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) October 28,1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delawar
(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 October 28, 1997, Boston Capital Tax Credit Fund IV L.P.,
a Delaware limited partnership, specifically Series 27 thereof
(the "Partnership") completed various agreements relating to
Angelou Associates, L. P., a New York limited partnership (the
"Operating Partnership"), including an Amended and Restated
Agreement of Limited Partnership of the Operating Partnership
dated as of October 1, 1997 (the "Operating Partnership
Agreement"), pursuant to which the Partnership acquired a limited
partner interest in the Operating Partnership. Capitalized terms
used and not otherwise defined herein have their meanings set
forth in the Operating Partnership Agreement, a copy of which is
attached hereto as Exhibit (2)(a).
The Operating Partnership owns and is currently renovating
an apartment complex located at 516-520 Manhattan Avenue,
New York, New York, which is known as Angelou Court Apartments
(the "Apartment Complex"). The Apartment Complex is comprised of
three attached five-story buildings which will be combined into
one interconnected structure containing five (5) 1-bedroom
apartment units, sixteen (16) 2-bedroom apartment units and two
(2) 3-bedroom apartment units, for a total of twenty-three (23)
apartment units. Twenty-two (22) of the apartment units will be
rental units and one unit will serve as a building superintendent
unit. Renovation of the Apartment Complex is expected to be
substantially completed by November, 1998 and the Apartment
Complex is expected to achieve 100% occupancy by January, 1999.
The Operating Partnership is receiving construction first
mortgage financing in the amount of up to $318,000 (the
"Construction First Mortgage") from Chase Community Development
Corporation. The Construction First Mortgage has a term of 18
months and bears interest at a variable amount equal to 2% above
an established formula rate. The Guarantor of the Construction
First Mortgage is Novelex/MDG J.V., the Contractor for the
Apartment Complex. The Operating Partnership expects to receive
permanent first mortgage financing in the amount of $318,000 (the
"Permanent First Mortgage") from Chase Community Development
Corporation. The Permanent First Mortgage is expected to bear
interest at a fixed rate of 8.56% per annum and have a term of 15
years. The Operating Partnership is also receiving construction
second mortgage financing in the amount of up to $690,000 (the
"Construction Second Mortgage") from the New York State Housing
Trust Fund which will convert to a permanent second mortgage of
$690,000 (the "Permanent Second Mortgage") upon completion of
renovation of the Apartment Complex. The Construction Second
Mortgage has a term of 18 months and bears interest at the fixed
rate of 6% per annum. The Permanent Second Mortgage will have a
term of 30 years and bear interest at the fixed rate of 1% per
annum.
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 Angelou
of Harlem, Inc., a New York corporation (the "General Partner")
which is a special purpose entity formed to serve as the General
Partner of the Operating Partnership. Harlem Congregations for
Community Improvement, Inc., a New York non-profit corporation
(the "HCCI") is the parent corporation of the General Partner and
the Developer of the Apartment Complex. The obligations of the
General Partner under the Operating Partnership Agreement have
been guaranteed by HCCI. Founded in 1986, HCCI is a diverse
community based organization established to revitalize the
physical, economic, cultural and spiritual conditions of the
Harlem community. HCCI is divided into four divisions and has a
staff of 31 people, including 8 staff members dedicated to real
estate development. Since 1991, HCCI has developed more than 900
units of affordable housing, implemented economic development
initiatives by providing 26 commercial store fronts for local
entrepreneurs, established more than 22 tenant associations and
paved the way for employment opportunities in the construction
industry.
It is currently anticipated that an entity formed as a
cooperative corporation will be admitted as an additional General
Partner of the Operating Partnership (the "Co-General Partner").
The Co-General Partner will be structured in a manner similar to
that of a conventional cooperative apartment corporation in which
the tenants of the Apartment Complex will be sold shares in the
Co-General Partner. In connection with the foregoing, the
Operating Partnership will enter into a Master Lease with the Co-
General Partner for a 15-year term and at the end of such 15-year
term the Co-General Partner will have the option of purchasing
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
$1,893,804 to the Operating Partnership in four (4) Installments
as follows:
1. $1,515,042 (the "First Installment") on the later of
(i) the Admission Date, (ii) Construction Mortgage
Closing or (iii) receipt of Permanent Mortgage
Commitments;
2. $184,257 (the "Second Installment") on the later of (i)
the Completion Date, (ii) Cost Certification, (iii)
receipt by the Partnership of a copy of the Operating
Partnership's owner's title insurance policy, as
endorsed through Permanent Mortgage Commencement, with
such policy, and endorsement in form and substance
satisfactory to the Special Limited Partner, (iv)
receipt of the Contractor Payment Letter and(v) receipt
of the Lender Estoppel Letters;
3. $184,257 (the "Third Installment") on the latest of (i)
the Initial 100% Occupancy Date, (ii) State
Designation, (iii) Permanent Mortgage Commencement,
(iv) an opinion of counsel to the Operating Partnership
concerning the Permanent Mortgages, including the non-
recourse nature thereof, satisfactory to form, content
and counsel to the Special Limited Partner and (v)
Rental Achievement; and
4. $10,248 (the "Fourth Installment") on Rental
Achievement Confirmation.
The total Capital Contribution of the Partnership to the
Operating Partnership is based on the Operating Partnership
receiving $2,916,460 of Tax Credits during the 10-year period
commencing in 1998 of which 99.90% ($2,913,540) will be allocated
to the Partnership as the Investment Limited Partner of the
Operating Partnership. The Special Limited Partner of the
Operating Partnership is BCTC 94, Inc., an affiliate of the
Partnership.
The Partnership believes that the Apartment Complex is
adequately insured.
Ownership interests in the Operating Partnership are as
follows, subject in each case to certain priority allocations and
distributions as set forth in the Operating Partnership
Agreement:
Normal Operations CapitalTransactions Cash Flow
General Partner 0.10% 70.000% 80%
Partnership 99.90% 29.999% 20%
Special Limited
Partner 0% 0.001% 0%
The Partnership used the funds obtained from the payments of
the holders of its beneficial assignee certificates to make the
acquisition of its interest in the Operating Partnership.
Boston Capital Communications Limited Partnership or an
affiliate thereof will receive an Asset Management Fee commencing
in 1999 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 the lesser of (i) $2,000 or (ii) one-half of one
per cent (0.5%) of the Aggregate Cost of the Apartment Complex.
The Asset Management Fee for each fiscal year will be payable
from Cash Flow in the manner and priority set forth in Section
10.2(a) of the Operating Partnership Agreement; provided,
however, that if in any fiscal year commencing with 1999, Cash
Flow is insufficient to pay the full amount of the Asset
Management Fee and the shortfall is not paid from funds advanced
pursuant to Section 6.10 of the Operating Partnership Agreement,
the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first year in which there is sufficient
Cash Flow or from the proceeds of a Capital Transaction as
provided in Article X of the Operating Partnership Agreement.
The Operating Partnership shall pay to the General Partner a
fee (the "Annual Partnership Management Fee") commencing in 1999
for its services in connection with the administration of the day
to day business of the Operating Partnership in an annual amount
equal to the lesser of (i) $7,500 per annum or (ii) the excess of
(A) one-half of one per cent (0.5%) of the Aggregate Cost of the
Apartment Complex over (B) the amount of the Asset Management Fee
attributable to such year. The Annual Partnership Management Fee
for each fiscal year of the Operating Partnership shall be
payable from Cash Flow in the manner and priority set forth in
Section 10.2(a) of the Operating Partnership Agreement to the
extent Cash Flow is available therefor for such year; provided,
however, that if in any fiscal year commencing with 1999, Cash
Flow is insufficient to pay the full amount of the Annual
Partnership Management Fee, the unpaid portion thereof shall
accrue and be payable on a cumulative basis in the first year in
which there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X of the Operating
Partnership Agreement.
In consideration of its consultation, advice and other
services in connection with the construction and development of
the Apartment Complex and as consideration for the assignment
described in Section 6.14 of the Operating Partnership Agreement,
the Operating Partnership shall pay to the General Partner (or
its designee) a construction and development fee (the
"Construction and Development Fee") in the principal amount of
$345,072, which fee shall be earned in full as to each building
in the Apartment Complex as of the date such building is
completed. The Construction and Development Fee shall be payable
$85,088 from the proceeds of the First Installment, $153,457 from
the proceeds of the Second Installment, $80,834 from the proceeds
of the Third Installment and $10,248 from the proceeds of the
Fourth Installment, with the unpaid balance (the "Deferred
Development Fee") payable as provided in Article X of the
Operating Partnership Agreement.
Item 7. Exhibits.
(c) Exhibits. Page
(1)(a)<F1> Form of Dealer-Manager Agreement
between Boston Capital Services, Inc.
and the Registrant (including, as an
exhibit thereto, the form of Soliciting
Dealer Agreement)
(2)(a) Amended and Restated Agreement of
Limited Partnership of Angelou
Associates, L.P.
(2)(b) Certification and Agreement relating to
Angelou Associates, L.P.
(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 3, 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
ANGELOU ASSOCIATES, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
dated as of October 1, 1997
ANGELOU ASSOCIATES, L.P.
Table of Contents
Preliminary Statement 1
ARTICLE I - Defined Terms 1
ARTICLE II - Name and Business 11
2.1 Name; Continuation 11
2.2 Office and Resident Agent 11
2.3 Purpose 11
2.4 Term and Dissolution 11
ARTICLE III -Mortgage, Refinancing and Disposition of Property 12
ARTICLE IV - Partners; Capital 12
4.1 Capital and Capital Accounts 12
4.2 General Partners 13
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner 13
4.4 Liability of the Limited Partners 14
4.5 Special Rights of the Investment Limited Partner and the
Special Limited Partner 14
4.6 Meetings 15
ARTICLE V - Capital Contributions of the Investment Limited Partner 15
5.1 Payments 15
5.2 Return of Capital Contributions 18
5.3 Default by Investment Limited Partner 20
ARTICLE VI - Rights, Powers and Duties of General Partners 21
6.1 Authorized Acts 21
6.2 Restrictions on Authority 22
6.3 Personal Services 23
6.4 Business Management and Control; Tax Matters Partner 24
6.5 Duties and Obligations 24
6.6 Representations and Warranties 26
6.7 Liability on the Mortgages 28
6.8 Indemnification of the General Partners 28
6.9 Indemnification of the Partnership and the Limited Partners 29
6.10 Operating Deficits 30
6.11 Obligation to Complete the Rehabilitation of the Apartment
Complex 30
6.12 Certain Payments to the General Partners and Others 32
6.13 Delegation of General Partner Authority 32
6.14 Assignment to Partnership 33
ARTICLE VII - Withdrawal of a General Partner; New General Partners 33
7.1 Withdrawal 33
7.2 Obligation to Continue 33
7.3 Withdrawal of All General Partners 34
7.4 Interest of General Partner After Permitted Withdrawal 34
ARTICLE VIII - Transferability of Limited Partner Interests 34
8.1 Assignments 34
8.2 Substituted Limited Partner 35
8.3 Restrictions 35
ARTICLE IX - Borrowings 36
ARTICLE X - Profits, Losses, Tax Credits, Distributions and
Capital Accounts 36
10.1 Profits, Losses and Tax Credits 36
10.2 Cash Distributions Prior to Dissolution 37
10.3 Distributions Upon Dissolution 38
10.4 Special Provisions 39
10.5 Authority of the General Partners to Vary Allocations to
Preserve and Protect the Partners' Intent 42
ARTICLE XI - Management Agent 42
ARTICLE XII - Books and Records, Accounting, Tax Elections, Etc. 44
12.1 Books and Records 44
12.2 Bank Accounts 44
12.3 Auditors 44
12.4 Cost Recovery and Elections 45
12.5 Special Basis Adjustments 45
12.6 Fiscal Year 45
12.7 Information to Partners 45
ARTICLE XIII - General Provisions 49
13.1 Restrictions by Reason of Section 708 of the Code 49
13.2 Amendments to Certificate 49
13.3 Notices 49
13.4 Word Meanings 49
13.5 Binding Effect 50
13.6 Applicable Law 50
13.7 Counterparts 50
13.8 Financing Regulations 50
13.9 Separability of Provisions 50
13.10 Paragraph Titles 50
13.11 Amendment Procedure 50
13.12 Extraordinary Limited Partner Expenses 50
13.13 Time of Admission 51
ARTICLE XIV - Certain Restrictions 51
14.1 City Requirements In General 51
14.2 LDA Requirements 51
14.3 Regulatory Requirements 52
14.4 HTF Requirements 52
ANGELOU ASSOCIATES, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Angelou Associates, L.P. (the "Partnership") was formed as a
New York limited partnership pursuant to a Limited Partnership
Agreement dated March 30, 1997 (the "Original Agreement") by and
among Angelou of Harlem, Inc. as general partner and Harlem
Congregations for Community Improvement, Inc. as the limited
partner (the "Original Limited Partner"). A Certificate of
Limited Partnership with respect thereto (the "Original
Certificate") was filed in the Filing Office on April 16, 1997.
Certain capitalized terms used herein shall have the respective
meanings specified in Article I.
In consideration of mutual agreements set forth herein, it
is agreed and certified, and the Original Agreement is hereby
amended and restated in its entirety, as follows:
ARTICLE I - Defined Terms
The defined terms used in this Agreement shall have the
meanings specified below:
Actual Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the Partnership
to the Investment Limited Partner for such year. The Actual
Credit shall be retroactively revised if the amount of Tax Credit
properly allocable to the Investment Limited Partner is revised
after audit or recaptured.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to Section
4.5(b) or Section 7.4.
Admission Date means the first date on which all parties
hereto shall have executed and delivered this Agreement.
Affiliate means (A) as to the Investment Limited Partner,
the Investment General Partner or Boston Capital, (i) such
Person; (ii) each member of the Immediate Family of such Person;
(iii) each legal representative, successor or assignee of any
Person referred to in the preceding clauses (i) or (ii);
(iv) each trustee of a trust for the benefit of any Person
referred to in the preceding clauses (i) or (ii); or (v) any
other Person (a) who directly or indirectly controls, is
controlled by, or is under common control with such Person, (b)
who is an officer of, director of, partner in or trustee of, or
serves in a similar capacity with respect to, such Person or of
which such Person is an officer, director, partner or trustee, or
with respect to which such Person serves in a similar capacity,
(c) who, directly or indirectly, is the beneficial owner of ten
per cent (10%) or more of any class of equity securities of such
Person or of which such Person is directly or indirectly the
owner of ten per cent (10%) or more of any class of equity
securities, (d) who is an officer, director, general partner,
trustee or holder of ten per cent (10%) or more of the voting
securities or beneficial interests of any Person referred to in
the foregoing clauses (v)(a), (v)(b) or (v)(c) or (e) who,
whatever his title, performs functions for such Person or any
Affiliate of such Person similar to a Chairman or member of the
Board of Directors, or executive officer such as the President,
Executive Vice President or Senior Vice President, Corporate
Secretary, or Treasurer, or any Person holding a five per cent
(5%) or more equity interest in such Person, or any Person having
the power to direct or cause the direction of such Person,
whether through the ownership of voting securities, by contract
or otherwise; and (B) as to any other named Person or Persons
(i) such Person; (ii) each member of the Immediate Family of such
Person; (iii) each legal representative, successor or assignee of
any Person referred to in the preceding clauses (i) or (ii);
(iv) each trustee of a trust for the benefit of any Person
referred to in the preceding clauses (i) or (ii); or (v) any
other Person (a) who directly or indirectly controls, is
controlled by, or is under common control with such Person, (b)
who owns or controls ten per cent (10%) or more of the
outstanding voting securities of such Person, (c) of which ten
per cent (10%) or more of the outstanding voting securities is
owned by such Person or any of the Persons referred to in the
foregoing clauses (i) through (iii), (d) who is an officer,
director, partner or trustee of such Person, or (e) for which
such Person acts in the capacity of officer, director, partner or
trustee. An Affiliate of the Investment Limited Partner or of
the Investment General Partner does not include a Person who is a
partner in a partnership or joint venture with the Investment
Limited Partner or any other Affiliate of the Investment Limited
Partner if such Person is not otherwise an Affiliate of the
Investment Limited Partner or the Investment General Partner.
For purposes of this definition, the term Affiliate shall not be
deemed to include any law firm (or member or associate thereof)
providing legal services to the Investment Limited Partner, the
Investment General Partner or any Affiliate of either of them.
Aggregate Cost means the sum of (i) the total Capital
Contributions made or anticipated to be made by the Investment
Limited Partner plus (ii) the proportionate amount of the
mortgage loans on, and other debts related to, the Apartment
Complex, which proportionate amount is equal to the Investment
Limited Partner's initial pro rata interest in the profits,
losses, and tax credits of the Partnership. The amount of the
Aggregate Cost determined upon payment of the last of the four
Installments of the Capital Contribution of the Investment
Limited Partner shall not thereafter be reduced.
Agreement means this Amended and Restated Agreement of
Limited Partnership, including Schedule A, as amended from time
to time.
Annual Partnership Management Fee means the fee payable to
the General Partners pursuant to the provisions of
Section 6.12(a).
Apartment Complex means the real property located at 516-520
Manhattan Avenue, New York, New York, as more fully described in
the Mortgages, together with (i) all buildings and other
improvements constructed or to be constructed thereon and
(ii) all furnishings, equipment and personal property covered by
the Mortgage.
Applicable Federal Rate means the "applicable federal rate"
as defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section
42(b) of the Code.
Asset Management Fee means the fee payable to BCCLP or an
Affiliate thereof pursuant to Section 6.12(c).
Auditors means Reznick, Fedder & Silverman, of Bethesda,
Maryland, or such other firm of independent certified public
accountants as may be engaged by the General Partners with the
consent of Boston Capital for the purposes of preparing the
Partnership income tax returns, auditing the books and records of
the Partnership and certifying financial reports of the
Partnership.
BCCLP means Boston Capital Communications Limited
Partnership, a Massachusetts limited partnership, and its
successors in interest.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, and its successors.
Capital Account has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a then
Partner shall include a Capital Contribution previously made by
any prior Partner for the Interest of such then Partner.
Capital Transaction means any transaction the proceeds of
which are not includable in determining Cash Flow, including,
without limitation, the sale or other disposition of all or
substantially all of the assets of the Partnership, but excluding
the payment of Capital Contributions.
Carryover Certification means the date upon which the
Investment Limited Partner shall have received, in a form and in
substance satisfactory to the Investment Limited Partner, the
certification of the Auditors that as of a date no later than
December 31, 1997, 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, 1999, 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 Flow means the profits or losses of the Partnership
from and after the Commencement Date subject to the following
adjustments:
(a) Cost recovery deductions of buildings,
improvements and personal property and amortization of any
financing fees shall not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining
profits and losses but which is not currently payable in
cash shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any Construction Mortgage or
Permanent Mortgage refinancing, any sale, exchange, eminent
domain taking, damage or destruction (whether insured or
uninsured), or other disposition, of all or any part of the
Apartment Complex (other than the proceeds of any business
or rental interruption insurance) shall not be included;
(g) Any rent or interest subsidy payments shall be
included;
(h) The fees set forth in Sections 6.12, any interest
on the Construction and Development Fee, and any fee payable
in connection with any transaction referred to in clause (f)
above shall not be deducted; and
(i) Prior to Permanent Mortgage Commencement, an
amount equal to the amount, if any, of net rental income
applied to complete the rehabilitation of the Apartment
Complex pursuant to Section 6.11(a) shall be deducted.
Certificate means the Original Certificate as amended from
time to time (including any amendment thereto effected by or in
connection with this Agreement).
Class Contribution means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the
General Partners, the Investment Limited Partner, the Special
Limited Partner or any Additional Limited Partner).
Code means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations (permanent and temporary)
issued thereunder. References herein to any Code section shall
include any successor provisions.
Commencement Date means the first day of the month in which
the Admission Date occurs.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size, type
and location of the Apartment Complex or other property.
Completion Date means the date upon which the Apartment
Complex has been substantially completed as evidenced by the
issuance by the inspecting architect and by each governmental
agency having jurisdiction of certificates of substantial
completion or occupancy (or local equivalents) with respect to
all 23 apartment units in the Apartment Complex.
Compliance Period means the fifteen (15)-year period
commencing with the first year of the Credit Period.
Consent of the Investment Limited Partner means the prior
written consent or approval of the Investment Limited Partner
(which shall not be unreasonably withheld).
Construction Contract means the construction contract for
the rehabilitation of the Apartment Complex between the
Partnership and the Contractor.
Contractor means Novalex/MDG J.V.
Contractor Payment Letter means a letter (or final lien
waiver) from the Contractor stating that the Partnership has
fully complied with the Construction Contract and all amounts
payable thereunder for the rehabilitation of the Apartment
Complex through substantial completion thereof have been paid in
full (other than standard punch list items and for retainage
contemplated by the Construction Contract).
Construction and Development Fee means the fee described in
Section 6.12(b).
Construction Lenders means the Construction First Lender and
the Construction Second Lender.
Construction First Lender means Chase Community Development
Corporation in its capacity as holder of the Construction First
Mortgage, or its successors or assigns in such capacity.
Construction First Mortgage means the financing for the
construction of the Apartment Complex provided by the
Construction First Lender in a principal amount of up to
$318,000.
Construction Mortgage Closings means the first date upon
which the Construction Mortgages shall have closed.
Construction Second Lender means HTFC, in its capacity as
holder of the Construction Second Mortgage, or its successors or
assigns in such capacity.
Construction Second Mortgage means the financing for the
construction of the Apartment Complex provided by the
Construction Second Lender in a principal amount of up to
$690,000.
Controlling Person has the meaning given to it in the
context of Section 15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited
Partner shall have received the written certification of the
Auditors, in a form and in substance reasonably satisfactory to
Boston Capital, as to the itemized amounts of the construction
and development costs of the Apartment Complex and the Eligible
Basis and Applicable Percentage pertaining to each building in
the Apartment Complex.
Credit Period has the meaning given to it in Section
42(f)(1) of the Code.
Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully
described in Section 5.1(f). Credit Recovery Loans and interest
thereon shall not be treated as loans or interest, respectively,
for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(1). For the purposes of Article X, the term
Credit Recovery Loan shall not include any portion of such an
advance which shall have theretofore been paid to the Investment
Limited Partner.
Credit Shortfall has the meaning given to it in
Section 5.1(f).
Deferred Development Fee has the meaning specified in
Section 6.12(b).
Disposition (including the forms Dispose and Disposing)
means, as to a Limited Partner, the assignment, sale, transfer,
exchange or other disposition of all or any part of its Interest.
Due Diligence Compliance means the full satisfaction, in the
judgment of the Investment Limited Partner in its sole
discretion, of the requirements, if any, made pursuant to the due
diligence letter from Boston Capital to the General Partners
provided to the General Partners prior to the Admission Date,
which requirements shall be satisfied on or prior to the due date
for the Second Installment.
Economic Risk of Loss has the meaning set forth in Treasury
Regulation Section 1.752-2.
Eligible Basis has the meaning given to it in Section 42(d)
of the Code.
Entity means any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust,
business trust, cooperative or association.
Estoppel Letters means estoppel letters from the Lenders
with respect to the absence of uncured defaults under the
Permanent Mortgages and in form and substance reasonably
satisfactory to the Investment Limited Partner in its sole
discretion.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a
court having jurisdiction in respect of such Person or in
respect of any Controlling Person of such Person in a case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or of any Controlling Person of such Person or for any
substantial part of such Person's property or of the
property of any Controlling Person of such Person, or the
issuance of an order for the winding-up or liquidation of
such Person's affairs or the affairs of any Controlling
Person of such Person and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60)
consecutive days, or
(ii) the commencement by such Person or by any
Controlling Person of such Person of a proceeding seeking
any decree, order or appointment referred to in clause (i),
the consent by such Person or by any Controlling Person of
such Person to any such decree, order or the appointment, or
taking of any action by such Person or by any Controlling
Person of such Person in furtherance of any of the
foregoing.
Filing Office means the New York State Department of State.
General Partners means the Persons designated as General
Partners in Schedule A and any Persons who become General
Partners as provided herein, in their capacities as general
partners of the Partnership. At any and all times where there is
only one General Partner, the term General Partners shall mean
such sole General Partner.
Hazardous Material has the collective meanings given to the
terms "hazardous material", "hazardous substances" and "hazardous
wastes" in the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601 et
seq., as amended, and to the term "radioactive materials" in the
context of the Atomic Energy Act, 28 U.S.C. Sec. 2344, and also
includes any meanings given to such terms in any similar state or
local statutes, ordinances, regulations or by-laws. In addition,
the term Hazardous Material also includes oil and any other
substance known to be hazardous.
HTFC means the Housing Trust Fund Corporation of the State.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
children-in-law and grandchildren-in-law.
Incentive Management Fee has the meaning specified in
Article XI E.
Initial 100% Occupancy Date means the first date upon which
not less than 100% of the 22 rental apartment units in the
Apartment Complex shall have been leased to and 90% of such units
shall have been 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.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be
entitled hereunder and the obligation of such Partner to comply
with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the Capital Contribution of the
Investment Limited Partner divided by 73% and (ii) as to any
other Partner, an amount equal to its Capital Contribution.
Investment General Partner means Boston Capital Associates
IV L.P., a Delaware limited partnership, in its capacity as the
general partner of the Investment Limited Partner, and any other
Person who may become a successor or additional general partner
of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit
Fund IV L.P., a Delaware limited partnership, specifically
Series 27 thereof, and any Person or Persons who replace it as
Substituted Limited Partner, but shall not include any Special
Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Agreement of
Limited Partnership of the Investment Limited Partner, as amended
from time to time.
Lender means any Construction Lender or Permanent Lender.
Limited Partners means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
Management Agent means the management and rental agent for
the Apartment Complex.
Management Agreement means the agreement between the
Partnership and the Management Agent providing for the management
of the Apartment Complex.
Management Fee means the Management Fee to which reference
is made in Article XI.A.
Master Lease means the master lease of the Apartment Complex
between the Partnership as lessor and a State cooperative
corporation as lessee to be entered into prior to Permanent
Mortgage Commencement and to be in form and substance
satisfactory to the Investment Limited Partner and its tax
counsel.
Minimum Set-Aside Test means the set aside test selected by
the Partnership pursuant to Section 42(g) of the Code whereby at
least 25% of the units in the Apartment Complex must be occupied
by individuals with incomes equal to 60% or less of area median
income, as adjusted for family size.
Mortgage means the mortgage indebtedness of the Partnership
to each Lender, including without limitation each Construction
Lender and Permanent Lender; where the context admits, Mortgage
shall mean and include the mortgage note evidencing such
indebtedness, the mortgage or deed of trust and security
agreement securing such indebtedness, the loan agreement,
regulatory agreement and all other documentation related thereto
which evidence and secure such indebtedness, including any Lender
documentation related thereto.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate has the meaning specified in the
Preliminary Statement.
Original Limited Partner has the meaning specified in the
Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability
(a) that is considered non-recourse under Treasury Regulation
Section 1.1001-2 or for which the creditor's right to repayment
is limited to one or more assets of the Partnership and (b) for
which any Partner or Related Person bears the Economic Risk of
Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of
partner nonrecourse debt minimum gain and the net increase or
decrease in partner nonrecourse debt minimum gain determined in a
manner consistent with Treasury Regulation Sections 1.704-2(d)
and 1.704-2(g)(3).
Partnership means the limited partnership continued pursuant
to this Agreement.
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction of such
liability, and by then aggregating the amounts so computed. Such
computations shall be made in a manner consistent with Treasury
Regulation Section 1.704-2(d).
Partnership Non-Recourse Liability means any Partnership
liability (or portion thereof) for which no Partner or Related
Person bears the Economic Risk of Loss.
Permanent First Mortgage means the mortgage loan to the
Partnership from Chase Community Development Corporation in the
amount of up to $318,000 to be obtained by the Partnership in
accordance with the Permanent First Mortgage Commitment.
Permanent First Mortgage Commitment means the commitment
from the Chase Community Development Corporation to the
Partnership dated September 9, 1997 relating to the Permanent
First Mortgage.
Permanent Lenders means HTFC and Chase Community Development
Corporation.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; and (b) the principal amount and maturity date
of the Permanent Mortgages shall have been finally determined.
Permanent Mortgage Commitments means, collectively, the
Permanent First Mortgage Commitment and the Permanent Second
Mortgage Commitment.
Permanent Mortgages means, collectively, the Permanent First
Mortgage and the Permanent Second Mortgage.
Permanent Second Mortgage means the mortgage loan to the
Partnership from HTFC in the amount of $690,000 pursuant to the
Permanent Second Mortgage Commitment.
Permanent Second Mortgage Commitment means the commitment of
HTFC to the Partnership dated August 12, 1996, as amended,
relating to the Permanent Second Mortgage.
Person means any individual or Entity.
Prime Rate means the rate of interest announced from time to
time by BankBoston as its Prime Rate from time to time. Upon
request from time to time by the General Partners and the
Investment Limited Partner will execute and deliver Uniform
Commercial Code Financing Statements with respect to the security
interests so granted.
Project Documents means and includes the Construction
Mortgage and the Permanent Mortgages, the Master Lease, the
Management Agreement, all other instruments delivered to (or
required by) the 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 $291,354 per annum for each of the
years 1999 through 2008; provided that upon the occurrence of any
of the events described in clauses (i), (ii) and (iii) of
Section 5.1(g) or in Section 5.1(h), the Projected Credit shall
thereafter be the Revised Projected Credit.
Prospectus means the prospectus contained in the
registration statement filed with the Securities and Exchange
Commission on behalf of the Investment Limited Partner for the
registration of beneficial assignee certificates and/or limited
partnership interests under the Securities Act of 1933, as
amended, in the final form in which said prospectus is filed with
said Commission and as thereafter amended and/or supplemented
from time to time pursuant to Rule 424 under said Act, or
otherwise.
Qualified Basis has the meaning given to it in Section 42(c)
of the Code.
Qualified Income Offset Item means (1) an allocation of loss
or deduction that, as of the end of each year, reasonably is
expected to be made (a) pursuant to Section 704(e)(2) of the Code
to a donee of an interest in the Partnership, (b) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership of
unrealized receivables or inventory items and (2) a distribution
that, as of the end of such year, reasonably is expected to be
made to a Partner to the extent it exceeds offsetting increases
to such Partner's Capital Account which reasonably are expected
to occur during or prior to the Partnership taxable year in which
such distribution reasonably is expected to occur.
Related Person means a Person related to a Partner within
the meaning of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42
of the Code whereby the gross rent charged to tenants of the low-
income units in the Apartment Complex may not exceed thirty per
cent (30%) of the qualifying income levels.
Rental Achievement means the first date on which, as
certified by the General Partners, there shall have previously
occurred a period of four consecutive full calendar months of
Partnership operations (all of which months occurring after the
later the Admission Date or Permanent Mortgage Commencement),
during each of which months (x) the Net Operating Income for
such month divided by (y) all debt service and other payments
required to be made on all Mortgages during such month
(regardless of any forbearance thereof) equaled or exceeded
115%. "Net Operating Income" for a period shall be the excess
of (a) the Revenues for such period, over (b) all of the
Partnership's expenses for such period on an accrual basis. For
purposes of the foregoing clause (b), expenses shall
(i) include, but not limited to, all operational costs and
expenses, adjusted to include a ratable portion of the annual
amount (as reasonably estimated by the General Partners) of
those seasonal expenses (such as utilities and maintenance
expenses) which might reasonably be expected to be incurred on
an unequal basis during a full annual period of operation,
(ii) include the funding of any reserves required by any Lender,
Agency and/or pursuant to the terms of this Agreement, (iii) be
adjusted, if necessary, so that the expenses of real estate
taxes and insurance are based on the General Partners'
reasonable estimate of the full assessed value and the full
replacement cost, respectively, of the Apartment Complex after
completion of construction, and (iv) exclude all Mortgage
payments referred to in clause (y) above, depreciation,
distributions of Cash Flow and Capital Transaction proceeds to
the Partners and the fees payable pursuant to this Agreement
other than the Asset Management Fee.
Rental Achievement Confirmation means the date upon which
each of the Limited Partners receives (a) a copy of the federal
income tax return of the Partnership and (b) the financial
reports to be provided pursuant to Section 12.7(a)(i), in each
case for the Partnership fiscal year in which Rental Achievement
shall have occurred, evidencing to the satisfaction of the
Special Limited Partner that Rental Achievement occurred in such
year.
Revised Projected Credit has the meaning given to it in
Section 5.1(g).
Schedule A means Schedule A to this Agreement, as amended
from time to time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a Delaware
corporation, and any Person who becomes a Special Limited Partner
as provided herein, in its capacity as a special limited partner
of the Partnership.
State means the State of New York.
State Designation means the date upon which the Partnership
receives the allocation by the authorized agency of the State of
Tax Credit for the building(s) constituting the Apartment Complex
in an annual dollar amount of not less than $291,646, as
evidenced by the execution by or on behalf of said agency of
Form(s) 8609.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted
to the Partnership as Limited Partner under Section 8.2 or
acquires the Interest of a Limited Partner pursuant to
Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman of
Bethesda, Maryland or such other firms of independent certified
public accountants as may be engaged by Boston Capital to review
the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant
to Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the
Partnership receives a reservation, effective for the year 1997,
the year the Apartment Complex is expected to receive an
allocation of Tax Credit, by the authorized agency of the State
of Tax Credit for the building(s) constituting the Apartment
Complex in an annual dollar amount of not less than $291,646,
which reservation shall not have expired or been revoked prior to
the date on which the First Installment is paid.
Uniform Act means the Revised Uniform Limited Partnership
Act as adopted by the State.
Vessel has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or involuntary
withdrawal or retirement from the Partnership for any reason,
including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this
Agreement. Withdrawal shall also mean the sale, assignment,
transfer or encumbrance by a General Partner of its interest as a
General Partner. A General Partner which is a corporation or
partnership shall be deemed to have sold, assigned, transferred
or encumbered its interest as a General Partner in the event (as
a result of one or more transactions) of any sale, assignment or
other transfer (but specifically excluding any transfer occurring
pursuant to the laws of descent and distribution) or encumbrance
of a controlling interest in a corporate General Partner or of a
general partner interest in a General Partner which is a
partnership. For purposes of this definition of Withdrawal,
"controlling interest" shall mean the power to direct the
management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise.
ARTICLE II - Name and Business
2.1 Name; Continuation
The name of the Partnership is Angelou Associates, L.P..
The Partners agree to continue the Partnership which was formed
pursuant to the provisions of the Uniform Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 2854
Frederick Douglass Boulevard, New York, New York 10039, at which
office there shall be maintained those records required by the
Uniform Act to be kept by the Partnership. The Partnership may
have such other or additional offices as the General Partners
shall deem desirable. The General Partners may at any time
change the location of the principal office and shall give due
notice thereof to the Limited Partners.
(b) The resident agent in the State for the Partnership for
service of process is as follows:
Angelou of Harlem, Inc.
2854 Frederick Douglass Boulevard
New York, NY 10039
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest
in, construct, rehabilitate, develop, improve, maintain, operate,
lease and otherwise deal with the Apartment Complex. The
Partnership shall operate the Apartment Complex in accordance
with any applicable Lender regulations and requirements. The
Partnership shall not engage in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect
until December 31, 2037, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially
all of the assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt,
insane or incompetent, (if a corporation or partnership) being
dissolved or liquidated, or voluntarily or involuntarily
withdrawing from the Partnership for any reason, including an
inability to continue serving as a General Partner by law or
pursuant to the terms of this Agreement, if (i) the remaining
General Partner(s), if any, shall fail to continue the business
of the Partnership and reconstitute the Partnership as a
successor limited partnership as provided in Section 7.2 and
(ii) the Investment Limited Partner shall fail to exercise the
right provided in Section 7.3;
(c) The election to dissolve the Partnership made in
writing by the General Partners with the Consent of the
Investment Limited Partner and the approval (if required);
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Uniform Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners
(or for purposes of this paragraph, their trustees, receivers or
successors) shall cause the cancellation of the Certificate,
liquidate the Partnership assets and apply and distribute the
proceeds thereof in accordance with Section 10.3. Notwithstanding
the foregoing, if, during liquidation, the General Partners shall
determine that an immediate sale of part or all of the
Partnership's assets would be impermissible, impractical or cause
undue loss to the Partners, the General Partners may defer
liquidation of, and withhold from distribution for a reasonable
time, any assets of the Partnership except those necessary to
satisfy Partnership debts and obligations (except the
Subordinated Loans).
ARTICLE III - Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly and
severally, are hereby authorized to incur personal liability for
the repayment of funds advanced by the Construction Lender (and
interest thereon) pursuant to the Construction Mortgage.
However, from and after Permanent Mortgage Commencement, neither
any General Partner nor any Related Person shall at any time
bear, nor shall the General Partners permit any other Partner or
any Related Person to bear, the Economic Risk of Loss for the
payment of any portion of any Mortgage.
B. The Partnership may decrease, increase or refinance the
Permanent Mortgage and may make any required transfer or
conveyance of Partnership assets for security or mortgage
purposes, provided, however, any such decrease, increase or
refinancing of any Permanent Mortgage may be made by the General
Partners only with the Consent of the Investment Limited Partner;
provided, however, that no Consent of the Investment Limited
Partner shall be required for the execution and delivery of the
Construction Mortgages and the Permanent Mortgages or the leasing
of apartments to tenants in the normal course of operations.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or substantially all the assets of the
Partnership (including pursuant to the Master Lease) only with
the Consent of the Investment Limited Partner.
D. The total compensation to all Persons for the sale of
the Apartment Complex shall be limited to a Competitive Real
Estate Commission, not to exceed six per cent (6%) of the
contract price for the sale of the Apartment Complex.
ARTICLE IV - Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as
set forth on Schedule A. No interest shall be paid on any
Capital Contribution. No Partner shall have the right to
withdraw its Capital Contribution or to demand and receive
property of the Partnership in return for its Capital
Contribution, except as may be specifically provided in this
Agreement or required by law.
(b) An individual Capital Account shall be established and
maintained on behalf of each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in
the Partnership. In accordance with Treasury Regulation
Section 1.704-1(b), the Capital Account of each Partner shall
consist of (i) the amount of cash such Partner has contributed to
the Partnership plus (ii) the fair market value of any property
such Partner has contributed to the Partnership net of any
liabilities assumed by the Partnership or to which such property
is subject plus (iii) the amount of profits or income (including
tax-exempt income) allocated to such Partner less (iv) the amount
of losses and deductions allocated to such Partner less (v) the
amount of all cash distributed to such Partner less (vi) the fair
market value of any property distributed to such Partner net of
any liabilities assumed by such Partner or to which such property
is subject less (vii) such Partner's share of any other
expenditures which are not deductible by the Partnership for
Federal income tax purposes or which are not allowable as
additions to the basis of Partnership property and shall be
(viii) subject to such other adjustments as may be required under
the Code. The Capital Account of a Partner shall not be affected
by any adjustments to basis made pursuant to Section 743 of the
Code but shall be adjusted with respect to adjustments to basis
made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as,
and shall replace, the Capital Account of the Partner which such
Substituted Partner succeeds, and, for the purposes of this
Agreement, such Substituted Partner shall be deemed to have made
the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term
"Substituted Partner," as used in this paragraph, shall mean a
Person who shall become entitled to receive a share of the
allocations and distributions of the Partnership by reason of
such Person succeeding to all or any part of the Interest of a
Partner by assignment of all or any part of a Partner's Interest.
To the extent a Substituted Partner receives less than 100% of
the Interest of a Partner he succeeds, the original Capital
Account of such transferee Substituted Partner and his Capital
Contribution shall be in proportion to the portion of the
transferor Partner's Interest prior to the transfer which the
transferee receives, and the Capital Account of the transferor
Partner who retains a portion of his former Interest and his
Capital Contribution shall continue, and not be replaced, in
proportion to the portion of the transferor Partner's Interest
prior to the transfer which the transferor Partner retains.
Nothing in this Section 4.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or
Article VIII.
4.2 General Partners
The name, address and Capital Contribution of each General
Partner are as set forth on Schedule A.
Further, in the event that the Deferred Development Fee has
not been paid in full by December 31, 2010, then the General
Partners will make an additional Capital Contribution on such
date in the amount of the unpaid amount of the Deferred
Development Fee and the Partnership shall immediately pay such
amount in full.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
The Original Limited Partner hereby withdraws as a limited
partner of the Partnership and acknowledges that it no longer has
any Interest in, or rights or claims against, the Partnership as
a Limited Partner as of the Admission Date. The Investment
Limited Partner and the Special Limited Partner are hereby
admitted to the Partnership as the sole Limited Partners in
substitution for the Original Limited Partner as of the Admission
Date and agree to be bound by the terms and provisions of the
Project Documents and this Agreement. The names and addresses of
the Investment Limited Partner and the Special Limited Partner
are as set forth on Schedule A. The General Partners shall have
no authority to admit additional Limited Partners without the
Consent of the Investment Limited Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, the Special Limited
Partner and any Person who becomes an Additional Limited Partner
shall be liable for any debts, liabilities, contracts or
obligations of the Partnership and shall only be liable to pay
their respective Capital Contributions as and when the same are
due hereunder and under the Uniform Act and any other amounts
which may be required to be paid under the Uniform Act.
4.5 Special Rights of the Investment Limited Partner and
the Special Limited Partner
(a) Notwithstanding any other provision herein, to the
extent the law of the State is not inconsistent, each of the
Investment Limited Partner and the Special Limited Partner shall
have the right, subject to the prior written consent each Lender
(if such consent is required) to:
(i) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of
such General Partner's obligations constituting fraud, bad
faith, gross negligence, willful misconduct or breach of
fiduciary duty, or (B) upon the occurrence of any of the
following: (1) such General Partner shall have violated any
material provisions of any Project Document or other
document required in connection with any Mortgage and such
violation shall have continued beyond any applicable grace
or cure period; (2) such General Partner shall have violated
any material provision of this Agreement, including, but not
limited to, any obligation to fund any Partnership expense
under Section 6.10, or such General Partner shall have
violated any provision of applicable law; (3) any Mortgage
shall have gone into default; or (4) such General Partner
shall have conducted its own affairs or the affairs of the
Partnership in such a manner as would (a) cause the
termination of the Partnership for Federal income tax
purpose or (b) cause the Partnership to be treated for
Federal income tax purposes as an association taxable as a
corporation;
(ii) continue the business of the Partnership with a
substitute General Partner; and
(iii) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any
further action by any Partner, the Special Limited Partner or its
designee shall automatically become a General Partner and acquire
in consideration of a cash payment of $100 out of the Interest of
the removed General Partner a one per cent (1%) interest in all
Partnership allocations and distributions or such greater portion
of the Interest of the removed General Partner as counsel to the
Investment Limited Partnership shall determine is the minimum
appropriate interest in order to assure the continued status of
the Partnership as a partnership under the Code and under the
Act, (ii) the remaining portion of the economic Interest of the
removed General Partner shall automatically be converted to an
equal economic Interest as an Additional Limited Partner, (iii)
the economic Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new
status of the Special Limited Partner or its designee as a
General Partner, and (iv) the new General Partner shall
automatically be irrevocably delegated all of the powers and
duties of the General Partners pursuant to Section 6.13. In
addition, upon removal, the Partnership must promptly pay to the
removed General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that notwithstanding
the language of Section 6.12, Article X, Article XI and any other
provision hereof, no removed General Partner or any Affiliate
thereof shall be entitled to receive any fee, compensation or
other remuneration from the Partnership, other than (i) the
above-described payment for the portion of the Interest of the
removed General Partner acquired by the new General Partner, and
(ii) any such fee, compensation or other remuneration which had
already been earned in full prior to the date of such removal.
The Partnership is not authorized to enter into any arrangement
whereby any fee, compensation or other remuneration could be
payable directly or indirectly to any General Partner or
Affiliate thereof in a manner inconsistent with the immediately
preceding sentence unless the prior written consent of the
Special Limited Partner shall have been obtained to such
particular arrangement. The Partnership may offset against any
payments to a General Partner removed under this Section 4.4 any
damages suffered by the Partnership as a result of any breach of
the obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a general partner for
any obligations of the Partnership incurred after the effective
date of its removal. 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 4.4 and to enable the
new General Partner to manage the business of the Partnership.
4.6 Meetings
The General Partners or Limited Partners holding more than
ten per cent (10%) of the then outstanding Limited Partner
Interests may call meetings of the Partnership for any matters
for which the Limited Partners may vote as set forth in this
Agreement. A list of the names and addresses of all Limited
Partners shall be maintained as part of the books and records of
the Partnership and shall be made available upon request to any
Limited Partner or his representative at his cost. Upon receipt
of a written request either in person or by certified mail
stating the purpose(s) of the meeting, the General Partners shall
provide all Limited Partners within ten (10) days after receipt
of said request, written notice (either in person or by certified
mail) of a meeting and the purpose of such meeting to be held on
a date not less then fifteen (15) nor more than sixty (60) days
after receipt of said request, at a time convenient to the
Limited Partners. All meetings shall be held at the principal
office of the Partnership.
ARTICLE V - Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of
$10 shall be paid in full in cash on the Admission Date. The
Investment Limited Partner's Capital Contribution shall be paid
in cash installments (the "Installments"), as follows:
(1) $1,515,042 (the "First Installment") on the later
of (i) the Admission Date, (ii) Construction Mortgage
Closing or (iii) receipt of Permanent Mortgage Commitments;
(2) $184,257 (the "Second Installment") on the later
of (i) the Completion Date, (ii) Cost Certification,
(iii) receipt by the Limited Partners of a copy of the
Partnership's owner's title insurance policy, as endorsed
through Permanent Mortgage Commencement, with such policy,
and endorsement in form and substance satisfactory to the
Special Limited Partner, (iv) receipt of the Contractor
Payment Letter and (v) receipt of the Lender Estoppel
Letters;
(3) $184,257 (the "Third Installment") on the latest
of (i) the Initial 100% Occupancy Date, (ii) State
Designation, (iii) Permanent Mortgage Commencement, (iv) an
opinion of counsel to the Partnership concerning the
Permanent Mortgage, including the non-recourse nature
thereof, satisfactory as to form, content and counsel to the
Special Limited Partner and (v) Rental Achievement; and
(4) $10,248 (the "Fourth Installment") on Rental
Achievement Confirmation;
provided, however, that the General Partners shall give the
Investment Limited Partner not less than ten (10) days' written
notice prior to the due date of each Installment subsequent to
the First Installment.
(b) The obligation of the Investment Limited Partner to pay
each Installment is conditioned upon delivery by the General
Partners to the Investment Limited Partner of a written
certificate (the "Payment Certificate") stating that as of the
date of such certificate (i) all the conditions to the payment of
such Installment have been satisfied and (ii) all representations
and warranties of the General Partners contained in this
Agreement are true and correct. Except as provided in the final
sentence of this Section 5.1(b), acceptance by the Partnership
of any Installment shall constitute a confirmation that, as of
the date of payment, all such conditions are satisfied and all
such representations and warranties are true and correct. The
obligation of the Investment Limited Partner to pay the First
Installment is also conditioned upon delivery by the General
Partners to the Investment Limited Partner of (i) a legal opinion
of independent counsel to the Partnership, which opinion must be
satisfactory to the Investment Limited Partner as to form,
content and identity of counsel and (ii) a photocopy of an
owner's title insurance policy, or an endorsement thereto, issued
to the Partnership with respect to the Apartment Complex with an
effective date on or after the Admission Date, in an insured
amount of not less than $2,901,803, from a title insurance
company reasonably satisfactory to the Investment Limited Partner
and evidencing the Partnership's ownership of the Apartment
Complex subject only to such exclusions, exceptions, conditions
and stipulations as shall be acceptable to the Investment Limited
Partner, in its sole discretion. In no event shall any
Installment become due until all of the conditions for all of the
Installments listed prior to the Installment in question in
Section 5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an
Installment becomes due and payable, the Partnership has an
"Operating Deficit" (expenses in excess of revenues which the
General Partners would be required to fund pursuant to Section
6.10), then the Investment Limited Partner may, at its option,
waive the requirement of the delivery of the Payment Certificate
or any other condition with respect to part or all of such
Installment and pay such part or all of such Installment,
provided that the proceeds of the amount so paid are used by the
Partnership to fully fund such Operating Deficit; provided,
however, that if the proceeds of such amount so paid are
designated in Section 6.12 or Section 10.2(c) to be used to pay
fee(s) or special distribution(s), then such proceeds shall be
utilized to pay such fee(s) or special distribution(s) and the
recipient(s) thereof shall be required to, and hereby agree to,
utilize the proceeds of such fee(s) or special distribution(s)
to fund such Operating Deficit, in which case the Investment
Limited Partner is hereby authorized to directly fund such
Operating Deficit, with the funds so applied being deemed to have
been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be
dated and delivered not less than ten (10) nor more than thirty
(30) days prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise
be due, any statement required to be made in the Payment
Certificate for such Installment cannot be truthfully made, the
General Partners shall notify the Investment Limited Partner of
the reason why such statement would be untrue if made, and the
Investment Limited Partner shall not be required to pay such
Installment; provided, however, that if (i) any such statement
can subsequently be truthfully made and (ii) the Investment
Limited Partner shall not have irrevocably lost, in the good
faith judgment of the Investment General Partner, any material
tax or other benefits hereunder, then the Investment Limited
Partner shall pay such Installment to the Partnership thirty (30)
days after delivery by the General Partners to the Investment
Limited Partner of the Payment Certificate together with an
explanation of the manner in which each such statement had become
true.
(e) If with respect to any year all or a portion of which
occurs during the 60-month period commencing on the later of (i)
the Admission Date or (ii) the date on which the first building
in the Apartment Complex is placed in service for the purposes of
Section 42 of the Code (a "Reduction Year") the Actual Credit is
or was less than the Projected Credit, then the General Partners
shall pay to the Investment Limited Partner the Reduction Amount.
The Reduction Amount shall be equal to the sum of (A) the excess
of the Projected Credit for such year over the Actual Credit for
such year multiplied by .867 plus (B) the amount of any
recapture, interest or penalty payable by the limited partners
and/or holders of beneficial assignee certificates of the
Investment Limited Partner as a result of such shortfall,
assuming that each limited partner and/or holder of a beneficial
assignee certificate in the Investment Limited Partner used all
of the Tax Credits allocated to him in the year of allocation and
that each such Person was subject to interest at the rate set
forth in Section 6621(a)(2) of the Code and to the penalty for
understatement of tax set forth in Section 6662(d) of the Code.
The Auditors shall make their determination of the amount of the
Actual Credit with respect to each Reduction Year within thirty
(30) days following the end of such year. The 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, at the option of the Investment Limited
Partner, either (i) first be applied to the Installment next due
to be paid by the Investment Limited Partner, with any portion of
such 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 Partners to the Investment Limited Partner promptly after
demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such
event or (ii) be paid in its entirety by the General Partners to
the Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event.
(f) In the event that, for any reason, at any time after
the end of the year during which there occurs the sixty (60)-
month anniversary of the later of (i) the Admission Date or (ii)
the date on which the first building in the Apartment Complex is
placed in service for the purposes of Section 42 of the Code, the
amount of the Actual Credit shall be less than the Projected
Credit with respect to any fiscal year of the Partnership (such
difference being hereinafter referred to as a "Credit
Shortfall"), the Investment Limited Partner shall be treated as
having made a constructive advance to the Partnership with
respect to such year (a "Credit Recovery Loan"), which shall be
deemed to have been made on January 1 of such year in an amount
equal to the sum of (i) the Credit Shortfall for such year plus
(ii) the amount of any recapture, interest or penalty payable by
the limited partners and/or the holders of beneficial assignee
certificates of the Investment Limited Partner as a result of the
Credit Shortfall for such year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the
Investment Partnership used all of the Tax Credits allocated to
him in the year of allocation and that each such Person was
subject to interest at the rate set forth in Section 6621(a)(2)
of the Code and to the penalty for understatement of tax set
forth in Section 6662(d) of the Code. Credit Recovery Loans
shall be deemed to bear simple (not compounded) interest from the
respective dates on which such principal advances shall have been
deemed to have been made under this Section 5.1(f) at 9% per
annum. Credit Recovery Loans shall be payable by the Partnership
as provided in Section 10.2(b), Clause Third.
(g) In the event that (i) State Designation does not occur
by December 31, 1999, or (ii) by December 31, 1999, the Limited
Partners shall not have received a written certification of the
Auditors in a form and in substance satisfactory for the purpose
of achieving Cost Certification and indicating that the product
of the Apartment Complex's Eligible Basis and its Applicable
Percentage is such that the Apartment Complex will be eligible to
receive Tax Credit in an annual amount of at least $291,646, or
(iii) at any time after the Completion Date the product of the
Apartment Complex's Eligible Basis and its Applicable Percentage
is determined by the Auditors, the Tax Accountants or the Service
to be such that the Apartment Complex will not be eligible to
receive Tax Credit in an annual dollar amount of at least
$291,646, then (a) the General Partners shall pay to the
Investment Limited Partner an amount equal to 99.9% of the
product of (A) difference between (I) $2,916,460 and (ii) the
total amount of Tax Credit allocated and available to the
Partnership and (B) .867 and (b) the Projected Credit for each
year shall thereafter be redefined to mean 99.9% of the total
amount of Tax Credit actually so allocated and available to the
Partnership for such year (the "Revised Projected Credit"). Any
amount payable by the General Partners to the Investment Limited
Partner pursuant to this Section 5.1(g) shall, at the option of
the Investment Limited Partner, either (i) be applied first to
the Installment, if any, next due to be paid by the Investment
Limited Partner, and any balance of such amount payable by the
General Partners in excess of the amount of such Installment
shall be applied to succeeding Installments, if any, provided
that if such amount payable by the General Partners exceeds the
sum of the remaining Installments, if any, then an amount equal
to the amount of such excess shall be paid by the General
Partners to the Investment Limited Partner promptly after demand
is made therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event, or
(ii) be paid in its entirety by the General Partners to the
Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event.
(h) If by December 31, 1999, State Designation has occurred
and the product of the Apartment Complex's Eligible Basis and its
Applicable Percentage is such that the Apartment Complex will be
eligible to receive Tax Credit in an annual amount of in excess
of $291,646, then the Investment Limited Partnership will make an
additional Capital Contribution payable at the time of the Fourth
Installment (the "Upward Adjustment Amount") so that the Ratio
(as hereinafter defined) remains at 65%; provided, however, that
the Upward Adjustment Amount shall not be in excess of $185,000;
and provided, further, that the Projected Credit for each year
thereafter shall be redefined to mean 99.9% of the total amount
of Tax Credit actually so allocated at State Designation. As
used herein, the term "Ratio" shall mean a fraction the numerator
of which is the agreed-to Capital Contributions of the Investment
Limited Partner and the denominator of which is the Tax Credit
expected to be allocated to the Investment Limited Partner for
the 10-year Tax Credit period.
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit
Benchmarks and Standards. If (i) all 23 apartment units in the
Apartment Complex shall not have been placed in service by
December 31, 1998 (or any later date fixed by the General
Partners with the Consent of Investment Limited Partner), or
(ii) by December 31, 1999 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) less
than 22 rental apartment units in the Apartment Complex shall
have been occupied by tenants meeting the terms of the Minimum
Set-Aside Test under executed leases which shall have received
any necessary Agency or Lender approvals at rental levels meeting
the requirements of the Rent Restriction Test, or (iii) Permanent
Mortgage Commencement shall not have occurred prior to
December 31, 1999 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner), or
(iv) State Designation shall not have occurred by December 31,
1999 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner) and by said date the
General Partners shall not have made any payment as described in
the last sentence of Section 5.1(g) or, if the Investment Limited
Partner shall have elected to have all or a portion of any
payment under Section 5.1(g) applied toward future Installment
obligations of the Investment Limited Partner, amendments to this
Agreement and, if applicable, to the Certificate shall not have
been adopted and, in the case of the Certificate, if applicable,
filed in the Filing Office, reflecting such event, or (v) the
Partnership shall fail to meet the Minimum Set-Aside Test or the
Rent Restriction Test by the close of the first year of the
Credit Period and/or fails to continue to meet either of those
Tests at any time during the sixty (60)-month period commencing
on such date, or (vi) prior to Permanent Mortgage Commencement,
(a) foreclosure proceedings shall have commenced under the
Construction Mortgage and such proceedings shall not have been
dismissed within thirty (30) days, (b) any of the commitments of
the Lenders to provide the Permanent Mortgages and/or any subsidy
financing shall be terminated or withdrawn and not reinstated or
replaced within sixty (60) days with terms equally or more
favorable to the Investment Limited Partner or terms for which
the Consent of the Investment Limited Partner and (if required)
the approval of the Lenders shall have been obtained, or (c) the
Construction Lender shall have irrevocably refused to make any
further advances under the Construction Mortgage and such
decision shall not have been reversed or the Construction Lender
replaced within thirty (30) days, or (vii) if by December 31,
1998 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner), the Investment
Limited Partner shall not have received, in form and substance
satisfactory to the Investment Limited Partner, the certification
of the Auditors that as of a date no later than December 31,
1997, 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, 1999, so that each building in the
Apartment Complex is a "qualified building" for the purposes of
Section 42(h)(1)(E)(ii) of the Code, or (viii) if at any time it
shall be determined by the Service or by the Tax Accountants that
as of December 31, 1997 the Partnership had not incurred
capitalizable costs with respect to the Apartment Complex of at
least ten per cent (10%) of the Partnership's reasonably expected
basis in the Apartment Complex as of December 31, 1999, or (ix)
if by December 31, 1999 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) Cost
Certification shall not have occurred, or (x) if by December 31,
2000 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner) Rental Achievement
shall not have been achieved, or (xi) if by December 31, 1997 (or
any later date fixed by the General Partners with the Consent of
the Investment Limited Partner) the Partnership shall not have
received from the duly authorized agency of the State a
"carryover allocation" of Tax Credit pursuant to Section
42(h)(1)(E) of the Code in an annual dollar amount of not less
than $291,646, or (xii) the General Partners fail to make the
advances necessary to fund payment of the Asset Management Fee
pursuant to Section 6.10 then the General Partners shall, within
five (5) days of the occurrence thereof, send to the Investment
Limited Partner and the Special Limited Partner notice of such
event and of the General Partners' obligation to repurchase the
Interests of the Investment Limited Partner and the Special
Limited Partner by paying to the Investment Limited Partner and
the Special Limited Partner an amount (the "Repurchase Amount")
equal to each such Partner's 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(a) in the event the
Investment Limited Partner and/or the Special Limited Partner
requires such a repurchase. If either the Special Limited
Partner or the Investment Limited Partner elects to require a
repurchase of its Interest and the payment to it of an amount
equal to its Repurchase Amount, it shall send notice thereof to
the Partnership within thirty (30) days after the mailing date of
the General Partners' notice, or at any time after the occurrence
of any of the foregoing if the General Partners shall not have
sent such a notice thereof, and the General Partners shall within
ten (10) days after the Partnership receives any such notice from
a Partner requesting the purchase of its Interest repurchase the
Interest of such Partner by paying to such Partner an amount
equal to its Repurchase Amount.
(b) Lender Disapproval. If any Lender shall disapprove, or
fail to give any required approval of, the Investment Limited
Partner and/or the Special Limited Partner as a Limited Partner
hereunder within one hundred eighty (180) days of the Admission
Date, then the Partner being disapproved or not approved shall,
effective as of such time or such later time as may be selected
by the Partner being disapproved or not approved (or such other
time as may be specified by the Lender in its disapproval), at
the option of the Partner being disapproved or not approved (if
not directed by the Lender to withdraw), cease to be a Limited
Partner. The General Partners shall, within 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 Partners shall indemnify and hold harmless such
Partner from any losses, damages, and liabilities to which such
Partner (as a result of its participation hereunder) may be
subject.
(d) Waiver of Repurchase Right. The Investment Limited
Partner shall have the right to irrevocably waive its right to
have its Interest repurchased pursuant to any clause or clauses
of Section 5.2(a), or any portion thereof, at any time during
which any of such rights shall be in effect. Such a waiver shall
be exercised by delivery to the General Partners of a written
notice stating that the rights being waived pursuant to any
specified clause or clauses of Section 5.2(a), or any specified
portion thereof, are thereby waived from that date forward.
(e) Additional General Partner. If the General Partners
shall fail to make on the due date therefor any payment required
under Section 5.2(a) or Section 5.2(b), time being of the
essence, at any time thereafter the Special Limited Partner shall
have the option, exercisable in its sole discretion, to cause
itself or its designee to be admitted as an additional General
Partner, receiving from the pre-existing General Partners,
proportionally out of their Interests, in consideration of $10, a
one per cent (1%) interest in the 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 not being affected
thereby. Upon any such admission of the Special Limited Partner
or its designee as an additional General Partner, each of the
other General Partners hereby agrees that all of its rights and
powers hereunder as a General Partner shall automatically be
irrevocably delegated to the Special Limited Partner pursuant to
Section 6.13 without the necessity of any further action by any
Partner. Each Partner hereby grants to the Special Limited
Partner an irrevocable (to the extent permitted by applicable
law) power of attorney coupled with an interest to take any
action and to execute, deliver and file or record any and all
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 against any and all losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained
in connection with its capacity as a General Partner.
5.3 Default by Investment Limited Partner
(a) In the event that the Investment Limited Partner shall
fail to pay any Installment which shall become due to the
Partnership and such failure shall continue for 21 days (or such
additional time as may be provided pursuant to Section 5.06(b))
following the receipt of written notice of such failure from the
General Partners to the Investment Limited Partner (the "Cure
Period"), then the Investment Limited Partner shall be in default
hereunder (a "Default") and the Partnership shall be entitled to
exercise all remedies at law and in equity, including without
limitation exercise of its rights as a secured creditor as
referred to below. Interest on any amounts in default shall
accrue from and after the Default at the Prime Rate, plus 4% per
annum.
(b) In the event the Investment Limited Partner shall
dispute the claim by the General Partners that a particular
Installment is currently due and payable, it may send notice to
such effect to the General Partners stating the basis for its
dispute and offering to submit such dispute to arbitration as
provided in subparagraph (c). The Cure Period referred to in
subparagraph (a) above shall be suspended by the sending of such
notice and (i) shall recommence at the point of suspension (i.e.,
beginning with the number of days elapsed when such suspension
occurred) upon delivery to the Investment Limited Partner of the
arbitrator's final determination (if adverse to the Investment
Limited Partner) as provided in subparagraph (c) below or
(ii) shall being anew (i.e., a new 21-day Cure Period shall begin
to run) upon receipt by the Investment Partnership of notice from
the General Partners to the effect that the General Partners have
eliminated the cause for the dispute and that the Installment in
question is now due and payable.
(c) In the event the Investment Limited Partner elects to
arbitrate a dispute relating to the payment of an Installment
hereunder, such matter shall be submitted to arbitration in the
manner provided under the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Such
arbitration shall be conducted in Boston, Massachusetts, before a
single arbitrator chosen in accordance with such rules and shall
be binding on all parties to the dispute. Judgment on the award
of such arbitrator may be rendered by any court having
jurisdiction of such parties on the subject matter. All
reasonable out-of-pocket costs and expenses of arbitration shall
be borne by the losing party thereto unless the arbitrator shall
expressly determine that a different allocation of such cost is
equitable under the circumstances.
(d) The Investment Limited Partner hereby grants a security
interest to the Partnership in the Interest of the Investment
Limited Partner hereunder to secure the obligation of the
Investment Limited Partner to pay all Installments of its Capital
Contribution to the Partnership under this Agreement. Upon
request from time to time from the General Partners, the
Investment Limited Partner will deliver Uniform Commercial Code
Financing Statements with respect to the security interest so
granted.
(e) This Section 5.3 shall be void and of no further force
or effect from and after the date upon which the Partnership
receives the Fourth Installment of the Capital Contribution of
the Investment Limited Partner.
ARTICLE VI - Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions
of this Agreement, the General Partners for, in the name and on
behalf of the Partnership, are hereby authorized to do the
following in furtherance of the purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or
otherwise any real or personal property;
(2) To construct, rehabilitate, operate, maintain,
finance and improve, and to own, sell, convey, assign,
mortgage or lease any real estate and any personal property;
(3) To borrow money and issue evidences of
indebtedness and to secure the same by mortgage, pledge or
other lien on the Apartment Complex or any other assets of
the Partnership;
(4) To execute the Construction and Permanent
Mortgages, the Master Lease, the other Project Documents and
all such other documents as the General Partners deem
necessary or appropriate in connection with the acquisition,
development and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify
the Construction and Permanent Mortgages or any other
financing affecting the Apartment Complex;
(6) To employ the Management Agent (which may be an
Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To employ their respective Affiliates to perform
services for, or sell goods to, the Partnership;
(8) To execute contracts with, the State or any
subdivision or agency thereof or any other government agency
to make apartments or tenants in the Apartment Complex
eligible for any public-subsidy program;
(9) To execute leases of some or all of the dwelling
units or cause the Master Lease lessee to enter into
subleases;
(10) to employ 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
(11) To enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and documents which may be required under the
laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement,
the General Partners shall have no authority to perform any act
in violation of applicable law or government regulations,
requirements of any Lender, or the Project Documents. In the
event of any conflict between the terms of this Agreement and any
applicable government regulations or requirements of any Lender,
the terms of such regulations or requirements shall govern.
Neither shall the General Partners have any authority to do any
of the following acts without the Consent of the Investment
Limited Partner and the prior written consent of the Special
Limited Partner:
(1) To have borrowings in excess of $10,000 in the
aggregate at any one time outstanding on the general credit
of the Partnership, except borrowings constituting
Subordinated Loans or the Working Capital Loan;
(2) To borrow from the Partnership or commingle
Partnership funds with funds of any other Person;
(3) Following the Completion Date, to construct any
new or replacement capital improvements on the Apartment
Complex which substantially alter the Apartment Complex or
its use or which are at a cost in excess of $20,000 in a
single Partnership fiscal year, except (a) replacements and
remodeling in the ordinary course of business or under
emergency conditions, (b) construction paid for from
insurance proceeds or (c) to the extent payable out of
reserves established and maintained in accordance with this
Agreement;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) Following Permanent Mortgage Commencement, to
increase, decrease (except through the amortization schedule
provided for in the Permanent Mortgages), modify the terms
of or refinance any Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements
of the Minimum Set-Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership, except any transfer made or contemplated by the
Master Lease or pursuant to any right of first refusal or
similar right of the General Partners or their Affiliates;
(8) To cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect
to the Partnership under the federal bankruptcy laws, as now
or hereafter constituted, or under any other federal or
state bankruptcy, insolvency or similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the
Partnership or for any substantial part of the Partnership's
business or property, or to cause the Partnership to consent
to any such decree, relief, order or appointment initiated
by any Person other than the Partnership; or
(9) To do any act required to be approved or ratified by
all limited partners under the Uniform Act.
(b) In the event that any General Partner violates any
provision of Section 6.2(a), the Special Limited Partner, in its
sole discretion, may cause itself or its designee to be admitted
as an additional General Partner without any further action by
any other Partner. Upon any such admission of an additional
General Partner, each pre-existing General Partner shall be
deemed to have assigned proportionally to the additional General
Partner, automatically and without further action, such portion
of its General Partner interest so that the additional General
Partner shall receive not less than a 0.1% interest in the
profits, losses, tax credits and distributions of the Partnership
in consideration of $1.00 and any other consideration which may
be agreed upon. An additional General Partner so admitted shall
automatically become the Managing General Partner and be
irrevocably delegated all of the power and authority of all of
the General Partners pursuant to Section 6.13. Any such
additional General Partner shall have the right to withdraw as a
General Partner at any time, leaving the pre-existing General
Partners once again as the only General Partners, the provisions
of Article VII 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 the Certificate and this Agreement and to do
anything else which, in the view of the Special Limited Partner,
may be necessary or appropriate to accomplish the purposes of
this Section 6.2(b) or to enable any additional General Partner
admitted pursuant to this Section 6.2(b) to manage the business
of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional General
Partner from and against any and all losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with its capacity as a General
Partner.
(c) Neither the Investment General Partner nor any
Affiliate thereof shall be given an exclusive right to sell, or
exclusive employment to sell, the Apartment Complex.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any
salary or other direct or indirect compensation for any services
or goods provided in connection with the Partnership or the
Apartment Complex, except as may be specifically provided in
Section 6.12 and Article XI or as to which the prior written
consent of the Special Limited Partner shall have been obtained
to the precise terms thereof prior to the commencement of such
services or the provision of such goods. Any Partner may engage
independently or with others in other business ventures of every
nature and description including the ownership, operation,
management, syndication and development of competing real estate;
neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or
profits derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General
Partners shall have the exclusive right to control the business
of the Partnership. No Limited Partner shall have the right to
take part in the management or control of the business of the
Partnership or to transact any business in the name of the
Partnership. No provision of this Agreement which makes the
Consent of the Investment Limited Partner a condition for the
effectiveness of an action taken by the General Partners is
intended, and no such provision shall be construed, to give the
Investment Limited Partner any participation in the control of
the Partnership business. Each of the Special Limited Partner
and the Investment Limited Partner hereby consents to the
exercise by the General Partners of the powers conferred on them
by law and this Agreement, and the General Partners agree to
exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement.
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. All Partners
hereby agree that Angelou of Harlem, Inc. shall serve as the "Tax
Matters Partner." In the case of litigation, the Tax Matters
Partner is required to file suit in the United States Tax Court
unless the Consent of the Investment Limited Partner is obtained
to file suit in the United States Claims Court or the United
States District Court. Nothing herein shall be construed to
restrict the Partnership from engaging the Auditors to assist the
Tax Matters Partner in discharging its duties hereunder.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the
Partnership to the best of their ability, shall use their best
efforts to carry out the purpose of the Partnership, and shall
devote to the Partnership such time as may be necessary for the
proper performance of their duties and the business of the
Partnership. The General Partners shall promptly take all action
which may be necessary or appropriate for the proper development,
maintenance and operation of the Apartment Complex in accordance
with the provisions of this Agreement, the Project Documents and
applicable laws and regulations, including, without limitation,
funding the Construction and Development Fee to the extent
Capital Contributions are insufficient. The General Partners are
responsible for the management and operation of the Partnership,
including the oversight of the rent-up and operational stages of
the Apartment Complex.
(b) The General Partners shall use their best efforts to
cause the Partnership to generate Cash Flow for distribution to
the Partners at the maximum realizable level in view of (i) any
applicable regulations, (ii) the Minimum Set-Aside Test and
(iii) the Rent Restriction Test, and, if necessary, the General
Partners shall also use their best efforts to obtain approvals
and implementation of appropriate adjustments in the rental
schedule of the Apartment Complex.
(c) The General Partners shall cause the Partnership to
obtain and keep in force, during the term of the Partnership,
comprehensive casualty insurance, including, but not limited to,
fire and other risks generally included under "extended coverage"
policies, workmen's compensation and public liability insurance
in favor of the Partnership (i) with such companies and in such
amounts as shall be customary for apartment complexes similar to
the Apartment Complex, and (ii) in amounts which shall be (A) no
less than those amounts which are customary in the area for
apartment complexes such as the Apartment Complex, (B) no less
than such amounts as may be reasonably requested by the
Investment Limited Partner and/or the Special Limited Partner
from time to time, and (C) in any event, sufficient to prevent
the Partnership from becoming a co-insurer under any such
policies. No deductibles on such policies may exceed $1,000.
The public liability insurance in favor of the Partnership shall
be in an amount not less than $1,000,000. Through the Completion
Date, or such later date as may be required by the Construction
Lender, the General Partners shall also cause the Partnership to
obtain and keep in force a builder's risk policy in favor of the
Partnership in an amount not less than the greater of (i) the
full replacement value of the Apartment Complex (excluding the
value of the underlying land, the site utilities and the
foundations) or (ii) such other amount as shall be required by
the Construction Lender. Throughout the term of the Partnership,
the General Partners shall provide copies of all such policies
(or binders) to the Investment Limited Partner promptly after
their receipt thereof. Upon the request of the Investment
Limited Partner to the General Partners, the General Partners
shall cause the applicable insurer to name the Investment Limited
Partner as an "additional insured" on each Partnership insurance
policy.
(d) The obligations of the General Partners hereunder shall
be the joint and several obligations of each General Partner.
Except as otherwise provided in Sections 4.5(b) and 7.1, such
obligations shall survive any Withdrawal of a General Partner
from the Partnership.
(e) The General Partners shall establish and maintain
reasonable reserves to provide for working capital needs,
improvements, replacements and any other contingencies of the
Partnership.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be admitted if
he, she or it has not first agreed to be bound by this Agreement
(and assume the obligations of a General Partner hereunder) and
by the Project Documents to the same extent and under the same
terms as the other General Partners.
(g) The General Partners shall take all actions necessary
to ensure that the Investment Limited Partner receives the full
amount of the Projected Credit, including, without limitation,
the rental of apartments to appropriate tenants and the filing of
annual certifications as may be required. In this regard, the
General Partners shall, inter alia, cause (i) the Partnership to
satisfy all requirements imposed from time to time under the Code
with respect to rental levels and occupancy by qualified tenants
by the close of the first year of the Credit Period and
throughout the Compliance Period so as to permit the Partnership
to be entitled to the maximum available Tax Credit, (ii) the
Partnership to comply with all State Tax Credit monitoring
procedures, (iii) all dwelling units in the Apartment Complex to
be leased for periods of not less than six months to persons
satisfying the Rent Restriction Test, (iv) the Partnership to
make all appropriate Tax Credit elections in a timely fashion,
and (v) all rental units in the Apartment Complex to be of equal
quality with comparable amenities available to low-income tenants
on a comparable basis without separate fees.
(h) On or before the Admission Date, the General Partners
shall provide to the Investment Limited Partner an appraisal of
the Apartment Complex prepared by a competent independent
appraiser, setting forth estimates with respect to construction
and mortgage financing costs and initial rental income and
operating expense figures for the Apartment Complex.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations pertaining
thereto) or dispose of any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a
General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor
indirectly transport or arrange for the transport of any
Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any
General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or
from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, any Affiliate of a
General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General Partner's
receipt of any notice to such effect from any Federal, state, or
other governmental authority; and (z) upon any General Partner's
obtaining knowledge of any incurrence of any expense or loss by
any such governmental authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for
which expense or loss a lien may be imposed on the Apartment
Complex.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment
Limited Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited
partnership validly existing and in good standing under the
laws of the State and has complied with all filing
requirements necessary for its existence and to preserve the
limited liability of the Investment Limited Partner and the
Special Limited Partner.
(2) No event or proceeding has occurred or is pending
or threatened which would (a) materially adversely affect
the Partnership or its properties, or (b) materially
adversely affect the ability of the General Partners or any
of their Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the
Apartment Complex, other than legal proceedings which have
been bonded against without recourse to Partnership assets
in such manner as to stay the effect of the proceedings or
otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation,
the following: (x) legal actions or proceedings before any
court, commission, administrative body or other governmental
authority having jurisdiction over the zoning applicable to
the Apartment Complex; (y) labor disputes; and (z) acts of
any governmental authority.
(3) No default (or event which, with the giving of
notice or the passage of time or both, would constitute a
default) has occurred and is continuing under this Agreement
or under any material provision of the Project Documents,
and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic
Risk of Loss with respect to the Permanent Mortgage. No
General Partner has, either on its own behalf or on behalf
of the Partnership, incurred any financial responsibility
with respect to the Partnership prior to the Admission Date,
other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex will be or has been
rehabilitated in a timely manner in conformity with the
Project Documents. There is no violation by the Partnership
or the General Partners of any zoning, environmental or
similar regulation applicable to the Apartment Complex which
could have a material adverse effect thereon, and the
Partnership has complied with all applicable municipal and
other laws, ordinances and regulations relating to such
construction and use of the Apartment Complex. All
appropriate public utilities, including, but not limited to,
water, electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will
be available and operating properly for each unit in the
Apartment Complex at the time of the first occupancy of such
unit.
(6) The Partnership owns good and marketable fee
simple title to the Apartment Complex, subject to no
material liens, charges or encumbrances other than those
which (a) are both permitted by the Project Documents and
are noted or excepted in a title insurance policy in the
amount of $2,901,803 issued by First American Title
Insurance Company of New York to the Partnership, and in
form and substance satisfactory to the Investment Limited
Partner, and (b) do not materially interfere with use of the
Apartment Complex (or any part thereof) for its intended
purpose or have a material adverse effect on the value of
the Apartment Complex.
(7) The execution and delivery of all instruments and
the performance of all acts heretofore or hereafter made or
taken pertaining to the Partnership or the Apartment Complex
by each Affiliate of a General Partner which is a
corporation have been or will be duly authorized by all
necessary corporate or other action, and the consummation of
any such transactions with or on behalf of the Partnership
will not constitute a breach or violation of, or a default
under, the charter or by-laws of such Affiliate or any
agreement by which such Affiliate or any of its properties
is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") has been duly organized, is validly existing
and in good standing under the laws of its state of
incorporation and has all requisite corporate power to be a
General Partner and to perform its duties and obligations as
contemplated by this Agreement and the Project Documents.
Neither the execution and delivery by any Corporation of
this Agreement nor the performance of any of the actions of
any Corporation contemplated hereby has constituted or will
constitute a violation of (a) the articles of organization
or by-laws of such Corporation, (b) any agreement by which
such Corporation is bound or to which any of its property or
assets is subject, or (c) any law, administrative regulation
or court decree.
(9) No Event of Bankruptcy has occurred with respect
to any General Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of the Project Documents,
including, but not necessarily limited to, any account for
replacement reserves, are currently funded to the levels
required by any Lender.
(11) All payments and expenses required to be made or
incurred in order to complete construction of the Apartment
Complex in conformity with the Project Documents, to fund
any reserves hereunder or under any other Project Document
required to be funded at or prior to the later of the
Admission Date or Permanent Mortgage Commencement, to
satisfy all requirements under the Project Documents and/or
which form the basis for determining the principal sum of
the Permanent Mortgage and to pay the Construction and
Development Fee have been or will be paid or provided for
utilizing only (a) the funds available from the Construction
Mortgage, (b) the Capital Contribution of the Investment
Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as
of the Admission Date, (d) the available net rental income,
if any, earned by the Partnership prior to Permanent
Mortgage Commencement (to the extent that it is permitted to
be used for such purposes by the Lenders), (e) any insurance
proceeds and (f) any funds furnished by the General Partners
pursuant to Sections 6.5(a) and 6.11(a).
(12) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited
Partner is $288,730 per annum for each of the years 1999
through 2008 (inclusive); provided, however, that the
General Partners shall have no liability to the Investment
Limited Partner or Special Limited Partner for any breach of
the representation contained in this subparagraph (12) if
the adjuster provisions in Section 5.1 have become operative
and all required payments or adjustments have been made
thereunder in accordance with the terms thereof.
(13) The Apartment Complex is being developed in a
manner which satisfies and shall continue to satisfy all
restrictions, including tenant income and rent restrictions,
applicable to projects generating Tax Credits.
(14) 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.
(15) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on,
transported, or disposed of on the land comprising the
Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance with
all laws, ordinances, and regulations pertaining thereto.
(16) The General Partners have fulfilled and will
continue to fulfill all of their duties and obligations
under Section 6.5.
6.7 Liability on the Mortgages
Neither any General Partner nor any Related Person shall at
any time bear the Economic Risk of Loss for the payment of any
portion of any Mortgage, and the General Partners shall not
permit any other Partner or any Related Person to bear the
Economic Risk of Loss for the payment of any portion of any
Mortgage, except as may be expressly permitted with respect to
the Construction Mortgage pursuant to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any
loss suffered by the Partnership which arises out of any action
or inaction of any General Partner or Affiliate thereof if such
General Partner or Affiliate thereof in good faith determined
that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute gross
negligence or willful misconduct of such General Partner or
Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership, provided
that all of the following conditions are met: (i) such General
Partner has determined, in good faith, that the course of conduct
which caused the loss, judgment, liability, expense or amount
paid in settlement was in the best interests of the Partnership;
and (ii) such loss, judgment, liability, expense or amount paid
in settlement was not the result of negligence or misconduct on
the part of such General Partner or Affiliate thereof; and
(iii) such indemnification or agreement to hold harmless is
recoverable only out of the assets of the Partnership, and not
from the Limited Partners.
(c) Notwithstanding the above, no General Partner or any
Affiliate thereof performing services for the Partnership or any
broker-dealer shall be indemnified for any losses, liabilities or
expenses arising from or out of an alleged violation of Federal
or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving securities
laws violations as to the particular indemnitee and the court
approves the indemnification of such litigation costs, (ii) such
claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee
and the court approves the indemnification of such litigation
costs or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and the
court finds that indemnification of the settlement and related
costs should be made. In any claim for indemnification for
Federal or state securities law violations, the party seeking
indemnification shall, prior to seeking court approval for such
indemnification, place before the court the positions of the
Securities and Exchange Commission, the Massachusetts Securities
Division, the Missouri Securities Commission, the Tennessee
Securities Division, and any other applicable state securities
administrator with respect to the issue of indemnification for
securities law violations.
(d) The Partnership shall not incur the cost of the portion
of any insurance, other than public liability insurance, which
insures any party against any liability as to which such party is
herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves activity
in which such Affiliates acted in the capacity of a General
Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on behalf
of the Partnership who (i) directly or indirectly controls, is
controlled by or is under common control with a General Partner;
(ii) owns or controls ten per cent (10%) or more of the
outstanding voting securities of a General Partner; (iii) is an
officer, director, partner or trustee of a General Partner; or
(iv) if a General Partner is an officer, director, partner or
trustee, is any company for which such General Partner acts in
any such capacity.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partners will indemnify and hold the
Partnership and the Limited Partners harmless from and against
any and all losses, damages and liabilities which the Partnership
or any Limited Partner may incur by reason of the (a) past,
present or future actions or omissions of the General Partners or
any of their Affiliates, or (b) any liabilities to which either
the Partnership or the Apartment Complex is subject; provided,
however, that the foregoing indemnification shall not apply to
(i) any Mortgage or (ii) necessary contractual obligations
incurred pursuant to Lender requirements in connection with the
operation of the Apartment Complex in the ordinary course of
business.
(b) Notwithstanding the foregoing, no General Partner shall
be liable to a Limited Partner or the Partnership for any act or
omission for which the Partnership is required to indemnify such
General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold
the Limited Partners harmless from and against any claim brought
or threatened against any Limited Partner or loss (as well as
from any and all reasonable attorneys' fees and expenses incurred
in connection with any such claim or loss) on account of the
presence of any Hazardous Material at the Apartment Complex. Any
claim or loss described in the immediately preceding sentence may
be defended, compromised, settled, or pursued by the Limited
Partners with counsel of the Limited Partners' selection, but at
the expense of General Partners. Notwithstanding anything else
set forth herein, this indemnification shall survive the
withdrawal of any General Partner and/or the termination of this
Agreement.
6.10 Operating Deficits
Subject to the prior written consent of Lender (if such
consent shall be required under applicable Lender regulations),
the General Partners shall be obligated from Permanent Mortgage
Commencement to promptly advance funds to meet operating expenses
(including full payment of the Asset Management Fee) and debt
service of the Partnership which exceed operating income
available for the payment thereof. Such obligation shall
continue for a period of 36 months. Further, any provisions of
Section 6.11(a) to the contrary notwithstanding, advances made by
the General Partners prior to Permanent Mortgage Commencement to
establish escrows for water or sewer expenses or otherwise to be
applied on or after Permanent Mortgage Commencement to the
payment of operating expenses of the Partnership shall be deemed
advances under this Section 6.10 to be evidenced by Subordinated
Loans as hereinafter provided. In the event that the General
Partners shall fail to make any such advance as aforesaid, (a)
the Partnership shall utilize amounts (the "Applied Amounts")
otherwise payable to the General Partners or Affiliates thereof
under Section 6.12 and/or Article X to meet the obligations of
the General Partners pursuant to this Section 6.10, with such
utilization of Applied Amounts constituting payment and
satisfaction of the corresponding amounts payable to the General
Partners or Affiliates thereof under Section 6.12 and/or Article
X, with the proceeds thereof being applied to such obligations,
and with the obligation of the Partnership to make such payments
to the General Partners or Affiliates thereof pursuant to Section
6.12 and/or Article X being deemed satisfied to the extent
thereof and (b) the Special Limited Partner shall have the
option, exercisable in its sole discretion, to cause it or one or
more of its designees to be admitted to the Partnership as
additional General Partner(s). An additional General Partner so
admitted shall automatically, without the need for any further
action by any Partner, become the Managing General Partner and be
delegated all of the power and authority of all of the General
Partners pursuant to Section 6.13, and each Partner hereby grants
to any such additional General Partner a power of attorney,
coupled with an interest and irrevocable to the extent permitted
by law, to execute and deliver any and all instruments and
documents which it believes to be necessary or appropriate in
order to accomplish the purposes of this Section 6.10 and to
manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General
Partner of any of its economic obligations hereunder, and each
other General Partner shall fully indemnify and hold harmless
each additional General Partner from and against any and all
losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner. For the purpose of this
Section 6.10, all expenses shall be paid on a sixty (60)-day
current basis. Moreover, the General Partners may in their sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in
order to facilitate the Partnership's compliance with the Rent
Restriction Test. All advances pursuant to this Section 6.10
(including any Applied Amounts) shall be Subordinated Loans
repayable without interest in accordance with the provisions of
Article X. The form and provisions of all Subordinated Loans
shall conform to applicable rules and regulations.
6.11 Obligation to Complete the Rehabilitation of the
Apartment Complex
(a) The General Partners shall complete the rehabilitation
of the Apartment Complex substantially in accordance with the
plans and specifications approved by the Lenders and all
requirements necessary to obtain the required certificates of
occupancy for dwelling units, or cause the same to be completed,
in a good and workmanlike manner, free and clear of all
mechanics', materialmen's or similar liens, and shall equip the
Apartment Complex or cause the same to be equipped with all
necessary and appropriate fixtures, equipment and articles of
personal property, including refrigerators and ranges, and shall
cause all necessary certificates of occupancy for all apartment
units in the Apartment Complex to be obtained, all in accordance
with the Project Documents. If the proceeds of the Construction
and Permanent Mortgages, the net rental income, if any, of the
Apartment Complex generated prior to the later of Permanent
Mortgage Commencement or the Admission Date and which is
permitted by the Lenders to be utilized for any of the purposes
hereinafter set forth, the Capital Contribution of the Investment
Limited Partner, the Capital Contributions of the General
Partners in the amounts set forth on Schedule A as of the
Admission Date, and any insurance proceeds arising out of
casualties prior to the later of Permanent Mortgage Commencement
or the Admission Date as available from time to time are
insufficient to (i) acquire and complete the construction of the
Apartment Complex and satisfy all other obligations, all as
provided in the first sentence of this Section 6.11(a), (ii) pay
the Construction and Development Fee (other than the Deferred
Development Fee), (iii) arrive at Permanent Mortgage Commencement
in conformity with the Project Documents, (iv) discharge all
Partnership liabilities and obligations arising out of any
casualty giving rise to any such insurance proceeds, and (v)
provide for all other payments and expenses required to be made
or incurred through the later of Permanent Mortgage Commencement
or the Admission Date, including the funding of any reserves
required hereunder or under any other Project Document and the
repayment in full of all obligations under the Construction
Mortgage, the General Partners shall be responsible for and
obligated to pay such deficiencies and shall, to the extent
permitted under the Project Documents and any applicable
regulations or requirements of any Lender, be reimbursed at or
prior to the later of Permanent Mortgage Commencement or the
Admission Date only out of the proceeds designated in this
sentence available from time to time after payment of all costs
described in this sentence. Any amounts not reimbursed through
the later of Permanent Mortgage Commencement or the Admission
Date or from the proceeds of the Capital Contribution of the
Investment Limited Partner as provided in Section 5.1 shall not
be reimbursable or otherwise change the Interest of any Person in
the Partnership but shall be borne by the General Partners;
provided, however, that, notwithstanding the foregoing, to the
extent any such amounts represent items which are properly
included in the Partnership's Qualified Basis and result in an
increase in the amount of Tax Credit allocated and available to
the Partnership over and above the amount of Tax Credit required
in order to achieve State Designation ("Includable Items"), the
General Partners shall make an additional Capital Contribution in
the amount of the Includable Items and the Partnership shall
utilize the proceeds of such additional Capital Contribution to
pay the Includable Items. In the event that the General Partners
shall fail to fund any such deficiency as required by this
Section 6.11(a), an amount not in excess of the next installment
of the Construction and Development Fee due to the General
Partners or any of their Affiliates under Section 6.12 or any
other provision hereof shall be applied by the Partnership to
meet such obligation of the General Partners, and, to the extent
there may still be a deficiency, any amounts otherwise payable as
the Annual Partnership Management Fee or distributable to the
General Partners pursuant to Article X shall also be so applied.
Any such application of funds as described in the immediately
preceding sentence shall constitute a payment of the amount of
the Fee or such other item which such funds had been earmarked to
pay, and the obligation of the General Partners to advance such
amount under this Section 6.11(a) shall be satisfied to the
extent of such application.
(b) The completion of the Apartment Complex shall be
secured by payment and performance bonds in amounts at least
equal to the full amount of the construction contract for the
Apartment Complex or by other security satisfactory to the
Investment Limited Partner.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners a fee
(the "Annual Partnership Management Fee") commencing in 1999 for
their services in connection with the administration of the day
to day business of the Partnership in an annual amount equal to
the lesser of (i) $7,500 per annum or (ii) the excess of (A) one-
half of one per cent (0.5%) of the Aggregate Cost of the
Apartment Complex over (B) the amount of the Asset Management Fee
attributable to such year. The Annual Partnership Management Fee
for each fiscal year of the Partnership shall be payable from
Cash Flow in the manner and priority set forth in Section 10.2(a)
to the extent Cash Flow is available therefor for such year;
provided, however, that if in any fiscal year commencing with
1999, Cash Flow is insufficient to pay the full amount of the
Partnership Management Fee, the unpaid portion thereof shall
accrue and be payable on a cumulative basis in the first year in
which there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X.
(b) In consideration of their consultation, advice and
other services in connection with the construction and
development of the Apartment Complex and as consideration for the
assignment described in Section 6.14, the Partnership shall pay
to the General Partners (or their designee) a construction and
development fee (the "Construction and Development Fee") in the
principal amount of $345,072, which fee shall be earned in full
as to each building in the Apartment Complex as of the date such
building is completed. The Construction and Development Fee
shall be payable $85,088 from the proceeds of the First
Installment, $153,457 from the proceeds of the Second
Installment, $80,834 from the proceeds of the Third Installment
and $10,248 from the proceeds of the Fourth Installment, with the
unpaid balance (the "Deferred Development Fee") payable as
provided in Article X.
(c) The Partnership shall pay a fee (the "Asset Management
Fee") commencing in 1999 for its services in connection with the
Partnership's accounting matters relating to the Investment
Limited Partner and assisting with the preparation of tax returns
and the reports required by Section 12.7 in the annual amount of
the lesser of (i) $2,000 or (ii) one-half of one per cent (0.5%)
of the Aggregate Cost of the Apartment Complex. The Asset
Management Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a); provided, however, that if
in any fiscal year commencing with 1999, Cash Flow is
insufficient to pay the full amount of the Asset Management Fee
and the shortfall is not paid from funds advanced pursuant to
Section 6.10, the unpaid portion thereof shall accrue and be
payable on a cumulative basis in the first year in which there is
sufficient Cash Flow or from the proceeds of a Capital
Transaction as provided in Article X.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or
duties hereunder to another General Partner or General Partners.
Every contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder that
at the time of the delivery thereof (a) the Partnership was in
existence, (b) this Agreement had not been amended in any manner
so as to restrict the delegation of authority among General
Partners (except as shown in certificates or other instruments
duly filed in the Filing Office) and (c) the execution and
delivery of such instrument was duly authorized by the General
Partners. Any Person may always rely on a certificate addressed
to him and signed by any General Partner hereunder:
(1) As to who are the General Partners or Limited
Partners hereunder;
(2) As to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the
General Partners or in any other manner germane to the
affairs of the Partnership;
(3) As to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) As to the authenticity of any copy of this
Agreement, the Certificate 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 General Partners hereby transfer and assign to the
Partnership all of their right, title and interest in and to the
Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts
with architects, supervising architects, engineers and
contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings
heretofore prepared or obtained in connection with the Apartment
Complex; (iii) all governmental commitments and approvals
obtained, and applications therefor, including, but not limited
to, those relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any
Mortgages; (v) any and all contracts or rights with respect to
any agreements with the Lenders; and (vi) any other work product
related to the Apartment Complex and/or the Partnership.
ARTICLE VII - Withdrawal of a General Partner; New General
Partners
7.1 Withdrawal
No General Partner shall Withdraw from the Partnership
(other than by reason of death or adjudication of incompetence or
insanity) or sell, assign or encumber its Interest without the
Consent of the Investment Limited Partner and all the other
General Partners, except that if the Special Limited Partner or a
designee thereof becomes a General Partner pursuant to Section
4.5(b), Section 5.2(e), Section 6.2(b) or Section 6.10, it shall
not require the consent of any other General Partner to transfer
all or any portion of its interest as a General Partner, other
than as may be required under the Uniform Act. In the event of
any Withdrawal by a General Partner in violation of this
Section 7.1, such General Partner, in addition to being subject
to any and all other legal remedies which may be pursued by the
Partners, shall forfeit to the Special Limited Partner or its
designee, such General Partner's Interest and all unpaid fees
from the Partnership and shall remain liable for all of the
Withdrawing General Partner's obligations under this Agreement.
In addition, upon such Withdrawal and transfer, the Special
Limited Partner or its designee shall automatically become a
General Partner without further action by the Withdrawing General
Partner or any other Partner, and each Partner hereby consents to
such transfer and to the admission of the Special Limited Partner
or its designee as a General Partner in such a situation. Such
transfer shall occur automatically upon such Withdrawal without
further action by such Withdrawing General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining
General Partners shall have the right and obligation to continue
the business of the Partnership employing its assets and name,
all as contemplated by the Uniform Act. Within thirty (30) days
after they obtain knowledge of the Withdrawal of a General
Partner, the remaining General Partners shall notify the
Investment Limited Partner or its designee of such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is
no remaining General Partner, the Investment Limited Partner and
the Special Limited Partner may elect to reconstitute the
Partnership and continue the business of the Partnership for the
balance of the term specified in Section 2.4 by selecting a
successor General Partner. If the Investment Limited Partner and
the Special Limited Partner elect to reconstitute the Partnership
pursuant to this Section 7.3 and admit the designated successor
General Partner, the relationship among the then Partners shall
be governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in
Section 4.5(b), the Withdrawing General Partner hereby covenants
and agrees to transfer to the remaining General Partners or to a
successor General Partner selected in accordance with
Section 7.3, as the case may be, such portion of the Withdrawing
General Partner's Interest as such remaining or successor General
Partners may designate, such transfer to be made in consideration
of the payment by the transferee of either the agreed value of
such Interest or, if such value is not agreed to, the fair market
value of such Interest as determined by a committee of three
qualified real estate appraisers, one selected by the Withdrawing
General Partner, one selected by the transferee and a third
selected by the other two. The portion of the Withdrawing
General Partner's Interest designated to be transferred in
accordance with the provisions of this Section 7.4 shall be
sufficient to ensure the continued treatment of the Partnership
as a partnership under the Code and as a limited partnership
under the Uniform Act, and, for the purposes of Article X, shall
be deemed to be effective as of the date of Withdrawal, but the
Partnership shall not make any distributions to the designated
transferee until the transfer shall have been made. Any holder
of any portion of the Interest of a Withdrawing General Partner
which is not designated to be transferred to the remaining or
successor General Partners pursuant to the provisions of this
Section 7.4 shall become an Additional Limited Partner but
(i) with the same share of the profits, losses, tax credits, Cash
Flow and other distributions to which the holder of such Interest
was entitled when held as a General Partner Interest, and
(ii) shall not participate in the votes or Consents of the
Investment Limited Partner hereunder. The admission of any
successor or additional General Partner shall be subject to the
consent of the Lenders (if required) and the Consent of the
Investment Limited Partner.
ARTICLE VIII - Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of
descent and distribution) or Section 8.1(b), no Limited Partner
may assign all or any part of its Interest without the written
consent of the General Partners, the giving or withholding of
which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the General
Partners, may assign to any Person all or any portion of the
economic benefits of the ownership of 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, and shall only have, the
right to receive the share of allocations and distributions of
the Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof)
so assigned if no such assignment had been made by such Limited
Partner. Any assigning Limited Partner whose permitted assignee
becomes a Substituted Limited Partner shall thereupon cease to be
a Limited Partner and shall no longer have any of the rights or
privileges of a Limited Partner. Where the assignee does not
become a Substituted Limited Partner, the Partnership shall
recognize such assignment not later than the last day of the
calendar month following receipt of notice of assignment and all
documentation required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this
Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to
Section 8.3, the General Partners may, however, in their sole
discretion, permit an assignee to become a Substituted Limited
Partner. The consent of the General Partners to an assignment of
a Limited Partner Interest under Section 8.1 shall not, in and of
itself, constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General
Partners to signify the agreement of such Substituted Limited
Partner to be bound by all the provisions of this Agreement and
shall pay the Partnership's reasonable legal fees and filing
costs in connection with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would
violate Section 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partners may, in addition to any other
requirement they may impose, require as a condition of any
Disposition that the transferor (i) assume all costs incurred by
the Partnership in connection therewith and (ii) furnish the
Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition in
contravention of any of the provisions of this Section 8.3 shall
be void and ineffectual and shall not bind or be recognized by
the Partnership.
(e) Notwithstanding any other provision contained in this
Article VIII, each Investment Limited Partner shall have a right
of first refusal to purchase the Interest of any other Investment
Limited Partner who wishes to sell or otherwise transfer its
Interest at a price equal to and on terms identical to those of
the prospective purchaser thereof, 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, including, but not limited to, the restrictions
of Section 6.2, and may be made from any source, including
Partners and their Affiliates. If any Partner shall lend any
monies to the Partnership, the amount of any such loan shall not
be an increase of such Partner's Capital Contribution. If any
Partner shall so lend monies, each such 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 provided by the
General Partners to the Partnership pursuant to Section 6.11(a)
shall not constitute borrowings for the purposes of this Section
9.2 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 Section 10.1(c) and Section 10.4, for each
Partnership fiscal year or portion thereof, all profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures and tax credits incurred or accrued on or after the
Commencement Date, other than those arising from a Capital
Transaction, shall be allocated 99.9% to the Investment Limited
Partner and 0.1% to the General Partners.
(b) Except as otherwise specifically provided in this
Article, all profits and losses arising from a Capital
Transaction shall be allocated to the Partners as follows:
As to profits:
First, that portion of profits (including any
profits treated as ordinary income for Federal income
tax purposes) shall be allocated to the Partners who
have negative Capital Account balances in proportion to
the amounts of such balances, provided that no profits
shall be allocated to a Partner under this Clause First
to increase any such Partner's Capital Account above
zero;
Second, profits in excess of the amounts allocated
under Clauses First and Second above shall be allocated
to the Investment Limited Partner in an amount equal to
the amount of cash required to pay to the Investment
Limited Partner the full amount (including interest) of
any Credit Recovery Loans;
Third, profits in excess of the amounts allocated
under Clauses First and Second above shall be allocated
(i) to the Investment Limited Partner in an amount
equal to the sum of (a) its Invested Amount plus (b)
the full amount (including interest) of any Credit
Recovery Loans and (ii) to each other Limited Partner
in an amount equal to the amount of its respective
Invested Amount, reduced (but not below zero) in the
case of each Limited Partner (whether under clause (i)
or clause (ii)) by the sum of (A) the total amount of
all prior cash distributions made to such Limited
Partner pursuant to Section 10.2(b), Clause Sixth plus
(B) the positive balance in the Capital Account of such
Limited Partner prior to the allocation made pursuant
to this Clause Third;
Fourth, profits in excess of the amounts allocated
under Clauses First, Second and Third above shall be
allocated to each General Partner in the amount of its
respective paid-in Capital Contributions reduced (but
not below zero) by the sum of (i) the total amount of
distributions previously made to it pursuant to Section
10.2(b), Clause Seventh of Section 10.2(b) plus (ii)
the positive balance in such General Partner's
respective Capital Accounts prior to the allocations
made pursuant to this Clause Fourth; and
Fifth, profits in excess of the amounts allocated
under Clauses First, Second, Third and Fourth above
shall be allocated to the Partners in the same
percentages as cash is distributed under Clause Eighth
of Section 10.2(b).
As to losses:
First, an amount of losses shall be allocated to
the Partners to the extent and in such proportions as
shall be necessary such that, after giving effect
thereto, the respective balances in all Partners'
Capital Accounts shall be in the ratio of 99.9% for the
Investment Limited Partner and 0.1% for the General
Partners;
Second, an amount of losses shall be allocated to
the Partners until the balance in each Partner's
Capital Account equals the amount of such Partner's
Capital Contribution (after the allocation under Clause
First above);
Third, an amount of losses shall be allocated to
the Partners to the extent of and in proportion to such
Partners' Capital Account balances (after the
allocations under Clauses First and Second above); and
Fourth, any remaining amount of losses after the
allocations under Clauses First, Second and Third above
shall be allocated to the Partners in accordance with
the manner in which they bear the Economic Risk of Loss
associated with such loss; provided, however, that in
the event that no Partner bears an Economic Risk of
Loss, then any remaining losses shall be allocated
99.9% to the Investment Limited Partner and 0.1% to the
General Partners.
(c) Notwithstanding the foregoing provisions of
Sections 10.1(a) and 10.1(b), in no event shall any losses be
allocated to the Investment Limited Partner, the Special Limited
Partner or any additional General Partner admitted pursuant to
any of Section 4.5(b), Section 5.2(e), Section 6.2(b), Section
6.10, if and to the extent that such allocation would cause, as
of the end of the Partnership taxable year, the negative balance
in such Partner's Capital Account to exceed such Partner's share
of Partnership Minimum Gain plus such Partner's share, if any, of
Partner Non-Recourse Debt Minimum Gain. Any losses which are not
allocated to a Partner by virtue of the application of this
Section 10.1(c) shall be allocated to the General Partners,
excluding any General Partner which shall have been admitted
pursuant to any of Section 4.5(b), Section 5.2(e), Section
6.2(b), Section 6.10. For the purposes of this Section 10.1(c),
a Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Lender approval (if required), Cash Flow for each
fiscal year or portion thereof of the Partnership shall be
applied as follows:
First, to the payment of the Asset Management Fee for such
year and for any previous year(s) as to which the Asset
Management Fee shall not yet have been paid in full;
Second, to the repayment of any Subordinated Loans;
Third, to the payment of the Annual Partnership Management
Fee attributable to such year and for any previous year(s) as to
which the Annual Partnership Management Fee shall not yet have
been paid in full and then to the payment of the Deferred
Development Fee;
Fourth, to the payment of the Incentive Management Fee in an
amount equal to 3% of any remaining Cash Flow; and
Fifth, the balance thereof, if any, shall be distributed
annually, within seventy-five (75) days after the end of the
fiscal year, 20% to the Investment Limited Partner and 80% to the
General Partners.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall
determine from time to time that cash is available for
distribution from a Capital Transaction, such cash shall be
applied or distributed as follows:
First, to the payment of all matured debts and liabilities
of the Partnership (including, but not limited to, all expenses
of the Partnership incident to the Capital Transaction),
excluding (i) debts and liabilities of the Partnership to
Partners or their Affiliates and (ii) all unpaid fees owing to
the General Partners or their Affiliates; and to the
establishment of any reserves which the General Partners and the
Auditors shall deem reasonably necessary for contingent,
unmatured or unforeseen liabilities or obligations of the
Partnership;
Second, to the payment of any accrued and unpaid Asset
Management Fees and then to the payment of the Deferred
Development Fee;
Third, to the payment to the Investment Limited Partner of
the full amount (including interest) of any Credit Recovery
Loans;
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the repayment of any then-unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them, including,
but not limited to, the accrued and unpaid Annual Partnership
Management Fees; 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 to each Limited Partner of an amount
equal to its Invested Amount, in each case minus any prior
distributions made to such Partner under this Clause Sixth, but
never an amount less than zero;
Seventh, to the repayment to the General Partners of their
paid-in Capital Contributions minus any prior distributions made
to them under this Clause Seventh and under Section 10.2(c), but
never an amount less than zero; and
Eighth, any balance 29.999% to the Investment Limited
Partner, .001% to the Special Limited Partner and 70% to the
General Partners.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall be
distributed to the Partners in accordance with the positive
balances in their Capital Accounts after taking into account all
Capital Account adjustments for the Partnership taxable year,
including adjustments to Capital Accounts pursuant to
Sections 10.1(b) and 10.3(b). In the event that a General
Partner or Additional Limited Partner has a negative balance in
its Capital Account following the liquidation of the Partnership
or such Partner's Interest, after taking into account all Capital
Account adjustments for the Partnership taxable year in which
such liquidation occurs, such Partner shall pay to the
Partnership in cash an amount equal to the negative balance in
such Partner's Capital Account. Such payment shall be made by
the end of such taxable year (or, if later, within ninety (90)
days after the date of such liquidation) and shall, upon
liquidation of the Partnership, be paid to recourse creditors of
the Partnership or distributed to other Partners in accordance
with the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the
Partners in liquidation or otherwise, (i) any unrealized
appreciation or unrealized depreciation in the values of such
assets shall be deemed to be profits and losses realized by the
Partnership immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be
allocated to the Partners in accordance with Section 10.1(b), and
any property so distributed shall be treated as a distribution of
an amount in cash equal to the excess of such fair market value
over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered. For the purposes
of this Section 10.3(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market
value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of
the Code), and the Partnership's adjusted basis for such assets
as determined under Regulation Section 1.704-1(b). This Section
10.3(b) is merely intended to provide a rule for allocating
unrealized gains and losses upon liquidation or other
distribution event, and nothing contained in this Section 10.3(b)
or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be
selected by the General Partners with the Consent of the
Investment Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, tax credits and cash distributions
shared by a class of Partners shall be shared by each Partner in
such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of
Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations
or Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses
from extraordinary events which are not recovered from
insurance or otherwise (collectively "Recourse Obligations")
in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations shall be allocated
to the General Partners; and second, the balance of such
deductions shall be allocated as provided in
Section 10.1(a).
(ii) If any profit arises from the sale or other
disposition of any Partnership asset which shall be treated
as ordinary income under the depreciation recapture
provisions of the Code, then the full amount of such
ordinary income shall be allocated among the Partners in the
proportions that the Partnership deductions from the
depreciation giving rise to such recapture were actually
allocated. In the event that subsequently-enacted
provisions of the Code result in other recapture income, no
allocation of such recapture income shall be made to any
Partner who has not received the benefit of those items
giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase
money indebtedness in partial payment of the purchase price
of the Apartment Complex and such indebtedness is
distributed to the Partners pursuant to the provisions of
Section 10.2(b) or Section 10.3, the distributions of the
cash portion of such purchase price and the principal amount
of such purchase money indebtedness hereunder shall be
allocated among the Partners in the following manner: On
the basis of the sum of the principal amount of the purchase
money indebtedness and cash payments received on the sale
(net of amounts required to pay Partnership obligations and
fund reasonable reserves), there shall be calculated the
percentage of the total net proceeds distributable to each
class of Partners based on Section 10.2(b) or Section 10.3,
as applicable, treating cash payments and purchase money
indebtedness principal interchangeably for this purpose,
and the respective classes shall receive such respective
percentages of the net cash purchase price and purchase
money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be
distributed in accordance with the respective portions of
principal allocated to the respective classes of Partners in
accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds
shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to
any asset which has a variation between its basis computed
in accordance with Treasury Regulation Section 1.704-1(b)
and its basis computed for Federal income tax purposes shall
be shared among the Partners so as to take account of such
variation in a manner consistent with the principles of
Section 704(c) of the Code and Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this
Agreement shall mean income and losses, and each item of
income, gain, loss, deduction or credit entering into the
computation thereof, as determined in accordance with the
accounting methods followed by the Partnership and computed
in accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv). Profits and losses for Federal income tax
purposes shall be allocated in the same manner as set forth
in this Article X, except as provided in
Section 10.4(b)(iv).
(vi) If there is a net decrease in Partnership Minimum
Gain during a Partnership taxable year, each Partner will be
allocated items of income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain during the year,
before any other allocation of Partnership items for such
taxable year. A Partner shall not be subject to this
mandatory allocation of income or gain to the extent that
any of the exceptions provided in Treasury Regulation
Section 1.704-2(f)(2)-(5) applies. All allocations pursuant
to this Section 10.4(b)(vi) shall be in accordance with
Treasury Regulation Section 1.704-2(f). This provision is a
"minimum gain chargeback" within the meaning of Treasury
Regulation Section 1.704-2(f) and shall be construed as
such.
(vii) If there is a net decrease in Partner Non-Recourse
Debt Minimum Gain during a Partnership taxable year, then
each Partner with a share of the minimum gain attributable
to such debt at the beginning of such year will be allocated
items of income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share
of the net decrease in Partner Non-Recourse Debt Minimum
Gain during the year. A Partner is not subject to this
Partner Non-Recourse Debt Minimum Gain chargeback to the
extent that any of the exceptions provided in Treasury
Regulation Section 1.704-2(i)(4) applied consistently with
Treasury Regulation Section 1.704-2(f)(2)-(5) applies. Such
allocations shall be made in a manner consistent with the
requirements of Treasury Regulation Section 1.704-2(i)(4)
under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in
Section 705(a)(2)(B) of the Code made (1) pursuant to
Section 704(e)(2) of the Code to a donee of an Interest,
(2) pursuant to Section 706(d) of the Code as the result of
a change in any Partner's Interest, or (3) pursuant to
Regulation Section 1.751-1(b)(2)(ii) as a result of a
distribution by the Partnership of unrealized receivables or
inventory items or (b) a distribution, and such allocation
and/or distribution would cause the negative balance in such
Partner's Capital Account to exceed (i) such Partner's share
of Partnership Minimum Gain plus (ii) the amount of such
Partner's obligation, if any, to restore a negative balance
in such Partner's Capital Account plus (iii) such Partner's
share of Partner Non-Recourse Debt Minimum Gain with respect
to which such Partner or a Related Person to such Partner
bears the Economic Risk of Loss, then such Partner shall be
allocated items of income and gain in an amount and manner
sufficient to eliminate such negative balance as quickly as
possible. For purposes of this Section 10.4(b)(viii), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
(ix) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined
to be a non-deductible, non-capitalizable distribution from
the Partnership to a Partner for Federal income tax
purposes, then there shall be allocated to such General
Partner an amount of gross income equal to the amount of
such distribution.
(x) In applying the provisions of Article X with
respect to distributions and allocations, the following
ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced
by Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions from Capital Transactions under
Section 10.2(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section 10.4(b)(vi) or
Section 10.4(b)(vii).
(5) Capital Accounts shall be increased by any
qualified income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by
allocations of profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by
allocations of losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by
allocations of losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that
the Partners' Capital Accounts reflect the amounts they
would have reflected if adjustments required by
Sections 10.4(b)(vi), 10.4(b)(vii) and 10.4(b)(viii) had not
occurred.
10.5 Authority of the General Partners to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items
thereof) shall be determined and allocated in accordance with
this Agreement to the fullest extent permitted by Section 704(b)
of the Code. In order to preserve and protect the determinations
and allocations provided for in this Agreement, the General
Partners are hereby authorized and directed to allocate profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any year
differently than otherwise provided for in this Agreement to the
extent that allocating profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive
share of profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures or credits (or any item thereof) not
to be permitted by Section 704(b) of the Code. Any allocation
made pursuant to this Section 10.5 shall be deemed to be a
complete substitute for any allocation otherwise provided for in
this Agreement, and no amendment of this Agreement or approval of
any Partner shall be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partners are authorized to act only
after having been advised in writing by the Tax Accountants that,
under Section 704(b) of the Code, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum
modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the
then-current year or in any preceding year, each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (or any
item thereof) is determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of
the Code.
(c) If the General Partners are required by Section 10.5(a)
to make any New Allocation in a manner less favorable to the
Limited Partners than is otherwise provided for herein, then the
General Partners are authorized and directed, only after having
been advised in writing by the Tax Accountants that such an
allocation is permitted by Section 704(b) of the Code, to
allocate profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures and credits (and any item thereof)
arising in later years in such manner so as to bring the
allocations of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures and credits (and each item
thereof) to the Limited Partners as nearly as possible to the
allocations thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under
Section 10.5(a) and Section 10.5(c) in reliance upon the advice
of the Tax Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partners to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
ARTICLE XI - Management Agent
A. The General Partners shall engage the Management Agent
to manage the Apartment Complex pursuant to the Management
Agreement. The Management Agent shall receive a Management Fee
of those amounts payable from time to time by the Partnership to
the Management Agent for management services in accordance with a
reasonable and competitive fee arrangement. From and after the
Admission Date, the Partnership shall not enter into any
Management Agreement or modify or extend any Management Agreement
unless (i) the General Partners shall have obtained the prior
written consent of the Special Limited Partner to the identity of
the Management Agent and the terms of the Management Agreement or
the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30)
days' notice by the Partnership in the event of any change in the
identity of the General Partners.
B. Notwithstanding the foregoing, however, should the
Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property
management, rent-up or leasing fees shall be paid to the
Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser
of (i) fees competitive in price and terms with those of non-
affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably
be available to the Partnership, or (ii) eight per cent (8%) of
the gross revenues of the Apartment Complex. No duplicate
property management fees shall be paid to any Person.
C. If (i) the Management Agent is a General Partner or an
Affiliate of a General Partner, and (a) the Apartment Complex
shall be subject to a substantial building code violation which
shall not have been cured within six months after notice from the
applicable governmental agency or department or (b) the
Partnership shall not have Cash Flow of at least $9,500 during
any year after 1999, or (ii) an Event of Bankruptcy shall occur
with respect to the Management Agent, or (iii) the Management
Agent shall commit willful misconduct or gross negligence in its
conduct of its duties and obligations under the Management
Agreement, or (iv) the Management Agent is cited by the Lenders,
any Tax Credit monitoring or compliance agency of the State or
any other governmental agency for a violation or alleged
violation of any applicable rules, regulations or requirements,
including, but not limited to, non-compliance with the Minimum
Set-Aside Test, the Rent Restriction Test or any other Tax
Credit-related provision, then, upon request by the Special
Limited Partner, the General Partners must cause the Partnership
to promptly terminate the Management Agreement with the
Management Agent and appoint a new Management Agent selected by
the Special Limited Partner, which new Management Agent shall not
be an Affiliate of a General Partner. Each General Partner
hereby grants to the Special Limited Partner an irrevocable (to
the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute and deliver
any and all documents and instruments on behalf of such General
Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI.C. Subject to the Lenders
approval, if required, the Partnership shall not enter into any
future management arrangement or renew or extend any existing
management arrangement unless such arrangement is terminable
without penalty upon the occurrence of the events described in
this Article XI.
D. The General Partners shall have the duty to manage the
Apartment Complex during any period when there is no Management
Agent.
E. The Partnership shall pay to the General Partners (or
their designee) an annual non-cumulative incentive management fee
(the "Incentive Management Fee") for their services in achieving
high operating efficiency of the Apartment Complex (such Fee to
be treated as a Partnership expense regardless of its treatment
for Lender purposes), which fee for each fiscal year shall be in
the priority and amount set forth in Section 10.2(a).
ARTICLE XII - Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which
are required under the Uniform Act or by any governmental agency
having jurisdiction and may maintain such other books and records
as the General Partners in their discretion deem advisable.
Every Limited Partner, or its duly authorized representatives,
shall at all times have access to the records of the Partnership
at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records.
A list of the names and addresses of all of the Limited Partners
shall be maintained as part of the books and records of the
Partnership and shall be mailed to any Limited Partner upon
request. A reasonable charge for copy work may be charged by the
Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in
the Partnership's name with such financial institutions as the
General Partners shall determine. Withdrawals shall be made only
in the regular course of Partnership business on such signature
or signatures as the General Partners may determine. All
deposits (including security deposits and other funds required to
be escrowed by the Lenders) 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 Mortgage
requirements, in interest-bearing accounts or invested in United
States Government obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the
General Partners, all tax returns of the Partnership. Prior to
the filing of the Partnership tax returns, and in no event later
than February 1 of each year, the Auditors shall deliver the tax
returns for such year to the Tax Accountants for their review and
comment. If a dispute arises between the Auditors and the Tax
Accountants over the proper preparation of the tax returns and
such dispute cannot be resolved by the Auditors and the Tax
Accountants by March 1 of such year, then the Tax Accountants
shall make the final decision on whether any changes are
necessary. The Partnership shall reimburse BCCLP for all costs
and expenses paid to the Tax Accountants for the aforementioned
services.
(b) The Auditors shall audit and certify all annual
financial reports to the Partners in accordance with generally
accepted auditing standards.
(c) If the Partnership fails to fulfill any of its
obligations under Section 12.7(a)(i) and/or Section 12.7(a)(ii)
within the time periods set forth therein, at any time thereafter
upon notice from the Special Limited Partner that a change in the
identity of the Auditors is desired, the General Partners, on
behalf of the Partnership, shall promptly terminate the
Partnership's engagement of the Auditors, and the prior written
consent of the Special Limited Partner must be received to the
appointment of replacement Auditors. If no such consent is
received to the appointment of replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to
replace the Auditors, then the Special Limited Partner shall
appoint replacement Auditors of its own choosing, the cost of
which shall be borne by the Partnership as a Partnership expense.
All Partners hereby grant to the Special Limited Partner a
special power of attorney, irrevocable to the extent permitted by
law, coupled with an interest, to so appoint replacement Auditors
and to anything else which in the view of the Special Limited
Partner may be necessary or appropriate to accomplish the
purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to
use, so far as permitted by the provisions of the Code,
accelerated cost recovery methods. However, the Partnership may
change to another method of cost recovery if such other method
is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner and the limited partners and/or
holders of beneficial assignee certificates thereof.
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partners in such
manner as will, in the opinion of the Auditors, be most
advantageous to the Investment Limited Partner and the limited
partners and/or holders of beneficial assignee certificates
thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the
Interest of the Investment Limited Partner or a transfer of all
or any part of an interest of a partner and/or a holder of a
beneficial assignee certificate of the Investment Limited
Partner, the Partnership shall elect, upon the request of the
Investment Limited Partner, pursuant to Section 754 of the Code,
to adjust the basis of the Partnership property. Any adjustments
made pursuant to said Section 754 shall affect only the successor
in interest to the transferring Partner or partner or holder of a
beneficial assignee certificate thereof. Each Partner will
furnish the Partnership all information necessary to give effect
to such election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the
calendar year. The books of the Partnership shall be kept on an
accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
fiscal year of the Partnership:
(i) Within forty-five (45) days after the end of each
fiscal year of the Partnership, (A) a balance sheet as of
the end of such fiscal year, a statement of income, a
statement of partners' equity, and a statement of cash
flows, each for the year then ended, all of which, except
the statement of cash flows, shall be prepared in accordance
with generally accepted accounting principles and
accompanied by a report of the Auditors containing an
opinion of the Auditors, and (B) a report of the activities
of the Partnership during the period covered by the report.
With respect to any distribution to the Investment Limited
Partner, the report called for shall separately identify
distributions from (1) Cash Flow from operations during the
period, (2) Cash Flow from operations during a prior period
which had been held as reserves, (3) proceeds from
disposition of property and investments, (4) lease payments
on net leases with builders and sellers, (5) reserves from
the gross proceeds of the Capital Contribution of the
Investment Limited Partner, (6) borrowed monies, and
(7) transactions outside of the ordinary course of business
with a description thereof.
(ii) Within thirty (30) days after the end of each
fiscal year of the Partnership, all information relating to
the Partnership and/or the Apartment Complex which is
necessary, in the view of the Tax Accountants, for the
preparation of the Limited Partners' Federal income tax
returns.
(iii) Within thirty (30) days after the end of each
quarter of a fiscal year of the Partnership, a report
containing:
(A) a balance sheet, which may be unaudited;
(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 Partners that
the Apartment Complex and its tenants are in compliance
with all applicable federal, state and local
requirements and regulations;
(E) a low-income housing tax credit monitoring
form, a copy of the rent roll for the Apartment
Complex, a statement of income and expenses, an
operating statement and an Occupancy/Rental Report, all
in the form specified by BCCLP;
(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 Partners shall
furnish such information within thirty (30) days of receipt of
such request.
(d) Prior to October 15 of each year, the Partnership shall
send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the tax credits, profits
and losses of the Partnership for Federal income tax purposes for
the current fiscal year. Such estimate shall be prepared by the
General Partners and the Auditors and shall be in the form
specified by BCCLP.
(e) Within fifteen (15) days after the end of any calendar
quarter during which:
(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 collaterized its
Interest in the Partnership,
the General Partners shall send the Investment Limited Partner a
detailed report of such event.
(f) After the Admission Date, the Partnership shall send to
the Investment Limited Partner, on or before the tenth day of
each month, the monthly housing credit monitoring form, and
copies of all applicable periodic reports covering the status of
project operations from the previous period, as may be required
by any Lender.
(g) On or before May 1st of each of the Partnership's
fiscal years, the Partnership shall send to the Investment
Limited Partner a report on operations, in the form supplied by
BCCLP.
(h) The General Partners shall cause the Partnership to
send to the Investment Limited Partner a copy of each
Construction Mortgage draw requisition and any notification or
correspondence from the Construction Lender indicating that any
such draw will not be paid as requisitioned. Upon receipt, the
Partnership shall send to the Investment Limited Partner copies
of the Form(s) 8609 evidencing the Tax Credit allocation.
Promptly after Permanent Mortgage Commencement, the General
Partners shall send to BCCLP a closing binder containing
photocopies of the fully-executed versions of all documents
signed in connection with the Permanent Mortgages.
(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 rehabilitation of such units shall
have occurred six months or more prior to the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership, then the General Partners shall cause to be prepared
and delivered to the Investment Limited Partner within sixty (60)
days of the Admission Date the following items:
(i) An unaudited statement of income of the
Partnership for the year (or such shorter period as there
may be from the date of the most recent audited statement of
income of the Partnership) ended on the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership; and
(ii) An audited statement of income of the Partnership
for any fiscal year of the Partnership ending between
(A) the earlier of (1) the Completion Date or (2) the date
upon which tenants first occupied apartment units in the
Apartment Complex 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 of the Completion Date, the
General Partners 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 BCCLP.
(k) If the General Partners do not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or
Section 12.7(a)(ii) within the time periods set forth therein,
the General Partners shall pay as damages the sum of $250 per day
(plus interest at a rate equal to the general base rate of
interest established by BankBoston or its successors and assigns
and announced by it as the rate charged by it to its prime
commercial customers on short-term unsecured borrowings as its
"base rate" from time to time in effect plus 3%) to the
Investment Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General
Partners, and failure to so pay shall constitute a material
default of the General Partners hereunder. In addition, if the
General Partners shall so fail to pay, the General Partners and
their Affiliates shall forthwith cease to be entitled to the
Annual Partnership Management Fee and to the payment of any Cash
Flow or Capital Transaction proceeds to which they may otherwise
be entitled hereunder. Such payments of the Annual Partnership
Management Fee, Cash Flow and Capital Transaction proceeds shall
be restored only upon the payment of such damages in full, and
any amount of such damages not so paid shall be deducted against
payments of the Annual Partnership Management Fee, Cash Flow and
Capital Transaction proceeds otherwise due to the General
Partners or their Affiliates.
(l) Within thirty (30) days of the Admission Date, the
General Partners shall deliver to the Investment Limited Partner
a copy of the letter(s) of engagement pursuant to which the
Partnership has engaged the Auditors to prepare the Partnership
income tax returns, audit the books and records of the
Partnership and certify the financial reports of the Partnership.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed
directly to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for
the sale of goods or services or the lending of money to the
Partnership or the General Partners, except for (i) management
services, subject to the restrictions set forth in Article XI.B.,
(ii) loans made by, or guaranteed by, the Investment General
Partner or any of its Affiliates, and (iii) those dealings,
contracts or provision of services described in the Investment
Partnership Agreement or the Prospectus. Extraordinary
circumstances shall only be presumed to exist where there is an
emergency situation requiring immediate action and the services
required are not immediately available from unaffiliated parties.
All services rendered under such circumstances must be rendered
pursuant to a written contract which must contain a clause
allowing termination without penalty on sixty (60) days' notice.
Goods and services provided under such circumstances must be
provided at the lesser of actual cost or the price charged for
such goods or services by independent parties.
(c) In the event extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partner nor any of its Affiliates
shall provide such services unless it believes it has an adequate
staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partner. Any such services
must be reasonable for and necessary to the Investment Limited
Partner, actually furnished to the Investment Limited Partner,
and provided at the lower of ten per cent (10%) of the
construction contract rate with respect to the Apartment Complex
or ninety per cent (90%) of the competitive price charged for
such services by independent parties for comparable goods and
services in the same geographic location (except that in the case
of transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the
lesser of costs or the compensation, price or fee of any other
Person rendering comparable services as aforesaid). Cost of
services as used herein means the pro rata cost of personnel,
including an allocation of overhead directly attributable to such
personnel, based on the amount of time such personnel spent on
such services or other method of allocation acceptable to the
accountants for the Investment Limited Partner.
(d) All services provided by the Investment General Partner
or any Affiliate thereof pursuant to Section 12.8(c) must be
rendered pursuant to the Investment Partnership Agreement or a
written contract which precisely describes the services to be
rendered and all compensation to be paid and shall contain a
clause allowing termination without penalty upon sixty (60) days'
notice to the Investment General Partner by a vote of a majority
in interest of the limited partners and assignees of beneficial
interests in the Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership
to the Investment General Partner or its Affiliates except as
described in the Investment Partnership Agreement or in the
Prospectus.
ARTICLE XIII - General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior
to the proposed date of the Disposition, could, in the opinion of
tax counsel to the Partnership, result in the termination of the
Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the
Investment Limited Partner's Interest or to a forfeiture of the
Interest of the Investment Limited Partner pursuant to Section
5.3. Any Disposition in contravention of any of the provisions of
this Section 13.1 shall be void ab initio and ineffectual and
shall not bind or be recognized by the Partnership.
Notwithstanding the foregoing provisions of this Section 13.1,
however, the Investment Limited Partner may waive the provisions
of this Section 13.1 at any time as to a Disposition or series of
Dispositions, and in the event of such a waiver, this Section
13.1 shall have no force or effect upon such Disposition or
series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner
shall have received any distributions under Article X, the
General Partners shall file an amendment to the Certificate
reducing by the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment
Limited Partner as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on account
of any such distribution.
The Partnership shall amend the Certificate at least once
each calendar quarter to effect the substitution of substituted
Limited Partners, although the General Partners may elect to do
so more frequently. In the case of assignments, where the
assignee does not become a Substituted Limited Partner, the
Partnership shall recognize the assignment not later than the
last day of the calendar month following receipt of notice of
assignment and all documentation required in connection therewith
hereunder.
Notwithstanding the foregoing provisions of this Section
13.2, no such amendments to the Certificate need be filed by the
General Partners if the Certificate is not required to and does
not identify the Limited Partners or their Capital Contributions
in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in
writing and shall be deemed adequately given if actually
delivered or if sent by registered or certified mail, postage
prepaid, to the party for whom such notice is intended at such
party's last address of record on the Partnership books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to
a subdivision in which such words appear unless the context
otherwise requires. The singular shall include the plural, and
vice versa, and each gender (masculine, feminine and neuter)
shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers
to the corresponding Section or Article of this Agreement, unless
specified otherwise. References to Treasury Regulations
(permanent or temporary) or Revenue Procedures shall include any
successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties
hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and
all so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties have not
signed the original or the same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect,
(a) each of the provisions of this Agreement shall be subject to,
and the General Partners covenant to act in accordance with, the
Project Documents; (b) the Project Documents shall govern the
rights and obligations of the Partners, their heirs, executors,
administrators, successors and assigns to the extent expressly
provided therein; (c) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the
possession and control of the Apartment Complex and no right to
collect the rent therefrom shall pass to any Person who is not,
or does not become, bound by the Project Documents in a manner
satisfactory to the Lenders; and (d) no amendment to any
provision of the Project Documents shall become effective without
the prior written consent of the Lenders (if required). No new
Partner shall be admitted to the Partnership, and no Partner
shall withdraw from the Partnership or be substituted for without
the consent of the Lenders (if such consent is then required).
13.9 Separability of Provisions
Each provision of this Agreement shall be considered
separable and (a) if for any reason any provision is determined
to be invalid, such invalidity shall not impair the operation of
or affect those portions of this Agreement which are valid, and
(b) if for any reason any provision would cause the Investment
Limited Partner to be bound by the obligations of the Partnership
(other than the requirements of any other Lender), such provision
or provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only
with the Consent of the Investment Limited Partner and the prior
written consent of the Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses
Any and all costs and expenses incurred by the Investment
Limited Partner and/or the Special Limited Partner in connection
with exercising rights and remedies against the General Partners
with respect to this Agreement, including without limitation,
reasonable attorneys' fees, shall be paid by the General Partners
on demand. All amounts due to the Investment Limited Partner
and/or the Special Limited Partner pursuant to this provision
shall bear interest from demand at a rate of 9%.
If any General Partner breaches any provision of this
Agreement, the Investment Limited Partner and/or the Special
Limited Partner may employ an attorney or attorneys to protect
its rights hereunder, and the General Partners shall pay on
demand the reasonable attorneys' fees and expenses incurred by
the Investment Limited Partner and/or the Special Limited
Partner, whether or not a legal action is actually commenced
against any General Partner by reason of such 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 9%.
13.13 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 regulations are issued under the Code or an
amendment to the Code is adopted which would require, in the
opinion of the Auditors, that the Investment Limited Partner be
deemed admitted on a date other than as of the Commencement Date,
then the General Partners shall select a permitted admission date
which is most favorable to the Investment Limited Partner.
ARTICLE XIV - Certain Restrictions.
14.1 City Requirements In General.
(a) The Partnership is entering into or has entered into a
Land Disposition Agreement ("LDA") and Deed ("Deed") with the
City of New York, which Deed is conveying the Apartment Complex
to the Partnership. The parties to this Agreement, and any
incoming parties, are bound by the restrictions contained
therein, including any restrictions on the transfer or assignment
of Partnership Interests. In addition, the Partnership and all
of its Partners are subject to and shall comply with the terms of
the LDA and Deed and all applicable Federal, State and local
statutes and regulations. If the terms and conditions of this
Agreement are inconsistent with any provision of the LDA or Deed,
the LDA or Deed shall be controlling and shall govern the rights
and obligations of the parties hereto.
14.2 LDA Requirements. Notwithstanding any provision of
this Agreement to the contrary, until HPD has issued a
Certificate of Completion for Project, in accordance with the
LDA:
(a) Without the prior written approval of HPD, there shall
not be any voluntary dissolution of the Partnership, or any
voluntary merger or consolidation of the Partnership with any
other entity;
(b) No Partners shall have any authority or right, without
the prior written approval of HPD, to withdraw or to substitute a
new person or entity for the General Partners or to cause any
other Person or Entity to be admitted as a General Partner;
(c) No distribution of the capital of the Partnership shall
be made to any Partner, or further, upon the dissolution of the
Partnership, no distribution shall be made to any Person or
Entity not bound by the LDA. However, nothing contained herein
shall preclude the Partnership from paying debts or fees owed by
it to the Partners;
(d) No assignment, mortgage or transfer of any interest in
the Apartment Complex or the LDA will take place except as
provided in the LDA or this Agreement; and
(e) The aforesaid subparagraphs (a)-(d) shall not be
amended without the prior written approval of HPD. In addition,
the Partnership is subject to the terms, covenants, conditions
and provisions of the LDA and, prior to the issuance by HPD of a
Certification of Completion, neither the general partners nor the
Partnership shall have any authority or right, without the prior
written approval of HPD, to substitute any person or entity for
any present general partner of the Partnership or cause any other
persons to be admitted or withdrawn as general partner.
Additional persons may be admitted as limited partners of the
Partnership, provided, however, if any such additional persons
are admitted, no distribution shall thereafter be made by the
Partnership to any partner (general or limited) until after the
issuance by HPD of said Certificate of Completion.
14.3 Regulatory Requirements. The Partnership agrees that
it, all present and future General Partners, Limited Partners and
assigns shall be bound by the terms and conditions stated in any
Regulatory Agreement with The City of New York or with the New
York State Division of Housing and Community Renewal and any
rules and regulations promulgated pursuant to said agreements.
14.4 HTF Requirements.
(a) The Partnership is authorized to execute a note and
mortgage in order to secure a loan given by the HTF and to
execute an Equity and Regulatory Agreement and other documents in
connection with such loan. Any incoming general partner shall,
as a condition of receiving an interest in the Partnership agree
to be bound by the note, mortgage, and other documents required
in connection with the HTF loan to the same extent and on the
same terms as the other general partners. Upon any dissolution,
no right to collect the rents therefrom shall pass to any person
who is not bound by the Equity and Regulatory Agreement in a
manner satisfactory to HTF.
(b) The Apartment Complex is and shall remain the sole
asset and business purpose of the Partnership so long as HTF or
its successors and assigns, is the holder or owner of a mortgage
on the Apartment Complex.
WITNESS the execution hereof under seal as of the 1st day of
October, 1997.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER: GENERAL PARTNERS:
HARLEM CONGREGATION FOR COMMUNITY ANGELOU OF HARLEM,INC.
IMPROVEMENT, INC.
/s/Preston Washington, President By:/s/Preston Washington, President
INVESTMENT LIMITED PARTNER: SPECIAL LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT BCTC 94, INC.
FUND IV L.P., a Delaware
limited partnership By:_/s/Bonnie Kate Fox
Bonnie Kate Fox, its
By: Boston Capital Associates Vice President
IV L.P., its general partner
By: C & M Associates d/b/a
Boston Capital Associates,
its general partner
By: /s/Bonnie Kate Fox,
Attorney-In-Fact for
John P. Manning,
a general partner
GUARANTY
The undersigned unconditionally guarantees the performance
by the General Partners of all of their obligations under
Sections 5.1, 5.2, 6.5, 6.10, 6.11(a) and 12.7(k) of the Amended
and Restated Agreement of Limited Partnership and hereby waives
any right to require that any action be brought against any other
Person or to require that resort be made to any security prior to
enforcement of this guaranty. The obligations of the undersigned
hereunder shall be binding upon the respective heirs, executors
and legal representatives of the undersigned. Execution of this
Agreement by the undersigned is solely for the purposes of
undertaking this guaranty and shall not be deemed to make the
undersigned a partner of the Partnership.
Harlem Congregations for Community
Improvement, Inc.
By:/s/Preston Washington
Preston Washington, President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the
foregoing Amended and Restated Agreement of Limited Partnership
notwithstanding any provision of the Management Agreement to the
contrary.
Management Agent:
Prestige Management, Inc.
By:_________________________
______________, President
STATE OF )
) SS.
COUNTY OF )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named
____________________, known to me to be the person who executed
the foregoing instrument, and, being duly sworn, acknowledged
that the statements therein are true and that [he] did sign the
same as [his] free act and deed.
WITNESS my hand and official seal this _________ day of
_____, 1997.
______________________________
Notary Public
______________________________
Name (Printed)
My Commission Expires:________
My County of Residence:________
STATE OF NEW YORK )
SS.)
COUNTY OF NEW YORK)
On this 23rd day of October, 1997, before me personally
came, Preston Washington, to me know to me, who, being duly
sworn, did depose and say that he resides at 231 Overlook Road,
New Rochelle, New York 10804; that he is the President of Angelou
of Harlem, Inc., a corporation described in and which executed
the foregoing instrument; and that he signed his name thereto by
order of the Board of Directors thereof.
/s/Richard Singer
Notary Public
STATE OF NEW YORK )
SS.)
COUNTY OF NEW YORK)
On this 23rd day of October, 1997, before me personally
came, Preston Washington, to me know to me, who, being duly
sworn, did depose and say that he resides at 231 Overlook Road,
New Rochelle, New York 10804; that he is the President of Harlem
Congregations for Community Improvement, Inc., a corporation
described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of
Directors thereof.
/s/Richard Singer
Notary Public
COMMONWEALTH OF MASSACHUSETTS)
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said
County and Commonwealth, personally appeared the above-named
Bonnie Kate Fox, known to me to be a general partner of
C & M Associates d/b/a Boston Capital Associates, which is the
general partner of Boston Capital Associates IV L.P., Boston
Capital Associates IV L.P. being the general partner of Boston
Capital Tax Credit Fund IV L.P., who, being duly sworn,
acknowledged that [he] did sign the foregoing instrument, that
the statements therein contained are true and that the same is
the duly authorized free act and deed of Boston Capital Tax
Credit Fund IV L.P.
WITNESS my hand and official seal this 17th day of Oct.,
1997.
/s/Carole S. Wicky
Notary Public
Carole S. Wicky
Name (Printed)
My Commission Expires:5/15/2003
My County of Residence: Essex
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said
County and Commonwealth, personally appeared the above-named
Bonnnie Kate Fox, known to me to be the Attorney-in-fact for
John P. Manning of BCTC 94, Inc., who, being duly sworn,
acknowledged that [he] did sign the foregoing instrument, that
the statements therein contained are true and that the same is
the duly authorized free act and deed of BCTC 94, Inc.
WITNESS my hand and seal this 17th day of Oct., 1997.
/s/Carole S. Wicky
Notary Public
Carole S. Wicky_______________
Name (Printed)
My Commission Expires:5/15/2003
My County of Residence: Essex
Angelou Associates, L.P.
Schedule A
As of October 1, 1997
General Partners Capital Contributions
Angelou of Harlem, Inc. $100
2854 Frederick Douglass Boulevard
New York, New York 10039
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution*
Boston Capital Tax Credit $1,893,804 $1,515,042
Fund IV L.P.
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
_________________________________
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to
adjustment and are due at the times and subject to the conditions
set forth in the Agreement to which this Schedule is attached.
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
Certification and Agreement
of
Angelou Associates L.P.
CERTIFICATION AND AGREEMENT made as of October 1, 1997 by
ANGELOU ASSOCIATES L.P., a New York limited partnership (the
"Operating Partnership"); ANGELOU OF HARLEM, INC. (referred to
herein, even if only one, as the "Operating General Partners");
and HARLEM CONGREGATIONS FOR COMMUNITY IMPROVEMENT, INC.
("Original Limited Partner") for the benefit of BOSTON CAPITAL
TAX CREDIT FUND IV L.P. (Series 27), a Delaware limited
partnership (the "Investment Partnership"), BOSTON CAPITAL
ASSOCIATES IV L.P. (the "Investment General Partner"), PEABODY &
BROWN and certain other persons or entities described herein.
WHEREAS, the Operating Partnership proposes to admit the
Investment Partnership as a limited partner thereof pursuant to
an Amended and Restated Agreement of Limited Partnership of the
Operating Partnership dated as of October 1, 1997 (the "Operating
Partnership Agreement"), in accordance with which the Investment
Partnership will make substantial capital contributions to the
Operating Partnership;
WHEREAS, the Investment Partnership and Investment General
Partner have relied upon certain information and representations
described herein in evaluating the merits of investment by the
Investment Partnership in the Operating Partnership; and
WHEREAS, Peabody & Brown, as counsel for the Investment
Partnership, will rely upon such information and representations
in connection with its delivery of certain opinions with respect
to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to
enter into the Operating Partnership Agreement and become a
limited partner of the Operating Partnership, and for $1.00 and
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Operating Partnership, the
Operating General Partners and the Original Limited Partner
hereby agree as follows for the benefit of the Investment
Partnership, Investment General Partner, Peabody & Brown and
certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership, the Operating General Partners
and the Original Limited Partner
The Operating Partnership, the Operating General Partners
and the Original Limited Partner jointly and severally represent,
warrant and certify to the Investment Partnership, Investment
General Partner and Peabody & Brown that, with respect to the
Operating Partnership, as of the date hereof:
A. The Operating Partnership is duly organized and in good
standing as a limited partnership pursuant to the laws of the
state of its formation with full power and authority to own its
apartment complex (the "Apartment Complex") and conduct its busi-
ness; the Operating Partnership, the Operating General Partners
and the Original Limited Partner have the power and authority to
enter into and perform this Certification and Agreement; the
execution and delivery of this Certification and Agreement by the
Operating Partnership, the Operating General Partners and the
Original Limited Partner have been duly and validly authorized by
all necessary action; the execution and delivery of this
Certification and Agreement, the fulfillment of its terms and
consummation of the transactions contemplated hereunder do not
and will not conflict with or result in a violation, breach or
termination of or constitute a default under (or would not result
in such a conflict, violation, breach, termination or default
with the giving of notice or passage of time or both) any other
agreement, indenture or instrument by which the Operating
Partnership or any Operating General Partner or Original Limited
Partner is bound or any law, regulation, judgment, decree or
order applicable to the Operating Partnership or any Operating
General Partner or Original Limited Partner or any of their
respective properties; this Certification and Agreement
constitutes the valid and binding agreement of the Operating
Partnership, the Operating General Partners and the Original
Limited Partner, enforceable against each of them in accordance
with its terms.
B. The Operating General Partners have delivered to the
Investment Partnership, Investment General Partner or their
affiliates all documents and information which would be material
to a prudent investor in deciding whether to invest in the
Operating Partnership. All factual information, including
without limitation the information set forth in Exhibit A hereto,
provided to the Investment Partnership, Investment General
Partner or their affiliates either in writing or orally, did not,
at the time given, and does not, on the date hereof, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
under which they are made. The financial statements for the
Operating General Partners and their affiliates previously
delivered fairly present the financial condition of such parties
as of the dates of said financial statements and since the date
of such financial statements there has been no material adverse
change in the financial position of any of the Operating General
Partners or such affiliates. The estimates of occupancy rates,
operating expenses, cash flow, depreciation and tax credits set
forth on Exhibit A are reasonable in light of the knowledge and
experience of the Operating General Partners.
C. As of the date hereof, each of the representations
contained in Exhibit B attached hereto is true, accurate and
complete as to each of the Operating Partnership, the Operating
General Partners and the Original Limited Partner and as to any
of their affiliates, any of their predecessors and their
affiliates' predecessors, any of their directors, officers,
general partners and/or beneficial owners of ten per cent (10%)
or more of any class of their equity securities (beneficial
ownership meaning the power to vote or direct the vote and/or the
power to dispose or direct the disposition of such securities),
as the case may be, and any promoters presently connected with
them in any capacity.
D. Each of the representations and warranties contained in
the Operating Partnership Agreement is true and correct as of the
date hereof.
E. Each of the covenants and agreements of the Operating
Partnership and the Operating General Partners contained in the
Operating Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required
on or prior to the date hereof.
F. All conditions to admission of the Investment
Partnership as the investment limited partner of the Operating
Partnership contained in the Operating Partnership Agreement have
been satisfied.
G. No default has occurred and is continuing under the
Operating Partnership Agreement or any of the Project Documents
(as said term is defined in the Operating Partnership Agreement)
for the Operating Partnership.
H. No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
I. The Operating Partnership has the sole responsibility
to pay all maintenance and operating costs, including all taxes
levied and all insurance costs, attributable to the Apartment
Complex.
J. The Operating Partnership, except to the extent it is
protected by insurance and excluding any risk borne by lenders,
bears the sole risk of loss if the Apartment Complex is destroyed
or condemned or there is a diminution in the value of the
Apartment Complex.
K. No person or entity except the Operating Partnership
has the right to any proceeds, after payment of all indebtedness,
from the sale, refinancing, or leasing of the Apartment Complex.
L. No Operating General Partner is related in any manner
to the Investment Partnership, nor is any Operating General
Partner acting as an agent of the Investment Partnership.
M. The Apartment Complex contains no substance known to be
hazardous, such as hazardous waste, lead-based paint, asbestos,
methane gas, urea formaldehyde insulation, oil, toxic substances,
underground storage tanks, polychlorinated biphenals (PCBs), and
radon; the Apartment Complex is not affected by the presence of
oil, toxic substances, or other pollutants that could be a
detriment to the Apartment Complex nor is the Operating
Partnership in violation of any local, state, or federal law or
regulation; and no violation of the Clean Air Act, Clean Water
Act, Resource Conservation and Recovery Act, Toxic Substance
Control Act, Safe Drinking Water Control Act, Comprehensive
Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing.
Neither the Operating Partnership nor any Operating General
Partner or Original Limited Partner has received any notice from
any source whatsoever of the existence of any such hazardous
condition relating to the Apartment Complex or of any violation
of any local, state or federal law or regulation with respect to
the Apartment Complex.
N. The fair market value of the Apartment Complex exceeds
the total amount of indebtedness encumbering the Apartment
Complex and is expected to continue to do so throughout the term
of such indebtedness.
O. The Apartment Complex will not upon completion of
rehabilitation be in violation of any State or local health or
building code or regulation.
P. 1997 low-income housing tax credit authorization in the
amount of at least $291,646 per annum for the Property has been
obtained by the Partnership from the tax credit agency of the
State of New York and is in full force and effect.
Q. All 22 rental dwelling units in the Property will be
leased to persons who satisfy the income restrictions under
Section 42(g)(1) of the Code at rents satisfying the rent
restrictions of Section 42(g)(2) of the Code.
R. All qualified low income dwelling units in the Property
will be occupied by tenants under leases with terms of not less
than six months.
S The Apartment Complex does not receive assistance under
the HUD Section 8 Moderate Rehabilitation Program.
T The Operating General Partners agree to take all
actions necessary to claim the Projected Credit, including,
without limitation, the filing of Form(s) 8609 with the Internal
Revenue Service.
U The Project is located in a qualified census tract or
difficult development area for purposes of Section 42(d)(5)(B) of
the Code.
V The allocation of 1997 low income housing tax credit to
the Property was not made pursuant to the "nonprofit set aside"
provisions of Section 42 of the Code. [to be discussed further?]
W No part of the Property nor its operation has been,
directly or indirectly, financed at any time with either (1) an
obligation the interests on which is exempt from tax under
Section 103 of the Code or (2) any loan funded in whole or in
part, directly or indirectly, with federal funds (other than
funds provided pursuant to Section 106, 107 or 108 of the Housing
and Community Development Act of 1974) if the interest rate
payable on such loan is less than the applicable federal rate in
effect under Section 1274(d)(1) of the Code (as of the date on
which the loan is made).
X Either (a) rehabilitation expenditures with respect to
each building of the Apartment Complex allocable to low income
units during a twenty-four month period are (or will be) equal to
or greater than the greater of $3,000 per low income unit or 10%
of the unadjusted basis of the building or (b) rehabilitation
expenditures with respect to each building of the Apartment
Complex allocable to low income units during a twenty-four month
period are (or will be) equal to at least $3,000 per low income
unit and the building was acquired from a governmental unit.
2. Indemnification
A. The Operating General Partners (for purposes of this
Section 2.A, the "Indemnifying Parties" or, individually, an
"Indemnifying Party") agree to indemnify and hold harmless the
Investment Partnership, Investment General Partner (for purposes
of this Section 2.A, the "Indemnified Parties" or, individually,
an "Indemnified Party") and each officer, director, employee and
person, if any, who controls any party against any losses,
claims, damages or liabilities (collectively, "Liabilities"),
joint or several, to which any Indemnified Party or such officer,
director, employee or controlling person may become subject,
insofar as such Liabilities or actions in respect thereof arise
out of or are based upon (i) a breach by such Indemnifying Party
of any of his representations, warranties or covenants to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons under this Certification and
Agreement or (ii) liability under any statute, regulation,
ordinance, or other provision of federal, state, or local law or
any civil action pertaining to the protection of the environment
or otherwise pertaining to public health or employee health and
safety, including, without limitation, protection from hazardous
waste, lead-based paint, asbestos, methane gas, urea formaldehyde
insulation, oil, toxic substance, underground storage tanks,
polychlorinated biphenals (PCBs), and radon; and to reimburse
each such Indemnified Party and each such officer, director,
employee or controlling person for any legal or other expenses
reasonably incurred by it or them in connection with
investigating or defending against any such Liability or action;
provided, however, that the Indemnifying Party shall not be
required to indemnify any Indemnified Party or any such officer,
director, employee or controlling person for any payment made to
any claimant in settlement of any Liability or action unless such
payment is approved by the Indemnifying Party or by a court
having jurisdiction of the controversy. This indemnity agreement
shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the
termination of any agreement which refers to this indemnity and
shall be in addition to any liability which the Indemnifying
Party may otherwise have.
B. No Indemnifying Party shall be liable under the
indemnity agreements contained in Section 2.A unless the
Indemnified Party shall have notified the Indemnifying Party in
writing within forty-five (45) business days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Indemnified Party or any
such of its officers, directors, employees or controlling
persons, but failure to notify an Indemnifying Party of any such
claim shall not relieve it from any liability which it may have
to the Indemnified Party or any such of its officers, directors,
employees or controlling persons against whom action is brought
otherwise than on account of its indemnity agreement contained in
Section 2.A. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so
elects, in accordance with arrangements satisfactory to any other
Indemnifying Party or parties similarly notified, to assume the
defense thereof, with counsel who shall be satisfactory to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons and any other Indemnified
Parties who are defendants in such action; and after notice from
the Indemnifying Party to such Indemnified Party or any such of
its officers, directors, employees or controlling persons of its
election so to assume the defense thereof and the retaining of
such counsel by the Indemnifying Party, the Indemnifying Party
shall not be liable to such Indemnified Party or any such of its
officers, directors, employees or controlling persons for any
legal or other expenses subsequently incurred by such Indemnified
Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other
than the reasonable costs of investigation.
3. Miscellaneous
A. This Certification and Agreement is made solely for the
benefit of the Operating Partnership, the Operating General
Partners, the Original Limited Partner, Investment General
Partner, Peabody & Brown and the Investment Partnership (and, to
the extent provided in Section 2, the officers, directors,
partners, employees and controlling persons referred to therein),
and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
B. This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original, all of which together shall constitute one and the same
instrument.
C. Terms defined in the Operating Partnership Agreement
and used but not otherwise defined herein shall have the meanings
given to them in the Operating Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
OPERATING PARTNERSHIP:
ANGELOU ASSOCIATES L.P.
By: Angelou of Harlem, Inc.
By: /s/Preston Washington
Preston Washington,
President
OPERATING GENERAL PARTNER:
ANGELOU OF HARLEM, INC.
By: /s/Preston Washington
Preston Washington,
President
ORIGINAL LIMITED PARTNER:
_____________________________
HARLEM CONGREGATIONS FOR
COMMUNITY IMPROVEMENT, INC.
By: /s/Preston Washington
Preston Washington,
President
Attachments
Exhibit A Fact Sheet
Exhibit B Certificate re Lack of Disqualifications
Exhibit A
ANGELOU ASSOCIATES L.P.
FACT SHEET
Construction First
Mortgage Financing
Lender: Chase Community Development Corporation
Mortgage Amount: $318,000
Note Date: not yet closed
Interest Rate: 2% above (a) the Prime Rate or (b) the Alternate Base Rate
Guarantors: Novelex/MDG J.V.
Term: 18 months
Commitment Fees: $6,360
Permanent First
Mortgage
Financing
Lender: Chase Community Development
Corporation Mortgage Amount: $318,000
Note Date: not yet closed
Interest Rate: 8.56%
Term: 15 years
Construction and
Permanent Second
Mortgage Financing
Lender: New York State Housing Trust Fund
Mortgage Amount: $690,000
Note Date: not yet closed
Interest Rate: 1% - permanent
6% - construction
Term: 18 months - construction
30 years - permanent
Master Lease: to be entered into prior to
Permanent Mortgage Commencement
GP Capital
Contribution: $100
Total Capital
Contribution of
Investment
Partnership: $1,893,804
Capital
Contribution
$1,515,042 on the later of (i) the Admission Date, (ii)
Construction Mortgage Closing or (iii) Permanent
Mortgage Commitments;
$184,257 on the later of (i) the Completion Date, (ii) State
Designation, (iii) receipt by the Limited Partners
of a copy of the Partnership's owner's title
insurance policy, as endorsed through Permanent
Mortgage Commencement, with such policy, and
endorsement in form and substance satisfactory to
the Special Limited Partner, (iv) receipt of the
Contractor Payment Letter and (v) receipt of the
Lender Estoppel Letter;
$184,257 on the latest of (i) the Initial 100% Occupancy
Date, (ii) State Designation, (iii) Permanent
Mortgage Commencement, (iv) an opinion of counsel
to the Partnership concerning the Permanent
Mortgage, including the non-recourse nature
thereof, satisfactory as to form, content and
counsel to the Special Limited Partner and
(v) Rental Achievement;
$10,248 on Rental Achievement Confirmation.
Fees, Special
Distributions and
Other Items to be
paid from Capital
Contributions.
Construction and
Development Fee: $345,072 (of which $326,388 is payable from Capital
Contributions and the $18,684 balance of which is
deferred)
Amount of annual
Asset Management
Fee: $2,000 (1999)
Amount of annual
Partnership
Management Fee: $7,500 (1999)
Ownership Interests General Partners Investment Limited Special Limited
Partner Limited Partner
Profits, Losses
and Credits 0.1% 99.900% 0.000%
Cash Flow 80.0% 20.000% 0.000%
Capital Transaction 70.0% 29.999% 0.001%
Type of Credit: Nine Percent
Eligible Basis: $2,618,328
Qualified Basis: $3,403,826 (130%)
LIHC Rate: 8.57%% (anticipated rate presumed
to be in effect on the placed in
service date)
To the To the
Projected Credit Partnership Investment Partnership
Partnership (100%): (99.9%):
Each of the years
1999 through 2008: $291,646 per annum $291,354 per annum
Tax Credit Approval:
Reservation
Date: December 12, 1996
Credit Amount Reserved: $291,646
Building Breakdown:
#1
Unit #s 23
Number of units in
building
Apartment Complex:
Name: Angelou Court Apartments
Address: 516-520 Manhattan Avenue
New York, NY
Type of Project: Family
Area Median Income: $45,800
Type of Apartments:
Unit Size Number Square Feet Rent Utility
Allowance
1 bedroom 5 914 $460 $34
2 bedroom 16 877 $556 $40
3 bedroom 2 1,395 $650 $44
Rent-up Schedule: Occupancy As of the end of:
percentage: January 1997
100%
Annual Operating Expenses (beginning 1999): $90,468
Replacement Reserve Account
Annual Deposit: $4,600
Total: $46,000
Projected gross
annual Cash Flow: $7,083 (1999)
Amount of Total
Depreciable Base
Allocated to
Personal Property: $47,582
Projected Completion Date: November 18, 1998
General Partner: Angelou of Harlem, Inc.
Address: 2854 Frederick Douglass Blvd.
New York, NY 10039
Telephone Number:
(212) 283-1377
Contact Person: Rev. Dr. Preston Washington,
President
Guarantors of
General Partner
Obligations: Harlem Congregations for Community
Improvement, Inc.
Management Agent: Prestige Management, Inc.
Address: 3485 East Tremont Avenue
Buffalo, NY 10465
Amount of Fee: 8% of Gross Receipts
Builder: Novalex/MDG J.V.
Address: 2819 Frederick Douglass Blvd.
New York, NY 10039
Architect: Guy P. Romain, Architect
Address: 5760 Broadway
Brooklyn, NY
Operating Deficit Guaranty: The General Partners shall be obligated
during the 36-month period commencing on
Permanent Mortgage Commencement to advance
any funds which may be necessary
to meet cash operating expenses
which exceed cash operating income.
Replacement Reserve: The General Partners shall cause
the Partnership to deposit at
least $4,600 annually into the
Replacement Reserve. The Replacement Reserve
shall be funded by the General Partners in
the event that there is insufficient operating
income to fund the Replacement Reserve.
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partners and Original
Limited Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partners
and its Original Limited Partner (as identified on the
Certification and Agreement to which this Certificate is attached
as Exhibit B) hereby represent to you that neither (i) the
Operating Partnership, (ii) any predecessor of the Operating
Partnership, (iii) any of the Operating Partnership's affiliates
("affiliate" meaning a person that controls or is controlled by,
or is under common control with, the Operating Partnership),
(iv) any sponsor (meaning any person who (1) is directly or
indirectly instrumental in organizing the Operating Partnership
or (2) will directly or indirectly manage or participate in the
management of the Operating Partnership or (3) will regularly
perform, or select the person or entity who will regularly
perform, the primary activities of the Operating Partnership),
(v) any officer, director, principal or general partner of the
Operating Partnership or of any sponsor, (vi) any officer,
director, principal, promoter or general partner of any Operating
General Partner, (vii) any beneficial owner of ten per cent or
more of any class of the equity securities of the Operating
Partnership or of any sponsor (beneficial ownership meaning the
power to vote or direct the vote and/or the power to dispose or
direct the disposition of such securities), (viii) any promoter
of the Operating Partnership (meaning any person who, acting
alone or in conjunction with one or more other persons, directly
or indirectly has taken, is taking or will take the initiative in
founding and organizing the business of the Operating Partnership
or any person who, in connection with the founding and organizing
of the business or enterprise of the Operating Partnership,
directly or indirectly receives in consideration of services or
property, or both services and property, ten per cent or more of
any class of securities of the Operating Partnership or ten per
cent or more of the proceeds from the sale of any class of such
securities; provided, however, a person who receives such
securities or proceeds either solely as underwriting commissions
or solely in consideration of property shall not be deemed a
promoter if such person does not otherwise take part in founding
and organizing the enterprise) presently connected with the
Operating Partnership in any capacity:
(1) Has filed a registration statement which is the
subject of any pending proceeding or examination under the
securities laws of any jurisdiction, or which is the subject of a
any refusal order or stop order thereunder entered within five
years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere
to a misdemeanor or felony or, within the last ten years, been
held liable in a civil action by final judgment of a court based
upon conduct showing moral turpitude in connection with the
offer, purchase or sale of any security, franchise or commodity
(which term, for the purposes of this Certificate shall
hereinafter include commodity futures contracts) or any other
aspect of the securities or commodities business, or involving
racketeering, the making of a false filing or a violation of
Sections 1341, 1342 or 1343 of Title 18 of the United States Code
or arising out of the conduct of the business of an issuer,
underwriter, broker, dealer, municipal securities dealer, or
investment adviser, or involving theft, conversion,
misappropriation, fraud, breach of fiduciary duty, deceit or
intentional wrongdoing including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny
fraudulent conversion or misappropriation of property or
conspiracy to defraud, or which is a crime involving moral
turpitude, or within the last five years of a misdemeanor or
felony which is a criminal violation of statutes designed to
protect consumers against unlawful practices involving insurance,
securities, commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order,
judgment or decree entered within five years prior to the date
hereof entered or issued by or procured from a state securities
commission or administrator, the Securities and Exchange
Commission ("SEC"), the Commodities Futures Trading Commission or
the U.S. Postal Service, or to (b) any administrative order or
judgment, arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or
investment adviser, or involving deceit, theft, fraud or
fraudulent conduct, or breach of fiduciary duty, or which is
based upon a state banking, insurance, real estate or securities
law or (c) has been the subject of any administrative order,
judgment or decree in any state in which fraud, deceit, or
intentional wrongdoing, including, but not limited to, making
untrue statements of material fact or omitting to state material
facts, was found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of any
security or offering, or to any order, judgment or decree in
which registration violations were found or which prohibits,
denies or revokes the use of any exemption from registration in
connection with the offer, purchase or sale of securities, or to
an SEC censure or other order based on a finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction entered
within five years prior to the date hereof, temporarily,
preliminarily or permanently restraining or enjoining such
persons from engaging in or continuing any conduct or practice in
connection with any aspect of the securities or commodities
business or involving the making of any false filing or arising
out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
which restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to
conduct alleged to have violated section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an
exchange registered as a national securities exchange, an
association registered as a national securities association, or
any self-regulatory organization registered pursuant to the Secu-
rities Exchange Act of 1934, or a Canadian securities exchange,
or association or self-regulatory organization operating under
the authority of the Commodity Futures Trading Commission, or is
subject to any currently effective order or order entered within
the past five years of the SEC, the Commodity Futures Trading
Commission or any state securities administrator denying
registration to, or revoking or suspending the registration of,
such person as a broker-dealer, agent, futures commission merchant,
commodity pool operator, commodity trading adviser or investment adviser or
associated person of any of the foregoing, or prohibiting the
transaction of business as a broker-dealer or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding before the
SEC or any state securities commission or any regulatory
authority willfully made or caused to be made any statement which
was at the time and in the light of the circumstances under which
it was made false or misleading with respect to any material
fact, or has willfully omitted to state in any such application,
report or proceeding any material fact which is required to be
stated therein or necessary in order to make the statements made,
in the light of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Trust Indenture Act of 1939, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, the Commodity Exchange Act of
1974 or the securities laws of any state, or any predecessor law,
or of any rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled,
commanded, induced or procured the violation by any other person
of any of the statutes or rules or regulations referred to in
subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if
he is a broker-dealer, or his employees, if he is an investment
adviser, but no person shall be deemed to have failed in such
supervision if there have been established procedures, and a
system for applying such procedures, which would reasonably be
expected to prevent and detect, insofar as practicable, any
violation of statutes, rules or orders described in subsection
(8) and if such person has reasonably discharged the duties and
obligations incumbent upon him by reason of such procedures and
system without reasonable cause to believe that such procedures
and system were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state securities
administrator within five years prior to the date hereof or is
subject to a currently effective United States Postal Service
fraud order or has engaged in dishonest or unethical practices in
the securities business or has taken unfair advantage of a custo-
mer or is the subject of sanctions imposed by any state or
federal securities agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his
liabilities exceed his assets or in the sense that he cannot meet
his obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his
customers, or has not sufficient financial responsibility to
carry out the obligations incident to his operations or has been
adjudged a bankrupt or made a general assignment for the benefit
of creditors; or
(13) Is selling or has sold, or is offering or has
offered for sale, in any state securities through any
unregistered agent required to be registered under the
Pennsylvania Securities Act of 1972, as amended (the
"Pennsylvania Act") or for any broker-dealer or issuer with
knowledge that such broker- dealer or issuer had not or has not
complied with the Pennsylvania Act.
(14) If the Operating Partnership is subject to the
requirements of Section 12, 14 or 15(d) of the Securities
Exchange Act of 1934, then the Operating Partnership has filed
all reports required by those Sections to be filed during the 12
calendar months preceding the date hereof (or for such shorter
period that the Operating Partnership was required to file such
reports).
