscal Year of the Partnership:
(i) Within forty-five (45) days after the end of each
Fiscal Year of the Partnership, (A) a balance sheet as of the
end of such Fiscal Year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for the Fiscal
Year then ended, all of which, except the statement of cash flows,
shall be prepared in accordance with generally accepted accounting
principles and accompanied by a report of the Auditors containing an
opinion of the Auditors, and (B) a report of the activities of the
Partnership during the period covered by the report. With respect
to any distribution to the Investment Limited Partner, the report
called for shall separately identify distributions from (1) Cash Flow
from operations during the period, (2) Cash Flow from operations
during a prior period which had been held as reserves, (3) proceeds
from disposition of property and investments, (4) lease payments on
net leases with builders and sellers, (5) reserves from the gross
proceeds of the Capital Contributions of the Investment Limited
Partner, (6) borrowed monies, and (7) transactions outside of the
ordinary course of business with a description thereof.
(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 for the prior Fiscal Year.
(iii) Within thirty (30) days after the end of each
quarter of a Fiscal Year of the Partnership, a report
containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended, which may be
unaudited;
(C) a statement of cash flows for the quarter then ended, which may
be unaudited;
(D) a certification of the General Partner
that the Apartment Complex and its tenants are in compliance
with all applicable federal, state and local
requirements and regulations;
(E) a Tax Credit monitoring form, a copy of
the rent roll for the Apartment Complex for each month
during such quarter, a statement of income and expenses, an
operating statement and an Occupancy/Rental Report, all in a
form specified by the Special Limited Partner;
(F) all other information which would be pertinent to a reasonable
investor regarding the Partnership and its activities during the quarter
covered by the report; and
(b) Within sixty (60) days after the end of each Fiscal
Year of the Partnership a copy of the annual report to be filed
with the United States Treasury concerning the status of the
Apartment Complex as low-income housing and, if required, a
certificate to the appropriate state agency concerning the same.
(c) Upon the written request of the Investment Limited
Partner for further information with respect to any matter covered in
item (a) or item (b) above, the General Partner shall furnish such
information within thirty (30) days of receipt of such request.
(d) Prior to October 15 of each Fiscal Year, the
Partnership shall send to the Investment Limited Partner an estimate
of the Investment Limited Partner's share of the Tax Credits, Profits
and Losses of the Partnership for federal income tax purposes for the
current Fiscal Year. Such estimate shall be prepared by the General
Partner and the Auditors and shall be in the form specified by the
Special Limited Partner.
(e) The General Partner shall send the Investment Limited
Partner a detailed report within fifteen (15) days after the end
of any calendar quarter during which any of the following events
occur:
(i) There is a material default by the Partnership under any Project
Document or in the payment of any mortgage, taxes, interest or other
obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was established,
(iii) any General Partner has received any notice of
a material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited
Partner, or
(iv) any Partner has pledged or collateralized its
Interest in the Partnership.
(f) After the Admission Date, the Partnership shall send
to the Investment Limited Partner copies of all applicable periodic
reports covering the status of project operations and any matters
relating to the Tax Credit as are required by any Lender or
Agency.
(g) On or before May 1 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner a report on
operations, in the form supplied by the Special Limited Partner.
(h) The General Partner hereby consents to each Lender
or Agency providing the Special Limited Partner with copies of all
material communications between any such Lender or Agency and the
General Partner and/or the Partnership, including, but not limited
to, any notices of default.
(i) If the earlier of (A) the Completion Date or (B)
the date upon which tenants first occupied apartment units in the
Apartment Complex after the construction of such units, shall have
occurred six (6) months or more prior to the date on which the
Investment Limited Partner acquired its Interest in the
Partnership, then the General Partner shall cause to be
prepared and delivered to the Investment Limited Partner within
sixty (60) days of the Admission Date the following items:
(i) An unaudited statement of income of the
Partnership for the year (or such shorter period as there may
be from the date of the most recent audited statement of
income of the Partnership) ended on the date upon which the
Investment Limited Partner acquired its Interest in the Partnership;
and
(ii) An audited statement of income of the
Partnership for any fiscal year of the Partnership ending between (A)
the earlier of (1) the Completion Date or (2) the date upon which tenants
first occupied apartment units in the Apartment Complex after the
rehabilitation of such units and (B) the date upon which the
Investment Limited Partner acquired its Interest in the Partnership.
(j) Within thirty (30) days following the Completion
Date, the General Partner shall prepare, or cause the Auditors to
prepare, and deliver to each Limited Partner a Tax Credit basis
worksheet for each building in the Apartment Complex, all in a
form specified by the Special Limited Partner.
(k) Promptly after Permanent Mortgage Commencement,
the General Partner shall send to the Special Limited Partner a
closing binder containing photocopies of the fully executed
versions of all documents signed in connection with the Permanent
Mortgage. From and after any date upon which the General Partner
receives notice from the Special Limited Partner that the Special
Limited Partner would like copies of the monthly rent rolls for
the Apartment Complex to be sent to the Special Limited Partner,
the General Partner shall send copies of the rent rolls to the
Special Limited Partner no later than ten (10) days after the
expiration of each month.
(l) If the General Partner does not cause the Partnership
to fulfill its obligations under Section 12.7(a)(i) and/or
Section 12.7(a)(ii) within the time periods set forth therein,
the General Partner shall pay as damages the sum of $250 per day
to the Investment Limited Partner until such obligations shall
have been fulfilled. Such damages shall be paid forthwith by the
General Partner, and the failure to pay any such damages shall
constitute a material default by the General Partner hereunder. In
addition, if the General Partner shall fail to pay any such
damages, the General Partner and its Affiliates shall forthwith
cease to be entitled to the distribution of any Cash Flow or
Capital Proceeds to which they may otherwise be entitled
hereunder. Such distributions of Cash Flow and Capital Proceeds
shall be restored only upon the payment of such damages in full,
and any amount of such damages not so paid shall be deducted
against distributions of Cash Flow and Capital Proceeds otherwise
due to the General Partner or its Affiliates.
(m) On or before December 1 of each Fiscal Year, the
General Partner shall cause the Partnership to send to the
Investment Limited Partner an operating budget of the Apartment
Complex for the upcoming Fiscal Year.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed
directly to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither
the Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for
the sale of goods or services or the lending of money to the
Partnership or the General Partners, except for (i) management
services, subject to the restrictions set forth in Article XI,
(ii) loans made by, or guaranteed by, the Investment General
Partner or any of its Affiliates and (iii) those dealings,
contracts or provision of services described in the Investment
Partnership Agreement. Extraordinary circumstances shall only
be presumed to exist where there is an emergency situation
requiring immediate action and the services required are not
immediately available from unaffiliated parties. All services
rendered under such circumstances must be rendered pursuant to a
written contract which must contain a clause allowing
termination without penalty on sixty (60) days' notice. Goods
and services provided under such circumstances must be provided
at the lesser of actual cost or the price charged for such goods
or services by independent parties.
(c) In the event that extraordinary circumstances arise,
the Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partner nor any of its Affiliates
shall provide such services unless it believes it has an adequate
staff to do so and unless such provision of goods and construction
services is part of its ordinary and ongoing business in which it
has previously engaged, independent of the activities of the
Investment Limited Partner. Any such services must be reasonable
for and necessary to the Partnership, actually furnished to the
Partnership, and provided at the lower of one hundred percent (100%)
of the construction contract rate with respect to the Apartment
Complex or ninety percent (90%) of the competitive price charged for
such services by independent parties for comparable goods and
services in the same geographic location (except that in the case of
transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the
lesser of costs or the compensation, price or fee of any other
Person rendering comparable services as aforesaid). Cost of
services as used herein means the pro rata cost of personnel,
including an allocation of overhead directly attributable to such
personnel, based on the amount of time such personnel spend on such
services or other method of allocation acceptable to the accountants
for the Investment Limited Partner.
(d) All services provided by the Investment General
Partner or any Affiliate thereof pursuant to Section 12.8(c) must be
rendered pursuant to the Investment Partnership Agreement or a
written contract which precisely describes the services to be
rendered and all compensation to be paid and shall contain a clause
allowing termination without penalty upon sixty (60) days' notice to
the Investment General Partner by a vote of a majority in interest
of the limited partners and assignees of beneficial interests in the
Investment Limited Partner.
(e) No compensation or fees may be paid by the
Partnership to the Investment General Partner or its Affiliates
except as described in the Investment Partnership Agreement.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition of an Interest may be made if the
Interest sought to be Disposed of, when added to the total of
all other Interests Disposed of within the period of twelve (12)
consecutive months prior to the proposed date of the
Disposition, would, in the opinion of the Tax Accountants or tax
counsel to the Partnership, result in the termination of the
Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the
Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1
shall be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing
provisions of this Section 13.1, however, the Investment Limited
Partner may waive the provisions of this Section 13.1 at any
time as to a Disposition or series of Dispositions, and in the
event of such a waiver, this Section 13.1 shall have no force or
effect upon such Disposition or series of Dispositions.
13.2 Amendments to Certificates
Within one hundred twenty (120) days after the end of
the Partnership Fiscal Year in which the Investment Limited
Partner shall have received any distributions under Article X,
the General Partner shall file an amendment to the Certificate
reducing the amount of its allocable share of such distribution
the amount of Capital Contribution of the Investment Limited
Partner as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on
account of any such distribution.
The Partnership shall amend the Certificate at least
once each calendar quarter to effect the substitution of
Substitute Limited Partners, although the General Partner may
elect to do so more frequently. In the case of assignments,
where the assignee does not become a Substitute Limited Partner,
the Partnership shall recognize the assignment not later than
the last day of the calendar month following receipt of notice
of assignment and all documentation required in connection
therewith hereunder.
Notwithstanding the foregoing provisions of this
Section 13.2, no such amendments to the Certificate need be
filed by the General Partner if the Certificate is not required
to and does not identify the Limited Partners or their Capital
Contributions in such capacity.
13.3 Notices
Except as otherwise specifically provided herein, all
notices, demands or other communications hereunder shall be in
writing and shall be deemed to have been given when the same
are (i) deposited in the United States mail and sent by
certified or registered mail, postage prepaid, (ii) delivered
to a nationally recognized overnight delivery service, (iii)
sent by telecopier or other facsimile transmission, answerback
requested, or (iv) delivered personally, in each case, to the
parties at the addresses set forth below or at such other
addresses as such parties may designate by notice to the
Partnership:
(a) If to the Partnership, at the office of the
Partnership set forth in Section 2.2.
(b) If to a Partner, at its address set forth in the
Schedule, with copies to William F. Machen, Esq., Sherburne,
Powers & Needham, P.C., One Beacon Street, 32nd Floor, Boston,
MA, 02108 and Steven P. Berman, Esq., Ballard Spahr Andrews &
Ingersoll, 1735 Market Street, 51st Floor, Philadelphia, PA
191037599.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to
a subdivision in which such words appear unless the context
otherwise requires. The singular shall include the plural, and
vice versa, and each gender (masculine, feminine and neuter)
shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers
to the corresponding Section or Article of this Agreement,
unless specified otherwise. References to Treasury Regulations
(permanent or temporary) or Revenue Procedures shall include any
successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties
hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in
accordance with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts
and all so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties have not
signed the original or the same counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in
effect,
(i) each of the provisions of this Agreement shall be subject to,
and the General Partner covenants to act in accordance with, the
Project Documents; (ii) the Project Documents shall govern the
rights and obligations of the Partners, their heirs, executors,
administrators, successors and assigns to the extent expressly
provided therein; (iii) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the
possession and control of the Apartment Complex and no right to
collect the rent therefrom shall pass to any Person who is not, or
does not become, bound by the Project Documents in a manner
satisfactory to the Lenders and any Agency (to the extent that its
approval is required); (iv) no amendment to any provision of the
Project Documents shall become effective without the prior written
consent of any Lender and/or Agency (to the extent that its
approval is required); and (v) the affairs of the Partnership
shall be subject to the Regulations, and no action shall be
taken which would require the consent or approval of any Lender
and/or Agency unless the prior consent or approval of such
Lender and/or Agency, as the case may be, shall have been
obtained. No new Partner shall be admitted to the Partnership,
and no Partner shall withdraw from the Partnership or be
substituted for without the consent of any Lender and/or Agency
(if such consent is then required). No amendment to this
Agreement relating to matters governed by the Regulations or
requirements shall become effective until any Requisite
Approvals to such amendment shall have been obtained.
(b) Any conveyance or transfer of title to all or any
portion of the Apartment Complex required or permitted under
this Agreement shall in all respects be subject to all
conditions, approvals and other requirements of any Regulations
applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered
separable and (a) if for any reason any provision is determined
to be invalid, such invalidity shall not impair the operation of
or affect those portions of this Agreement which are valid, and
(b) if for any reason any provision would cause the Investment
Limited Partner or the Special Limited Partner (in its capacity
as a Limited Partner) to be bound by the obligations of the
Partnership (other than the Regulations and the other
requirements of any Agency or Lender), such provision or
provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are
for convenience of reference only and are not intended to
qualify the meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partner
only with the Consent of the Investment Limited Partner and the
Consent of the Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses
(a) Any and all costs and expenses incurred by the
Investment Limited Partner and/or the Special Limited Partner in
connection with exercising rights and remedies against the
General Partner with respect to this Agreement, including,
without limitation, reasonable attorneys' fees, shall be paid by
the General Partner on demand. All amounts due to the
Investment Limited Partner and/or the Special Limited Partner
pursuant to this provision shall bear interest from demand at a
rate of nine percent (9%) per annum.
(b) If any General Partner breaches any provision of
this Agreement, the Investment Limited Partner and/or the Special
Limited Partner may employ an attorney or attorneys to protect
its rights hereunder, and the General Partner shall pay on
demand the reasonable attorneys' fees and expenses incurred by
the Investment Limited Partner and/or the Special Limited
Partner, whether or not a legal action is actually commenced
against any General Partner by reason of such breach. All
amounts due to the Investment Limited Partner and/or the
Special Limited Partner pursuant to this provision shall bear
interest from demand at a rate equal to nine percent (9%) per
annum.
13.13 Extraordinary General Partner Expenses
(a) Any and all costs and expenses incurred by the
General Partner in connection with exercising rights and remedies against
the Investment Limited Partner and/or the Special Limited Partner
with respect to this Agreement, including, without limitation,
reasonable attorneys' fees, shall be paid by the Investment
Limited Partner and/or the Special Limited Partner on demand. All
amounts due to the General Partner pursuant to this provision shall
bear interest from demand at a rate of nine percent (9%) per annum.
(b) If any Investment Limited Partner and/or the
Special Limited Partner breaches any provision of this Agreement, the
General Partner may employ an attorney or attorneys to protect its
rights hereunder, and the Investment Limited Partner and/or the
Special Limited Partner shall pay on demand the reasonable
attorneys' fees and expenses incurred by the General Partner,
whether or not a legal action is actually commenced against any
Investment Limited Partner and/or the Special Limited Partner by
reason of such breach. All amounts due to the General Partner
pursuant to this provision shall bear interest from demand at a
rate equal to nine percent (9%) per annum.
13.14 Time of Admission
The Investment Limited Partner shall be deemed to have
been admitted to the Partnership as of the Commencement Date for
all purposes of this Agreement, including Article X, provided,
however, that if treasury regulations are issued under the Code
or an amendment to the Code is adopted which would require, in
the opinion of the Auditors, that the Investment Limited Partner
be deemed admitted on a date other than as of the Commencement
Date, then the General Partner shall select a permitted admission
date which is most favorable to the Investment Limited Partner.
13.15 Arbitration
Notwithstanding anything to the contrary set forth
herein, in the event of a dispute regarding the existence of a
default or other violation of the terms hereof, such dispute
shall be
resolved by binding arbitration ("Arbitration") and until the
issuance of a final arbitration award confirming the existence of
a default or other violation, as applicable, no party shall be
entitled to exercise any of its rights or remedies hereunder.
Such arbitration shall be conducted in accordance with the Rules
of Commercial Arbitration of the American Arbitration Association
by a single arbitrator appointed pursuant to those rules. The
arbitration shall take place in the City of Philadelphia,
Pennsylvania. The scope of the arbitrator's award shall be
solely limited to a determination of whether a default or other
violation, as applicable, has occurred. If the arbitrator
determines that a default or other violation, as applicable, has
occurred, then if requested by any party hereto within twenty
(20) days following receipt of the award, the arbitrator shall
provide the parties with a written explanation of the facts
underlying the determination, which shall become part of the
award. The prevailing party shall be awarded the costs of such
arbitration, provided, however, that each party shall bear the
costs of its own attorneys and witnesses.
WITNESS the execution hereof under seal as of the date
first written above.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER:
/s/James H. Levin
James H. Levin
GENERAL PARTNER:
WPB II, L.P., a Pennsylvania
limited partnership, by its
general partner, WPB II, Inc.,
a Pennsylvania corporation
By:/s/
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND
IV L.P., a Delaware limited
partnership, by its general
partner, Boston Capital
Associates IV L.P., a Delaware limited
partnership, by its
general partner, C&M Associates
d/b/a Boston Capital
Associates, a Massachusetts
general partnership
By:/s/Bonnie Kate Fox
Bonnie Kate Fox, as
Attorney-in-Fact for John
P. Manning, a Partner
CLASS A LIMITED PARTNER:
NEIGHBORHOOD ECONOMIC SUPPORT
FOUNDATION, a Pennsylvania
nonprofit corporation
By:/s/
SPECIAL LIMITED PARTNER:
BCTC 94, INC., a Delaware
corporation
By:/s/Bonnie Kate Fox
Bonnie Kate Fox, as
Attorney-in-Fact for John
P. Manning, President
CONSENTS AND AGREEMENTS
The undersigned hereby executes this Agreement for the
sole purpose of agreeing to the provisions of Article XI of the
foregoing First Amended and Restated Agreement of Limited
Partnership notwithstanding any provision of the Management
Agreement to the contrary.
PRIME PROPERTY MANAGEMENT, INC., a
Pennsylvania corporation
By:/s/
The undersigned hereby executes this Agreement for the
sole purpose of agreeing to the provisions of Sections 6.11 and
6.12(a) of the foregoing First Amended and Restated Agreement
of Limited Partnership.
WPB II, L.P., a Pennsylvania limited
partnership, by its general partner,
WPB II, Inc., a Pennsylvania
corporation
By:/s/
NEIGHBORHOOD RESTORATIONS LIMITED
PARTNERSHIP, VII
SCHEDULE A
General Partner Capital Percentage Interests Percentage Interests
Contribution of Operating Profits of Tax Credit
WPB II, L.P. $100 0.09% 0.1%
11 Mayo Place
Dresher, PA
Capital Percentage Interests Percentage Interests
Contribution of Operating Profits of Tax Credit
Class A Limited $100 0.01% 0%
Partner
Neighborhood Economic $100 0.01% 0%
Support Foundation
Capital Percentage Interests Percentage Interests
Contribution of Operating Profits of Tax Credits
Special Limited Partner
BCTC 94, Inc. $10 0% 0%
c/o Boston Capital Partners, Inc.
One Boston Place, 21st Floor
Boston, MA 02108
Total Paid-In Percentage Percentage
Investment Limited Partner Agreed-to Contribuiton Interests of Interests of
Capital Operating Tax Credits
Contribuiton Profits and
Losses
Boston Capital Tax Credit $3,816,835 $202,094 99.9% 99.9%
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to
adjustment and are due at the times and subject to the conditions
set forth in the Agreement to which this Schedule is attached.
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PROJECTED RENTS
EXHIBIT C
DUE DILIGENCE RECOMMENDATIONS
NONE
EXHIBIT D
INSURANCE CERTIFICATES
EXHIBIT E
FORM OF CONTRACTOR PAY-OFF LETTER
EXHIBIT F
FORM OF ESTOPPEL LETTER
GENERAL PARTNER'S PAYMENT CERTIFICATE
(First Installment)
Certificate, dated as of March 11, 1998 (this
"Certificate"), of WPB II, L.P., a Pennsylvania limited partnership
("WPB") (the "General Partner").
This Certificate is delivered pursuant to the provisions of
Section 5.1 of the First Amended and Restated Agreement of Limited
Partnership dated as of March 11, 1998 (the "Partnership
Agreement") of NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP, VII
(the "Partnership").
The undersigned hereby certify that:
(i) The General Partner has satisfied and
continues to satisfy all of its material obligations
under the Partnership Agreement.
(ii) The covenants, representations and
warranties set forth in Sections 6.5 and 6.6 of the Partnership
Agreement are true and correct as of the date hereof.
(iii) The Partnership is not in default under any
of the Project Documents or any other material
obligation of the Partnership.
(iv) The covenants, representations and
warranties set forth in the Tax Certificate issued by the General
Partner to BOSTON CAPITAL TAX CREDIT FUND IV L.P. and dated as
of March 11, 1998 are correct as of the date hereof in all
material respects.
(v) The facts and representations set forth
in the Fact Sheet attached hereto as Exhibit A are true
and correct as of the date hereof.
(vi) Each of the conditions precedent to the
payment of the First Installment (as such term is
defined in the Partnership Agreement) has been
satisfied as of the date hereof.
IN WITNESS WHEREOF, the undersigned has caused this
Certificate to be executed as of the day and year set forth
above.
GENERAL PARTNER:
WPB II, L.P., a Pennsylvania limited
partnership, by its general partner,
WPB II, Inc., a Pennsylvania
corporation
By:/s/
Exhibit A
FACT SHEET
NEIGHBORHOOD RESTORATIONS LIMITED
PARTNERSHIP, VII
1. Sources and Uses of Funds
SOURCES OF FUNDS APPLICATIONS OF FUNDS
Permanent Loan $2,600,000 Land $302,348
Grant $216,000 Construction Hard $4,265,000
Costs
Investment Limited $3,816,835 Construction Soft $1,289,049
Partner Capital Costs
General Partner $100 Construction $201,538
Capital Contingency
Deferred 0 Development Fee $575,000
Development Fee
Total $6,632,935 Total $6,632,935
2. Financing
Construction
A. Lender Royal Bank of Pennsylvania
B. Mortgage Amount $4,100,000
C. Note Date: April 15, 1997
D. Interest Rate: April 15, 1997
E. Amortization: Interest only (15-amortization on
an extension)
F. Maturity Date: July, 1998 (extendable for up to
five years
G. Guarantors:
Permanent
A. Lender: Collaborative Lending Initiative, Inc.
B. Mortgage Amount: $2,600,000
C. Note Date: To be determined
D. Interest Rate: 10-year Treasuries plus 2.75%
E. Amortization: 15 years
F. Maturity Date: 15 years
G. Guarantors: None
3. Eligible Basis: $5,496,553
4. Qualified Basis: $7,145,519
(130% of Eligibe Basis0
5. GP Capital Contribution: $100
6. Type of Credit: 9%, New Construction and Rehabilitation
7. Rent-up Schedule:
100% by March 1, 1998
8. Project Credit to
Investment Partnership:
9. Total Projected Credit:
A. $439,156 for 1998,
B. $526,987 per annum for each of the years 1999 through 2007
(inclusive), and
C. $87,831 for 2008
10. Tax Credit Application:
A. Reservation Date: October 9, 1996
B. Reservation Amount: $528,826/year
C. Carryover Allocation Date: December 12, 1996
D. Carryover Allocation: $526,987/year
E. Tax Credit Rate on 8609: 8.6%
11. A. Name: Neighborhood Restorations
B. Address: 44 Scattered Sites
C. County:
D. MSA: West Philadelphia
E. Type of Project: Multifamily
12. Median Income: ($44,000 (Family of four)
13. Kind of Apartments
Number of Number of Total Basic Utility
Bedrooms Units Sq. Ft. Rent Allowance
1BR 5 1,000/unit $500/month $
2BR 10 1,200/unit $538/month $
2BR 10 1,200/unit $600/month $
3BR 23 1,315/unit $619/month $
3BR 23 1,315/unit $764/month $
4BR 1 1,000/unit $685/month $
14. Rental Assistance: N/A
15. Annual Operating Expense: $143,448
(plus 3%annual
(beginning 1998) inflation)
16. Replacement Reserve Account: $14,400/year
(beginning 1998)
17. Maximum Yearly Distribution of
Cash Flow permitted: N/A
18. Amount of Asset Management Fee
to Boston Capital: $7,500/year
(commencing 1998)
19. Amount of Total Depreciable Base
Allocated to Personal Property: $114,251
20. Completion Date: March 31, 1998
(anticipated)
21. Total Capital Contribution of
Investment Partnership: $3,816,835
22. Schedule of Capital Contributions
Amount Installment Conditions on Capital
Contributions
$202,094 First on the Admission Date
$3,226,741 Second on the latest of (A) the
Completion Date, (B) Cost
Certification, (C) receipt of
an updated Title Policy in
form and substance
satisfactory to the Special
Limited Partner, (D) receipt
by the Investment Limited
Partner of the Contractor Pay-
Off Letter, (E) receipt by the
Investment Limited Partner of
an Estoppel Letter from each
Lender or (F) satisfaction of
the Due Diligence
Recommendations
$380,500 Third on the latest of (A) the
Initial 100% Occupancy Date,
(B) Permanent Mortgage
Commencement, (C) State
Designation or (D) Rental
Achievement
$7,500 Fourth upon the receipt by the
Investment Limited Partner of
a copy of the properly filed
Partnership federal income tax
return and an audited
Partnership financial
statement for the year in
which Rental Achievement
occurs
23. Fees and Special Distributions to be paid from
Capital Contributions:
$_________ of the Development Fee is
anticipated to be paid out of Capital Contributions
24. General Partner: WPB II, Inc.
Contact: James Levin
Address: c/o Prime Property
Management, Inc.
8300 Westchester Pike
Upper Darby, PA 19082
Telephone: (215) 653-7985
Fax: (610) 853-3506
25. Ownership Interests:
Partner Normal Capital Cash Tax
Operations Transactions Flow Credits
General Partner 0.9% 89.999% 90% 0.1%
Investment Limited Partner
26. Management Agent: PrimeProperty Management, Inc.
Contact: James Levin
Address: c/o Prime Property
Management, Inc.
8300 Westchester Pike
Upper Darby, PA 19082
Telephone: (215) 653-7985
Fax: (610) 853-3506
Amount of Fee: 8% of collected rents
27. Partnership Federal ID Number: 23-2831149
28. Operating Deficit Guarantees: Capped at $575,000
through third anniversary of Rental Achievement
Capped at $250,000 between third and fifth
anniversaries of Rental Achievement
No such guaranties after the fifth anniversary of
Rental Achievement
29. Building Breakdown:
BIN # of Units
PA96-01031 72
through
PA96-33031
33 Total BINS 72
TOTAL 72
AMENDED AND RESTATED
DEVELOPMENT AGREEMENT
AGREEMENT made as of March 11, 1998 by and between
NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP, VII, a
Pennsylvania limited partnership (the "Partnership") and WPB II,
L.P., a Pennsylvania limited partnership (the "Developer") in
its capacity as the Developer of the Apartment Complex and not
as a General Partner of the Partnership.
Recitals
1. The Partnership was formed to acquire,
construct, develop, improve, maintain, own, operate, lease,
dispose of and otherwise deal with an apartment project located
in Philadelphia, Pennsylvania, known as the Neighborhood
Restorations VII Apartments (the "Apartment Complex").
2. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the First Amended
and
Restated Agreement of Limited Partnership of the Partnership of
even date herewith (the "Partnership Agreement").
3. The Apartment Complex, following the completion
of construction, is expected to constitute a "qualified lowincome
housing project" (as defined in Section 42(g)(1) of the Code).
4. The Developer has already provided and will
continue to provide certain services with respect to the
Apartment Complex
during the acquisition, development, construction and initial
operating phases thereof.
5. In consideration for such services, past and
future, the Partnership has agreed to pay to the Developer
certain fees computed and paid in the manner stated herein.
NOW, THEREFORE, in consideration of the mutual covenants
and conditions set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Defined Terms.
"Development Advances" has the meaning set forth in Section
2.
"Development Costs" means any and all costs and expenses
necessary to (i) cause the construction of the Apartment Complex to
be completed, in a good and workmanlike manner, free and clear of
all mechanics', materialmen's or similar liens, in accordance with
the Plans and Specifications, (ii) equip the Apartment Complex with
all necessary and appropriate fixtures, equipment and articles of
personal property (including, without limitation, refrigerators and
ranges), (iii) obtain all required certificates of occupancy for the
apartment units and other space in the Apartment Complex, (iv) pay
the Development Fee, (v) finance the construction of the Apartment
Complex and achieve Rental Achievement in accordance with the
provisions of the Project Documents, (vi) discharge all Partnership
liabilities and obligations arising out of any casualty generating
insurance proceeds for the Partnership, (vii) fund any Partnership
reserves required hereunder or under any of the Project Documents,
(viii) repay and discharge the Construction Loan, and (ix) pay any
other costs or expenses necessary to achieve the Completion Date and
Rental Achievement.
"Specified Proceeds" means (i) the proceeds of all Mortgage
Loans, (ii) the net rental income, if any, generated by the
Apartment Complex prior to Rental Achievement which is permitted by
the Lenders to be applied to the payment of Development Costs, (iii)
the Capital Contributions of the Investment Limited Partner, the
Class A Limited Partner and the Special Limited Partner, (iv) the
Capital Contributions of the General Partner in the amounts set
forth in Schedule A of the Partnership Agreement as of the Admission
Date and (v) any insurance proceeds arising out of casualties
occurring prior to Rental Achievement.
Section 2. Obligation to Complete Construction and to
Pay Development Costs.
The Developer shall complete the construction of the
Apartment Complex 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 without limitation, refrigerators and
ranges, provided for in the Project Documents and the Plans and
Specifications. The Developer also shall cause the achievement
of Rental Achievement in accordance with the terms of the
Partnership Agreement. If the Specified Proceeds as available
from time to time are insufficient to pay all Development Costs
and achieve Rental Achievement, the Developer shall advance or
cause to be advanced to the Partnership from time to time as
needed all such funds as are required to pay such deficiencies.
Any such advances ("Development Advances") shall, to the extent
permitted under the Project Documents and any applicable
Regulations or requirements of any Lender or Agency (or
otherwise with any Requisite Approvals), be reimbursed at or
prior to Rental Achievement only out of Specified Proceeds
available from time to time after payment of all Development
Costs. Any balance of the amount of each Development Advance
not reimbursed through Rental Achievement shall not be
reimbursable, shall not be credited to the Capital Account of
any Partner, or otherwise change the interest of any Person in
the Partnership, but shall be borne by the Developer under the
terms of this Agreement.
Section 3. Development Services.
(a) The Developer has heretofore performed certain
services
relating to the development of the Apartment Complex and shall
continue to oversee the construction and development of the
Apartment Complex, and shall perform the services and carry out the
responsibilities with respect to the Apartment Complex as are set
forth herein, and such additional duties and responsibilities as
are reasonably within the general scope of such services and
responsibilities and are designated from time to time by the
General Partner.
(b) The Developer's services shall be performed in the
name
and on behalf of the Partnership and shall consist of the duties
set forth in subparagraphs (i)-(xv) below of this Section 3(b)
and as provided elsewhere in this Agreement; provided, however,
that if the performance of any duty of the Developer set forth
in this Agreement is beyond the reasonable control of the
Developer, the Developer shall nonetheless be obligated to (i)
use its best efforts to perform such duty and (ii) promptly
notify the General Partner that the performance of such duty is
beyond its reasonable control. The Developer has performed or
shall perform the following:
(i) Negotiate and cause to be executed in
the name and on behalf of the Partnership any agreements
for architectural, engineering, testing or
consulting services for the Apartment Complex, and
any agreements for the construction of any
improvements or tenant improvements to be
constructed or installed by the Partnership or the
furnishing of any supplies, materials, machinery
or equipment therefor, or any amendments thereof,
provided that no agreement shall be executed nor
binding commitment made until the terms and
conditions thereof and the party with whom the
agreement is to be made have been approved by the
General Partner unless the terms, conditions, and
parties comply with guidelines issued by the
General Partner concerning such agreements;
(ii) Advise the Partnership as to the
steps necessary to qualify the Apartment Complex during the
compliance period defined in Section 42(i)(1) of the
Code as a "qualified low-income housing project" under
Section 42(g)(1) of the Code;
(iii) Assist the Partnership in preparing
and
processing an application for a low-income housing tax
credit allocation for the Apartment Complex under
Section 42 of the Code;
(iv) Advise the Partnership as to federal,
state
and local subsidy programs available for the Apartment
Complex;
(v) Establish and implement appropriate
administrative and financial controls for the design
and construction of the Apartment Complex, including
but not limited to:
(A) coordination and administration of
the Apartment Complex architect, the general contractor,
and other contractors, professionals and consultants employed in
connection with the design or construction of the Apartment
Complex;
(B) administration of any construction
contracts on behalf of the Partnership;
(C) participation in conferences and the
rendering of such advice and assistance as will aid in
developing economical, efficient and desirable design
and construction procedures;
(D) the rendering of advice and
recommendations as to the selection of subcontractors and suppliers;
(E) the review and submission to the General
Partner for approval of all requests for payments under
any architectural agreement, general contractor's agreement, or any
loan agreements with any lending institutions providing funds for the
benefit of the Partnership for the design or construction of any
improvements;
(F) the submission of any suggestions or
requests for changes which could in any reasonable manner
improve the design, efficiency or cost of the Apartment
Complex;
(G) applying for and maintaining in full
force and effect any and all governmental permits and
approvals required for the lawful construction of the
Apartment Complex;
(H) compliance with all terms and conditions
applicable to the Partnership or the Apartment Complex
contained in any governmental permit or approval required or
obtained for the lawful construction of the Apartment Complex, or in
any insurance policy affecting or covering the Apartment Complex, or
in any surety bond obtained in connection with the Apartment Complex;
(I) furnishing such consultation and
advice relating to the Apartment Complex as may be reasonably
requested from time to time by the General Partner;
(J) keeping the General Partner fully informed
on a regular basis of the progress of the design and
construction of the Apartment Complex, including the preparation
of such reports as are provided for herein or as may reasonably be
requested by the General Partner and which are of a nature
generally requested or expected of construction managers or similar
owner's representatives on similar projects;
(K) giving or making the
Partnership's instructions, requirements, approvals and payments
provided for in the agreements with the Apartment Complex
architect, general contractor, and other contractors, professionals
and consultants retained for the Apartment Complex; and
(L) at the Partnership's expense, filing
on behalf of and as the attorney-in-fact for the
Partnership any notices of completion required or permitted to
be filed upon the completion of any improvement(s) and taking such
actions as may be required to obtain any certificates of occupancy
or equivalent documents required to permit the occupancy of the
Apartment Complex.
(vi) Inspect the progress of the course of
the
construction of the Apartment Complex, including verification
of the materials and labor being furnished
to and on such construction so as to be fully competent to approve
or disapprove requests for payment made by the Apartment Complex
architect and the general contractor, or by any other parties
with respect to the design or construction of the Apartment
Complex, and in addition to verify that the construction is being
carried out substantially in accordance with the Plans and
Specifications approved by the General Partner or, in the event
that the construction is not being so carried out, to promptly
notify the General Partner;
(vii) If requested to do so by the General
Partner, perform on behalf of the Partnership all obligations of
the Partnership with respect to the design or
construction of the Apartment Complex contained in any loan
agreement or security agreement entered into in connection
with any construction or long-term financing for the
Apartment Complex, or in any lease or rental agreement
relating to space in the Apartment Complex, or in any
agreement entered into with any governmental body or agency
relating to the terms and conditions of such construction,
provided that copies of such agreements have been provided by
the Partnership to the Developer or the Partnership has
otherwise notified the Developer in writing of such
obligations;
(viii) To the extent requested to do so by
the General Partner, prepare and distribute to the General
Partner a critical path schedule, and periodic updates
thereto as necessary to reflect any material changes,
but in any event not less frequently than quarterly,
other design or construction cost estimates as
required by the General Partner, and financial accounting
reports, including monthly progress reports on the
quality, progress and cost of the construction and
recommendations as to the drawing of funds from any
loans arranged by the Partnership to cover the cost
of design and construction of the Apartment Complex,
or as to the providing of additional capital
contributions should such loan funds for any reason
be unavailable or inadequate;
(ix) At the Partnership's expense,
obtain and maintain insurance coverage for the
Apartment Complex,
the Partnership, and the Developer and its employees,
at all times until final completion of the
construction of the Apartment Complex, in accordance
with an insurance schedule approved by the General
Partner, which insurance shall include general public
liability insurance covering claims for personal
injury, including but not limited to bodily injury,
or property damage, occurring in or upon the Property
or the streets, passageways, curbs and vaults
adjoining the Property. Such insurance shall be in a
liability amount approved by the General Partner;
(x) Comply with all applicable
present and future laws, ordinances, orders, rules,
regulations and requirements (hereinafter in this subparagraph (x)
called "laws") of all federal, state and municipal
governments, courts, departments, commissions, boards
and offices, any national or local Board of Fire
Underwriters or Insurance Services Offices having
jurisdiction in the county in which the Apartment
Complex is located or any other body exercising
functions similar to those of any of the foregoing,
or any insurance carriers providing any insurance
coverage for the Partnership or the Apartment
Complex, which may be applicable to the Apartment
Complex or any part thereof. Any such compliance undertaken by
the Developer on behalf of and in the name of the
Partnership, in accordance with the provisions of
this Agreement, shall be at the Partnership's
expense. The Developer shall likewise ensure that
all agreements between the Partnership and
independent contractors performing work in connection
with the Apartment Complex shall include the
agreement of said independent contractors to comply
with all such applicable laws;
(xi) Assemble and retain all contracts,
agreements and other records and data as may be necessary to
carry out the Developer's functions hereunder. Without
limiting the foregoing, the Developer will prepare, accumulate
and furnish to the General Partner and the appropriate
governmental authorities, as necessary, data and information
sufficient to identify the market value of improvements in
place as of each real property tax lien date, and will make
application for appropriate exclusions from the capital costs
of the Apartment Complex for purposes of real property ad
valorem taxes;
(xii) Coordinate and administer the design
and construction of all interior tenant improvements to the
extent required under any leases or other occupancy agreements
to be constructed or furnished by the Partnership with respect
to the initial leasing of space in the Apartment Complex,
whether involving
building standard or non-building standard work;
(xiii) Use its best efforts to accomplish the
timely completion of the Apartment Complex in
accordance with the approved Plans and Specifications and the
time schedules for such completion approved by the General
Partner;
(xiv) At the direction of the General
Partner, implement any decisions of the General Partner made
in connection with the design, construction and
development of the Apartment Complex or any policies
and procedures relating thereto, exclusive of leasing
activities; and
(xv) Perform and administer any and
all other services and responsibilities of the Developer
which are set forth in any other provisions of this
Agreement, or which are requested to be performed by
the General Partner and are within the general scope
of the services described herein.
Section 4. Limitations and Restrictions.
Notwithstanding any provisions of this Agreement, the
Developer shall not take any action, expend any sum, make any
decision, give any consent, approval or authorization, or
incur any obligation with respect to any of the following
matters unless and until the same has been approved by the
General Partner:
(a) Approval of all construction and architectural
contracts and all architectural plans, specifications and
drawings prior to the construction and/or alteration of any
improvements contemplated thereby, except for such matters as may
be expressly delegated in writing to the Developer by the General
Partner;
(b) Any proposed change in the work of the
construction of the Apartment Complex, or in the Plans and Specifications
therefor as previously approved by the General Partner, or in the cost
thereof, or any other change which would affect the design, cost,
value or quality of the Apartment Complex, except for such matters
as may be expressly delegated in writing to the Developer by the
General Partner;
(c) Making any expenditure or incurring any obligation
by or on behalf of the Partnership or the Apartment Complex involving a
sum in excess of $25,000 or involving a sum of more than $5,000
where the same relates to a component part of any work, the combined
cost of which exceeds $25,000, except for expenditures made and
obligations incurred pursuant to and specifically set forth in a
construction budget approved by the General Partner
(the "Construction Budget") or for such matters as may be
otherwise expressly delegated to the Developer by the General
Partner;
(d) Making any expenditure or incurring any
obligation which, when added to any other expenditure, exceeds the
Construction Budget or any line item specified in the
Construction Budget, except for such matters as may be
otherwise expressly delegated in writing to the Developer by
the General Partner; or
(e) Expending more than what the Developer in good
faith believes to be the fair and reasonable market value at the time and
place of contracting for any goods purchased or leased or services
engaged on behalf of the Partnership or otherwise in connection with
the Apartment Complex.
Section 5. Accounts and Records.
(a) The Developer on behalf of the Partnership, shall
keep such books of account and other records as may be required and
approved by the General Partner, including, but not limited to,
records relating to the costs of construction and construction
advances. The Developer shall keep vouchers, statements,
receipted bills and invoices and all other records, in the form
approved by the General Partner, covering all collections, if any,
disbursements and other data in connection with the Apartment
Complex prior to the Completion Date. All accounts and records
relating to the Apartment Complex, including all correspondence,
shall be surrendered to the Partnership, upon demand without charge
therefor.
(b) The Developer shall cooperate with the Management
Agent to facilitate the timely preparation by the Management Agent
of such reports and financial statements as the Management Agent is
required to furnish pursuant to the Management Agreement.
(c) All books and records prepared or maintained by
the Developer shall be kept and maintained at all times at the
place or places approved by the General Partner, and shall be
available for and subject to audit, inspection and copying by the
Management Agent, the General Partner or any representative or
auditor thereof or supervisory or regulatory authority, at the
times and in the manner set forth in the Partnership Agreement.
Section 6. Development Fees.
For its services in connection with the development of the
Apartment Complex and the supervision of the construction of the
Apartment Complex, and as reimbursement for Development Advances,
the Developer shall receive a fee (the "Development Fee") in the
amount of $575,000. $143,750 of such fee was earned by the
Developer as of December 31, 1996 and was accrued as of
December 31, 1996. The remainder of the Development Fee shall be
deemed to have been earned as and when the Developer's services
are rendered and such Development Fee shall be paid out of
Specified Proceeds. If Specified Proceeds are insufficient to pay
the Development Fee, such unpaid amounts shall be paid out of Cash
Flow as set forth in Section 10.2(a) of the Partnership Agreement.
In any event, the General Partner shall cause the Partnership to
pay such Development Fee only after the payment of all Development
Costs (other than the Development Fee). If the Development Fee
has not been fully paid by the tenth anniversary of the Completion
Date, the General Partner shall make a Capital Contribution to the
Partnership in an amount sufficient to enable the Partnership to
pay any unpaid portion of the Development Fee.
Section 7. Applicable Law.
This Agreement, and the application or interpretation
hereof, shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
Section 8. Binding Agreement.
This Agreement shall be binding on the parties hereto,
their heirs, executors, personal representatives, successors and
assigns. As long as the Developer is not in default under this
Agreement, the obligation of the Partnership to pay the Development
Fee shall not be affected by any change in the identity of the
General Partner of the Partnership.
Section 9. Headings.
All section headings in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of
any section.
Section 10. Terminology.
All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all
other genders, the singular shall include the plural, and vice
versa as the context may require.
Section 11. Benefit of Agreement.
The obligations and undertakings of the Developer set forth
in this Agreement are made for the benefit of the Partnership and
its Partners and shall not inure to the benefit of any creditor of
the Partnership other than a Partner, notwithstanding any pledge or
assignment by the Partnership of this Agreement or any rights
hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
PARTNERSHIP:
NEIGHBORHOOD RESTORATIONS LIMITED
PARTNERSHIP, VII, a Pennsylvania
limited partnership, by its general
partner, WPB II, L.P., a Pennsylvania
limited partnership, by its general
partner, WPB II, Inc., a Pennsylvania
corporation
By:/s/
DEVELOPER:
WPB II, L.P., a Pennsylvania limited
partnership
By:/s/
CAPITAL DISPOSITION AGREEMENT
AGREEMENT executed as of March 11, 1998 by and between
NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP, VII, a
Pennsylvania limited partnership (the "Partnership") and WPB II,
L.P., a Pennsylvania limited partnership (the "Developer").
Recitals.
1. The Partnership was formed to develop,
construct, own and operate a multi-family housing project located in
Philadelphia, Pennsylvania (the "Apartment Complex").
2. It is expected that the Apartment Complex will be
eligible for the low-income housing tax credit (the "Tax Credit")
described in Section 42 of the Internal Revenue Code of 1986, as
amended (the "Code").
3. The Developer has provided certain services in
connection with the development and construction of the Apartment
Complex and will continue to provide other services to the
Partnership, as more fully described below.
4. The Partnership has agreed to pay the Developer a
fee for certain of such services as more fully set forth below.
5. Capitalized terms used herein and not otherwise
defined shall the meanings set forth in the Partnership Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Services.
In the event that a sale of the Apartment Complex is
contemplated at any time, whether pursuant to a
specific provision of the Partnership Agreement or otherwise,
the Developer shall provide the following services to
the Partnership:
(i) if a buyer has not been
identified, assistance in locating a suitable buyer
with the financial resources to consummate the proposed
purchase;
(ii) the negotiation of the terms
and conditions of the proposed sale, including,
without limitation, the price, any deferred payment
provisions, the security for any deferred payments, the
conditions to closing and similar matters;
(iii) advice concerning compliance with
any applicable provisions of Section 42 of the Code,
including, without limitation, Section 42(i)(7),
Section 42(h)(5), and Section 42(j);
(iv) advice concerning the necessity,
availability and cost of recapture bonds;
(v) assistance in obtaining any
governmental or other consents or approvals to such sale;
(vi) advising the Limited Partners of
the terms and conditions of any such sale and the
status of negotiations relating thereto and
assisting the General Partner in soliciting and
obtaining the consent or approval of the Limited
Partners to such;
(vii) the review of any
proposed purchase and sale agreement, deed, assignments,
closing statements, purchase money notes and mortgages,
and similar documents relating to any such sale;
(viii) assistance in calculating
the income tax consequences of any such sale,
including, without limitation, the review of any
projections prepared by the Auditors and
coordination with the Partnership's other tax
advisors, if any; and
(ix) assistance in developing an
effective program for notifying tenants, vendors and others
of such sale in a manner designed to minimize any
costs or disruptions.
2. Disposition Fee.
(a) In consideration of the services to be
performed by the Developer as outlined in Section 1 above, the
Partnership shall pay to the Developer a fee (the
"Disposition Fee") equal to six percent (6%) of the gross
sales proceeds of the Apartment Complex.
(b) The Disposition Fee shall be paid from
Capital Proceeds in the manner set forth in Section 10.2(b) of the
Partnership Agreement, provided, however, that the Disposition
Fee shall first be applied to pay any and all costs associated
with the sale of the Apartment Complex in connection with
which the Disposition Fee is paid.
3. Binding Effect. Wherever any of the parties
to this Agreement is referred to, such reference is deemed to
include the heirs, successors, assigns and personal
representatives of such party. This Agreement shall be
binding upon and inure to the benefit of the successors and
assigns of each party hereto.
4. Notices. Notices required or permitted
hereunder shall be in writing and shall be deemed to have been given and
received (i) two (2) business days after sent by
registered or certified mail, return receipt requested, (ii)
one (1) business day following delivery delivered by a
nationally recognized overnight courier service, or (iii) on
the business day sent by facsimile transmission, answerback
requested, in each case to the parties at the addresses set
forth in the Development Agreement, or at such other address
as either party may specify to the other by not less than ten
(10) days' prior notice complying with the foregoing
provisions.
5. Counterparts. This Agreement may be executed
in several counterparts and all so executed shall constitute one
agreement binding on both parties, notwithstanding that both
parties have not signed the original or the same counterpart.
6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
7. No Waiver. No delay on the part of any party
in exercising any of its options, powers or rights, or partial or
single exercise thereof, shall constitute a waiver thereof.
8. Amendments and Waivers. No amendment or waiver
of any provision of this Agreement shall be effective unless
the same shall be in writing and signed by each of the parties.
9. Captions. The captions of the sections of this
Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any
provision of this Agreement.
10. Further Assurances. The parties shall, upon
request of any other party, duly execute and deliver, or
cause to be duly executed and delivered, to the other
parties or any of them such further instruments and take
and cause to be taken such further actions as may be
reasonably necessary to carry out the provisions and
purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
PARTNERSHIP:
NEIGHBORHOOD
RESTORATIONS LIMITED PARTNERSHIP, VII, a
Pennsylvania limited
partnership, by its general
partner, WPB II, L.P., a
Pennsylvania limited
partnership, by its general
partner, WPB II, Inc., a
Pennsylvania corporation
By:/s/
DEVELOPER:
WPB II, L.P.,
a Pennsylvania limited partnership
By:/s/
