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)
November 14, 1997
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-70564 04-3208648
(Commission File Number) (IRS Employer Identification No.)
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108-4406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
On November 14, 1997, Boston Capital Tax Credit Fund IV
L.P., a Delaware limited partnership, specifically Series 27
thereof (the "Partnership") completed various agreements
relating to Magnolia Place Apartments Partnership,
A Mississippi Limited Partnership (the "Operating
Partnership"), including the Second Amended and Restated
Agreement of Limited Partnership of the Operating
Partnership dated as of November 14, 1997 (the "Operating
Partnership Agreement"), pursuant to which the Partnership
acquired a limited partner interest in the Operating
Partnership. Capitalized terms used and not otherwise
defined herein have their meanings set forth in
the Operating Partnership Agreement, a copy of which is
attached hereto as Exhibit (2)(a).
The Operating Partnership owns and operates a recently
constructed forty (40) unit apartment complex located in
Gautier, Mississippi, which is known as Gautier Place
Apartments (the "Apartment Complex"). The Apartment Complex
contains thirteen (13) buildings consisting of twenty
(20) 1-bedroom units, ten (10) 2-bedroom units and
ten (10) 3-bedroom units and is currently in the rent-up
stage with the expectation that 100% occupancy will be
achieved in May 1998.
The Operating Partnership is receiving permanent first
mortgage financing in the amount of $400,000 (the "Permanent
First Mortgage") from Hibernia National Bank. The Permanent
First Mortgage bears interest at a starting rate of 8.80%
(with adjustments on the fifth and tenth
anniversary) payable over a fifteen year term based on
a twenty-five year amortization schedule. The Operating
Partnership is receiving permanent second mortgage financing
in the amount of $500,000 (the "Permanent Second
Mortgage") from the Jackson County Board of Supervisors.
The Permanent Second Mortgage bears interest at the rate of
1% per annum payable over a forty year term.
It is expected that 100% of the rental apartment units
in the Apartment Complex will qualify for the low-income
housing tax credit (the "Tax Credits") under Section 42 of
the Internal Revenue Code of 1986, as amended (the "Code").
The general partners of the Operating Partnership are
T. F. Management, Inc. and M. Riemer Calhoun, Jr.
(the "General Partners"). Mr. Calhoun is the President of
T. F. Management, Inc., which is the Developer of
the Apartment Complex. Affiliates of the General Partners,
Calhoun Builders, Inc. and Calhoun Property Management,
Inc., serve as the Builder and Management Agent,
respectively, of the Apartment Complex. The Calhoun
organization has developed, built and currently manages more
than 110 affordable housing complexes totaling more than
4,000 units.
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 $800,027 to the Operating Partnership in three
installments as follows:
(1) $600,020 (the "First Installment") on
the latest of (i) the Admission Date; (ii) Tax Credit
Set-Aside; (iii) Construction Mortgage Closing; or
(iv) Permanent Mortgage Commitment;
(2) $80,003 (the "Second Installment") on
the latest of (i) the Completion Date; (ii) Cost
Certification; or (iii) State Designation; and
(3) $120,004 (the "Third Installment") on
the latest of (i) the Initial 100% Occupancy Rate;
(ii) receipt by the Partnership of the Operating
Partnership's owner's title insurance policy, as
endorsed through Permanent Mortgage Commencement, with
such policy and enclosement in form and substance
satisfactory to the Special Limited Partner;
(iv) delivery of an Opinion of Counsel to the Operating
Partnership concerning the Permanent Mortgages,
including the non-recourse nature thereof, satisfactory
as to form, content and counsel to the Special Limited
Partner; and (v) Breakeven Point.
The total Capital Contribution of the Partnership to
the Operating Partnership is based on the Operating
Partnership receiving $1,303,400 of Tax Credits during
the 10-year period commencing in 1998 of which 99%
($1,290,370) will be allocated to the Partnership as
the Investment Limited Partner of the Operating Partnership.
The Special Limited Partner of the Operating Partnership is
BCTC 94, Inc., an affiliate of the Partnership.
The Partnership believes that the Apartment Complex is
adequately insured.
Ownership interests in the Operating Partnership are as
follows, subject in each case to certain priority
allocations and distributions as set forth in the Operating
Partnership Agreement:
Normal Capital Cash
Operations Transactions Flow
General Partner 1.00% 1.00% 50%
Partnership 98.99% 98.99% 50%
Special Limited
Partner .01% .01% 0%
The Partnership used the funds obtained from
the payments of the holders of its beneficial assignee
certificates to make the acquisition of its interest in
the Operating Partnership.
Boston Capital Communications Limited Partnership
("BCAMLP") or an affiliate thereof will receive an Asset
Management Fee commencing in 1998 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 $4,000. The Asset Management Fee for each fiscal year
will be payable from Cash Flow in the manner and priority
set forth in Section 10.3(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, 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
Partners a fee (the "Partnership Management Fee") commencing
in 1998 for their services in connection with
the administration of the day to day business of
the Operating Partnership in an annual amount equal to
$4,000 per annum. The Partnership Management Fee for each
fiscal year of the Operating Partnership shall be payable
from Cash Flow in the manner and priority set forth in
Section 10.3(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 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 6.13 of the Operating
Partnership Agreement, the Operating Partnership will pay
the General Partners (or their designee) a Construction and
Development Fee in the principal amount of $194,000.
The Construction and Development Fee shall be payable
$73,996 at the time of the Second Installment and $120,004
at the time of the Third Installment.
Calhoun Builders, Inc., as the Builder of the Apartment
Complex received total compensation of $1,256,600. Calhoun
Property Management, Inc., as the Management Agent of
the Apartment Complex, is receiving a Management Fee equal
to 5% of gross rental receipts.
Item 7. Exhibits.
(c) Exhibits. Page
(1)(a)<F1> Form of Dealer-Manager Agreement between
Boston Capital Services, Inc. and
the Registrant (including, as an exhibit
thereto, the form of Soliciting Dealer
Agreement)
(2)(a) Second Amended and Restated Agreement of
Limited Partnership of Magnolia Place
Apartments Partnership, A Mississippi
Limited Partnership
(2)(b) Certification and Agreement relating to
Magnolia Place Apartments, A Mississippi
Limited Partnership
(4)(a)<F2> Agreement of Limited Partnership of
the Partnership
(16) None
(17) None
(21) None
(24) None
(25) None
(28) None
<F1>Incorporated by reference to Exhibit (1) to Registration
Statement No. 33-70564 on Form S-11, as filed with the
Securities and Exchange Commission.
<F2>Incorporated by reference to Exhibit (4) to Registration
Statement No. 33-70564 on Form S-11, as filed with the
Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereto duly
authorized.
Dated: April 28, 1998
BOSTON CAPITAL TAX CREDIT FUND
IV L.P.
By: Boston Capital Associates
IV L.P.,
its General Partner
By: C&M Associates,
d/b/a Boston
Capital Associates, its
General Partner
By: /s/Herbert F. Collins
Herbert F. Collins, Partner
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAGNOLIA PLACE APARTMENTS PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
By and Among
T.F. MANAGEMENT, INC.
as the General Partner
and
M. RIEMER CALHOUN, JR.
as the General Partner
and
M. RIEMER CALHOUN, JR.
as the Withdrawing Original Limited Partner
and
BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
(Series 27)
as the Investment Limited Partner
and
BCTC 94, INC.
as the Special Limited Partner
Dated as of November 14, 1997
Table of Contents
PRELIMINARY STATEMENT 1
ARTICLE I-DEFINED TERMS 1
ARTICLE II-NAME AND BUSINESS 15
2.1 NAME; CONTINUATION 15
2.2 OFFICE AND RESIDENT AGENT 15
2.3 PURPOSE 15
2.4 TERM AND DISSOLUTION 16
ARTICLE III-MORTGAGES; REFINANCING AND DISPOSITION OF
PROPERTY 16
ARTICLE IV-PARTNERS 17
4.1 GENERAL PARTNERS 17
4.2 INVESTMENT LIMITED PARTNER SPECIAL LIMITED PARTNER AND WITHDRAWING
ORIGINAL LIMITED PARTNER 17
4.3 LIABILITY OF THE LIMITED PARTNERS 18
4.4 SPECIAL RIGHTS OF THE INVESTMENT LIMITED PARTNER AND THE SPECIAL
LIMITED PARTNER 18
4.5 MEETINGS 20
ARTICLE V-CAPITAL CONTRIBUTIONS OF THE INVESTMENT LIMITED
PARTNER AND THE SPECIAL LIMITED PARTNER 21
5.1 PAVMENTS 21
5.2 RETURN OF CAPITAL CONTRIBUTIONS 24
ARTICLE VI-RIGHTS, POWERS AND DUTIES OF GENERAL PARTNERS 27
6.1 AUTHORIZED ACTS 27
6.2 RESTRICTIONS ON AUTHORITY 28
6.3 PERSONAL SERVICES 29
6.4 BUSINESS MANAGEMENT AND CONTROL: TAX MATTERS PARTNER 30
6.5 ADDITIONAL DUTIES AND OBLIGATIONS OF THE GENERAL PARTNERS 30
6.6 REPRESENTATIONS AND WARRANTIES 33
6.7 LIABILITY ON THE PERMANENT MORTGAGES 36
6.8 INDEMNIFICATION OF THE GENERAL PARTNERS 36
6.9 INDEMNIFICATION OF THE PARTNERSHIP AND THE LIMITED PARTNERS 37
6.10 OPERATING DEFICITS 38
6.11 OBLIGATION TO COMPLETE THE CONSTRUCTION OF THE APARTMENT COMPLEX 39
6.12 CERTAIN PAYMENTS TO THE GENERAL PARTNERS AND OTHERS 40
6.13 ASSIGNMENT TO PARTNERSHIP 41
ARTICLE VII-WITHDRAWAL OF A GENERAL PARTNER: NEW GENERAL
PARTNERS 41
7.1 WITHDRAWAL 41
7.2 OBLIGATION TO CONTINUE 42
7.3 WITHDRAWAL OF ALL GENERAL PARTNERS 42
7.4 INTEREST OF GENERAL PARTNER AFTER PERMITTED WITHDRAWAL 42
7.5 ADMISSION OF ADDITIONAL GENERAL PARTNER(S) UNDER CERTAIN
CIRCUMSTANCES 43
ARTICLE VIII-TRANSFERABILITY OF LIMITED PARTNER INTERESTS 44
8.1 ASSIGNMENTS 44
8.2 SUBSTITUTED LIMITED PARTNER 44
8.3 RESTRICTIONS 45
ARTICLE IX-BORROWINGS 45
ARTICLE X-PROFITS, LOSSES. TAX CREDITS. DISTRIBUTIONS AND
CAPITAL ACCOUNTS 45
10.1 CAPITAL AND CAPITAL ACCOUNTS 45
10.2 PROFITS. LOSSES AND TAX CREDITS 46
10.3 CASH DISTRIBUTIONS PRIOR TO DISSOLUTION 48
10.4 DISTRIBUTIONS UPON DISSOLUTION 49
10.5 SPECIAL PROVISIONS 50
10.6 AUTHORITY OF THE GENERAL PARTNERS TO VARY ALLOCATIONS TO PRESERVE
AND PROTECT THE PARTNERS' INTENT 54
ARTICLE XI-MANAGEMENT AGENT 55
ARTICLE XII-BOOKS AND RECORDS' ACCOUNTING TAX ELECTIONS ETC.
56
12.1 BOOKS AND RECORDS 56
12.2 BANK ACCOUNTS 56
12.3 AUDITORS 57
12.4 COST RECOVERY AND ELECTIONS 57
12.5 SPECIAL BASIS ADJUSTMENTS 58
12.6 FISCAL YEAR 58
12.7 INFORMATION TO PARTNERS 58
12.8 EXPENSES OF THE PARTNERSHIP 62
ARTICLE XIII-GENERAL PROVISIONS 62
13.1 RESTRICTIONS BY REASON OF SECTION 708 OF THE CODE 62
13.2 AMENDMENTS TO CERTIFICATE 63
13.3 NOTICES 63
13.4 WORD MEANINGS 63
13.5 BINDING EFFECT 64
13.6 APPLICABLE LAW 64
13.7 COUNTERPARTS 64
13.8 FINANCING REGULATIONS 64
13.9 SEPARABILITV OF PROVISIONS 65
13.10 PARAGRAPH TITLES 65
13.11 AMENDMENT PROCEDURE 65
13.12 EXTRAORDINARV LIMITED PARTNER EXPENSES 65
13.13 TIME OF ADMISSION 65
CONSENT AND AGREEMENT 69
SCHEDULE A 70
MAGNOLIA PLACE APARTMENTS PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Magnolia Place Apartments Partnership, A Mississippi
Limited Partnership (the "Partnership"), was formed as a
Mississippi limited partnership pursuant to an Agreement and
Certificate of Limited Partnership dated June 1, 1996 (the
"Original Agreement"), by and among M. Riemer Calhoun, Jr.,
and The Resource Foundation, Inc. as the general partners
and M. Riemer Calhoun, Jr., as the limited partner (the
"Withdrawing Original Limited Partner"). The Original
Agreement was filed and registered in the Filing Office on
June 11, 1996 (as so filed, the "Original Certificate").
The Original Agreement was amended by an Amended and
Restated Agreement of Limited Partnership dated August 27,
1997, whereby The Resource Foundation, Inc. withdrew as a
general partner and T. F. Management, Inc., a Louisiana
corporation was substituted as a general partner (M. Riemer
Calhoun, Jr. and T.F. Management, Inc. are collectively
referred to as the "General Partners"). The Amended
Certificate of Limited Partnership was filed and registered
with the Filing Office on August 28, 1997. Certain
capitalized terms used herein shall have the respective
meanings specified in Article I.
The parties hereto now desire to enter into this
Second Amended and Restated Agreement of Limited Partnership
to: (i) continue the Partnership; (ii) admit Boston Capital
Tax Credit Fund IV, L.P., a Delaware limited partnership
(specifically Series 27 thereof), to the Partnership as its
Investment Limited Partner; (iii) admit BCTC 94, Inc., a
Delaware corporation, as Special Limited Partner; (iv)
acknowledge the withdrawal of the Withdrawing Original
Limited Partner; (v) reassign the Interests in the
Partnership; and (vi) set forth all of the provisions
governing the Partnership and the Partners herein.
In consideration of mutual agreements set forth
herein, it is agreed and certified, and the Original
Agreement and the Original Certificate are hereby amended
and restated in their entireties, as follows:
ARTICLE I Defined Terms
The following defined terms used in this Agreement shall
have the meanings specified below:
Act means Section 79-14-201 of the Mississippi Code of
1972, as amended from time to time.
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 for a year shall be retroactively
revised if the amount of Tax Credit properly allocable to
the Investment Limited Partner for such year is revised
after audit or recaptured.
Additional Limited Partner means any holder of an
Interest designated as an Additional Limited Partner
pursuant to Section 4.4(b) or Section 7.4.
Admission Date means the first date on which all
parties hereto shall have executed this Agreement, or, if,
pursuant to the Act, the Investment Limited Partner shall
not be deemed admitted to the Partnership on such date, then
the next date thereafter on which the Investment Limited
Partner shall be deemed to be admitted to the Partnership
under the Act.
Affiliate means (A) as to the Investment Limited
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, (c) who, directly or indirectly, is the
beneficial owner of ten percent (10%) or more of any class
of equity securities of such Person of which such Person is
directly the owner of ten percent (10%) or more of any class
of securities, (d) who is an officer, director, general
partner, trustee or holder of ten percent (10%) or more of
the voting securities or beneficial interests of any Person
referred to in the foregoing clauses (v)(a), (v)(b) or
(v)(c) or (e) who, whatever his title, performs functions
for such Person or any Affiliate of such Person similar to a
Chairman or member of the Board of Directors, or executive
officer such as the President, Executive Vice President or
Senior Vice President, Corporate Secretary, or Treasurer, or
any Person holding a five percent (5%) or more equity
interest in such Person, or any Person having the power to
direct or cause the direction of such Person whether through
the ownership of voting securities, by contract or
otherwise; and (B) as to any other named Person or Persons:
(i) such Person; (ii) each member of the Immediate Family of
such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses
(i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii);
or (v) any other Person(a) who directly or indirectly
controls, is controlled by, or is under common control with
such Person, (b) who owns or controls ten percent (10%) or
more of the outstanding voting securities of such Person,
(c) of which ten percent (10%) or more of the outstanding
voting securities is owned by such Person or any of the
Persons referred to in the foregoing clauses (i) through
(iii), (d) who is an officer, director, partner or trustee
of such Person, or (e) for which such Person acts in the
capacity of the officer, partner or trustee of such Person,
or (e) for which such Person acts in the capacity of the
officer, director, partner or trustee. An affiliate of the
Investment limited 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. For the
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 or any Affiliate.
Agency means, as applicable, the Credit Agency, the
Jackson County Board of Supervisors and/or any other
governmental agency having jurisdiction over the particular
matter to which reference is being made.
Agency Regulatory Agreement means the HOME Affordable
Rental Housing Program Regulatory Agreement to be entered
into between the Permanent Second Lender and the
Partnership.
Agreement means this Second Amended and Restated
Agreement of Limited Partnership, including Schedule A, as
amended from time to time.
Apartment Complex means the real property located in
Gautier, Jackson County, Mississippi, 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, fixtures and
personal property covered by the Mortgages, known or to be
known as Magnolia Place Apartments.
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 Todd Little & Company, or such other
firm of independent certified public accountants as may be
engaged by the General Partners with the consent of the
Special Limited Partner 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 and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, and its successors and assigns.
Breakeven Confirmation means the date upon which each
of the Limited Partners receive a copy of the federal income
tax return of the Partnership for the Partnership fiscal
year in which the Breakeven Point shall have occurred,
evidencing to the satisfaction of the Special Limited
Partner that the Breakeven Point occurred in such year.
Breakeven Point means thirty (30) days after the first
time at which, as certified by the General Partners to the
Limited Partners in writing together with a statement fully
disclosing the basis therefor and the manner of calculation
thereof, there have been three (3) consecutive full calendar
months of Partnership operations occurring after the later
to occur of (i) the Admission Date or (ii) Permanent
Mortgage Commencement, during which Revenues for each of
such months shall have exceeded all the Partnership's
expenses for such month on an accrual basis (including, but
not limited to, (a) all operational costs and expenses, (b)
all items payable in connection with any Mortgage, and (c)
the funding of any reserves required by any Lender or Agency
and/or pursuant to the terms of this Agreement), except for
depreciation, amortization and other non-cash charges,
distributions of Cash Flow and Capital Transaction proceeds
to the Partners and the fees payable pursuant to this
Agreement. If free rent or other rental concessions shall
have been granted to tenants, the calculation of income
pursuant to the preceding sentence shall be adjusted so that
the effect of such concessions is amortized equally over the
term of all leases (excluding renewal periods) to which it
applies. For purposes of the foregoing, expenses shall (i)
include monthly payments of principal and interest in the
amount specified in any Mortgage regardless of any
forbearance thereof, (ii) include a ratable portion of the
annual amount (as estimated by the General Partners) of
those seasonal expenses (such as utilities and maintenance
expenses) which might reasonably be expected to be incurred
on an unequal basis during a full annual period of
operation, and (iii) be adjusted, if necessary, so that the
expenses of real estate taxes and insurance are based on the
General Partners' reasonable estimate of the full assessed
value of the Apartment Complex after completion of
construction.
Capital Account has the meaning specified in Section
10.1(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, casualty where any insurance proceeds are not
to be used for reconstruction, condemnation or refinancing
of the Apartment Complex, but excluding the payment of
Capital Contributions.
Carryover Certification means the date upon which the
Limited Partners shall have received, in a form and in
substance satisfactory to the Special Limited Partner, the
certification of the Auditors that as of a date no later
than December 31, 1996, the Partnership had owned land or
depreciable property constituting part of the Apartment
Complex and had incurred capitalizable costs with respect to
the Apartment Complex of at least ten per cent (10%) of the
Partnership's reasonably expected basis in the Apartment
Complex as of December 31, 1998, so that each building in
the Apartment Complex constitutes a "qualified building" for
the purposes of Section 42(h)(1)(E)(ii) of the Code.
Cash Flow means, with respect to any fiscal year of
the Partnership, or any other applicable period, from and
after the Commencement Date, subject to any applicable
Agency requirements (a) all Revenues received by the
Partnership during such period plus (b) any amounts which
the General Partners, with the prior written consent of each
Lender or Agency whose consent may be required and the
Consent of the Investment Limited Partner, release from any
Partnership reserve account as no longer being necessary to
be held as part of such reserve account, less (i) operating
expenses of the Partnership paid from Revenues during the
applicable period, (ii) all cash payments made from Revenues
during such period to discharge interest and/or principal
obligations of Partnership indebtedness, and (iii) all
amounts from Revenues, if any, added to Partnership reserves
during such period; provided, however, that in no event will
the deductions in determining Cash Flow pursuant to clauses
(i) and (ii) above include payments made on account of the
Asset Management Fee, the Partnership Management Fee or
Subordinated Loans. Cash Flow Shall be determined separately
for each fiscal year and shall not be cumulative.
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 latest of (a) the date upon
which the Apartment Complex has been completed as evidenced
by the issuance by the inspecting architect and by each
governmental agency having jurisdiction of certificates of
substantial completion or occupancy (or local equivalents)
with respect to all apartment units in the Apartment Complex
and (b) the Partnership shall have obtained and furnished to
the Investment Limited Partner all due diligence
documentation with respect to the construction and
development of the Apartment Complex (which documentation
shall be satisfactory in form and content to the Investment
Limited Partner in its sole discretion), including without
limitation (i) an estoppel letter from each of the Lenders
stating that the Mortgages are in full force and effect and
no defaults have occurred thereunder (provided, however,
that if an estoppel letter is not obtainable from the Agency
notwithstanding the best efforts of the General Partners,
then the Investment Limited Partner shall be provided with
such certification and other evidence as it may request to
the effect that the Permanent Second Mortgage is in full
force and effect and no defaults have occurred thereunder),
and (ii) a letter from the contractor stating all amounts
due to it pursuant to the construction contract and
otherwise in connection with the construction and
development of the Apartment Complex have been paid in full
and the Partnership is not in default under said
construction contract (or, instead of such payoff letter,
submission to the Investment Limited Partner of other
evidence demonstrating the truth of said payoff letter
statements).
Compliance Period means the fifteen (15)-year period
commencing with the first year of the Credit Period.
Consent of the Investment Limited Partner means the
prior written consent or approval of the Investment Limited
Partner.
Construction and Development Fee means the fee
described in Section 6.12(b).
Construction Lender means the Hibernia National Bank,
in its capacity as holder of the Construction Mortgage, or
its successors or assigns in such capacity.
Construction Mortgage means the financing for the
construction of the Apartment Complex provided by the
Construction Lender in a principal amount of up to $975,000.
Construction Mortgage Closing means the first date
upon which (i) the Partnership shall have received all
necessary governmental and other permits and approvals for
the construction and operation of the Apartment Complex in
accordance with the plans and specifications therefor and
(ii) the Construction Mortgage shall have closed and the
initial draw thereunder shall have been disbursed.
Construction Permitting Date means the first date upon
which the Partnership shall have received all necessary
governmental and other permits and approvals for the
construction and operation of the Apartment Complex in
accordance with the plans and specifications therefor.
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
satisfactory to the Special Limited Partner, 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 Agency means the Mississippi Home Corporation.
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(g). Credit Recovery
Loans and interest thereon shall not be treated as loans or
interest, respectively, for accounting, tax or liability
purposes or for the purposes of Section 6.2(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(g).
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.
Economic Risk of Loss has the meaning set forth in
Treasury Regulation Section 1.752-2.
89-12 Requirements means the net worth requirement set
forth in Internal Revenue Procedure 89-12, which procedure
describes the prerequisites to the issuance with respect to
a limited partnership, assuming that each general partner of
such limited partnership is a corporation by the Service of
an advance ruling that such limited partnership lacks the
corporate characteristics of limited liability.
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, limited liability
partnership, corporation, joint venture, trust, business
trust, cooperative or association.
Event of Bankruptcy means with respect to any Person:
(i) the entry of a decree or order for relief by a
court having jurisdiction in respect of such Person or
in respect of any Controlling Person of such Person in
a case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal
or state bankruptcy, insolvency or other similar law,
or the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official)
of such Person or of any Controlling Person of such
Person 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 Office of the Secretary of the
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.
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-inlaw, descendants,
nephews, nieces, brothers, sisters, brothers-in-law,
sisters-in-law, children-in-law and grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon
which not less than 100% of the 40 apartment units in the
Apartment Complex shall have been leased to and physically
occupied by Qualified Tenants.
Installment means an installment of the Investment
Limited Partner's Capital Contribution paid or payable to
the Partnership pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of
such Partner to any and all benefits to which a Partner may
be entitled hereunder and the obligation of such Partner to
comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the quotient of (a) the paid-in
Capital Contribution of the Investment Limited Partner,
divided by (b) 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., in its capacity as the general partner
of the Investment Limited Partner, and any other Persons who
may become successor or additional general partners 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 Amended and
Restated Agreement of Limited Partnership of the Investment
Limited Partner, as amended from time to time.
Lenders means the Construction Lender, Permanent First
Lender and the Permanent Second Lender, each in its capacity
as maker of a Mortgage loan and its successors and assigns
in such capacity.
Limited Partners means the Investment Limited Partner,
the Special Limited Partner and any Additional Limited
Partner.
Low-Income Apartment Units means the 40 units in the
Project with respect to which the Partnership has agreed to
comply with the requirements for the Tax Credit under
Section 42 of the Code.
Management Agent means the management and rental agent
for the Apartment Complex.
Management Agreement means the agreement between the
Partnership and the Management Agent providing for the
management of the Apartment Complex.
Management Fee means the Management Fee to which
reference is made in Article XI.A.
Minimum Set-Aside Test means the set aside test
selected by the Partnership pursuant to Section 42(g) of the
Code whereby at least 40% of the units in the Apartment
Complex must be occupied by individuals with incomes equal
to 60% or less of area median income, as adjusted for family
size.
Mortgages means the mortgage indebtedness of the
Partnership to the Lender, the Permanent First Lender and
the Permanent Second Lender; where the context admits,
Mortgages shall mean the Construction Mortgage and include
the mortgage notes evidencing such indebtedness, the
mortgage or deed of trust and security agreements securing
such indebtedness, the loan agreements and all other
documentation related thereto which evidence and secure such
indebtedness, including any Agency documentation related
thereto.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate 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 Management Fee means the fee payable to the
General Partners pursuant to the provisions of Section
6.12(a).
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 Lenders mean, collectively, the Permanent
First Lender and the Permanent Second Lender.
Permanent First Lender means Hibernia National Bank, in
its capacity as maker and holder of the Permanent First
Mortgage, together with its successors and assigns in such
capacity.
Permanent First Mortgage means the permanent financing
provided, or to be provided, by the Permanent First Lender
for the Apartment Complex following the completion thereof
in the initial principal amount of up of $400,000.
Permanent Mortgages means the Permanent First Mortgage
and the Permanent Second Mortgage.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; (b) the principal amount and maturity date
of the Permanent Mortgages shall have been finally
determined; and (c) amortization of the Permanent Mortgages
shall have commenced.
Permanent Mortgage Commitment means the first date on
which the Partnership receives the written commitment of the
Permanent Lenders to make the Permanent Mortgages.
Permanent Second Lender means the Jackson County Board
of Supervisors, in its capacity as maker and holder of the
Permanent Second Mortgage, together with its successors and
assigns in such capacity.
Permanent Second Mortgage means the permanent financing
provided by the Permanent Second Lender for the Apartment
Complex following the completion thereof in the initial
principal amount of up of $500,000.
Person means any individual or Entity.
Project Documents means and includes all documents
evidencing or relating to the Construction Mortgage and the
Permanent Mortgages, the Management Agreement, the Agency
Regulatory Agreement, all other instruments delivered to (or
required by) the Construction Lender and/or the Permanent
Lenders 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 to the Investment Limited Partner
means $91,401 for 1998, $129,037 per annum for each of the
years 1999 through 2007 (inclusive) and $37,636 for 2008;
provided, however, that the Projected Credit for 2008 shall
be reduced by the amount, if any, by which the Actual Credit
for 1998 exceeds $91,401; and provided further that upon the
occurrence of any of the events described in clauses (i),
(ii) and (iii) of Section 5.1(e), the Projected Credit shall
thereafter be the Revised Projected Credit.
Qualified Basis has the meaning given to it in Section
42(c) of the Code.
Qualified Income Offset Item means (1) an allocation of
loss or deduction that, as of the end of each year,
reasonably is expected to be made (a) pursuant to Section
704(e)(2) of the Code to a donee of an interest in the
Partnership, (b) pursuant to Section 706(d) of the Code as
the result of a change in any Partner's Interest, or (c)
pursuant to Regulation Section 1.751-1(b)(2)(ii) as the
result of a distribution by the Partnership of unrealized
receivables or inventory items and (2) a distribution that,
as of the end of such year, reasonably is expected to be
made to a Partner to the extent it exceeds offsetting
increases to such Partner's Capital Account which reasonably
are expected to occur during or prior to the Partnership
taxable year in which such distribution reasonably is
expected to occur.
Qualified Tenant means a tenant (i) with income not
exceeding that permitted by the Minimum Set-Aside Test who
leases a Low-Income Apartment Unit in the Apartment Complex
at a rent which satisfies the Rent Restriction Test and (ii)
complying with any other requirements imposed by the Project
Documents.
Related Person means a Person related to a Partner
within the meaning of Treasury Regulation Section
1.752-4(b).
Rent Restriction Test means the test pursuant to
Section 42 of the Code whereby the gross rent (as defined
therein) charged to tenants of the Low-Income Apartment
Units may not exceed thirty per cent (30%) of the qualifying
income levels.
Revenues means all cash receipts (actually received) of
the Partnership during a specified period of time, including
rental assistance payments, operating subsidies and the
proceeds of rental interruption insurance receipts, but
excluding the proceeds of Capital Contributions, the
proceeds of the sale or other disposition of Partnership
assets, liquidation proceeds, loan or refinancing proceeds,
casualty proceeds, condemnation or eminent domain proceeds.
Any net rental income applied to complete the construction
of the Apartment Complex pursuant to Section 6.11 prior to
the later of the Admission Date or Permanent Mortgage
Commencement shall not be included when determining
Revenues. For the purposes of computing Revenues, rental
receipts shall not include prepaid rent and, if attributable
to Low-Income Apartment Units, shall be included only if
attributable to Qualified Tenants.
Revised Projected Credit has the meaning given to it in
Section 5.1(e).
Schedule A means Schedule A to this Agreement, as
amended from time to time.
Service means the Internal Revenue Service.
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 Mississippi.
State Designation means the date upon which the
Partnership receives the final allocation from the Credit
Agency for the building(s) constituting the Apartment
Complex in an annual dollar amount of not less than
$130,340, as evidenced by the execution by or on behalf of
said agency of Form(s) 8609. For the purposes of determining
State Designation, each building in the Apartment Complex
shall be treated as having received an allocation of Tax
Credit in an amount equal to the lesser of (i) the amount of
Tax Credit carryover allocation received from the Credit
Agency as to such building or (ii) the amount of Tax Credit
set forth on the Form 8609 as to such building.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is
admitted to the Partnership as Limited Partner under Section
8.2 or acquires the Interest of a Limited Partner pursuant
to Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman, of
Bethesda, Maryland, or such other firms of independent
certified public accountants as may be engaged by Boston
Capital to review the Partnership income tax returns.
Tax Credit means the low-income housing tax credit
pursuant to Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the
Partnership receives a reservation, effective for the year
1996, in an annual dollar amount of not less than $130,340,
which reservation shall not have expired or been revoked
prior to the date on which the First Installment is paid.
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 or the interest of
a Controlling Person 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.
Withdrawing Original Limited Partner has the meaning
specified in the Preliminary Statement.
ARTICLE II Name and Business
2.1 Name; Continuation
The name of the Partnership is Magnolia Place
Apartments Partnership, A Mississippi Limited Partnership.
The Partners agree to continue the Partnership which was
formed pursuant to the provisions of the Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is:
4 Riverbend Place
Jackson, Mississippi 39208
at which office there shall be maintained those records
required by the Act to be kept by the Partnership.
The Partnership may have such other or additional
offices as the General Partners shall deem desirable. The
General Partners may at any time change the location of the
Partnership offices 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:
Gary Harkins
4 Riverbend Place
Jackson, Mississippi 39208
2.3 Purpose
The purpose of the Partnership is to acquire, hold,
invest in, construct, develop, improve, maintain, operate,
lease and otherwise deal with the Apartment Complex. The
Partnership shall operate the Apartment Complex in
accordance with any applicable Agency regulations and
requirements. The Partnership shall not engage in any other
business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect
until December 31, 2038, 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) The Withdrawal of a General Partner 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 and the Special Limited
Partner shall fail to exercise the right provided in
Section 7.3;
(c) The election to dissolve the Partnership made in
writing by the General Partners with the Consent of
the Investment Limited Partner and the approval (if
required) of each applicable Agency;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of
the Partnership under the 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 assets of the Partnership 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 (other than Subordinated
Loans).
ARTICLE III Mortgages; Refinancing and Disposition of
Property
A. The General Partners and their Affiliates, jointly,
severally, and in solido, 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 amend, modify, decrease,
increase or refinance the Construction or Permanent
Mortgages and may make any required transfer or conveyance
of Partnership assets for security or mortgage purposes;
provided, however, any such amendment, modification,
decrease (except through the Permanent Mortgage amortization
schedule anticipated at Permanent Mortgage Commencement),
increase or refinancing of the Construction or Permanent
Mortgages may be made by the General Partners only with the
Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or
otherwise transfer or convey all or any substantial part of
the assets of the Partnership only with the Consent of the
Investment Limited Partner. Notwithstanding the foregoing
and except as set forth in Section 6.2(6), no Consent of the
Investment Limited Partner shall be required for the leasing
of apartments to tenants in the normal course of operations.
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 three percent (3%) of
the contract price for the sale of the Apartment Complex.
ARTICLE IV Partners
4.1 General Partners
The name, address and Capital Contribution of each
General Partner are as set forth on Schedule A. The General
Partners shall make additional Capital Contributions to the
Partnership in an amount aufficient to enable the
Partnership to pay any deferred portion of the Construction
and Development Fee not paid by December 31, 2008.
4.2 Investment Limited Partner Special Limited Partner
and Withdrawing Original Limited Partner
The Withdrawing Original Limited Partner hereby
withdraws as a limited partner of the Partnership and
acknowledges that the Withdrawing Original Limited Partner
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 Withdrawing
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.
4.3 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 Act.
4.4 Special Rights of the Investment Limited Partner
and the Special Limited Partner
(a) Notwithstanding any other provision herein, to the
extent the law of the State is not inconsistent, each of the
Investment Limited Partner and the Special Limited Partner
shall have the right, subject to the prior written consent
of any Lender or Agency (if such consent is required) to:
(i) amend this Agreement in any particular;
(ii) remove any General Partner and elect a new
General Partner (A) on the basis of the performance and
discharge of any General Partner's obligations
constituting fraud, bad faith, negligence, misconduct
or breach of fiduciary duty, or (B) upon the occurrence
of any of the following: (1) a General Partner shall
have materially violated any provisions of any Project
Document or other document required in connection with
any Mortgage, or any provisions of any Agency
regulations applicable to the Apartment Complex; (2) a
General Partner shall have materially violated any
provision of this Agreement, including, but not limited
to, any obligation to fund any Partnership expenses
under Section 6.12, or a General Partner shall have
materially violated any provision of applicable law;
(3) any Mortgage shall have gone into default; (4) the
termination of the Partnership for Federal income tax
purpose; (5) the treatment of the Partnership for
federal income tax purposes as an association taxable
as a corporation; or (6) the Partnership failing to pay
on a timely basis any of its real estate or personal
property tax obligations to any county, city, town or
other local government;
(iii) continue the business of the Partnership
with a substitute General Partner; and
(iv) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without
any further action by any Partner, the Special Limited
Partner or its designee shall automatically become a General
Partner and acquire in consideration of a cash payment of
$100 such portion of the Interest of the removed General
Partner as counsel to the Investment Limited 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 Interest of the removed General
Partner shall automatically be converted to an equal
Interest as an Additional Limited Partner, (iii) the
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 6.4. The
Special Limited Partner or any successor General Partner
proposed by the Special Limited Partner shall have the
option, exercisable in its sole discretion, to acquire the
Additional Limited Partner Interest, or any portion thereof,
of any removed General Partner upon payment of the agreed or
then present fair market value of such Interest or portion
thereof. Any dispute as to the value of the Interest or
portion thereof to be acquired pursuant to the immediately
preceding sentence shall be submitted to a committee
composed of three qualified real estate appraisers, one
chosen by the removed General Partner, one chosen by the
successor General Partner, and the third chosen by the two
so chosen. The committee of appraisers shall meet in
Shreveport, Louisiana, and the proceedings of such committee
shall conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall
be final and binding. The expense of arbitration shall be
born equally by the removed General Partner and the
Partnership. The method of payment to the removed General
Partner shall be fair and must protect the solvency and
liquidity of the Partnership. The method of payment will be
deemed presumptively fair where it provides for an
interest-bearing promissory note coming due in no less than
five (5) years with equal installments each year. In
addition, upon removal, the Partnership must promptly pay to
the removed General Partner all amounts then accrued and
owing to the removed General Partner; provided, however,
that notwithstanding the language of Section 6.14, Article
X, Article XI and any other provision hereof, no removed
General Partner or any Affiliate thereof shall be entitled
to receive any fee, compensation or other remuneration from
the Partnership, other than (i) the above-described payment
for the Interest, or portion thereof, of the removed General
Partner, and (ii) any such fee, compensation or other
remuneration which had already been earned in full prior 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.
(c) In order to implement Section 4.4(a)(iv), the
General Partners are hereby required, within five (5) days
after their receipt of any offer to purchase the Apartment
Complex or all of the Interests in the Partnership, to send
a copy of such offer (or a written description of any such
oral offer) to each of the Limited Partners. If, within
thirty (30) days of its receipt of any such copy of such an
offer, the Special Limited Partner shall send notice to the
General Partners that the Special Limited Partner desires
that the Partnership accept such offer, then the General
Partners shall be required to accept such offer on behalf of
the Partnership and proceed promptly to close such
transaction unless otherwise instructed by the Special
Limited Partner at any point prior to the closing of such
transaction. To the extent, if any, that the Special Limited
Partner shall determine, in its discretion, that the General
Partners are not proceeding in a manner satisfactory to it
with respect to any such offer or closing, each Partner
hereby grants to the Special Limited Partner an irrevocable
(to the extent permitted by law) power of attorney coupled
with an interest to execute and deliver any and all
documents and instruments on behalf of the Partnership and
any Partner as the Special Limited Partner may deem to be
necessary or appropriate in order to effect the acceptance
of and/or closing pursuant to any such offer in such a
manner as the Special Limited Partner shall, in its
discretion, determine to be satisfactory.
4.5 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
shall be $10, payable in full in cash on the Admission Date.
The Investment Limited Partner may deliver to the
Partnership, on behalf of the Special Limited Partner, the
Special Limited Partner's Capital Contribution. The
Investment Limited Partner's Capital Contribution shall be
paid in cash installments (the "Installments"), as follows:
(1) $600,020 (the "First Installment") on the latest of
(i) the Admission Date, (ii) Tax Credit Set-Aside, (iii)
Construction Mortgage Closing or (iv) Permanent Mortgage
Commitment;
(2) $80,003 (the "Second Installment") on the latest of
(i) the Completion Date, (ii) Cost Certification or (iii)
State Designation; and
(3) $120,004 (the "Third Installment") on the latest of
(i) the Initial 100% Occupancy Date, (ii) Permanent Mortgage
Commencement, (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) delivery of an opinion of
counsel to the Partnership concerning the Permanent
Mortgages, including the non-recourse nature thereof,
satisfactory as to form, content and counsel to the Special
Limited Partner and (v) Breakeven Point; provided, however,
that the General Partners shall give the Investment Limited
Partner not less than twenty-one (21) days' written notice
prior to the due date of each Installment subsequent to the
First Installment.
(b) The obligation of the Investment Limited Partner
to pay each Installment is conditioned upon delivery by the
General Partners to the Investment Limited Partner of a
written certificate (the "Payment Certificate") stating that
as of the date of such certificate (i) all the conditions to
the payment of such Installment have been satisfied and (ii)
all representations and warranties of the General 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. In
addition, 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 $1,700,027, 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 any
unpaid items enumerated in the numbered clauses of the
second sentence of Section 6.11 or 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 unpaid item and/or
Operating Deficit; provided, however, that if the proceeds
so paid are designated in this Agreement to be used to pay
fee(s) or distributions to the General Partners of their
Affiliates, then such proceeds shall be deemed to have first
been paid to the General Partners or their Affiliates as
such fees or distributions and then applied by the General
Partners to fund such unpaid item and/or Operating Deficit
as provided in said Section 6.10 or 6.11, as the case may
be.
(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) In the event that (i) State Designation does not
occur by June 30, 1998, or (ii) by June 30, 1998, 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
Qualified 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 $130,340, or (iii) at any
time after the Completion Date the product of the Apartment
Complex's Qualified 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 $130,340, then (a) the General Partners shall pay
to the Investment Limited Partner an amount equal to 99% of
the product of (A) the excess of $1,303,400 over the total
amount of Tax Credit actually allocated or expected to be
allocated to the Partnership over the entire Credit Period
and (B) 0.62, and (b) the Projected Credit for each year
shall thereafter be redefined to mean 99% of the annual
amount of Tax Credit actually so allocated to the
Partnership (the "Revised Projected Credit"). Any amount
payable by the General Partners to the Investment Limited
Partner pursuant to this Section 5.1(e) shall, at the option
of the Investment Limited Partner, (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, and/or (ii) be paid in its entirety by
the General Partners directly 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) If with respect to any fiscal year commencing
during the sixty (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) 62% of the
excess of the Projected Credit for such year over the Actual
Credit for such year, plus (B) the amount of any recapture,
interest or penalty payable by the limited partners of the
Investment Limited Partner as a result of such shortfall,
assuming that each limited partner in the Investment Limited
Partner used all of the Tax Credits allocated to it 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 but such amount shall be
subject to later adjustment by the Auditors or by the
Service in connection with an audit. The Investment Limited
Partner shall be eligible to be paid a Reduction Amount as
hereinabove described with respect to each Reduction Year
and may receive multiple payments of Reduction Amounts in
the event of multiple changes in the Actual Credit. Any
Reduction Amount shall, at the option of the Investment
Limited Partner, (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, and/or (ii) be paid in its entirety by the
General Partners directly 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.
(g) In the event that, for any reason, with respect to
any fiscal year following the fiscal years referred to in
Section 5.1(f), the amount of the Actual Credit shall be
less than the Projected Credit (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 (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 of the Investment Limited Partner as a result of
the Credit Shortfall for such year, assuming that each
limited partner in the Investment Partnership used all of
the Tax Credits allocated to it 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 constructive advances shall have been
deemed to have been made under this Section 5.1(g) at 9% per
annum. Credit Recovery Loans shall be payable by the
Partnership as provided in Section 10.3(b), Clause Third.
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit
Benchmarks and Standards. If:
(1) all of the Low-Income Apartment Units shall not
have been placed in service by June 30, 1998 (or any later
date fixed by the General Partners with the Consent of
Investment Limited Partner), or
(2) by June 30, 1998 (or any later date fixed by the
General Partners with the Consent of the Investment Limited
Partner) less than 40 apartment units in the Apartment
Complex shall have been occupied by Qualified Tenants, or
(3) Permanent Mortgage Commencement shall not have
occurred prior to June 30, 1998 (or any later date fixed by
the General Partners with the Consent of the Investment
Limited Partner), or
(4) State Designation shall not have occurred by June
30, 1998 (or any later date fixed by the General Partners
with the Consent of the Investment Limited Partner), or
(5) 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
(6) 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 any Lender or Agency 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 any Agency or other Lender 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
(7) if by June 30, 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, 1996,
the Partnership will have had incurred capitalizable costs
with respect to the Apartment Complex of at least ten per
cent (10%) of the Partnership's reasonably expected basis in
the Apartment Complex as of December 31, 1998, so that each
building in the Apartment Complex is a "qualified building"
for the purposes of Section 42(h)(1)(E)(ii) of the Code, or
(8) if at any time it shall be determined by the
Service or by the Tax Accountants that as of December 31,
1996 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, 1998, or
(9) if by June 30, 1998 (or any later date fixed by the
General Partners with the Consent of the Investment Limited
Partner) Cost Certification shall not have occurred, or
(10) if by September 30, 1998 (or any later date fixed
by the General Partners with the Consent of the Investment
Limited Partner) Breakeven shall not have been achieved, or
(11) the General Partners fail to make any advances
necessary to fund payment of the Asset Management Fee
pursuant to Section 6.12,
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 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 and/or Agency
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 such Limited
Partner shall, effective as of such time or such later time
as may be selected by such Limited Partner (or such other
time as may be specified by the Lender and/or Agency in its
disapproval), at the option of such Limited Partner (lf not
directed by the Lender and/or Agency 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
such Limited Partner an amount equal to its Invested Amount
minus the amount, if any, of such Limited 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) Failure to Perform. 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, then, in addition to all other remedies available
for such failure, the Special Limited Partner shall have the
rights set forth in Section 7.5.
ARTICLE VI Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other
provisions of this Agreement, the General Partners for, in
the name and on behalf of the Partnership, are hereby
authorized to do the following in furtherance of the
purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or
otherwise any real or personal property;
(2) To construct, operate, maintain, finance and
improve, and to own, sell, convey, assign, mortgage or lease
any real estate and any personal property;
(3) To borrow money and issue evidences of
indebtedness and to secure the same by mortgage, pledge or
other lien on the Apartment Complex or any other assets of
the Partnership;
(4) To execute the Construction and Permanent
Mortgages, the other Project Documents and all such other
documents as the General Partners deem necessary or
appropriate in connection with the acquisition, development
and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or amend
or modify the Construction and Permanent Mortgages or any
other financing affecting the Apartment Complex;
(6) To employ the Management Agent (which may be an
Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To employ their respective Affiliates to perform
services for, or sell goods to, the Partnership;
(8) To execute contracts with the State or any
subdivision or agency thereof or any other government agency
to make apartments or tenants in the Apartment Complex
eligible for any public-subsidy program;
(9) To execute leases of some or all of the apartment
units of the Apartment Complex to a public housing authority
and/or to a non-profit corporation, cooperative or other
non-profit Entity; and
(10) To enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and documents which may be required under the
laws of the State.
6.2 Restrictions on Authority
Notwithstanding any other Section of this Agreement,
the General Partners shall have no authority to perform any
act in violation of applicable law, Agency or other
government regulations, requirements of any Lender, or the
Project Documents. In the event of any conflict between the
terms of this Agreement and any applicable Agency or other
government regulations or requirements of the Lender, the
terms of such regulations or requirements shall govern.
Neither shall the General Partners have any authority to do
any of the following acts without the Consent of the
Investment Limited Partner and the prior written consent of
the Special Limited Partner, and in the event that any
General Partner violates any provision of this Section 6.2,
the Special Limited Partner shall have the rights set forth
in Section 7.5:
(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;
(2) To borrow from the Partnership or commingle
Partnership funds with funds of any other Person;
(3) Following the Completion Date, to construct any
new or replacement capital improvements on the Apartment
Complex which substantially alter the Apartment Complex or
its use or which are at a cost in excess of $10,000 in a
single Partnership fiscal year, excent (a) replacements and
remodeling in the ordinary course of business or under
emergency conditions or (b) construction paid for from
insurance proceeds;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) To increase, decrease (except through the
amortization schedule provided for in the Permanent
Mortgages), amend or modify the terms of or refinance the
Construction or Permanent Mortgages;
(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 all or any substantial part of the
assets of the Partnership;
(8) To terminate any agreement with any Agency;
(9) 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;
(10) To amend the Construction Contract, except for
change orders approved by the Lenders;
(11) To pledge or assign any of the Capital
Contribution of the Investment Limited Partner or the
proceeds thereof; or
(12) To do any act required to be approved or ratified
by all limited partners under the Act.
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; neither the Partnership nor
any other Partner shall have any rights in and to such
independent ventures or the income or profits derived
therefrom. Any and all contractual relationships between the
Partnership and any General Partner or Affiliate thereof
must (i) be cancelable upon sixty (60) days' notice from the
Special Limited Partner and (ii) not provided for payments
in excess of those determined by the Special Limited Partner
to be reasonable. Any and all compensation received directly
or indirectly by any General Partner or Affiliate thereof
pursuant to any such relationship must be fully disclosed
and specifically itemized in reports pursuant to Section
12.7.
6.4 Business Management and Control; Tax Matters
Partner
Subject to the provisions of this Agreement, the
General Partners shall have the exclusive right to control
the business of the Partnership. The Investment Limited
Partner shall have no right to take part in the management
or control of the business of the Partnership or to transact
any business in the name of the Partnership. No provision of
this Agreement which makes the Consent of the Investment
Limited Partner a condition for the effectiveness of an
action taken by the General Partners is intended, and no
such provision shall be construed, to give the Investment
Limited Partner any participation in the control of the
Partnership business. Each of the Special Limited Partner
and the Investment Limited Partner hereby consents to the
exercise by the General Partners of the powers conferred on
them by law and this Agreement, and the General Partners
agree to exercise control of the business of the Partnership
only in accordance with the provisions of this Agreement.
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 the Investment Limited Partner
or the Special Limited Partner to take any action hereunder.
All Partners hereby agree that the General Partners 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 his duties hereunder.
6.5 Additional Duties and Obligations of the General
Partners
(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 shall be responsible for
the management and operation of the Partnership, including
the oversight of the rent-up and operational stages of the
Apartment Complex.
(b) The General Partners shall use their best efforts
to cause the Partnership to generate Cash Flow for
distribution to the Partners at the maximum realizable level
in view of (i) any applicable Agency and other regulations,
(ii) the Minimum Set-Aside Test and (iii) the Rent
Restriction Test, and, if necessary, the General Partners
shall also use their best efforts to obtain approvals and
implementation of appropriate adjustments in the rental
schedule of the Apartment Complex.
(c) The General Partners shall cause the Partnership
to obtain and keep in force, during the term of the
Partnership, comprehensive casualty insurance, including,
but not limited to, fire and other risks generally included
under "extended coverage" policies, workmen's compensation
and public liability insurance in favor of the Partnership
(i) with such companies and in such amounts as shall be
satisfactory to the Lenders and any Agency, or, if the
Apartment Complex is no longer subject to Lender or Agency
regulation or requirements, as shall be customary for
apartment complexes similar to the Apartment Complex, and
(ii) in amounts which shall be (A) no less than those
amounts which are customary in the area for apartment
complexes such as the Apartment Complex, (B) in the case of
the "extended coverage" portion, no less than the full
original replacement value of the Apartment Complex, (C) 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 (D) 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
$5,000,000. Through the Completion Date, or such later date
as may be required by the Construction Lender or any Agency,
the General Partners shall also cause the Partnership to
obtain and keep in force a builder's risk policy in favor of
the Partnership in an amount not less than the greater of
(i) the full replacement value of the Apartment Complex
(excluding the value of the underlying land, the site
utilities and the foundations) or (ii) such other amount as
shall be required by any Agency or the Construction Lender.
Throughout the term of the Partnership, the General Partners
shall provide copies of all such policies (or binders) to
the Investment Limited Partner promptly after their receipt
thereof or upon request but no less frequently than
annually. The General Partners shall cause the applicable
insurer to name the Investment Limited Partner as an
"additional insured" on each Partnership insurance policy.
Prior to the expiration date for any such Partnership
insurance policy, the General Partners shall deliver to the
Investment Limited Partner a copy of the comparable new or
replacement policy, including all endorsements, exhibits and
riders thereto.
(d) Except as otherwise provided herein, the
obligations of the General Partners hereunder shall be the
joint and several obligations of each General Partner.
Except as otherwise provided in Sections 4.4(b) and 7.1,
such obligations shall survive any Withdrawal of a General
Partner from the Partnership.
(e) The General Partners shall establish and maintain
reasonable reserves to provide for working capital needs,
improvements, replacements and any other contingencies of
the Partnership. At a minimum, the General Partners shall
cause the Partnership to annually deposit, commencing in
1998, $8,000 from its Cash Flow into replacement reserves;
to the extent that Cash Flow (as determined before deduction
of this reserve deposit) for any year shall be insufficient
to make such deposit in full, the General Partners shall
fund such shortfall from its own funds as a Subordinated
Loan.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be
admitted if he, she or it has not first agreed to be bound
by this Agreement (and assume the obligations of a General
Partner hereunder) and by the Project Documents to the same
extent and under the same terms as the other General
Partners.
(g) The General Partners shall take all actions
necessary to ensure that the Investment Limited Partner
receives the full amount of the Projected Credit, including,
without limitation, the rental of apartments to Qualified
Tenants and the filing of annual certifications as may be
required. In this regard, the General Partners shall, inter
alia, cause (i) the Partnership to satisfy all requirements
imposed from time to time under the Code with respect to
rental levels and occupancy by Qualified Tenants by the
close of the first year of the Credit Period and throughout
the Compliance Period so as to permit the Partnership to be
entitled to the maximum available Tax Credit, (ii) the
Partnership to comply with all Tax Credit monitoring
procedures, (iii) all Low-Income Apartment Units to be
occupied pursuant to leases to Qualified Tenants for periods
of not less than six (6) months, (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 available for rental by the general public and to be
of equal quality and all Apartment Complex amenities to be
made available to all tenants on a comparable basis without
separate fees.
(h) On or before the Admission Date, the General
Partners shall provide to the Investment Limited Partner
either (i) an appraisal of the Apartment Complex prepared by
a competent independent appraiser or (ii) a project cost and
budget analysis on an Agency form or any comparable form of
a state or other governmental agency, including any
applicable Tax Credit allocation agency, setting forth
estimates with respect to construction and mortgage
financing costs and initial rental income and operating
expense figures for the Apartment Complex.
(i) The General Partners shall (i) not store (except
in compliance with all laws, ordinances, and regulations
pertaining thereto) or dispose of any Hazardous Material at
the Apartment Complex, or at or on any other Site or Vessel
owned, occupied, or operated either by any General Partner,
any Affiliate of a General Partner, or any Person for whose
conduct any General Partner is or was responsible; (ii)
neither directly nor indirectly transport or arrange for the
transport of any Hazardous Material (except in compliance
with all laws, ordinances, and regulations pertaining
thereto); (iii) provide the Investment Limited Partner with
written notice (x) upon any General Partner's obtaining
knowledge of any potential or known release, or threat of
release, of any Hazardous Material at or from the Apartment
Complex or any other Site or Vessel owned, occupied, or
operated by any General Partner, any Affiliate of a General
Partner or any Person for whose conduct any General Partner
is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General
Partner's receipt of any notice to such effect from any
Federal, state, or other governmental authority; and (z)
upon any General Partner's obtaining knowledge of any
incurrence of any expense or loss by any such governmental
authority in connection with the assessment, containment, or
removal of any Hazardous Material for which expense or loss
any General Partner may be liable or for which expense or
loss a lien may be imposed on the Apartment Complex.
6.6 Representations and Warranties
The General Partners represent and warrant to the
Investment Limited Partner and the Special Limited Partner
as follows:
(1) The Partnership is a duly organized limited
partnership validly existing 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) disputes with suppliers of labor
and/or materials; 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 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 Mortgages, except
as may be expressly permitted by Article III. No General
Partner has, either on its own behalf or on behalf of the
Partnership, incurred any financial responsibility with
respect to the Partnership prior to the Admission Date,
other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been
completed in a timely manner in conformity with the Project
Documents. There is no violation by the Partnership or the
General Partners of any zoning, environmental or similar
regulation applicable to the Apartment Complex which could
have a material adverse effect thereon, and the Partnership
has complied with all applicable municipal and other laws,
ordinances and regulations relating to such construction and
use of the Apartment Complex. All appropriate public
utilities, including, but not limited to, water,
electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will
be available and operating properly for each unit in the
Apartment Complex at the time of the first occupancy of such
unit.
(6) The Partnership owns good and marketable fee
simple title to the Apartment Complex, subject to no
material liens, charges or encumbrances other than those
which (a) are both permitted by the Project Documents and
are noted or excepted in title insurance policy delivered to
the Partnership pursuant to Section 5.1(b) and (b) do not
materially interfere with use of the Apartment Complex (or
any part thereof) for its intended purpose or have a
material adverse effect on the value of the Apartment
Complex.
(7) The execution and delivery of all instruments and
the performance of all acts heretofore or hereafter made or
taken pertaining to the Partnership or the Apartment Complex
by each Affiliate of a General Partner which is a
corporation or a limited liability company have been or will
be duly authorized by all necessary organizational 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, by-laws or
other organizational documents 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 or
limited liability company has been duly organized, is
validly existing and in good standing under the laws of its
state of organization and has all requisite 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 such General Partner
of this Agreement nor the performance of any of the actions
of such General Partner contemplated hereby has constituted
or will constitute a violation of (a) the articles of
organization, by-laws, operating agreement or other
organizational documents of such General Partner, (b) any
agreement by which such General Partner 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 or any Controlling Person of a
General Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of the Project Documents,
including, but not necessarily limited to, any account for
replacement reserves, are currently funded to the levels
required by the Lenders and/or any Agency.
(11) If the only General Partner(s) are one or more
corporations or limited liability companies, then the
General Partner(s) have a net worth which satisfies the
89-12 Requirements.
(12) All payments and expenses required to be made or
incurred in order to complete construction of the Apartment
Complex in conformity with the Project Documents, to fund
any reserves hereunder or under any other Project Document
required to be funded at or prior to the later of the
Admission Date or Permanent Mortgage Commencement, to
satisfy all requirements under the Project Documents and/or
which form the basis for determining the principal sum of
the Permanent Mortgages and to pay the Construction and
Development Fee have been or will be paid or provided for
utilizing only (a) the funds available from the Construction
Mortgage, (b) the Capital Contribution of the Investment
Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as
of the Admission Date, (d) the available net rental income,
if any, earned by the Partnership prior to Permanent
Mortgage Commencement (to the extent that it is permitted to
be used for such purposes by the Lenders and/or any Agency),
(e) any insurance proceeds and (f) any funds furnished by
the General Partners pursuant to Sections 6.5(a) and 6.10.
(13) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited
Partner is $91,401 for 1998, $129,037 per annum for each of
the years 1999 through 2007 (inclusive) and $37,636 for
2008.
(14) The Apartment Complex is being developed in a
manner which satisfies and shall continue to satisfy all
restrictions, including tenant income and rent restrictions,
applicable to projects eligible for Tax Credits and in
accordance with the Agency Regulatory Agreement.
(15) The General Partners have provided to the
Investment Limited Partner a complete copy of a "Phase I"
hazardous waste site assessment report for the Apartment
Complex, prepared in accordance with ASTM standards. 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 authonty or by any other
Person in connection with the assessment, containment, or
removal of any release or threat of release of any Hazardous
Material from the Apartment Complex or any such Site or
Vessel.
(16) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on,
transported, or disposed of on the land comprising the
Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance with
all laws, ordinances, and regulations pertaining thereto.
(17) The General Partners have furfilled and will
continue to fulfill all of their duties and obligations
under Sections 6.3 through 6.5.
6.7 Liability on the Permanent 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 pursuant to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall
have liability to the Partnership or to any Limited Partner
for any loss suffered by the Partnership which arises out of
any action or inaction of any General Partner or Affiliate
thereof if such General Partner or Affiliate thereof in good
faith determined that such course of conduct was in the best
interest of the Partnership and such course of conduct did
not constitute negligence or misconduct of such General
Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership,
provided that all of the following conditions are met: (i)
such General Partner has determined, in good faith, that the
course of conduct which caused the loss, judgment,
liability, expense or amount paid in settlement was in the
best interests of the Partnership; and (ii) such loss,
judgment, liability, expense or amount paid in settlement
was not the result of negligence or misconduct on the part
of 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, and any 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 6.10 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
Agency or Lender requirements in connection with the
operation of the Apartment Complex in the ordinary course of
business.
(b) Notwithstanding the foregoing, no General Partner
shall be liable to a Limited Partner or the Partnership for
any act or omission for which the Partnership is required to
indemnify such General Partner under Section 6.9.
(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 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 the
General Partners. Notwithstanding anything else set forth
herein, this indemnification shall survive the withdrawal of
any General Partner and/or the termination of this
Agreement.
6.10 Operating Deficits
The General Partners shall be obligated to promptly
advance funds to meet operating expenses (including full
payment of the Asset Management Fee and reserve deposits
required pursuant to Section 6.7(e) or by any Lender or
Agency) and debt service of the Partnership following the
later to occur of (i) the Admission Date or (ii) Permanent
Mortgage Commencement which exceed operating income
attributable to such period and available for the payment
thereof. In the event that the General Partners shall fail
to make any such advance as aforesaid, (a) the Partnership
shall utilize amounts (the "Applied Amounts") otherwise
payable to the General Partners or Affiliates thereof under
Section 6.12 and/or Article 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 rights set forth in Section
7.5. 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.
6.11 Obligation to Complete the Construction of the
Apartment Complex
The General Partners shall complete the construction of
the Apartment Complex substantially in accordance with the
plans and specifications approved by the Lenders and/or any
Agency and all requirements necessary to obtain the required
certificates of occupancy for dwelling units, or cause the
same to be completed, in a good and workmanlike manner, free
and clear of all mechanics', materialmen's or similar liens,
and shall equip the Apartment Complex or cause the same to
be equipped with all necessary and appropriate fixtures,
equipment and articles of personal property, including
refrigerators and ranges, and shall cause all necessary
certificates of occupancy for all apartment units in the
Apartment Complex to be obtained, all in accordance with the
Project Documents. If the proceeds of the Construction and
Permanent Mortgages, the net rental income, if any, of the
Apartment Complex generated prior to the later of Permanent
Mortgage Commencement or the Admission Date and which is
permitted by the Lenders and/or any Agency to be utilized
for any of the purposes hereinafter set forth, the Capital
Contribution of the Investment Limited Partner, the Capital
Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, and any
insurance proceeds arising out of casualties prior to the
later of Permanent Mortgage Commencement or the Admission
Date as available from time to time are insufficient to (i)
acquire and complete the construction of the Apartment
Complex and satisfy all other obligations, all as provided
in the first sentence of this Section 6.11, (ii) pay the
Construction and Development Fee (other than the deferred
portion thereof referred to in Section 6.12(b)), (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 in their
capacity as developers shall be responsible for and
obligated to pay such deficiencies and shall, to the extent
permitted under the Project Documents and any applicable
regulations or requirements of the Lenders and/or any
Agency, be reimbursed at or prior to the later of Permanent
Mortgage Commencement or the Admission Date only out of the
proceeds designated in this sentence available from time to
time after payment of all costs described in this sentence.
Any amounts not reimbursed through the later of Permanent
Mortgage Commencement or 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 in their capacity as developers; 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 and/or the Developer shall
fail to fund any such deficiency as required by this Section
6.11, an amount not in excess of the unpaid portion of the
Construction and Development Fee due to the Developer, 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/or the Developer, and, to the extent there may still be
a deficiency, any amounts otherwise payable as the
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
and/or the Developer to advance such amount under this
Section 6.11 shall be satisfied to the extent of such
application.
6.12 Certain Payments to the General Partners and
Others
(a) The Partnership shall pay to the General Partners
a fee (the "Partnership Management Fee") commencing in 1998
for their services in connection with the administration of
the day to day business of the Partnership in an annual
amount equal to $4,000 per annum. The 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 10.3(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 aufficient 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 6.13, the
Partnership shall pay to the General Partners (or their
designee) a construction and development fee (the
"Construction and Development Fee") in the amount of
$194,000, 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 $73,996 at the time of the Second
Installment and $120,004 at the time of the payment of the
Third Installment.
(c) The Partnership shall pay to BCCLP or an Affiliate
thereof a fee (the "Asset Management Fee") commencing in
1998 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 $4,000. The Asset Management Fee shall be payable
from Cash Flow in the manner and priority set forth in
Section 10.3(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 aufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X.
6.13 Assignment to Partnership
The General Partners hereby transfer and assign to the
Partnership all of their right, title and interest in and to
the Apartment Complex and in and to all of the Project
Documents, including, but not limited to, the following: (i)
all contracts with architects, supervising architects,
engineers and contractors with respect to the development of
the Apartment Complex; (ii) all plans, specifications and
working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and
applications therefor, including, but not limited to, those
relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with
respect to any agreements with the Lenders and any Agency;
and (vi) any other work product related to the Apartment
Complex and/or the Partnership, all of which shall have an
agreed to value of $1.00 for purposes of determining the
opening Capital Account of the General Partners.
ARTICLE VII Withdrawal of a General Partner; New General
Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the
Partnership (other than by reason of death or ad)udication
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, 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 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 on the terms set
forth in Section 7.5 without further action by the
Withdrawing General Partner or any other Partner, and each
Partner hereby consents to such transfer and to the
admission of the Special Limited Partner or its designee as
a General Partner in such a situation. Such transfer shall
occur automatically upon such Withdrawal without further
action by such Withdrawing General Partner.
(b) If at any time the only General Partners shall be
one or more corporations (or partnerships with corporations
as sole general partners), they shall be obligated to have a
net worth which satisfies the 89-12 Requirements. If the
General Partners shall at any time fail to meet the
requirements of this Section 7.l(b) and no additional
General Partner is admitted pursuant to Section 7.5, then
they shall be deemed to have withdrawn from the Partnership
in violation of the provisions of this Section 7.1 and shall
be subject to the provisions of Section 7.1(a).
Notwithstanding the foregoing, the provisions of this
Section 7.1(b) shall not apply to the Special Limited
Partner or its designee in the event it becomes the sole
General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the
remaining General Partners shall have the right and
obligation to continue the business of the Partnership
employing its assets and name, all as contemplated by the
Act. Within thirty (30) days after they obtain knowledge of
the Withdrawal of a General Partner, the remaining General
Partners shall notify the Limited Partners 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 4.4(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 aufficient to ensure the continued
treatment of the Partnership as a partnership under the Code
and as a limited partnership under the Act, and, for the
purposes of Article X, shall be deemed to be effective as of
the date of Withdrawal, but the Partnership shall not make
any distributions to the designated transferee until the
transfer shall have been made. Any holder of any portion of
the Interest of a Withdrawing General Partner which is not
designated to be transferred to the remaining or successor
General Partners pursuant to the provisions of this Section
7.4 shall become an Additional Limited Partner but (i) with
the same share of the profits, losses, tax credits, Cash
Flow and other distributions to which the holder of such
Interest was entitled when held as a General Partner
Interest, and (ii) shall not participate in the votes or
Consents of the Investment Limited Partner hereunder. The
admission of any successor or additional General Partner
shall be subject to the consent of the Lenders and any
Agency (if required) and the Consent of the Investment
Limited Partner.
7.5 Admission of Additional General Partner(s) under
Certain Circumstances
In the event that a General Partner violates any
provision of this Agreement, the Special Limited Partner, in
its sole discretion, shall have the option at any time
thereafter to cause itself or its designee to be admitted as
an additional General Partner on the terms set forth herein
without any further action by any other Partner. Upon any
such admission of an additional General Partner and in
consideration of the payment of $10, all pre-existing
General Partners shall be deemed to have transferred
(ratably in accordance with their respective Interests) to
the additional General Partner such portion of their
respective General Partner interests so that the additional
General Partner shall receive not less than a one percent
(1%) interest in all profits, losses, tax credits and
distributions of the Partnership (such transfer
notwithstanding, the Special Limited Partner shall also
retain its status as such, and its interest in the
Partnership as the Special Limited Partner shall not be
affected). 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 other General Partners pursuant to Section 6.4. 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 this 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 7.5 or to enable any additional General Partner
admitted pursuant to this Section 7.5 to manage the business
of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any
of its obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional
General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner.
ARTICLE VIII Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of
descent and distribution), 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) An assignee of a Limited Partner who does not
become a Substituted Limited Partner shall have, and shall
only have, the right to receive the share of allocations and
distributions of the Partnership to which the assigning
Limited Partner would have been entitled with respect to the
Interest (or portion thereof) so assigned if no such
assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a
Limited Partner and shall no longer have any of the rights
or privileges of a Limited Partner. Where the assignee does
not become a Substituted Limited Partner, the Partnership
shall recognize such assignment not later than the last day
of the calendar month following receipt of notice of
assignment and all documentation required in connection
therewith.
(c) Every assignee of a Limited Partner Interest (or
any portion thereof) who desires to make a further
assignment of its Interest shall be subject to all the
provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute
an assignee as Limited Partner in its place. Subject to
Section 8.3, the General Partners may, however, in their
sole discretion, permit an assignee to become a Substituted
Limited Partner. The consent of the General Partners to an
assignment of a Limited Partner Interest under Section 8.1
shall not, in and of itself, constitute permission under
this Section 8.2.
Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the
General Partners to signify the agreement of such
Substituted Limited Partner to be bound by all the
provisions of this Agreement and shall pay the Partnership's
reasonable legal fees and filing costs in connection with
its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition
would violate Section 13.1.
(b) In no event shall all or any part of a Limited
Partner Interest be Disposed of to a minor (other than to a
descendant by reason of death) or to an incompetent.
(c) The General Partners may, in addition to any other
requirement they may impose, require as a condition of any
Disposition that the transferor (i) assume all costs
incurred by the Partnership in connection therewith and (ii)
furnish the Partnership and the other Partners with an
opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable
Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition
in contravention of any of the provisions of this Section
8.3 shall be void and ineffectual and shall not bind or be
recognized by the Partnership.
ARTICLE IX Borrowings
All Partnership borrowings shall be subject to the
terms of this Agreement, including, but not limited to, the
restrictions of Section 6.2, and may be made from any
source, including Partners and their Affiliates. Any
Partnership borrowings from any Partner shall be subject to
the prior written consent of the Special Limited Partner and
any Lender or Agency (if required under applicable Lender or
Agency regulations or requirements). If any Partner shall
lend any monies to the Partnership, the amount of any such
loan shall not be an increase of such Partner's Capital
Contribution. If any Partner shall so lend monies, 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 6.10 shall not
constitute borrowings for the purposes of this Article IX or
for any other purposes.
ARTICLE X Profits, Losses, Tax Credits. Distributions and
Capital Accounts
10.1 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-l(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 10.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or
Article VIII.
10.2 Profits, Losses and Tax Credits
(a) Except as otherwise specifically provided in this
Article, for each Partnership fiscal year or portion
thereof, all profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures and tax
credits incurred or accrued on or after the Commencement
Date, other than those arising from a Capital Transaction,
shall be allocated 99% to the Investment Limited Partner and
1% to the General Partners.
(b) Except as otherwise specifically provided in this
Article, all profits and losses arising from a Capital
Transaction shall be allocated to the Partners as follows:
As to profits:
First, an amount of profit equal to the aggregate
negative balances (if any) in the Capital Accounts of all
Partners having negative balance Capital Accounts shall be
allocated to such Partners in proportion to their negative
Capital Account balances until all such Capital Accounts
shall have zero balances; and
Second, an amount of profits shall be allocated to each
of the Partners until the positive balance in the Capital
Account of each Partner equals, as nearly as possible, the
amount of cash which would be distributed to such Partner if
the aggregate amount in the Capital Accounts of all Partners
were cash available to be distributed in accordance with the
provisions of Clauses Third, Sixth, Seventh and Eighth of
Section 10.3(b).
As to losses:
First, an amount of losses equal to the aggregate
positive balances (if any) in the Capital Accounts of all
Partners having positive balance Capital Accounts shall be
allocated to such Partners in proportion to their positive
Capital Account balances until all such Capital Accounts
shall have zero balances; provided, however, that if the
amount of losses so to be allocated is less than the sum of
the positive balances in the Capital Accounts of those
Partners having positive balances in their Capital Accounts,
then such losses shall be allocated to the Partners in such
proportions and in such amounts so that the Capital Account
balances of each Partner shall equal, as nearly as possible,
the amount such Partner would receive if an amount equal to
the excess of (a) the sum of all Partners' balances in their
Capital Accounts computed prior to the allocation of losses
under this clause First over (b) the aggregate amount of
losses to be allocated to the Partners pursuant to this
clause First were distributed to the Partners in accordance
with the provisions of Clauses Third, Sixth, Seventh and
Eighth of Section 10.3(b); and
Second, the balance, if any, of such losses shall be
allocated 1% to the General Partners and 99% to the
Investment Limited Partner.
(c) Notwithstanding the foregoing provisions of
Sections 10.2(a) and 10.3(b), in no event shall any losses
be allocated to the Investment Limited Partner, the Special
Limited Partner, or to any additional General Partner
admitted pursuant to any of Section 4.4(b), Section 5.2(e),
Section 7.1(a) or Section 7.5, 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
obligation (actual or deemed under Treasury Regulation
Section 1.704l(b)(2)(ii)(c)) to restore a deficit balance in
such Partner's Capital Account plus such Partner's share of
Partnership Minimum Gain plus such Partner's share of
Partner Non-Recourse Debt Minimum Gain. Any losses which are
not allocated to a Partner by virtue of the application of
this Section 10.2(c) shall be allocated to the General
Partners. For the purposes of this Section 10.2(c), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.3 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required),
Cash Flow for each fiscal year or portion thereof of the
Partnership shall be applied in the following priority:
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 Partnership Management
Fee attributable to such year; and
Fourth, any balance 50% to the General Partners and
50% to the Investment Limited Partner;
provided, however, that during such time as Agency
regulations are applicable to the Apartment Complex, the
total amount of Cash Flow which may be so distributed to the
Partners in respect to any fiscal year shall not exceed such
amounts as Agency regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall
determine from time to time that cash is available for
distribution from a Capital Transaction, such cash shall be
applied or distributed as follows:
First, to the payment of all matured debts and
liabilities of the Partnership (including, but not limited
to, all expenses of the Partnership incident to the Capital
Transaction), excluding (i) debts and liabilities of the
Partnership to Partners or their Affiliates and (ii) all
unpaid fees owing to the General Partners or their
Affiliates; and to the establishment of any reserves which
the General Partners and the Auditors shall deem reasonably
necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, to the payment of any accrued and unpaid Asset
Management Fees;
Third, to the payment to the Investment Limited Partner
of the full amount (including interest) of any Credit
Recovery Loans;
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the repayment of any then-unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them,
including, but not limited to, accrued and unpaid Annual
Partnership Management Fee for the fiscal year of the
Capital Transaction; provided, however, that any debts or
obligations to be repaid to any Limited Partner or Affiliate
thereof pursuant to this Clause Fifth shall be repaid prior
to the repayment of any such debts or obligations to any
General Partner or Affiliate thereof;
Sixth, to the payment to the Investment Limited Partner
of an amount equal to its paid-in capital, less any prior
distributions made to such Investment Limited 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 10.1(b), but never an amount less than zero;
and
Eighth, any balance 49.999% to the Investment Limited
Partner, .001% to the Special Limited Partner and 50% to the
General Partners.
10.4 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 10.3(b) and 10.4(b). In the
event that a General Partner, other than a General Partner
admitted pursuant to any of Section 4.4(b), Section 5.2(e),
Section 7.1(a) or Section 7.5, 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 10.2(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 10.4(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-l(b). This Section 10.4(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 10.4(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.
10.5 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 (consisting of deductions
other than cost recovery deductions) shall be allocated
to the General Partners; and second, the balance of
deductions (including all cost recovery deductions)
shall be allocated as provided in Section 10.2(a). For
purposes of this section, extraordinary events include
casualty losses, losses resulting from liability to
third parties for tortious injury, losses resulting
from a breach of legal duty by the Partnership or by
the General Partners, and losses resulting from other
liabilities which are not incurred in the ordinary
course of business. Nothing in this Section 10.5(b)(i)
shall prevent the Partnership from recovering an
extraordinary loss from a General Partner who is liable
therefor by law or under this Agreement.
(ii) If any Recourse Obligations shall be repaid
from Cash Flow generated in respect of any Partnership
taxable year, then the allocation of profits and losses
under Section 10.2(a) for such year shall be adjusted
as follows: first, the General Partners shall be
allocated an amount of the gross income of the
Partnership equal to the lesser of (i) the amount of
items of Loss previously allocated to the General
Partner under Section 10.5(b)(i) and not previously
offset by allocations of Profits or items thereof, and
(ii) the amount of the Excess Expenses repaid in such
year.
(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 10.3(b) or Section 10.4, 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 Partner based on Section 10.3(b) or Section 10.4
as applicable, treating cash payments and purchase
money indebtedness principal interchangeably for this
purpose, and the respective Partners 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 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
1.704l(b) and its basis computed for Federal income tax
purposes shall be shared among the Partners so as to
take account of such variation in a manner consistent
with the principles of Section 704(c) of the Code and
Treasury Regulation Section 1.704-l(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this
Agreement shall mean income and losses, and each item
of income, gain, loss, deduction or credit entering
into the computation thereof, as determined in
accordance with the accounting methods followed by the
Partnership and computed in accordance with Treasury
Regulation Section 1.704-l(b)(2)(iv). Profits and
losses for federal income tax purposes shall be
computed and allocated in the same manner as set forth
in this Article X, except as provided in Section
10.5(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 10.5(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-l(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 (actual or deemed), to restore a
negative balance in such Partner's Capital Account plus
(iii) such Partner's share of Partner Non-Recourse Debt
Minimum Gain, 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
10.5(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 in the year(s) of
payment an amount of gross income equal to the amount
of such distnbution in such year.
(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
10.3(a).
(3) Capital Accounts shall be reduced by
distributions from Capital Transactions under
Section 10.3(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section
10.5(b)(vi) or Section 10.5(b)(vii).
(5) Capital Accounts shall be increased by any
qualified income offset under Section
10.5(b)(viii).
(6) Capital Accounts shall be increased by
allocations of profits under Section 10.2(a).
(7) Capital Accounts shall be reduced by
allocations of losses under Section 10.2(a).
(8) Capital Accounts shall be reduced by
allocations of losses under Section 10.2(b).
(9) Capital Accounts shall be increased by
allocations of profits under Section 10.2(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
10.5(b)(vi), 10.5(b)(vii) and 10.5(b)(viii) had not
occurred.
10.6 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 10.6 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 10.6(a), the General Partners are authorized
to act only after having been advised in writing by the Tax
Accountants or the Special Limited Partner that, under
Section 704(b) of the Code, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum
mod)fication 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 noncapitalizable 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
10.6(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 or the Special Limited Partner 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 10.6(a) and Section 10.6(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 initial Management Agent shall be
Calhoun Property Management, Inc. The Management Agent shall
receive a Management Fee of those amounts payable from time
to time by the Partnership to the Management Agent for
management services in accordance with a management contract
approved by the Agency and Lenders (if such approval is
required) or, when the Apartment Complex is not subject to
Agency and Lender regulation, in accordance with a
reasonable and competitive fee arrangement and in no event
in excess of 5% of gross rental income from the Apartment
Complex. 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. 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 $8,000 during any year after 1998, or (ii) an
Event of Bankruptcy shall occur with respect to the
Management Agent, or (iii) the Management Agent shall commit
willful misconduct or gross negligence in its conduct of its
duties and obligations under the Management Agreement or
(iv) there is any change in the identity of the General
Partners, or (v) (subject to the last sentence of Article
XI.C.) the Management Agent is cited by any Agency,
including the Credit Agency or any other governmental
agency, for a material violation or alleged material
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 and subject to Agency
approval, if required, the General Partners must cause the
Partnership to promptly terminate the Management Agreement
with the Management Agent and appoint a new Management Agent
selected by the Special Limited Partner, which new
Management Agent shall not be an Affiliate of a General
Partner. Each General Partner hereby grants to the Special
Limited Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest
to take any action and to execute and deliver any and all
documents and instruments on behalf of such General Partner
and the Partnership as the Special Limited Partner may deem
to be necessary or appropriate in order to effectuate the
provisions of this Article XI.C. Subject to Agency approval,
if required, the Partnership shall not enter into any future
management arrangement or renew or extend any existing
management arrangement unless such arrangement is terminable
without penalty upon the occurrence of the events described
in this Article XI. Notwithstanding the foregoing, with
respect to any material violation or alleged violation of
clause (v) above, the General Partner shall be given a
period of 60 days after notice of any violation to cure the
event or condition cited by any such agency prior to any
removal by the Special Limited Partner.
D. The General Partners shall have the duty to manage
the Apartment Complex during any period when there is no
Management Agent.
ARTICLE XII Books and Records' Accounting Tax Elections Etc.
12.1 Books and Records
The Partnership shall maintain all books and records
which are required under the Act 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;
provided, however, that no such account may be held in a
bank which is an Affiliate of any General Partner unless the
prior written consent of the Special Limited Partner shall
have been received thereto. 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 Agency or Mortgage
requirements, in interestbearing 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 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 do 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 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 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 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 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 together with a draft of the Partnership's Federal
income tax return and, promptly following the filing thereof
with the Service, a final copy of such return as filed.
(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 and expenses for the
quarter then ended, which may be unaudited, in the
form specified by BCCLP;
(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 and an Occupancy/Rental Report, all in the
form specified by BCCLP;
(F) a copy of the rent roll for the Apartment
Complex; and
(G) all other information which would be pertinant
to a reasonable investor regarding the Partnership
and its activities during the quarter covered by
the report.
(iv) Within forty five (45) days after the end of
each fiscal year of the Partnership a copy of the
annual report or Form(s) 8609 to be filed with the
United States Department of the Treasury concerning
the status of the Apartment Complex as low-income
housing and any reports filed in connection with the
compliance monitoring conducted by the Credit
Agency.
(b) Upon the written request of the Investment Limited
Partner for further information with respect to any matter
covered in item (a) above, the General Partners shall
furnish such information within thirty (30) days of receipt
of such request.
(c) Within ninety (90) days after the end of each
fiscal year of the Partnership, the General Partners shall
provide to the Limited Partners:
(i) a certification from the General Partners that
(A) all Construction and/or Permanent Mortgage
payments and taxes and insurance with respect to the
Apartment Complex are current as of the date of the
year-end report, (B) there is no default under the
Project Documents or this Agreement, or if there is
any such default, a detailed description thereof,
and (C) there is no building, health or fire code
violation or similar violation of a governmental
law, ordinance or regulation against the Apartment
Complex or, if there is any such violation, a
detailed description thereof; and
(ii) a descriptive statement of all transactions
during the fiscal year between the Partnership and
General Partners or any Affiliate thereof, including
the nature of the transaction and the payments
involved.
(d) 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 collateralized its
Interest in the Partnership,
the General Partners shall send the Investment Limited
Partner a detailed report of such event.
(e) 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 in a form prescribed by BCCLP, as well as
copies of all applicable periodic reports covering the
status of project operations from the previous period, as
may be required by the Credit Agency or any other Agency.
(f) On or before ninety (90) days after the expiration
of each fiscal year of the General Partners, such General
Partners shall send to the Investment Limited Partner copies
of the balance sheet and income statement of such General
Partners for such fiscal year, which financial statements
shall be reviewed by an independent certified public
accountant.
(g) The General Partners shall cause the Partnership to
send to the Investment Limited Partner a copy of each
Construction Mortgage draw requisition and any not)fication
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 all documents evidencing any
"carryover allocation" pursuant to Section 42(h)(1)(E) of
the Code and 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.
The General Partners hereby consent to any Agency's
providing BCCLP with copies of all material communications
between any such office and the General Partners and/or the
Partnership, including, but not limited to, any notices of
default. From and after any date upon which the General
Partners receive notice from the Investment Limited Partner
that the Investment Limited Partner would like copies of the
monthly rent rolls for the Apartment Complex to be sent to
BCCLP, the General Partners shall send copies of the rent
rolls to BCCLP no later than ten (10) days after the
expiration of each month.
(h) If either (A) the Completion Date or (B) the date
upon which tenants first occupied apartment units in the
Apartment Complex shall have occurred six months or more
prior to the date upon which the Investment Limited Partner
acquired its Interest in the Partnership, then the General
Partners shall cause to be prepared and delivered to the
Investment Limited Partner within sixty (60) days of the
Admission Date the following items:
(i) An unaudited statement of income of the
Partnership for the year (or such shorter period as
there may be from the date of the most recent audited
statement of income of the Partnership) ended on the
date upon which the Investment Limited Partner acquired
its Interest in the Partnership; and
(ii) An audited statement of income of the
Partnership for any fiscal year of the Partnership
ending between (A) the earlier of (1) the Completion
Date or (2) the date upon which tenants first occupied
apartment units in the Apartment Complex (after the
construction of such units) and (B) the date upon which
the Investment Limited Partner acquired its Interest in
the Partnership.
(i) 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.
(j) 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.
(k) On or before January 31st of each Partnership fiscal
year, the Partnership shall send to the Investment Limited
Partner copies of the complete insurance policies satisfactory to
the Investment Limited Partner so that the Investment Limited
Partner will be able to determine that insurance policies
required to be maintained on the Apartment Complex pursuant to
Section 6.7(c) are in force, accompanied by a certificate of the
General Partners stating that such insurance policies satisfy the
requirements of Section 6.7(c).
(l) On or before December 1 of each Partnership fiscal
year, the Partnership shall send to the Investment Limited
Partner a proposed budget for the up-coming fiscal year setting
forth the anticipated rental income and operating expenses for
the Apartment Complex.
(m) If the General Partners does not cause the Partnership
to furfill his obligations under Section 12.7(a)(i) and/or
Section 12.7(a)(ii) within the time periods set forth therein,
the General Partners shall pay as damages the sum of $100 per day
to the Investment Limited Partner until such obligations shall
have been furfilled. 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 fail so to pay, the General
Partners and their Affiliates shall forthwith cease to be
entitled to the 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 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 Partnership Management Fee, Cash Flow and Capital
Transaction proceeds otherwise due to the General Partners or
their Affiliates.
12.8 Expenses of the Partnership
All expenses of the Partnership shall be billed directly to
and paid by the Partnership.
ARTICLE XIII General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior
to the proposed date of the Disposition, could, in the opinion of
tax counsel to the Partnership, result in the termination of the
Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the
Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1 shall
be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing
provisions of this Section 13.1, however, the Investment Limited
Partner may waive the provisions of this Section 13.1 at any time
as to a Disposition or series of Dispositions, and in the event
of such a waiver, this Section 13.1 shall have no force or effect
upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner
shall have received any distributions under Article X, the
General Partners shall file an amendment to the Certificate
reducing by the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment
Limited Partner as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on account
of any such distribution. The Partnership shall amend the
Certificate as necessary to effect the substitution of
substituted Limited Partners.
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 onginal 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 each Agency; (d) no amendment to any provision of
the Project Documents shall become effective without the prior
written consent of each Agency (if required); and (e) the affairs
of the Partnership shall be subject to Agency regulation, and no
action shall be taken which would require the consent or approval
of any Agency unless the prior consent or approval of such Agency
shall have been obtained. No new Partner shall be admitted to the
Partnership, and no Partner shall withdraw from the Partnership
or be substituted for without the consent of each Agency (if such
consent is then required). No amendment to this Agreement
relating to matters governed by Agency regulations or
requirements shall become effective until the prior written
consent of each Agency (if required) to such amendment shall have
been obtained.
Any conveyance or transfer of title to all or any portion of
the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of Agency rules and regulations applicable
thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered
separable and (a) if for any reason any provision is determined
to be invalid, such invalidity shall not impair the operation of
or affect those portions of this Agreement which are valid, and
(b) if for any reason any provision would cause the Investment
Limited Partner to be bound by the obligations of the Partnership
(other than the rules and regulations of an Agency and the
requirements of any 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 the General Partners breach 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 the General Partners 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.
WITNESS the execution hereof under seal as of the 14th day
of November, 1997.
PARTNERSHIP: MAGNOLIA PLACE APARTMENTS
PARTNERSHIP, A MISSISSIPPI
LIMITED PARTNERSHIP
By: T.F. Management, Inc.
Its: General Partner
By: /s/M. Riemer Calhoun, Jr.
Its: President
M. RIEMER CALHOUN, JR.
Its: General Partner
/s/M. Riemer Calhoun, Jr.
GENERAL PARTNERS: T.F. MANAGEMENT, INC.
By: M. Riemer Calhoun, Jr.
Its: President
/s/M. Riemer Calhoun, Jr.
M. RIEMER CALHOUN, JR.
/s/M. Riemer Calhoun, Jr.
WITHDRAWING ORIGINAL M. RIEMER CALHOUN, JR.
LIMITED PARTNER
INVESTMENT LIMITED BOSTON CAPITAL TAX
PARTNER TAX CREDIT FUND IV, L.P.
a Delaware limited partnership
By: Boston Capital Associates IV.,
L.P.
its general partner
By: C&M Associates d/b/a Boston
Capital Associates,
its general partner
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, Attorney-
In-Fact
for John P. Manning,
its general partner
SPECIAL LIMITED PARTNER BCTC 94, INC.
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, Attorney-In-
Fact
for John P. Manning, its
President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the
foregoing Second Amended and Restated Agreement of Limited
Partnership notwithstanding any provision of the Management
Agreement to the contrary.
Management Agent: CALHOUN PROPERTY
MANAGEMENT, INC.
By: M. Riemer Calhoun, Jr.
Its: President
/s/M. Riemer Calhoun
MAGNOLIA PLACE APARTMENTS PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
Schedule A
As of November 14, 1997
General Partners Capital Contribution
T.F. Management, Inc. $50
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
M. Riemer Calhoun, Jr. $50
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10.00
One Boston Place
Boston, MA 02108-4406
Total Agreed-to Paid-In
Capital Contribution Capital Contribution*
Boston Capital Corporate $800,027 $600,020
Tax Credit Fund IV, L.P.
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108-4406
*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.
MAGNOLIA PLACE APARTMENTS PARTNERSHIP,
A Mississippi Limited Partnership
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of November 14, 1997, by
Magnolia Place Apartments Partnership, A Mississippi Limited
Partnership (the "Operating Partnership"); M. Riemer Calhoun, Jr.
and T.F. Management, Inc., its general partners (the "General
Partners"); and M. Riemer Calhoun, Jr., its limited partner (the
"Withdrawing Original Limited Partner") for the benefit of Boston
Capital Tax Credit Fund IV, L.P., a Delaware limited partnership
(specifically Series 27 thereof) (the "Investment Partnership");
BCTC 94, Inc., a Delaware corporation, and 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
Second Amended and Restated Agreement of Limited Partnership of
the Operating Partnership, dated as of November 14, 1997 (the
"Operating Partnership Agreement"), and in accordance with which
the Investment Partnership will make substantial capital
contributions to the Operating Partnership;
WHEREAS, the Investment Partnership and Boston Capital have
relied upon certain information and representations described
herein in evaluating the merits of investment by the Investment
Partnership in the Operating Partnership; and
WHEREAS, 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
General Partners and the Withdrawing Original Limited Partner
hereby agree as follows for the benefit of the Investment
Partnership, Boston Capital, Peabody & Brown, and certain other
persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership and the General Partners
The Operating Partnership and the General Partners jointly
and severally, and in solido, represent, warrant and certify to
the Investment Partnership, Boston Capital, and Peabody & Brown
that, with respect to the Operating Partnership, as of the date
hereof:
1.01 The Operating Partnership is duly organized as a
limited partnership pursuant to the laws of the State of
Mississippi with full power and authority to own the apartment
complex (the "Apartment Complex") and conduct its business; the
Operating Partnership, the General Partners and the Withdrawing
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 General Partners and the Withdrawing 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 General Partners or Withdrawing Original Limited
Partner are bound or any law, regulation, judgment, decree or
order applicable to the Operating Partnership or the General
Partners or the Withdrawing Original Limited Partner or any of
their respective properties; this Certification and Agreement
constitutes the valid and binding agreement of the Operating
Partnership, the General Partners and the Withdrawing Original
Limited Partner, enforceable against each of them in accordance
with its terms.
1.02 The General Partners have delivered to the Investment
Partnership, Boston Capital or their affiliates all documents and
information which would be material to a prudent investor in
deciding whether to invest in the Operating Partnership. All
factual information, including without limitation the information
set forth in Exhibit A hereto, provided to the Investment
Partnership, Boston Capital or their affiliates either in writing
or orally, did not, at the time given, and does not, on the date
hereof, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they are made. The financial
statements for the 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
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 General Partners.
1.03 As of the date hereof, each of the representations
contained in Exhibit B attached hereto is true, accurate and
complete as to each of the Operating Partnership, the General
Partners and the Withdrawing 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 percent (10%) or
more of any class of their equity securities (beneficial
ownership meaning the power to vote or direct the vote and/or the
power to dispose or direct the disposition of such securities),
as the case may be, and any promoters presently connected with
them in any capacity.
1.04 Each of the representations and warranties contained in
the Operating Partnership Agreement is true and correct as of the
date hereof.
1.05 Each of the covenants and agreements of the Operating
Partnership and the 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.
1.06 All conditions to admission of the Investment
Partnership as the investment limited partner of the Operating
Partnership contained in the Operating Partnership Agreement have
been satisfied.
1.07 No default has occurred and is continuing under the
Operating Partnership Agreement or any of the Project Documents
(as said term is defined in the Operating Partnership Agreement)
for the Operating Partnership.
1.08 The General Partners agree to take all actions
necessary to claim the Projected Credit, including, without
limitation, the filing of a Form 8609 with the Internal Revenue
Service.
1.09 No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
1.10 The Operating Partnership has the sole
responsibility to pay all maintenance and operating costs,
including all taxes levied and all insurance costs, attributable
to the Apartment Complex.
1.11 The Operating Partnership, except to the extent it is
protected by insurance and excluding any risk borne by lenders,
bears the sole risk of loss if the Apartment Complex is destroyed
or condemned or there is a diminution in the value of the
Apartment Complex.
1.12 No person or entity except the Operating Partnership
has the right to any proceeds, after payment of all indebtedness,
from the sale, refinancing, or leasing of the Apartment Complex.
1.13 The General Partners are not related in any manner to
the Investment Partnership, nor are the General Partners acting
as an agent of the Investment Partnership.
1.14 The Apartment Complex contains no substance known to be
hazardous, such as hazardous waste, lead-based paint, asbestos,
methane gas, urea formaldehyde insulation, oil, toxic substances,
underground storage tanks, polychlorinated biphenyls (PCBs), and
radon; the Apartment Complex is not affected by the presence of
oil, toxic substances, or other pollutants that could be a
detriment to the Apartment Complex nor is the Operating
Partnership in violation of any local, state, or federal law or
regulation; and no violation of the Clean Air Act, Clean Water
Act, Resource Conservation and Recovery Act, Toxic Substance
Control Act, Safe Drinking Water Control Act, Comprehensive
Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing.
Neither the Operating Partnership nor the General Partners nor
the Withdrawing Original Limited Partner have received any notice
from any source whatsoever of the existence of any such hazardous
condition relating to the Apartment Complex or of any violation
of any local, state or federal law or regulation with respect to
the Apartment Complex.
1.15 The fair market value of the Apartment Complex exceeds
the total amount of indebtedness encumbering the Apartment
Complex and is expected to continue to do so throughout the term
of such indebtedness.
1.16 The Apartment Complex is not in violation of any State
of local health or building code or regulation.
1.17 The 1996 low-income housing tax credit authorization in
the amount of at least $130,340 per annum for the Property has
been obtained by the Partnership from the tax credit agency of
the State of Mississippi and is in full force and effect.
1.18 The Partnership has validly elected under Section
42(b)(2)(A)(ii) of the Code to lock in a credit percentage of
8.60% with respect to the qualified basis of the Property.
1.19 All 40 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.
1.20 All qualified low income dwelling units in the Property
will be occupied by tenants under leases with terms of not less
than six months.
1.21 All rental units in the Property are of equal quality
with comparable amenities available to low-income tenants on a
comparable basis without separate fees.
1.22 The Apartment Complex does not receive assistance under
HUD Section 8 Moderate Rehabilitation Program.
1.23 The Operating Partnership, as of December 31, 1996,
owned the Apartment Complex and had a basis in the Apartment
Complex equal to at least 10% of its anticipated basis in the
Apartment Complex as of December 31, 1998, and all buildings in
the Apartment Complex will be placed in service for the purposes
of the Code not later than December 31, 1998.
1.24 The allocation of 1996 low income housing tax credit to
the Property was not made pursuant to the "nonprofit set aside"
provisions of Section 42 of the Code.
2. Indemnification
2.01 The General Partners (for purposes of this Section
2.01, (the "Indemnifying Party") agrees to indemnify and hold
harmless the Investment Partnership and Boston Capital (for
purposes of this Section 2.01, the "Indemnified Parties" or,
individually, an "Indemnified Party") and each officer, director,
employee and person, if any, who controls any party against any
losses, claims, damages or liabilities (collectively,
"Liabilities"), joint or several, to which any Indemnified Party
or such officer, director, employee or controlling person may
become subject, insofar as such Liabilities or actions in respect
thereof arise out of or are based upon (i) a breach by such
Indemnifying Party of any of his representations, warranties or
covenants to such Indemnified Party or any such of its officers,
directors, employees or controlling persons under this
Certification and Agreement or (ii) liability under any statute,
regulation, ordinance, or other provision of federal, state, or
local law or any civil action pertaining to the protection of the
environment or otherwise pertaining to public health or employee
health and safety, including, without limitation, protection from
hazardous waste, lead-based paint, asbestos, methane gas, urea
formaldehyde insulation, oil, toxic substance, underground
storage tanks, polychlorinated biphenyls (PCBs), and radon; and
to reimburse each such Indemnified Party and each such officer,
director, employee or controlling person for any legal or other
expenses reasonably incurred by it or them in connection with
investigating or defending against any such Liability or action;
provided, however, that the Indemnifying Party shall not be
required to indemnify any Indemnified Party or any such officer,
director, employee or controlling person for any payment made to
any claimant in settlement of any Liability or action unless such
payment is approved by the Indemnifying Party or by a court
having jurisdiction of the controversy. This indemnity agreement
shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the
termination of any agreement which refers to this indemnity and
shall be in addition to any liability which the Indemnifying
Party may otherwise have.
2.02 The Indemnifying Party shall not be liable under the
indemnity agreements contained in Section 2.01 unless the
Indemnified Party shall have notified the Indemnifying Party in
writing within forty-five (45) business days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Indemnified Party or any
such of its officers, directors, employees or controlling
persons, but failure to notify an Indemnifying Party of any such
claim shall not relieve it from any liability which it may have
to the Indemnified Party or any such of its officers, directors,
employees or controlling persons against whom action is brought
otherwise than on account of its indemnity agreement contained in
Section 2.01. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to
participate at their own expense in the defense, or, if they so
elect, in accordance with arrangements satisfactory to the any
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 Party
who are defendants in such action; and after notice from the
Indemnifying Party to such Indemnified Party or any such of its
officers, directors, employees or controlling persons of its
election so to assume the defense thereof and the retaining of
such counsel by the Indemnifying Party, the Indemnifying Party
shall not be liable to such Indemnified Party or any such of its
officers, directors, employees or controlling persons for any
legal or other expenses subsequently incurred by such Indemnified
Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other
than the reasonable costs of investigation.
3. Miscellaneous
3.01 This Certification and Agreement is made solely
for the benefit of the Operating Partnership, the General
Partners, the Withdrawing Original Limited Partner, Boston
Capital, 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.
3.02 This Certification and Agreement may be executed
in several counterparts, each of which shall be deemed to be an
original, all of which together shall constitute one and the same
instrument.
3.03 Terms defined in the Operating Partnership
Agreement and used but not otherwise defined herein shall have
the meanings given to them in the Operating Partnership
Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
OPERATING PARTNERSHIP: MAGNOLIA PLACE APARTMENTS
PARTNERSHIP, A MISSISSIPPI
LIMITED PARTNERSHIP
By: T.F. Management, Inc.
Its: General Partner
By: M. Riemer Calhoun, Jr.
Its: President
/s/M. Riemer Calhoun, Jr.
By: M. Riemer Calhoun, Jr.
Its: General Partner
/s/M. Riemer Calhoun
GENERAL PARTNERS: T.F. MANAGEMENT, INC.
By: M. Riemer Calhoun, Jr.
Its: President
/s/M. Riemer Calhoun
M. RIEMER CALHOUN, JR.
/s/M. Riemer Calhoun
WITHDRAWING ORIGINAL M. RIEMER CALHOUN, JR.
LIMITED PARTNER
/s/M. Riemer Calhoun
Exhibit A
MAGNOLIA PLACE APARTMENTS PARTNERSHIP,
A Mississippi Limited Partnership
FACT SHEET
1. Sources and Uses
A. Sources
i. Permanent First Mortgage $400,000
ii. Permanent Second Mortgage $500,000
iii. LIHTC Equity $800,027
iv. General Partner Equity $100
TOTAL $1,700,027
B. Uses
i. Total Construction Costs $1,173,000
ii. Acquisition Costs
a. Land $150,000
b. Building $0
iii. Architect, Accounting, Legal &
Engineering $75,500
iv. Development Fee $194,000
v. Construction Interest $32,000
vi. Bond $13,000
vii. Taxes and Insurance $16,277
viii. Tax Credit Fees $12,500
ix. Permanent Loan Fee $9,750
x. Leasing/Operating Reserve $24,000
TOTAL $1,700,027
2. Construction Financing
A. Lender Hibernia National Bank
B. Mortgage Amount $975,000
i. Note Date August 29, 1997
ii. Interest Rate 8.80%
iii. Term 12 months
iv. Fee $9,750
3. Permanent Financing
A. Lender (First Mortgage) Hibernia National Bank
B. Mortgage Amount: $400,000
i Note Date: August 29, 1997
ii. Interest Rate: 8.80% adjusted on 5th and
10th anniversary
iii. Term: 15 years
iv. Amortization: 300 months
A. Lender (Second Mortgage) Jackson County
B. Mortgage Amoun $500,000
C. Note Date: N/A (upon completion)
ii. Interest Rate: 1%
iii. Term 40 years
4. Total Construction Costs: $1,173,000
5. Construction Commencement: August, 1997
6. Construction Completion: March, 1998
7. Eligible Basis: $1,516,277
8. Qualified Basis: $1,516,277
9. Capital Contributions:
General Partners $100
Investment Limited Partner $800,027
10. Type of Credit: New construction
11. Rent-up Schedule: 100% occupancy by May,
1998
12. Projected Credit to the
Investment Partnership (99%): $91,401 for 1998
($129,037 new construction) $129,037 for 1999-2007
$37,636 for 2008
13. Total Projected Credit to the
Operating Partnership (100%): $92,324 for 1998
($130,340 new construction) $130,340 for 1999-2007
$38,016 for 2008
14. Tax Credit Approval:
A. Application
i. Filing Date:
ii. Credit Amount Requested: $139,256
B. Reservation
i. Date: November 11, 1996
ii. Credit Amount Reserved $139,256
C. Allocation
i. Date: December 26, 1996
ii. Credit Amount Allocated $130,034
15. Apartment Complex
A. Name Magnolia Place Apartments
B. Address Gautier, Mississippi
C. Type of Project Family
Type of Project Family
16. Area Median Income: $34,600
17. Type of Apartments: Garden Apartments
# Unit Sq. Ft. Basic Rent Util. Allow. Total Rent
1 BR (50% median) 20 800 261 63 324
2 BR (60% median) 10 950 396 71 467
3 BR (60% median) 10 1,100 454 86 540
18. Number of Units Receiving
Rental Assistance: -0-
19. Annual Operating Expenses
(beginning 1998): $74,411
20. Replacement Reserve Account
A Annual: $8,000
B. Required Total Accumulation: $80,000
21. Operating Reserve Account: $12,000
22. Amount of Annual Reporting
Fee to Boston Capital: $4,000
23. Amount of Annual Partnership
Management Fee: $4,000
24. Amount of Total Depreciable Base
Allocated to Personal Property: $30,121
25. Total Capital Contribution of
Investment Partnership: $800,027
26. Schedule of Capital Contributions
A. $600,020 on the latest to occur of:
i. Tax Credit Set-Aside;
ii. Admission Date;
iii. Construction Loan Closing; and
iv. Permanent Mortgage Loan Commitment.
B. $80,003 on the latest to occur of:
i. Completion;
ii. State Designation; or
iii. Cost Certification;
C. $120,004 on the latest to occur of:
i. the Initial 100% Occupancy Date;
ii. Permanent Mortgage Commencement;
iii. receipt by the Limited Partners of the Partnership's
owner's title policy;
iv. opinion of counsel to the Partnership; or
v. Breakeven Point.
27. General Partners: T.F. Management, Inc.
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
M. Riemer Calhoun, Jr.
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
28. Ownership Interests
Normal Operations CapitalTransactions
A. General Partners: 1.0% 1.0%
B. Investment L.P.: 98.99 98.99%
C. Special L.P. .01% .01%
29. Management Agent: Calhoun Property Management, Inc.
Contact Person: James C. Howell, Jr.
A. Address: 907 Polk Street, P.O.
Drawer 799
Mansfield, LA 71052
B. Telephone Number: 318-872-0286
C. Amount of Management Fees: (5% of gross rental
receipts)
30. Builder: Calhoun Builders, Inc.
Contact Person: James C. Howell, Jr.
A. Address: 907 Polk Street, P.O. Drawer 799
Mansfield, LA. 71052
B. Telephone Number: 318-872-0286
C. Construction Contract $1,256,600
31. Architect: Paul F. Stewart Architect, Ltd.
Contact Person: Wayne Hotzclaw
A. Address: 1904 Stubbs Ave., Suite B
Monroe, LA 71201
B Telephone Number: 318-322-7158
C Amount of Fee: $34,500
32. Auditor and Tax Return Preparer: Todd Little & Company
Contact Person: Todd Little
A. Address: P.O. Box 2485
Monroe, LA 71211
B Telephone Number: 318-323-1717
C. Fee: $4,500
33. Federal Taxpayer I.D. Number: 64-0877967
34. Operating Deficit Guaranty: M. Riemer Calhoun, Jr.
M. Riemer Calhoun, Jr., individually, and on behalf of the
Operating Partnership, shall be obligated to make
Subordinated Loans to the Partnership to cover debt service,
operating expenses and the Replacement Reserve Fund to the
extent these exceed available operating income.
35. Building Breakdown
A. # of units: 40
B. # of Buildings: 13
BIN: MS-96-119-01 through 13
cc: Boston Capital Accounting Department
Exhibit B
Certificate of Operating Partnership, General Partners
and Withdrawing Original Limited Partner
Re: Lack of Disqualifications
The Operating Partnership, its General Partners and its
Withdrawing Original Limited Partner (as identified on the
Certification and Agreement to which this Certificate is attached
as Exhibit B) hereby represent to you that neither (i) the
Operating Partnership, (ii) any predecessor of the Operating
Partnership, (iii) any of the Operating Partnership's affiliates
("affiliate" meaning a person that controls or is controlled by,
or is under common control with, the Operating Partnership) ,
(iv) any sponsor (meaning any person who (1) is directly or
indirectly instrumental in organizing the Operating Partnership
or (2) will directly or indirectly manage or participate in the
management of the Operating Partnership or (3) will regularly
perform, or select the person or entity who will regularly
perform, the primary activities of the Operating Partnership),
(v) any officer, director, principal or general partner of the
Operating Partnership or of any sponsor, (vi) any officer,
director, principal, promoter or general partner of the General
Partners or General Partners, (vii) any beneficial owner of ten
per cent or more of any class of the equity securities of the
Operating Partnership or of any sponsor (beneficial ownership
meaning the power to vote or direct the vote and/or the power to
dispose or direct the disposition of such securities), (viii) any
promoter of the Operating Partnership (meaning any person who,
acting alone or in conjunction with one or more other persons,
directly or indirectly has taken, is taking or will take the
initiative in founding and organizing the business of the
operating Partnership or any person who, in connection with the
founding and organizing of the business or enterprise of the
Operating Partnership, directly or indirectly receives in
consideration of services or property, or both services and
property, ten per cent or more of any class of securities of the
Operating Partnership or ten per cent or more of the proceeds
from the sale of any class of such securities; provided, however,
a person who receives such securities or proceeds either solely
as underwriting commissions or solely in consideration of
property shall not be deemed a promoter if such person does not
otherwise take part in founding and organizing the enterprise)
presently connected with the Operating Partnership in any
capacity:
(1) Has filed a registration statement which is the subject
of any pending proceeding or examination under the securities
laws of any jurisdiction, or which is the subject of any refusal
order or stop order thereunder entered within five years prior to
the date hereof;
(2) Has been convicted of or pleaded nolo contendere
to a misdemeanor or felony or, within the last ten years,
been held liable in a civil action by final judgment of a court
based upon conduct showing moral turpitude in connection with the
offer, purchase or sale of any security, franchise or commodity
(which term, for the purposes of this Certificate shall
hereinafter include commodity futures contracts) or any other
aspect of the securities or commodities business, or involving
racketeering, the making of a false filing or a violation of
Sections 1341, 1342 or 1343 of Title 18 of the United States Code
or arising out of the conduct of the business of an issuer,
underwriter, broker, dealer, municipal securities dealer, or
investment adviser, or involving theft, conversion,
misappropriation, fraud, breach of fiduciary duty, deceit or
intentional wrongdoing including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny
fraudulent conversion or misappropriation of property or
conspiracy to defraud, or which is a crime involving moral
turpitude, or within the last five years of a misdemeanor or
felony which is a criminal violation of statutes designed to
protect consumers against unlawful practices involving insurance,
securities, commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order, judgment or
decree entered within five years prior to the date hereof entered
or issued by or procured from a state securities commission or
administrator, the Securities and Exchange Commission ("SEC"),
the Commodities Futures Trading Commission or the U.S. Postal
Service, or to (b) any administrative order or judgment, in the
business of an underwriter, broker, dealer, municipal securities
dealer, or investment adviser, or involving deceit theft, fraud
or fraudulent conduct, or breach of fiduciary duty, or which is
based upon a state banking, insurance, real estate or securities
law or (c) has been the subject of any administrative order, judgment
or decree in any state in which fraud, deceit, or intentional wrongdoing,
including, but not limited to, making untrue statements of
material fact or omitting to state material facts, was found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of any
security or offering, or to any order, judgment or decree in
which registration violations were found or which prohibits,
denies or revokes the use of any exemption from registration in
connection with the offer, purchase or sale of securities, or to
an SEC censure or other order based on a finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction entered
within five years prior to the date hereof, temporarily,
preliminarily or permanently restraining or enjoining such
persons from engaging in or continuing any conduct or practice in
connection with any aspect of the securities or commodities
business or involving the making of any false filing or arising
out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
which restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to
conduct alleged to have violated section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an
exchange registered as a national securities exchange, an
association registered as a national securities association, or
any self-regulatory organization registered pursuant to the
Securities Exchange Act of 1934, or a Canadian securities
exchange, or association or self-regulatory organization
operating under the authority of the Commodity Futures Trading
Commission, or is subject to any currently effective order or
order entered within the past five years of the SEC, the
Commodity Futures Trading Commission or any state securities
administrator denying registration to, or revoking or suspending
the registration of, such person as a broker-dealer, agent,
futures commission merchant, commodity pool operator, commodity
trading adviser or investment adviser or associated person of any
of the foregoing, or prohibiting the transaction of business as a
broker-dealer or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding before the
SEC or any state securities commission or any regulatory
authority willfully made or caused to be made any statement which
was at the time and in the light of the circumstances under which
it was made false or misleading with respect to any material
fact, or has willfully omitted to state in any such application,
report or proceeding any material fact which is required to be
stated therein or necessary in order to make the statements made,
in the light of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the Securities
Act of 1933, the Securities Exchange Act of 1934, the Trust
Indenture Act of 1939, the Investment Advisers Act of 1940, the
Investment Company Act of 1940, the Commodity Exchange Act of
1974 or the securities laws of any state, or any predecessor law,
or of any rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any of
the statutes or rules or regulations referred to in subsection
(8) hereof;
(10) Has failed reasonably to supervise his agents, if
he is a broker-dealer, or his employees, if he is an investment
adviser, but no person shall be deemed to have failed in such
supervision if there have been established procedures, and a
system for applying such procedures, which would reasonably be
expected to prevent and detect, insofar as practicable, any
violation of statutes, rules or orders described in subsection
(8) and if such person has reasonably discharged the duties and
obligations incumbent upon him by reason of such procedures and
system without reasonable cause to believe that such procedures
and system were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state securities
administrator within five years prior to the date hereof or is
subject to a currently effective United States Postal Service
fraud order or has engaged in dishonest or unethical practices in
the securities business or has taken unfair advantage of a
customer or is the subject of sanctions imposed by any state or
federal securities agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his
obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his
customers, or has not sufficient financial responsibility to
carry out the obligations incident to his operations or has been
adjudged a bankrupt or made a general assignment for the benefit
of creditors; or
(13) 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).
