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) January 1, 1998
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-70564 04-3208648
(Commission File Number) (IRS Employer Identification No.)
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108-4406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
On January 1, 1998, Boston Capital Tax Credit Fund IV L.P.,
a Delaware limited partnership, specifically Series 27 thereof
(the "Class B Limited Partner") completed various agreements
relating to Harrisonville Heights, L. P., a Missouri limited
partnership (the "Operating Partnership"), including the Second
Amended and Restated Agreement of Limited Partnership of the
Operating Partnership dated as of January 1, 1998 (the "Operating
Partnership Agreement"), pursuant to which the Class B Limited
Partner 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 apartment complex located in Harrisonville, Missouri
which is known as Harrisonville Heights (the "Apartment
Complex"). The Apartment Complex contains forty-eight (48)
1-bedroom units for senior citizens and is currently 100%
occupied.
The Operating Partnership is receiving permanent mortgage
financing in the amount of $1,424,000 (the "Permanent Mortgage")
from the Missouri Housing Development Commission under its HOME
Program. The Permanent Mortgage has a 40-year term and bears
interest at the rate of 1% per annum.
It is expected that 100% of the rental apartment units in
the Apartment Complex will qualify for the low-income housing tax
credit (the "Tax Credits") under Section 42 of the Internal
Revenue Code of 1986, as amended (the "Code").
The general partner of the Operating Partnership is
Jeffrey E. Smith Partnerships, L.C., a Missouri limited liability
company (the "General Partner"). The General Partner is a
special purpose entity which was formed to function as the
general partner of real state limited partnerships for entities
controlled by Jeffrey E. Smith. To date, the General Partner
serves as the general partner of twenty-seven real estate limited
partnerships. Jeffrey E. Smith is the Manager of the General
Partner ,and Mr. Smith individually and as Trustee of the
Jeffrey E. Smith Revocable Inter Vivos Trust, is guaranteeing the
obligations of the General Partner under the Operating
Partnership Agreement. Mr. Smith is a graduate of the University
of Missouri and has been involved in various aspects of the real
estate industry on a full-time basis since the early 1970s. In
the early 1980s, Mr. Smith formed Jeffrey E. Smith Development,
Inc. (the Developer of the Apartment Complex), Fairway
Construction, Inc. (the Builder of the Apartment Complex) and
Fairway Management, Inc. (the Management Agent of the Apartment
Complex), which have developed, built and currently manage over
2,700 housing units in Missouri, Iowa, Kansas, Nebraska and New
Mexico.
The Class B Limited Partner acquired its interest in the
Operating Partnership directly from the Operating Partnership in
consideration of an agreement to make a Capital Contribution of
$185,529 to the Operating Partnership.
The total Capital Contribution of the Class B Limited
Partner to the Operating Partnership is based on the Operating
Partnership receiving $2,560,310 of Tax Credits during the 10-
year period commencing in 1997 of which 13.672% ($334,977) will
be allocated commencing in 1998 to the Class B Limited Partner as
an Investment Limited Partner of the Operating Partnership. The
Class A Limited Partner of the Operating Partnership is Boston
Capital Corporate Tax Credit Fund V, A Limited Partnership and
the Special Limited Partner of the Operating Partnership is BCTC
94, Inc., both of which are affiliates of the Class B Limited
Partner. The Missouri Limited Partner of the Operating
Partnership is Missouri Affordable Housing Fund VI, L.P., an
affiliate of both the General Partner and the Operating
Partnership.
The Class B Limited Partner 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 Missouri
Operations Transactions Flow Tax Credits
General Partner 1.000% 69.99% 70.000% 0%
Class A Limited
Partner 85.328% 25.848% 25.855% 0%
Class B Limited
Partner 13.672% 4.142% 4.145% 0%
Special Limited
Partner 0% .01% 0% 0%
Missouri Limited
Partner 0% .01% 0% 100%
The Class B Limited Partner 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 1997 from the Operating Partnership for services in
connection with the Operating Partnership's accounting matters
and the preparation of tax returns and reports to the Class B
Limited Partner in the annual amount of the lesser of (i) $1,500
or (ii) one-half of one per cent (0.5%) of the Aggregate Cost of
the Apartment Complex. The Asset Management Fee for each fiscal
year will be payable from Cash Flow in the manner and priority
set forth in Section 10.2(a) of the Operating Partnership
Agreement; provided, however, that if in any fiscal year
commencing with 1997, Cash Flow is insufficient to pay the full
amount of the Asset Management Fee, the unpaid portion thereof
shall accrue and be payable on a cumulative basis in the first
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. To the extent Cash Flow in any
year is insufficient to pay an Asset Management Fee of at least
$750, the amount of such deficiency shall be paid directly by the
General Partner to BCAMLP or an affiliate thereat from its own
funds. To the extent that there is sufficient Cash Flow in any
year commencing with 1997 to pay all or a portion of the Asset
Management Fee but such amount cannot be paid by the Operating
Partnership due to any restrictions on distributions imposed by
MHDC, then the amount of the Asset Management Fee payable but for
the MHDC restrictions shall be paid directly by the General
Partner to BCAMLP or an affiliate thereof from its own funds.
The Operating Partnership shall pay to the General Partner a
fee (the "Annual Partnership Management Fee") commencing in 1997
for its services in connection with the administration of the day
to day business of the Operating Partnership in an annual amount
equal to the lesser of (i) $5,000 per annum or (ii) the excess of
(A) one-half of one per cent (0.5%) of the Aggregate Cost of the
Apartment Complex over (B) the amount of the Asset Management Fee
attributable to such year. The Annual Partnership Management Fee
for each fiscal year of the Operating Partnership shall be
payable from Cash Flow in the manner and priority set forth in
Section 10.2(a) of the Operating Partnership Agreement to the
extent Cash Flow is available therefor for such year; provided,
however, that if in any fiscal year commencing with 1999, Cash
Flow is insufficient to pay the full amount of the Annual
Partnership Management Fee, the unpaid portion thereof shall
accrue and be payable on a cumulative basis in the first year in
which there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X of the Operating
Partnership Agreement.
In consideration of its consultation, advice and other
services in connection with the construction and development of
the Apartment Complex, the Operating Partnership paid the General
Partner (or its designee) a Construction and Development Fee in
the principal amount of $410,029 as set forth in Section 6.12(a)
of the Operating Partnership Agreement.
Upon any sale of the Apartment Complex, the General Partner (or
its designee) shall receive a Sales Preparation Fee in an amount
equal to 5% of the gross sales price of the Apartment Complex.
In addition to the standard Management Fee of $28 per
occupied unit per month, the Operating Partnership shall also pay
to the Management Agent a management incentive fee (the
"Management Incentive Fee") of $11,846.50 per annum (plus accrued
interest earned thereon) if such fee is earned in accordance with
the terms and provisions of the Second Amended and Restated
Management Incentive Agreement, a copy of which is attached
hereto as Exhibit (2)(b). The Operating Partnership will apply
funds provided by the Class A Limited Partner to fund the annual
Management Incentive Fee. Any funds so applied shall be treated
at the time of application as a Conditional Capital Contribution
paid by the Class A Limited Partner to the Operating Partnership
and then applied by the Operating Partnership to pay the
Management Incentive Fee. The Class A Limited Partner has
escrowed funds to pay the Conditional Capital Contribution in
accordance with the terms and provisions of the Second Amended
and Restated Escrow Agreement, a copy of which is attached hereto
as Exhibit (2)(c).
Fairway Construction, Inc., as the Builder of the Apartment
Complex received total compensation of $1,980,541, including
builder's profit of $167,842 and Metro Equipment Rental, Inc.,
another affiliate of the General Partner and the Operating
Partnership, leased equipment utilized in the construction of the
Apartment Complex and received total compensation of $75,000,
including lessor's profit of $15,000.
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 Harrisonville
Heights, L.P.
(2) (b) Second Amended and Restated Management
Incentive Agreement relating to
Harrisonville Heights, L.P.
(2) (c) Second Amended and Restated Escrow
Agreement relating to Harrisonville
Heights, L.P.
(4) (a)<F2> Agreement of Limited Partnership of the
Class B Limited Partner
(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 23, 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
HARRISONVILLE HEIGHTS, L.P.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated effective as of January 1, 1998
HARRISONVILLE HEIGHTS, L.P.
TABLE OF CONTENTS
Page
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 16
2.4 -- Term and Dissolution 16
ARTICLE III -- MORTGAGE, REFINANCING AND DISPOSITION OF PROPERTY 17
ARTICLE IV -- PARTNERS; CAPITAL 17
4.1 -- Capital and Capital Accounts 17
4.2 -- General Partners 18
4.3 -- Investment Limited Partners, Missouri Limited Partner, Special Limited
Partner, Original Missouri Limited Partner and Original
Limited Partner 18
4.4 -- Liability of the Limited Partners 19
4.5 -- Special Rights of the Investment Limited Partners and the Special Limited
Partner 19
4.6 -- Meetings 21
ARTICLE V -- CAPITAL CONTRIBUTIONS OF THE SPECIAL LIMITED
PARTNER, THE MISSOURI LIMITED PARTNER AND THE INVESTMENT LIMITED
PARTNERS 21
5.1 -- Payments 21
5.2 -- Return of Capital Contributions 25
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 29
6.5 -- Duties and Obligations 30
6.6 -- Representations and Warranties 32
6.7 -- Liability on the Permanent Mortgage 35
6.8 -- Indemnification of the General Partners 35
6.9 -- Indemnification of the Partnership and the Limited Partners 36
6.10 -- Operating Deficits 37
6.11 -- Obligation to Complete the Construction of the Apartment Complex 38
6.12 -- Certain Payments to the General Partners and Others 39
6.13 -- Delegation of General Partner Authority 40
6.14 -- Additional Right of General Partners and Affiliates to Operate and
Further Develop Nearby Property 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
ARTICLE VIII -- TRANSFERABILITY OF LIMITED PARTNER INTERESTS 43
8.1 -- ASSIGNMENTS 43
8.2 -- Substituted Limited Partner 44
8.3 -- Restrictions 44
ARTICLE IX -- BORROWINGS 44
ARTICLE X -- PROFITS, LOSSES, TAX CREDITS, DISTRIBUTIONS AND
CAPITAL ACCOUNTS 45
10.1 -- Profits, Losses and Tax Credits 45
10.2 -- Cash Distributions Prior to Dissolution 46
10.3 -- Distributions Upon Dissolution 48
10.4 -- Special Provisions 48
10.5 -- Authority of the General Partners to Vary Allocations to Preserve
and Protect the Partners' Intent 51
ARTICLE XI -- MANAGEMENT AGENT 52
ARTICLE XII -- BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC.
53
12.1 -- Books and Records 53
12.2 -- Bank Accounts 54
12.3 -- Accountants and Auditors 54
12.4 -- Cost Recovery and Elections 55
12.5 -- Special Basis Adjustments 55
12.6 -- Fiscal Year 55
12.7 -- Information to Partners 55
12.8 -- Expenses of the Partnership 58
ARTICLE XIII -- GENERAL PROVISIONS 59
13.1 -- Restrictions by Reason of Section 708 of the Code 59
13.2 -- Amendments to Certificate 59
13.3 -- Notices 60
13.4 -- Word Meanings 60
13.5 -- Binding Effect 60
13.6 -- Applicable Law 60
13.7 -- Counterparts 60
13.8 -- Financing Regulations 61
13.9 -- Separability of Provisions 61
13.10 -- Paragraph Titles 62
13.11 -- Amendment Procedure 62
13.12 -- Time of Admission 62
SCHEDULE A 65
EXHIBIT A -- LEGAL DESCRIPTION 67
HARRISONVILLE HEIGHTS, L.P.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
HARRISONVILLE HEIGHTS, L.P. (the "Partnership") was formed
as a Missouri limited partnership pursuant to an Agreement of
Limited Partnership of the Partnership dated May 15, 1996 (the
"Original Agreement") by and between Jeffrey E. Smith
Partnerships, L.C., a Missouri limited liability company as
general partner and Pat Bess as the original limited partner (the
"Original Limited Partner"). In connection therewith, a
Certificate of Limited Partnership of the Partnership (the
"Original Certificate") was filed with the Office of the
Secretary of State of Missouri (the "Filing Office") on May 15,
1996. The Original Agreement was amended pursuant to a First
Amendment to Agreement of Limited Partnership dated effective as
of July 8, 1996 (the "Amended Agreement"). The Original
Agreement, as amended by the Amended Agreement, was amended and
restated in its entirety pursuant to an Amended and Restated
Agreement of Limited Partnership of the Partnership dated as of
October 1, 1996 (the "Amended and Restated Agreement") in
accordance with which the Original Limited Partner withdrew from
the Partnership and each of Boston Capital Corporate Tax Credit
Fund V, A Limited Partnership, a Massachusetts limited
partnership, BCCC, Inc., a Massachusetts corporation and
Jeffrey E. Smith Investment Co., L.C., a Missouri limited
liability company (the "Original Missouri Limited Partner") were
admitted to the Partnership as Limited Partners. The Amended and
Restated Agreement was amended pursuant to a First Amendment to
Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of March 1, 1997 (the "First Amendment") in
accordance with which the Original Missouri Limited Partner
withdrew from the Partnership as a Limited Partner and Missouri
Affordable Housing Fund VI, L.P., a Missouri limited partnership
was admitted to the Partnership as a Limited Partner. Certain
capitalized terms used herein shall have the respective meanings
specified in Article I.
In consideration of mutual agreements set forth herein, it
is agreed and certified, and the Amended and Restated Agreement
as amended by the First Amendment, is hereby amended and restated
in its entirety, as follows:
ARTICLE I
Defined Terms
The defined terms used in this Agreement shall have the
meanings specified below:
Accountants means Baird, Kurtz & Dobson, of Springfield,
Missouri or such other firm of independent certified public
accountants as may be engaged by the General Partners with the
consent of Boston Capital to prepare the Partnership income tax
returns.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to Section
4.5(b) or Section 7.4.
Affiliate means (A) as to the Investment Limited Partners,
the Investment General Partners or Boston Capital, (i) such
Person; (ii) each member of the Immediate Family of such Person;
(iii) each legal representative, successor or assignee of any
Person referred to in the preceding clauses (i) or (ii);
(iv) each trustee of a trust for the benefit of any Person
referred to in the preceding clauses (i) or (ii); or (v) any
other Person (a) who directly or indirectly controls, is
controlled by, or is under common control with such Person, (b)
who is an officer of, director of, partner in or trustee of, or
serves in a similar capacity with respect to, such Person or of
which such Person is an officer, director, partner or trustee, or
with respect to which such Person serves in a similar capacity,
(c) who, directly or indirectly, is the beneficial owner of 10%
or more of any class of equity securities of such Person or of
which such Person is directly or indirectly the owner of 10% or
more of any class of equity securities, (d) who is an officer,
director, general partner, trustee or holder of 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 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 10% or more of the outstanding voting
securities of such Person, (c) of which 10% or more of the
outstanding voting securities is owned by such Person or any of
the Persons referred to in the foregoing clauses (i) through
(iii), (d) who is an officer, director, partner or trustee of
such Person, or (e) for which such Person acts in the capacity of
officer, director, partner or trustee. An Affiliate of the
Investment Limited Partners or of the Investment General Partners
does not include a Person who is a partner in a partnership or
joint venture with the Investment Limited Partners or any other
Affiliate of the Investment Limited Partners if such Person is
not otherwise an Affiliate of the Investment Limited Partners or
the Investment General Partners. For purposes of this
definition, the term Affiliate shall not be deemed to include any
law firm (or member or associate thereof) providing legal
services to the Investment Limited Partners, the Investment
General Partners or any Affiliate of either of them.
Aggregate Cost means the sum of (i) the total Capital
Contribution made by the Investment Limited Partners hereunder
plus (ii) the proportionate amount of the mortgage loans on, and
other debts related to, the Apartment Complex, which
proportionate amount is equal to the Investment Limited Partners'
initial pro rata interest in the profits, losses, and tax credits
of the Partnership. The amount of the Aggregate Cost determined
upon payment of the Capital Contribution of the Investment
Limited Partners hereunder shall not thereafter be reduced.
Agreement means this Second Amended and Restated Agreement
of Limited Partnership, including Schedule A, as amended from
time to time.
Amended Agreement has the meaning specified in the
Preliminary Statement.
Amended and Restated Agreement has the meaning specified in
the Preliminary Statement.
Annual Partnership Management Fee means the fee payable to
the General Partners pursuant to the provisions of
Section 6.12(d).
Apartment Complex means the real property located in
Harrisonville, Cass County, Missouri, as more fully described in
the Mortgage and Exhibit A hereto, together with (i) all
buildings and other improvements constructed or to be constructed
thereon and (ii) all furnishings, equipment and personal property
covered by the Mortgage.
Applicable Federal Rate means the "applicable federal rate"
as defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section
42(b) of the Code.
Asset Management Fee means the fee payable to BCAMLP or an
Affiliate thereof pursuant to Section 6.12(b).
Auditors means Howe and Associates, P.C. of Columbia,
Missouri, or such other firm of independent certified public
accountants as may be engaged by the General Partners with the
consent of Boston Capital for the purposes of auditing the books
and records of the Partnership and certifying financial reports
of the Partnership.
Basic Capital Contribution means, with respect to an
Investment Limited Partner, the total value of cash or property
contributed and agreed to be contributed to the Partnership by
such Investment Limited Partner as set forth in Section 5.1(a).
BCAMLP means Boston Capital Asset Management 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 Point means 30 days after the first time at which,
as certified by the General Partners, there have been six
consecutive full calendar months of Partnership operations
occurring after the later to occur of (i) the First Admission
Date or (ii) Permanent Mortgage Commencement, during which the
rental income (including government subsidies) of the Partnership
actually received on a cash basis (excluding prepaid rent) for
each of such six 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 pursuant to the terms of this Agreement),
except for depreciation, distributions of Cash Flow and Capital
Transaction proceeds to the Partners and the fees payable
pursuant to this Agreement. For purposes of the foregoing,
expenses shall (i) include monthly payments of principal and
interest in the amount specified in the 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' estimate of the
full value of the Apartment Complex after completion of
construction.
Capital Account shall have the meaning set forth in
Section 4.1(b).
Capital Contribution means (i) with respect to the Class A
Limited Partner, the Basic Capital Contribution of the Class A
Limited Partner and the Conditional Capital Contribution,
(ii) with respect to the Class B Limited Partner, the Basic
Capital Contribution of the Class B Limited Partner and
(iii) with respect to each other Partner, the total value of cash
or property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a then
Partner shall include a Capital Contribution previously made by
any prior Partner for the Interest of such then Partner.
Capital Transaction means any transaction the proceeds of
which are not includable in determining Cash Flow, including,
without limitation, the sale or other disposition of all or
substantially all of the assets of the Partnership, but excluding
the payment of Capital Contributions and the Partnership's
receipt of Loan Advance proceeds.
Carryover Allocation shall mean a valid issuance of an
allocation of Tax Credits to the Partnership in an annual amount
of not less than $220,672 made pursuant to Section 42(h)(1)(E) of
the Code which requires the Apartment Complex to be placed in
service by the end of the second succeeding year.
Carryover Certification means the date upon which the
Class A Limited Partner shall have received, in a form and
substance satisfactory to the Class A Limited Partner, the
Certificate of the Auditors that as of a date no later than
December 31, 1996, the Partnership 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 the profits or losses of the Partnership
from and after the Commencement Date subject to any applicable
Lender requirements and to the following adjustments:
(a) Cost recovery deductions of buildings, improvements and
personal property and amortization of any financing fees shall
not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining
profits and losses but which is not currently payable in cash
shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any Land Mortgage, Construction
Mortgage or Permanent Mortgage refinancing, any sale, exchange,
eminent domain taking, damage or destruction (whether insured or
uninsured), or other disposition, of all or any part of the
Apartment Complex (other than the proceeds of any business or
rental interruption insurance) shall not be included;
(g) Any rent or interest subsidy payments shall be
included;
(h) The fees set forth in Sections 6.12, any interest on
the Construction and Development Fee, and any fee payable in
connection with any transaction referred to in clause (f) above
shall not be deducted; and
(i) Prior to Permanent Mortgage Commencement, an amount
equal to the amount, if any, of net rental income applied to
complete the construction of the Apartment Complex pursuant to
Section 6.11 shall be deducted.
Certificate means the Original Certificate as it may be
amended from time to time (including any amendment thereto
effected in conjunction with this Agreement).
Class A Limited Partner means Boston Capital Corporate Tax
Credit Fund V, A Limited Partnership, a Massachusetts limited
partnership, and any Person or Persons who replaces it as
Substituted Limited Partner, but shall not include any Special
Limited Partner or Additional Limited Partner.
Class A Limited Partner's Actual Credit means, with respect
to a particular year, the total amount of Tax Credit properly
allocable by the Partnership to the Class A Limited Partner for
such year. The Class A Limited Partner's Actual Credit shall be
retroactively revised if the amount of Tax Credit properly
allocable to the Class A Limited Partner is revised after audit
or recapture.
Class A Limited Partner's Credit Recovery Loan has the
meaning given to it in Section 5.1(d)(i).
Class A Limited Partner's Credit Shortfall has the meaning
given to it in Section 5.1(d)(i).
Class A Limited Partner's Projected Credit means $109,144
for 1997, $218,466 per annum for each of the years 1998 through
2006 (inclusive) and $124,394 for 2007; provided, however, that
the Class A Limited Partner's Projected Credit for 2007 shall be
reduced by the amount, if any, by which the Class A Limited
Partner's Actual Credit for 1997 exceeds $109,144 and provided
further that upon the occurrence of any of the events described
in Section 5.1(e)(i), the Class A Limited Partner's Projected
Credit shall thereafter be the Class A Limited Partner's Revised
Projected Credit.
Class A Limited Partner's Reduction Amount has the meaning
given to it in Section 5.1(c)(i).
Class A Limited Partner's Reduction Year has the meaning
given to it in Section 5.1(c)(i).
Class A Limited Partner's Revised Projected Credit has the
meaning given to it in Section 5.1(e)(i).
Class B 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 replaces it as Substituted
Limited Partner, but shall not include any Special Limited
Partner or Additional Limited Partner.
Class B Limited Partner's Actual Credit means, with respect
to a particular year, the total amount of Tax Credit properly
allocable by the Partnership to the Class B Limited Partner for
such year. The Class B Limited Partner's Actual Credit shall be
retroactively revised if the amount of Tax Credit properly
allocable to the Class B Limited Partner is revised after audit
or recapture.
Class B Limited Partner's Credit Recovery Loan has the
meaning given to it in Section 5.1(d)(ii).
Class B Limited Partner's Credit Shortfall has the meaning
given to it in Section 5.1(d)(ii).
Class B Limited Partner's Projected Credit means $35,005 per
annum for each of the years 1998 through 2006 (inclusive) and
$19,932 for 2007; provided, however, that upon the occurrence of
any of the events described in Section 5.1(e)(ii), the Class B
Limited Partner's Projected Credit shall thereafter be the Class
B Limited Partner's Revised Projected Credit.
Class B Limited Partner's Reduction Amount has the meaning
given to it in Section 5.1(c)(ii).
Class B Limited Partner's Reduction Year has the meaning
given to it in Section 5.1(c)(ii).
Class B Limited Partner's Revised Projected Credit has the
meaning given to it in Section 5.1(e)(ii).
Class Contribution means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the
General Partners, the Investment Limited Partners, the Missouri
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 First Admission Date or the Second Admission occurs.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size, type
and location of the Apartment Complex or other property.
Completion Date means the date upon which the Apartment
Complex has been completed as evidenced by the issuance by the
inspecting architect and by each governmental agency having
jurisdiction of certificates of substantial completion or
occupancy (or local equivalents) with respect to all 48 apartment
units in the Apartment Complex.
Compliance Period means with respect to each building in the
Apartment Complex, the period of fifteen (15) taxable years
beginning with the first taxable year of the Credit Period, as
more particularly defined in Section 42(i) of the Code.
Conditional Capital Contribution means, with respect to the
Class A Limited Partner, any amounts which said Limited Partner
has agreed to contribute to the Partnership pursuant to Section
6.12(e).
Consent of the Investment Limited Partners means the prior
written consent or approval of the Investment Limited Partners.
Construction and Development Fee means the fee described in
Section 6.12(a).
Construction Lender means Boone County National Bank or
such other lender approved in writing by the Special Limited
Partner 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 which may be provided by
the Construction Lender upon such terms which are approved in
writing by the Special Limited Partner.
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 the Class A
Limited Partner shall have received the written certification of
the Auditors, in a form and in a substance satisfactory to Boston
Capital, as to the itemized amounts of the construction and
development costs of the Apartment Complex and the Eligible Basis
and Applicable Percentage pertaining to each building in the
Apartment Complex.
Credit Period has the meaning given to it in Section
42(f)(1) of the Code.
Credit Recovery Loan means the Class A Limited Partner's
Credit Recovery Loan and the Class B Limited Partner's Credit
Loan, each being a constructive interest-bearing advance of an
Investment Limited Partner, as more fully described in
Section 5.1(d)(i) and (ii). Credit Recovery Loans and interest
thereon shall not be treated as loans or interest, respectively,
for accounting, tax or liability purposes or for purposes of
Section 6.2(a)(1). For the purposes of Article X, the term
Credit Recovery Loan shall not include any portion of such an
advance which shall have theretofore been paid to an Investment
Limited Partner.
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 requirements set forth in
Internal Revenue Procedure 89-12 which are prerequisites to the
issuance, assuming that each General Partner is a corporation, by
the Service of an advance ruling that the Partnership will be
taxed as a partnership and not as an association taxable as a
corporation for federal income tax purposes.
Eligible Basis has the meaning given to it in Section 42(d)
of the Code.
Entity means any general partnership, limited partnership,
corporation, limited liability company, 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 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 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 has the meaning specified in the Preliminary
Statement.
Firm State Reservation means the Firm Tax Credit Reservation
letter from the authorized agency of the State dated September
27, 1996 which reserves until November 1, 1996 Tax Credit for the
buildings constituting the Apartment Complex in an annual dollar
amount of not less than $220,672.
First Admission Date means October 1, 1996 with respect to
each of the Class A Limited Partner, the Special Limited Partner
and the Missouri Limited Partner, or if pursuant to the Uniform
Act, each such Limited Partner shall not be deemed admitted to
the Partnership on such date, then the next date thereafter on
which each such Limited Partner shall be deemed to have been
admitted to the Partnership under the Uniform Act.
First Amendment has the meaning specified in the Preliminary
Statement.
FmHA means Rural Housing Service (formerly known as the
Farmers Home Administration and Community Development Service, a
rural credit agency of the United States Department of
Agriculture).
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.
HOME Minimum Set-Aside Test means the HOME set-aside test
which requires that (i) at least 40% of the units (20 units) in
the Apartment Complex be occupied by individuals with incomes
equal to 50% or less of area median income, as adjusted for
family size and (ii) the remaining 60% of the units (28 units) in
the Apartment Complex be occupied by individuals with incomes
equal to 60% or less of area median income, as adjusted for
family size.
HOME Program means the HOME Investment Partnership Program
established under The Cranston-Gonzalez National Affordable
Housing Act of 1990.
HUD means the United States Department of Housing and Urban
Development.
Installment means the installments of the Investment Limited
Partners' Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
Immediate Family means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
children-in-law and grandchildren-in-law.
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 Class A Limited Partner,
an amount equal to (a) the sum of the paid-in Capital
Contribution of the Class A Limited Partner, divided by (b)
66.10%, (ii) as to the Class B Limited Partner, an amount equal
to (a) the sum of the paid-in Capital Contribution of the Class B
Limited Partner divided by (b) 73% and (iii) as to any other
Partner, an amount equal to its paid-in Capital Contribution.
Investment General Partners means (i) as to the Class A
Limited Partner, BCCTC Associates V Limited Partnership, a
Massachusetts limited partnership, in its capacity as the general
partner of the Class A Limited Partner, and (ii) as to the
Class B Limited Partner, Boston Capital Associates IV L.P., a
Delaware limited partnership, in its capacity as the general
partner of the Class B Limited Partner, and any other Person who
may become a successor or additional general partner of either of
the Investment Limited Partners.
Investment Limited Partners means the Class A Limited
Partner and the Class B Limited Partner.
Investment Partnership Agreements means the Amended and
Restated Agreement of Limited Partnership of each of the
Investment Limited Partners, as amended from time to time.
Land Lender means Boone County National Bank in its capacity
as the holder of the Land Mortgage, or its successors and assigns
in such capacity.
Land Mortgage means the financing provided by the Land
Lender in the principal amount of $102,637.12 which was utilized
by the Partnership for the acquisition of the real property on
which the Apartment Complex is being developed.
Lender means the Construction Lender, the Land Lender and
MHDC, each in its capacity as maker of a Mortgage loan, or its
successors and assigns in such capacity.
Limited Partners means the Investment Limited Partners, the
Missouri Limited Partner, the Special Limited Partner and any
Additional Limited Partner.
LLC means a limited liability company.
Loan Advance means the $1,042,079 advanced to the
Partnership by the Class A Limited Partner pursuant to the
Promissory Note of the Partnership dated July 8, 1996.
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.
Management Incentive Agreement means the Second Amended and
Restated Management Incentive Agreement dated effective as of
January 1, 1997 entered into between the Partnership and the
Management Agent in accordance with which the Management Agent
may earn the Management Incentive Fee.
Management Incentive Fee means the fee described in Section
6.12(e).
MHDC means the Missouri Housing Development Commission, a
public body corporate and politic organized and existing under
the laws of the State of Missouri.
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.
Missouri Limited Partner means Missouri Affordable Housing
Fund VI, L.P., a Missouri limited partnership.
Missouri Low-Income Housing Tax Credit means the Missouri
tax credits which may be allocated by the State to the
Partnership pursuant to Section 135.350 RSMo.
Mortgage means the mortgage indebtedness of the Partnership
to the Construction Lender, the Land Lender and MHDC; where the
context admits, Mortgage shall mean and include the mortgage
note(s) evidencing such indebtedness, the mortgage(s) or deed(s)
of trust and security agreement(s) securing such indebtedness,
the loan agreement(s) and all other documentation related thereto
which evidence and secure such indebtedness, including any MHDC
documentation related thereto.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate has the meaning specified in the
Preliminary Statement.
Original Limited Partner has the meaning specified in the
Preliminary Statement.
Original Missouri Limited Partner has the meaning specified
in the Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability
(a) that is considered non-recourse under Treasury Regulation
Section 1.1001-2 or for which the creditor's right to repayment
is limited to one or more assets of the Partnership and (b) for
which any Partner or Related Person bears the Economic Risk of
Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of
partner nonrecourse debt minimum gain and the net increase or
decrease in partner nonrecourse debt minimum gain determined in a
manner consistent with Treasury Regulation Sections 1.704-2(d)
and 1.704-2(g)(3) and 1.704-2(k).
Partnership means the limited partnership continued pursuant
to this Agreement.
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction of such
liability, and by then aggregating the amounts so computed. Such
computations shall be made in a manner consistent with Treasury
Regulation Sections 1.704-2(d) and (k).
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 Mortgage means the permanent financing to be
provided under the HOME Program by MHDC for the Apartment Complex
following the completion thereof in the initial principal amount
of $1,424,000.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; (b) the principal amount and maturity date of
the Permanent Mortgage shall have been finally determined; and
(c) amortization of the Permanent Mortgage shall have commenced.
Person means any individual or Entity.
Project Documents means and includes the Land Mortgage, the
Construction Mortgage, the Permanent Mortgage, the Management
Agreement, the Management Incentive Agreement, all other
instruments delivered to (or required by) the Land Lender, the
Construction Lender and/or MHDC and all other documents relating
to the Apartment Complex and by which the Partnership is bound,
as amended or supplemented from time to time.
Projected Credit means the Class A Limited Partner's
Projected Credit and the Class B Limited Partner's Projected
Credit.
Prospectus means the prospectus contained in the
registration statement (File No. 33-70564) filed with the
Securities and Exchange Commission on behalf of the Class B
Limited Partner for the registration of beneficial assignee
certificates and/or limited partnership interests under the
Securities Act of 1933, as amended, in the final form in which
said prospectus is filed with said Commission and as thereafter
amended and/or supplemented from time to time pursuant to
Rule 424 under said Act, or otherwise.
Qualified Basis has the meaning given to it in Section 42(c)
of the Code.
Qualified Income Offset Item means (1) an allocation of loss
or deduction that, as of the end of each year, reasonably is
expected to be made (a) pursuant to Section 704(e)(2) of the Code
to a donee of an interest in the Partnership, (b) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership of
unrealized receivables or inventory items and (2) a distribution
that, as of the end of such year, reasonably is expected to be
made to a Partner to the extent it exceeds offsetting increases
to such Partner's Capital Account which reasonably are expected
to occur during or prior to the Partnership taxable year in which
such distribution reasonably is expected to occur.
Related Person means a Person related to a Partner within
the meaning of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42
of the Code whereby the gross rent charged to tenants of the low-
income units in the Apartment Complex may not exceed 30% of the
qualifying income levels.
Sales Preparation Fee has the meaning specified in
Section 6.12(c).
Schedule A means Schedule A to this Agreement, as amended
from time to time.
Second Admission Date means with respect to the Class B
Limited Partner, January 1, 1997.
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 BCCC, Inc., a Massachusetts
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 Missouri.
State Designation (1996) means the date upon which the
Partnership receives the allocation by the authorized agency of
the State of a Tax Credit for the buildings constituting the
Apartment Complex in an annual dollar amount of not less than
$220,672 as evidenced by the execution by or on behalf of such
agency of Forms 8609. For the purposes of determining State
Designation (1996), each building in the Apartment Complex shall
be treated as having received an allocation of Tax Credit in an
amount equal to the lesser of (i) the amount of Tax Credit
carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of Tax Credit set
forth on the Form 8609 as to such building.
State Designation (1997) means the date upon which the
Partnership receives the allocation by the authorized agency of
the State of a Tax Credit for the buildings constituting the
Apartment Complex in an annual dollar amount of not less than
$35,359 as evidenced by the execution by or on behalf of such
agency of Forms 8609. For the purposes of determining State
Designation (1997), each building in the Apartment Complex shall
be treated as having received an allocation of Tax Credit in an
amount equal to the lesser of (i) the amount of Tax Credit
carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of Tax Credit set
forth on the Form 8609 as to such building.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted
to the Partnership as Limited Partner under Section 8.2 or
acquires the Interest of an Investment 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.
Title Commitment means the title insurance commitment number
41499 issued to the Partnership by Commonwealth Land Title
Insurance Company on September 20, 1996 at 8:00 a.m.
Title Policy means the owner's title insurance policy to be
issued to the Partnership by Commonwealth Land Title Insurance
Company or such other title insurance company acceptable to the
Class A Investment Limited Partner pursuant to the Title
Commitment, which policy will, among other things, update the
title to the Apartment Complex through at least Permanent
Mortgage Commencement, provide for insurance in an amount equal
to at least $3,021,103 and evidence the Partnership's ownership
of the Apartment Complex subject only to such exclusions,
exceptions and stipulations, as shall be acceptable to the
Class A Limited Partner, in its sole discretion.
Uniform Act means the Revised Missouri Uniform Limited
Partnership Act as adopted by the State.
Vessel has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or involuntary
withdrawal or retirement from the Partnership for any reason,
including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this
Agreement. Withdrawal shall also mean the sale, assignment,
transfer or encumbrance by a General Partner of its interest as a
General Partner. A General Partner which is a corporation or
partnership shall be deemed to have sold, assigned, transferred
or encumbered its interest as a General Partner in the event (as
a result of one or more transactions) of any sale, assignment or
other transfer (but specifically excluding any transfer occurring
pursuant to the laws of descent and distribution) or encumbrance
of a controlling interest in a corporate General Partner or of a
general partner interest in a General Partner which is a
partnership. For purposes of this definition of Withdrawal,
"controlling interest" shall mean the power to direct the
management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Harrisonville Heights, L.P.
The Partners agree to continue the Partnership which was formed
pursuant to the provisions of the Uniform Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 11000 South
Airport Drive, Building No. 1, South Wing, P.O. Box 7688,
Columbia, Missouri 65205, at which office there shall be
maintained those records required by the Uniform Act to be kept
by the Partnership. The Partnership may have such other or
additional offices as the General Partners shall deem desirable.
The General Partners may at any time change the location of the
principal office and shall give due notice thereof to the Limited
Partners.
(b) The resident agent in the State for the Partnership for
service of process is as follows:
Leslie K. Sha, Attorney At Law
Law Offices of Craig A. Van Matre, P.C.
1103 East Broadway, Suite 101
P.O. Box 1017
Columbia, Missouri 65205
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
MHDC regulations and requirements of MHDC. 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, 2056, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially
all of the assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt,
insane or incompetent, (if a corporation or partnership) being
dissolved or liquidated, or voluntarily or involuntarily
withdrawing from the Partnership for any reason, including an
inability to continue serving as a General Partner by law or
pursuant to the terms of this Agreement, if (i) the remaining
General Partner(s), if any, shall fail to continue the business
of the Partnership and reconstitute the Partnership as a
successor limited partnership as provided in Section 7.2 and
(ii) the Investment Limited Partners 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 Partners and the approval (if required) of
MHDC;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Uniform Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners
(or for purposes of this paragraph, their trustees, receivers or
successors) shall cause the cancellation of the Certificate,
liquidate the Partnership assets and apply and distribute the
proceeds thereof in accordance with Section 10.3. Notwith-
standing 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
Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly and
severally, are hereby authorized to incur personal liability for
the repayment of funds advanced by the Land Lender and the
Construction Lender (and interest thereon) pursuant to the Land
Mortgage and Construction Mortgage, respectively. However, from
and after Permanent Mortgage Commencement, neither any General
Partner nor any Related Person shall at any time bear, nor shall
the General Partners permit any other Partner or any Related
Person to bear, the Economic Risk of Loss for the payment of any
portion of any Mortgage.
B. The Partnership may decrease, increase or refinance the
Permanent Mortgage and may make any required transfer or
conveyance of Partnership assets for security or mortgage
purposes, provided, however, any such decrease (except through
the forty (40)-year amortization schedule anticipated at
Permanent Mortgage Commencement), increase or refinancing of the
Permanent Mortgage may be made by the General Partners only with
the Consent of the Investment Limited Partners, which consent may
not be unreasonably withheld.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or substantially all the assets of the
Partnership only with the Consent of the Investment Limited
Partners. Notwithstanding the foregoing and except as set forth
in Section 6.2(a)(6), no Consent of the Investment Limited
Partners shall be required for the leasing of apartments to
tenants in the normal course of operations or the leasing of all
or substantially all the apartments to a public housing authority
at rents satisfactory to MHDC as expressed in writing.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner is as set
forth on Schedule A. No interest shall be paid on any Capital
Contribution. No Partner shall have the right to withdraw its
Capital Contribution or to demand and receive property of the
Partnership in return for its Capital Contribution, except as may
be specifically provided in this Agreement or required by law.
(b) An individual Capital Account shall be established and
maintained on behalf of each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in
the Partnership. In accordance with Treasury Regulation
Section 1.704-1(b), the Capital Account of each Partner shall
consist of (i) the amount of cash such Partner has contributed to
the Partnership plus (ii) the fair market value of any property
such Partner has contributed to the Partnership net of any
liabilities assumed by the Partnership or to which such property
is subject plus (iii) the amount of profits or income (including
tax-exempt income) allocated to such Partner less (iv) the amount
of losses and deductions allocated to such Partner less (v) the
amount of all cash distributed to such Partner less (vi) the fair
market value of any property distributed to such Partner net of
any liabilities assumed by such Partner or to which such property
is subject less (vii) such Partner's share of any other
expenditures which are not deductible by the Partnership for
federal income tax purposes or which are not allowable as
additions to the basis of Partnership property and shall be
(viii) subject to such other adjustments as may be required under
the Code. The Capital Account of a Partner shall not be affected
by any adjustments to basis made pursuant to Section 743 of the
Code but shall be adjusted with respect to adjustments to basis
made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as,
and shall replace, the Capital Account of the Partner which such
Substituted Partner succeeds, and, for the purposes of this
Agreement, such Substituted Partner shall be deemed to have made
the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term
"Substituted Partner," as used in this paragraph, shall mean a
Person who shall become entitled to receive a share of the
allocations and distributions of the Partnership by reason of
such Person succeeding to all or any part of the Interest of a
Partner by assignment of all or any part of a Partner's Interest.
To the extent a Substituted Partner receives less than 100% of
the Interest of a Partner he succeeds, the original Capital
Account of such transferee Substituted Partner and his Capital
Contribution shall be in proportion to the portion of the
transferor Partner's Interest prior to the transfer which the
transferee receives, and the Capital Account of the transferor
Partner who retains a portion of his former Interest and his
Capital Contribution shall continue, and not be replaced, in
proportion to the portion of the transferor Partner's Interest
prior to the transfer which the transferor Partner retains.
Nothing in this Section 4.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or
Article VIII.
4.2 General Partners
The name, address and Capital Contribution of each General
Partner is as set forth on Schedule A.
4.3 Investment Limited Partners, Missouri Limited Partner,
Special Limited Partner, Original Missouri Limited
Partner and Original Limited Partner
The Original Limited Partner withdrew as a limited partner
of the Partnership and the Class A Limited Partner, the Original
Missouri Limited Partner and the Special Limited Partner were
admitted to the Partnership pursuant to the Amended and Restated
Agreement. The Original Missouri Limited Partner withdrew as a
limited partner of the Partnership and the Missouri Limited
Partner was admitted as a limited partner of the Partnership
pursuant to the First Amendment. The Class B Limited Partner is
hereby admitted as an additional Limited Partner of the
Partnership as of the effective date hereof and agrees to be
bound by the terms and provisions of the Project Documents and
this Agreement. The names and addresses of the Investment
Limited Partners, the Missouri 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 Partners.
4.4 Liability of the Limited Partners
None of the Investment Limited Partners, the Missouri
Limited Partner, the Special Limited Partner and any Person who
becomes an Additional Limited Partner shall be liable for any
debts, liabilities, contracts or obligations of the Partnership
and shall only be liable to pay their respective Capital
Contributions as and when the same are due hereunder and under
the Uniform Act.
4.5 Special Rights of the Investment Limited Partners 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 Partners and the Special Limited Partner shall
have the right, subject to the prior written consent of MHDC (if
such consent is required) to:
(i) amend this Agreement in any particular; provided,
however, that no amendment which would materially adversely
effect the vested rights of the General Partners may be adopted
without the consent of the General Partners;
(ii) dissolve the Partnership; provided, however, that no
dissolution which would materially adversely effect the vested
rights of the General Partners may be effected without the
consent of the General Partners;
(iii) remove and replace any General Partner and elect a
new General Partner (A) on the basis of the performance and
discharge of such General Partner's obligations constituting
fraud, bad faith, negligence, misconduct or breach of fiduciary
duty, or (B) upon the occurrence of any of the following which
would result in or is likely to result in a material detriment to
or an impairment of the Apartment Complex, the Partnership or
assets of the Partnership: (1) such General Partner shall have
violated any provisions of any Project Document or other document
required in connection with any Mortgage, or any provisions of
any MHDC regulations applicable to the Apartment Complex;
(2) such General Partner shall have violated any provision of
this Agreement or violated any provision of applicable law;
(3) any Mortgage shall have gone into default; or (4) such
General Partner shall have conducted its own affairs or the
affairs of the Partnership in such a manner as would (a) cause
the termination of the Partnership for federal income tax
purposes or (b) cause the Partnership to be treated for federal
income tax purposes as an association taxable as a corporation;
provided, however, that any dispute between the Investment
Limited Partners and/or the Special Limited Partner and such
General Partner regarding removal under this Section 4.5(a)(iii)
shall be settled by arbitration in accordance with the
arbitration rules of the American Arbitration Association then in
effect in Boston, Massachusetts;
(iv) continue the business of the Partnership with a
substitute General Partner; and
(v) approve or disapprove the sale of all or substantially
all of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any
further action by any Partner, the Special Limited Partner 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 Partners shall determine is the minimum
appropriate interest in order to assure the continued status of
the Partnership as a partnership under the Code and under the
Uniform Act, (ii) the remaining portion of the economic Interest
of the removed General Partner shall automatically be converted
to an equal economic Interest as an Additional Limited Partner,
(iii) the economic Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new
status of the Special Limited Partner or its designee as a
General Partner, and (iv) the new General Partner shall
automatically be irrevocably delegated all of the powers and
duties of the General Partners pursuant to Section 6.13. 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 remainder of the
Additional Limited Partner Interest, or any portion thereof, of
any removed General Partner upon payment of the agreed or then
present fair market value of such Interest or portion thereof,
which value shall include the value attributable to the ability
of a General Partner to select the Management Agent. Any dispute
as to such value shall be submitted to a committee composed of
three qualified real estate appraisers, one chosen by the removed
General Partner, one chosen by the successor General Partner or
the Investment Limited Partners, as the case may be, and the
third chosen by the two so chosen. The proceedings of such
committee shall conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall be
final and binding. The expense of arbitration shall be born
equally by the removed General Partner and the Partnership. The
method of payment to the removed General Partner shall be fair;
and must protect the solvency and liquidity of the Partnership.
The method of payment will be deemed presumptively fair where it
provides for an interest-bearing promissory note coming due in no
less than five (5) years with equal installments each year. In
addition, upon removal, the Partnership must promptly pay to the
removed General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that notwithstanding
the language of Section 6.12, Article X, Article XI and any other
provision hereof, no removed General Partner 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 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 so removed
under this Section 4.5 any damages suffered by the Partnership as
a result of any breach of the obligations of such General Partner
hereunder. A General Partner so removed will not be liable as a
general partner for any obligations of the Partnership after the
effective date of its removal. Each General Partner hereby
grants to the Special Limited Partner an irrevocable (to the
extent permitted by applicable law) power of attorney coupled
with an interest to execute and deliver any and all documents and
instruments on behalf of such General Partner as the Special
Limited Partner may deem to be necessary or appropriate in order
to effect the provisions of this Section 4.5 and to enable the
new General Partner to manage the business of the Partnership.
4.6 Meetings
The General Partners or Limited Partners holding more than
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 Special Limited Partner, the
Missouri Limited Partner and the Investment Limited Partners
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of
$10 was paid in full in cash on the First Admission Date. The
Missouri Limited Partner made a Capital Contribution of $5.00 to
the Partnership on the First Admission Date and the balance of
its Capital Contribution in the amount of $220,667 has been or
will be paid to the Partnership on or prior to Permanent Mortgage
Commencement. The Class A Limited Partner has or will make a
Basic Capital Contribution of $1,257,866 (equal to approximately
58% of the Class A Limited Partner's Projected Credit as of the
First Admission Date) and the Class B Limited Partner has or will
make a Basic Capital Contribution of $185,529 (equal to
approximately 55% of the Class B Limited Partner's Projected
Credit as of the Second Admission Date) which has been or will be
paid to the Partnership in four (4) installments (the
"Installments") as follows:
(1) $1,121,588 (the "First Installment") by the
Class A Limited Partner upon the First Admission Date;
(2) $36,278 (the "Second Installment") by the
Class A Limited Partner upon the latest of (i) Completion Date,
(ii) Cost Certification, (iii) Permanent Mortgage Commencement,
(iv) State Designation (1996) or (v) payment of the First
Installment;
(3) $100,000 (the "Third Installment") by the
Class A Limited Partner upon the later of (i) the date upon which
all parties hereto shall have executed this Agreement or
(ii) payment of the Second Installment; and
(4) $185,529 (the "Fourth Installment") by the
Class B Limited Partner upon the latest of (i) State Designation
(1997), (ii) the date upon which all parties hereto shall have
executed this Agreement, or (iii) payment of the Third
Installment.
A portion of the First Installment equal to $1,042,079
was utilized by the Partnership to repay the entire Loan Advance.
(b) Acceptance by the Partnership of an Installment shall
constitute a confirmation that, as of the date of payment, all
conditions set forth in Section 5.1(a) have been achieved. The
obligation of the Class A Limited Partner to pay the First
Installment is also conditioned upon delivery by the General
Partners to the Class A Limited Partner of a legal opinion of
independent Missouri counsel to the Partnership, which opinion
must be satisfactory to the Class A Limited Partner both as to
form and as to counsel. The obligation of the Class A Limited
Partner to pay the Second Installment is also conditioned upon
delivery by the General Partners to the Class A Limited Partner
of the Title Policy. The obligation of the Class B Limited
Partner to pay the Fourth Installment is also conditioned upon
delivery by the General Partners to the Class B Limited Partner
of a legal opinion of independent Missouri counsel to the
Partnership, which opinion must be satisfactory to the Class B
Limited Partner both as to form and as to counsel.
(c)(i) If with respect to any year all or a portion of
which occurs during the 60-month period commencing on the First
Admission Date (a "Class A Limited Partner's Reduction Year") the
Class A Limited Partner's Actual Credit is or was less than the
Class A Limited Partner's Projected Credit, then the Capital
Contribution of the Class A Limited Partner shall be reduced by
the Class A Limited Partner's Reduction Amount. The Class A
Limited Partner's Reduction Amount shall be equal to the excess
of the Class A Limited Partner's Projected Credit for such year
over the Class A Limited Partner's Actual Credit for such year
multiplied by a fraction the numerator of which is the total
Capital Contribution of the Class A Limited Partner and the
denominator of which is the total aggregate amount of the Class A
Limited Partner's Projected Credit. The Accountants shall make
their determination of the amount of the Class A Limited
Partner's Actual Credit with respect to each Class A Limited
Partner's Reduction Year within 30 days following the end of such
year. The Capital Contribution of the Class A Limited Partner
shall be subject to reduction as hereinabove described with
respect to each Class A Limited Partner's Reduction Year. Any
Class A Limited Partner's Reduction Amount shall, at the option
of the Class A Limited Partner, either (i) be applied to the
Second Installment or Third Installment if not yet paid by the
Class A Limited Partner, provided that if the Class A Limited
Partner's Reduction Amount shall exceed the amount of the Second
Installment and the Third Installment, then the entire Class A
Limited Partner's Reduction Amount or the balance of the Class A
Limited Partner's Reduction Amount, as the case may be, shall be
paid by the General Partners to the Class A Limited Partner
promptly after demand is made therefor, as a payment of damages
for breach of warranty, regardless of the reason for the
occurrence of such event or (ii) be paid in its entirety by the
General Partners to the Class A 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.
(c)(ii) If with respect to any year all or a portion of
which occurs during the 60-month period commencing on the Second
Admission Date (a "Class B Limited Partner's Reduction Year") the
Class B Limited Partner's Actual Credit is or was less than the
Class B Limited Partner's Projected Credit, then the Capital
Contribution of the Class B Limited Partner shall be reduced by
the Class B Limited Partner's Reduction Amount. The Class B
Limited Partner's Reduction Amount shall be equal to the excess
of the Class B Limited Partner's Projected Credit for such year
over the Class B Limited Partner's Actual Credit for such year
multiplied by a fraction the numerator of which is the total
Capital Contribution of the Class B Limited Partner and the
denominator of which is the total aggregate amount of the Class B
Limited Partner's Projected Credit. The Accountants shall make
their determination of the amount of the Class B Limited
Partner's Actual Credit with respect to each Class B Limited
Partner's Reduction Year within 30 days following the end of such
year. The Capital Contribution of the Class B Limited Partner
shall be subject to reduction as hereinabove described with
respect to each Class B Limited Partner's Reduction Year. Any
Class B Limited Partner's Reduction Amount shall be paid in its
entirety by the General Partners to the Class B 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.
(d)(i) In the event that, for any reason, at any time
after the end of the year during which the 60-month anniversary
of the First Admission Date occurs, the amount of the Class A
Limited Partner's Actual Credit shall be less than the Class A
Limited Partner's Projected Credit with respect to any fiscal
year of the Partnership (such difference being hereinafter
referred to as a "Class A Limited Partner's Credit Shortfall"),
the Class A Limited Partner shall be treated as having made a
constructive advance to the Partnership with respect to such year
(a "Class A Limited Partner's 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 Class A Limited Partner's
Credit Shortfall for such year plus (ii) the amount of any
recapture, interest or penalty payable by the limited partners of
the Class A Limited Partner (assuming the pass-through of all
such liability in the year incurred and a tax rate equal to the
maximum individual rate applicable in such year) as a result of
the Class A Limited Partner's Credit Shortfall for such year.
Class A Limited Partner's Credit Recovery Loans shall be deemed
to bear simple (not compounded) interest from the respective
dates on which such principal advances shall have been deemed to
have been made under this Section 5.1(d)(i) at 7% per annum.
Class A Limited Partner's Credit Recovery Loans shall be
repayable by the Partnership as provided in Section 10.2(b),
Clause Second.
(d)(ii) In the event that, for any reason, at any time
after the end of the year during which the 60-month anniversary
of the Second Admission Date occurs, the amount of the Class B
Limited Partner's Actual Credit shall be less than the Class B
Limited Partner's Projected Credit with respect to any fiscal
year of the Partnership (such difference being hereinafter
referred to as a "Class B Limited Partner's Credit Shortfall"),
the Class B Limited Partner shall be treated as having made a
constructive advance to the Partnership with respect to such year
(a "Class B Limited Partner's 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 Class B Limited Partner's
Credit Shortfall for such year plus (ii) the amount of any
recapture, interest or penalty payable by the limited partners
and/or holders of beneficial assignee certificates of the Class B
Limited Partner (assuming the pass-through of all such liability
in the year incurred and a tax rate equal to the maximum
individual rate applicable in such year) as a result of the Class
B Limited Partner's Credit Shortfall for such year. Class B
Limited Partner's Credit Recovery Loans shall be deemed to bear
simple (not compounded) interest from the respective dates on
which such principal advances shall have been deemed to have been
made under this Section 5.1(d)(ii) at 7% per annum. Class B
Limited Partner's Credit Recovery Loans shall be repayable by the
Partnership as provided in Section 10.2(b), Clause Second.
(e)(i) In the event that at any time after the Completion
Date the product of the Apartment Complex's Qualified Basis and
its Applicable Percentage is determined by the Accountants,
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 $256,031, then (a) the
General Partners shall pay to the Class A Limited Partner an
amount equal to 85.328% of the product of (A) the difference
between (i) $2,560,310 and (ii) the total amount of Tax Credit
allocated to the Partnership and (B) .63 and (b) the Class A
Limited Partner's Projected Credit for each year shall thereafter
be redefined to mean 85.328% of the total amount of Tax Credit so
allocated to the Partnership for such year (the "Class A Limited
Partner's Revised Projected Credit"). Any amount payable by the
General Partners to the Class A Limited Partner pursuant to this
Section 5.1(e)(i) shall, at the option of the Class A Limited
Partner, either (i) be applied to the Second Installment or Third
Installment, if not yet paid, provided that if such amount
payable by the General Partners exceeds the amount of the Second
Installment and the Third Installment, then an amount equal to
the amount of such excess shall be paid by the General Partners
to the Class A Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event, or
(ii) to be paid in its entirety by the General Partners to the
Class A 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.
(e)(ii) In the event that at any time after the Completion
Date the product of the Apartment Complex's Qualified Basis and
its Applicable Percentage is determined by the Accountants,
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 $256,031, then (a) the
General Partners shall pay to the Class B Limited Partner an
amount equal to 13.672% of the product of (A) the difference
between (i) $2,560,310 and (ii) the total amount of Tax Credit
allocated to the Partnership and (B) .63 and (b) the Class B
Limited Partner's Projected Credit for each year shall thereafter
be redefined to mean 13.672% of the total amount of Tax Credit so
allocated to the Partnership for such year (the "Class B Limited
Partner's Revised Projected Credit"). Any amount payable by the
General Partners to the Class B Limited Partner pursuant to this
Section 5.1(e)(ii) shall be paid in its entirety by the General
Partners to the Class B 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.
5.2 Return of Capital Contributions
(a) Failure to Complete and Loss of the Tax Credit. If (i)
by December 31, 1997 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partners)
less than 48 apartment units in the Apartment Complex shall have
been occupied by tenants meeting the terms of both the Minimum
Set-Aside Test and the HOME Minimum Set-Aside Test under executed
leases which shall have received any necessary MHDC or Lender
approvals at rental levels meeting the requirements of the Rent
Restriction Test, or (ii) the Partnership shall fail to meet the
Minimum Set-Aside Test, the HOME 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 any such Test at
any time during the 60-month period commencing on such date, or
(iii) prior to Permanent Mortgage Commencement, (a) foreclosure
proceedings shall have commenced under the Land Mortgage or the
Construction Mortgage and such proceedings shall not have been
dismissed within 60 days, (b) any of the commitments of MHDC to
provide the Permanent Mortgage and/or any subsidy financing shall
be terminated or withdrawn and not reinstated or replaced within
90 days with terms equally or more favorable to the Investment
Limited Partners or terms for which the Consent of the Investment
Limited Partners and (if required) the approval of MHDC 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 60 days, or
(iv) if by November 1, 1996 (or any later date fixed by the
General Partners with the Consent of the Investment Limited
Partners) the Partnership shall not have received either (a) an
extension of the Firm State Reservation or (b) the Carryover
Allocation or other binding allocation of Tax Credits from the
authorized agency of the State, or (v) if by December 31, 1996
(or any later date fixed by the General Partners with the Consent
of the Investment Limited Partners) the Partnership shall not
have received the Carryover Allocation, or (vi) Carryover
Certification shall not have been received by December 31, 1996
(or any later date fixed by the General Partners with the Consent
of the Investment Limited Partners), or (vii) the Completion Date
shall not have occurred by May 1, 1997 (or any later date fixed
by the General Partners with the Consent of the Investment
Limited Partners), or (viii) Permanent Mortgage Commencement
shall not have been achieved by May 1, 1997 (or any later date
fixed by the General Partners with the Consent of the Investment
Limited Partner), or (ix) the Breakeven Point shall not have been
achieved by June 30, 1998 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partners), or
(x) 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 (xi) if by May 1, 1997 (or any later
date fixed by the General Partners with the Consent of the
Investment Limited Partners) the Investment Limited Partners
shall not have received the Cost Certification, then the General
Partners shall, within 15 days of the occurrence thereof, send to
the Investment Limited Partners and the Special Limited Partner
notice of such event and of their obligation to repurchase the
Interests of the Investment Limited Partners and the Special
Limited Partner by paying to the Investment Limited Partners and
the Special Limited Partner an amount equal to each such
Partner's Invested Amount in the event the Investment Limited
Partners and the Special Limited Partner so requires. If either
the Investment Limited Partners or the Special Limited Partner
elects to require a repurchase of its Interest and the payment to
it of an amount equal to its Invested Amount, it shall send
notice thereof to the Partnership within 30 days after the
mailing date of the General Partners' notice, or at any time
after the occurrence of any of the foregoing if the General
Partners shall not have sent such a notice thereof, and the
General Partners shall within 30 days thereafter repurchase the
Interest of such Partner by paying to such Partner an amount
equal to its Invested Amount plus the amount of any third party
costs incurred by or on behalf of such Partner in implementing
this Section 5.2(a).
(b) Lender Disapproval. If any Lender shall disapprove, or
fail to give any required approval of, the Class A Limited
Partner and/or the Special Limited Partner as a Limited Partner
hereunder within 180 days of the First Admission Date or the
Class B Limited Partner within 180 days of the execution of this
Agreement, then the Partner being disapproved or not approved
shall, effective as of such time or such later time as may be
selected by the Partner being disapproved or not approved (or
such other time as may be specified by the Lender in its
disapproval), at the option of the Partner being disapproved or
not approved (if not directed by the Lender to withdraw), cease
to be a Limited Partner. The General Partners shall, within 10
days of the effective date of the termination pay to the Partner
being disapproved or not approved an amount equal to its Invested
Amount plus the amount of any third party costs incurred by or on
behalf of such Partner in implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by
the Investment Limited Partners 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. Each of the Investment
Limited Partners shall have the right to irrevocably waive its
right to have its Interest repurchased pursuant to any clause or
clauses of Section 5.2(a), or any portion thereof, at any time
during which any of such rights shall be in effect. Such a
waiver shall be exercised by delivery to the General Partners of
a written notice stating that the rights being waived pursuant to
any specified clause or clauses of Section 5.2(a), or any
specified portion thereof, are thereby waived from that date
forward.
(e) Additional General Partner. If the General Partners
shall fail to make on the due date therefor any payment required
under Section 5.2(a) or Section 5.2(b), time being of the
essence, at any time thereafter the Special Limited Partner shall
have the option, exercisable in its sole discretion, to cause
itself or its designee to be admitted as an additional General
Partner, receiving from the pre-existing General Partners,
proportionally out of their Interests, in consideration of $10, a
one per cent (1%) interest in the profits, losses, tax credits
and distributions of the Partnership, with the Special Limited
Partner retaining its status as such and its economic interest in
the Partnership as the Special Limited Partner not being effected
thereby. Upon any such admission of the Special Limited Partner
as an additional General Partner, each of the other General
Partners hereby agrees that all of its rights and powers
hereunder as a General Partner shall automatically be irrevocably
delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each
Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to take any action and to
execute, deliver and file or record any and all documents and
instruments on behalf of such Partner and the Partnership as the
Special Limited Partner may deem necessary or appropriate in
order to effectuate the provisions of this Section 5.2(e) and to
allow the additional General Partner to manage the business of
the Partnership. The admission of the Special Limited Partner as
an additional General Partner shall not relieve any other General
Partner of any of its economic obligations hereunder, and each
other General Partner shall fully indemnify and hold harmless the
additional General Partner against any and all losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with its capacity as a General
Partner.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions
of this Agreement, the General Partners for, in the name and on
behalf of the Partnership are hereby authorized to do the
following in furtherance of the purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise
any real or personal property;
(2) To construct, 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 Land, Construction and Permanent
Mortgages, the other Project Documents and all such other
documents as the General Partners deem necessary or appropriate
in connection with the acquisition, development and financing of
the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify the
Construction and Permanent Mortgages or any other financing
affecting the Apartment Complex;
(6) To employ the Management Agent (which, subject to MHDC
approval, may be an Affiliate of the General Partners) and to pay
reasonable compensation for its services;
(7) To execute contracts with MHDC, 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;
(8) 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
(9) To enter into any kind of activity and to perform and
carry out contracts of any kind which may be lawfully carried on
or performed by a partnership and to file all certificates and
documents which may be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement,
the General Partners shall have no authority to (i) knowingly
perform any act in violation of applicable law, MHDC or other
government regulations, requirements of any Lender, or the
Project Documents or (ii) even unknowingly, perform any act in
violation of applicable law, MHDC or other government
regulations, requirements of any Lender, or the Project Documents
if such act would or could materially adversely effect the
Apartment Complex, the Partnership or the Investment Limited
Partners. In the event of any conflict between the terms of this
Agreement and any applicable MHDC 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 Partners and the prior written
consent of the Special Limited Partner:
(1) To have borrowings in excess of $10,000 in the
aggregate at any one time outstanding on the general credit of
the Partnership, except borrowings constituting Subordinated
Loans;
(2) To borrow from the Partnership or commingle Partnership
funds with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the Apartment Complex or its use or which are
at a cost in excess of $10,000 in a single Partnership fiscal
year, except (a) replacements and remodeling in the ordinary
course of business or under emergency conditions or
(b) construction paid for from insurance proceeds;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) Following Permanent Mortgage Commencement, to modify
the terms of or refinance the Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such that
the Apartment Complex would not meet the requirements of the HOME
Minimum Set-Aside Test, the Minimum Set-Aside Test or the Rent
Restriction Test;
(7) To sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the
Partnership;
(8) To terminate any agreement with MHDC;
(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 instituted by any Person other than the Partnership;
(10) To do any act required to be approved or ratified by
all limited partners under the Uniform Act; or
(11) To amend or modify the Management Incentive Agreement.
(b) Neither the Investment General Partners nor any
Affiliate thereof shall be given an exclusive right to sell, or
exclusive employment to sell, the Apartment Complex.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any
salary or other compensation except as may be provided in
Section 6.12 and Article XI hereof or for construction,
rehabilitation and/or related services performed by such General
Partner or Affiliate in accordance with a reasonable and
competitive fee arrangement. Any Partner may engage
independently or with others in other business ventures of every
nature and description including the ownership, operation,
management, syndication and development of competing real estate;
neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or
profits derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General
Partners shall have the exclusive right to control the business
of the Partnership. The Investment Limited Partners 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 Partners 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 Partners any participation in the control
of the Partnership business. Each of the Special Limited
Partner, the Missouri Limited Partner and the Investment Limited
Partners hereby consents to the exercise by the General Partners
of the powers conferred on them by law and this Agreement, and
the General Partners agree to exercise control of the business of
the Partnership only in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, in no event may the
provisions of this Section 6.4 be invoked by any General Partner
or by any other Person as a defense against or as an impediment
to the ability of either the Investment Limited Partners or the
Special Limited Partner to take any action hereunder. All
Partners hereby agree that Jeffrey E. Smith Partnerships, L.C.
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 Partners is obtained to file suit in the United States
Claims Court or the United States District Court. Nothing herein
shall be construed to restrict the Partnership from engaging the
Auditors to assist the Tax Matters Partner in discharging its
duties hereunder. If the General Partner designated as the Tax
Matters Partner withdraws from the Partnership, the Partnership
shall designate a successor Tax Matters Partner in accordance
with Treasury Regulation Sections 301.6231(a)(7)-1(T) or any
successor Regulation. The Partnership shall notify the Service
of the designation of a successor Tax Matters Partner for such
year as well as for all prior years that the Withdrawn General
Partner was serving as Tax Matters Partner.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the
Partnership to the best of their ability, shall use their best
efforts to carry out the purpose of the Partnership, and shall
devote to the Partnership such time as may be necessary for the
proper performance of their duties and the business of the
Partnership. The General Partners shall promptly take all action
which may be necessary or appropriate for the proper development,
maintenance and operation of the Apartment Complex in accordance
with the provisions of this Agreement, the Project Documents and
applicable laws and regulations including, without limitation,
funding the Construction and Development Fee to the extent
Capital Contributions are insufficient. The General Partners are
responsible for the management and operation of the Partnership,
including the oversight of the rent-up and operational stages of
the Apartment Complex.
(b) The General Partners shall use their best efforts to
cause the Partnership to generate Cash Flow for distribution to
the Partners at the maximum realizable level in view of (i) any
applicable MHDC and other regulations, (ii) the Minimum Set-Aside
Test and the HOME 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 obtain and keep in force,
during the term of the Partnership, comprehensive casualty
insurance, including, but not limited to fire and extended
coverage, workmen's compensation and public liability insurance
in favor of the Partnership with such companies and with such
terms and in such amounts as shall be satisfactory to MHDC, or,
if the Apartment Complex is no longer subject to MHDC regulation
or requirements, as shall be customary for apartment complexes
such as the Apartment Complex.
(d) The obligations of the General Partners hereunder shall
be the joint and several obligations of each General Partner.
Except as otherwise provided in Sections 4.5(b) and 7.1, such
obligations shall survive any Withdrawal of a General Partner
from the Partnership.
(e) The General Partners shall establish and maintain
reasonable reserves to provide for working capital needs,
improvements, replacements and any other contingencies of the
Partnership. At a minimum, the General Partners shall cause the
Partnership starting in March 1997, or such earlier time as may
be required by MHDC or any Lender, to annually deposit $7,727
from its Cash Flow into replacement reserves; to the extent cash
flow (as determined before deduction of this reserve deposit) for
any year shall be insufficient to make such deposit in full, the
General Partners shall fund such shortfall from their own funds
as a Subordinated Loan. The General Partners shall also cause
the Partnership to fund an operating reserve of $39,600 and a
latent defect guarantee reserve of $35,600. The foregoing
reserves may be funded by a letter of credit and may be borrowed
against to the extent authorized by MHDC and each Lender. Upon
achievement of Breakeven Operations, the General Partners may
cause the Partnership to specially distribute to the General
Partners any funds in any Partnership or Apartment Complex
reserve account, other than the replacement reserve, so long as
(i) the General Partners shall have determined that the retention
of the funds to be distributed is no longer needed for
Partnership purposes and (ii) the General Partners shall have
received the prior written consent of MHDC and each Lender to
such distribution, to the extent any such consent is so required.
Any such special cash distribution shall be treated as a
distribution pursuant to Section 731 of the Code. In all events,
disbursements from the foregoing reserves shall be made only
after following applicable MHDC and Lender requirements.
(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 Class A Limited Partner receives the full
amount of the Class A Limited Partner's Projected Credit and that
the Class B Limited Partner receives the full amount of the
Class B Limited Partner's Projected Credit, including, without
limitation, the rental of apartments to appropriate tenants and
the filing of annual certifications as may be required. In this
regard, the General Partners shall, inter alia, cause (i) the
Partnership to satisfy all requirements imposed from time to time
under the Code with respect to rental levels and occupancy by
qualified tenants by the close of the first year of the Credit
Period so as to permit the Partnership to be entitled to the Tax
Credit throughout the compliance period specified in the Code,
(ii) the Partnership will comply with all State Tax Credit
monitoring procedures, (iii) all dwelling units in the Apartment
Complex to be leased for periods of not less than six months to
persons satisfying the Rent Restriction Test, (iv) the
Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex
to be of equal quality with comparable amenities available to
low-income tenants on a comparable basis without separate fees.
(h) On or before the First Admission Date, the General
Partners shall provide to the Class A Limited Partner either (i)
an appraisal of the Apartment Complex prepared by a competent
independent appraiser or (ii) completed FmHA Forms 1924-13
(estimate and certificate of actual cost) and 1930-7 (statement
of budget, income and expense) or HUD project cost and budget
analysis on Form 2264, or any successor FmHA or HUD form, any
comparable form of a state or other governmental agency,
including any applicable Tax Credit allocation agency, setting
forth estimates with respect to construction and mortgage
financing costs and initial rental income and operating expense
figures for the Apartment Complex.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations pertaining
thereto) or dispose of any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a
General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor
indirectly transport or arrange for the transport of any
Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partners 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.
(j) The General Partners shall promptly request in writing
of MHDC that MHDC cause the Investment Limited Partners to be
named as an "interested party" in the Permanent Mortgage
documents, so that MHDC will notify the Investment Limited
Partners of any default or other problem under the Permanent
Mortgage.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment
Limited Partners, the Missouri Limited Partner and the Special
Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State
and has complied with all filing requirements necessary for the
protection of the Investment Limited Partners, the Missouri
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 in such manner as to
stay the effect of the proceedings or otherwise have been
adequately provided for. This subparagraph shall be deemed to
include, without limitation, the following: (x) legal actions or
proceedings before any court, commission, administrative body or
other governmental authority having jurisdiction over the zoning
applicable to the Apartment Complex; (y) labor disputes; and
(z) acts of any governmental authority.
(3) No default (or event which, with the giving of notice
or the passage of time or both, would constitute a default) has
occurred and is continuing under this Agreement or under any
material provision of the Project Documents, and the same are in
full force and effect.
(4) No Partner or Related Person will bear the Economic
Risk of Loss with respect to the Permanent Mortgage.
(5) The Apartment Complex is being or has been completed in
conformity with the Project Documents. There is no violation by
the Partnership or the General Partners of any zoning or similar
regulation applicable to the Apartment Complex which could have a
material adverse effect thereon, or, to the best of the knowledge
of the General Partners after due inquiry, of any 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.
(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 permitted
by the Project Documents and are noted or excepted in the Title
Commitment, or, after the issuance thereof, the Title Policy, 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 the General Partners which is a corporation have
been or will be duly authorized by all necessary corporate or
other action, and the consummation of any such transactions with
or on behalf of the Partnership will not constitute a breach or
violation of, or a default under, the charter or by-laws of such
Affiliate or any agreement by which such Affiliate or any of its
properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") has been duly organized, is validly existing and
in good standing under the laws of its state of incorporation and
has all requisite corporate power to be a General Partner and to
perform its duties and obligations as contemplated by this
Agreement and the Project Documents. Neither the execution and
delivery by any Corporation of this Agreement nor the performance
of any of the actions of any Corporation contemplated hereby has
constituted or will constitute a violation of (a) the articles of
organization or by-laws of such Corporation, (b) any agreement by
which such Corporation is bound or to which any of its property
or assets is subject, or (c) any law, administrative regulation
or court decree.
(9) Any General Partner which is a limited liability
company (an "LLC") 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 an LLC of this Agreement nor the performance of any
of the actions of any LLC contemplated hereby has constituted or
will constitute a violation of (a) the articles of organization
or the operating agreement of such LLC, (b) any agreement by
which such LLC is bound or to which any of its property or assets
is subject, or (c) any law, administrative regulation or court
decree.
(10) No Event of Bankruptcy has occurred with respect to any
General Partner.
(11) 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 MHDC to
the extent required by MHDC.
(12) If the only General Partner(s) are one or more
corporation(s) or an LLC, then the General Partner(s) have a net
worth which satisfies the 89-12 Requirements.
(13) 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 satisfy all
requirements under the Project Documents and/or which form the
basis for determining the principal sum of the Permanent Mortgage
and to pay the Construction and Development Fee have been or will
be paid or provided for utilizing only (a) the funds available
from the Land Mortgage and the Construction Mortgage, (b) the
Capital Contributions of the Limited Partners, (c) the Capital
Contributions of the General Partners in the amounts set forth on
Schedule A as of the Second 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 Lender, (e) any
insurance proceeds and (f) the funds furnished by the General
Partners pursuant to Sections 6.5(a) and 6.11.
(14) The aggregate amount of Tax Credit which is expected to
be allocated by the Partnership to the Investment Limited
Partners is $109,144 for 1997, $253,471 per annum for each of the
years 1998 through 2006 (inclusive) and $144,326 for 2007.
(15) The Apartment Complex is being developed in a manner
which satisfies and shall continue to satisfy, all restrictions,
including tenant income and rent restrictions, applicable to
projects generating Tax Credits.
(16) The General Partners have provided to the Class A
Limited Partner a complete copy of a "Phase I" hazardous waste
site assessment report for the Apartment Complex. To the best of
the knowledge of the General Partners after due inquiry, 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 (except if such storage was
and is at all times in compliance with all laws, ordinances, and
regulations pertaining thereto) transported, or disposed of;
(ii) directly or indirectly transported, or arranged for
transport, of any Hazardous Material (except if such transport
was and is at all times in compliance with all laws, ordinances
and regulations pertaining thereto); (iii) caused or was legally
responsible for any release or threat of release of any Hazardous
Material; (iv) received notification from any federal, state or
other governmental authority of (x) any potential, known, or
threat of release of any Hazardous Material from the Apartment
Complex or any other Site or Vessel owned, occupied, or operated
by any General Partner, by any Affiliate of a General Partner, or
by any Person for whose conduct any General Partner is or was
responsible or whose liability may result in a lien on the
Apartment Complex; or (y) the incurrence of any expense or loss
by any such governmental authority or by any other Person in
connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from the
Apartment Complex or any such Site or Vessel.
(17) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on (except to the
extent any such storage was at all times in compliance with all
laws, ordinances, and regulations pertaining thereto),
transported, or disposed of on the land comprising the Apartment
Complex.
(18) The General Partners have fulfilled and will continue
to fulfill all of their duties and obligations under Section 6.5.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at
any time bear the Economic Risk of Loss for the payment of any
portion of any Mortgage, and the General Partners shall not
permit any other Partner or any Related Person to bear the
Economic Risk of Loss for the payment of any portion of any Mort-
gage, except as may be expressly permitted with respect to the
Land Mortgage and the Construction Mortgage pursuant to
Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any
loss suffered by the Partnership which arises out of any action
or inaction of any General Partner or Affiliate thereof if such
General Partner or Affiliate thereof in good faith determined
that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute
negligence or misconduct of such General Partner or Affiliate
thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership, provided
that all of the following conditions are met: (i) such General
Partner has determined, in good faith, that the course of conduct
which caused the loss, judgment, liability, expense or amount
paid in settlement was in the best interests of the Partnership;
and (ii) such loss, judgment, liability, expense or amount paid
in settlement was not the result of negligence or misconduct on
the part of such General Partner or Affiliate thereof; and (iii)
such indemnification or agreement to hold harmless is recoverable
only out of the assets of the Partnership, and not from the
Limited Partners.
(c) Notwithstanding the above, no General Partner or any
Affiliate thereof performing services for the Partnership or any
broker-dealer shall be indemnified for any losses, liabilities or
expenses arising from or out of an alleged violation of federal
or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving securities
laws violations as to the particular indemnitee and the court
approves the indemnification of such litigation costs, (ii) such
claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee
and the court approves the indemnification of such litigation
costs or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and the
court finds that indemnification of the settlement and related
costs should be made. In any claim for indemnification for
federal or state securities law violations, the party seeking
indemnification shall, prior to seeking court approval for such
indemnification, place before the court the positions of the
Securities and Exchange Commission, the Massachusetts Securities
Division, the Missouri Securities Commission, the Tennessee
Securities Division, and any other applicable state securities
administrator with respect to the issue of indemnification for
securities law violations.
(d) The Partnership shall not incur the cost of the portion
of any insurance, other than public liability insurance, which
insures any party against any liability as to which such party is
herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves activity
in which such Affiliates acted in the capacity of a General
Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on behalf
of the Partnership who (i) directly or indirectly controls, is
controlled by or is under common control with a General Partner;
(ii) owns or controls 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) the Land Mortgage, the Construction Mortgage or the Permanent
Mortgage or (ii) necessary contractual obligations incurred
pursuant to MHDC or Lender requirements in connection with the
operation of the Apartment Complex in the ordinary course of
business.
(b) Notwithstanding the foregoing, no General Partner shall
be liable to a Limited Partner or the Partnership for any act or
omission for which the Partnership is required to indemnify such
General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold
the Limited Partners harmless from and against any claim brought
or threatened against the Limited Partners 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 General Partners. Notwithstanding anything else
set forth herein, this indemnification shall survive the with-
drawal of any General Partner and/or the termination of this
Agreement.
6.10 Operating Deficits
Subject to the prior written consent of MHDC (if such
consent shall be required under applicable MHDC regulations), the
General Partners shall be obligated for a period of 120 months
from the later to occur of (i) Permanent Mortgage Commencement or
(ii) the Second Admission Date to promptly advance funds to meet
operating expenses of the Partnership which exceed operating
income available for the payment thereof. In the event that the
General Partners shall fail to make any such advances as
aforesaid, 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. Such utilization of Applied Amounts shall
constitute payment and satisfaction of the corresponding amounts
payable to the General Partners or Affiliates thereof under
Section 6.12 and/or Article X, with the proceeds thereof being
applied to such obligations, and the obligation of the
Partnership to make such payments to the General Partners or
Affiliates thereof pursuant to Section 6.12 and/or Article X
shall be deemed satisfied to the extent thereof. For the purpose
of this Section 6.10, all expenses shall be paid on a sixty (60)-
day current basis. Moreover, the General Partners may in their
sole discretion at any time advance funds to the Partnership to
pay operating expenses of the Partnership in order to facilitate
the Partnership's compliance with the Rent Restriction Test. All
advances pursuant to this Section 6.10 (including any Applied
Amounts) shall be Subordinated Loans repayable without interest
in accordance with the provisions of Article X. The form and
provisions of all Subordinated Loans shall conform to applicable
rules and regulations.
6.11 Obligation to Complete the 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 MHDC and the Lenders and all
requirements necessary to obtain the required certificates of
occupancy for dwelling units, or cause the same to be completed,
in a good and workmanlike manner, free and clear of all
mechanics', materialmen's or similar liens, and shall equip the
Apartment Complex or cause the same to be equipped with all
necessary and appropriate fixtures, equipment and articles of
personal property, including refrigerators and ranges and 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 Land, 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 Second Admission Date and which is
permitted by MHDC to be utilized for any of the purposes
hereinafter set forth, the Capital Contributions of the Limited
Partners, the Capital Contributions of the General Partners in
the amounts set forth on Schedule A as of the Second Admission
Date, and any insurance proceeds arising out of casualties prior
to the later of Permanent Mortgage Commencement or the Second
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, (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 Second 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 Land Mortgage and the Construction Mortgage, the
General Partners shall be responsible for and obligated to pay
such deficiencies and shall, to the extent permitted under the
Project Documents and any applicable regulations or requirements
of MHDC, be reimbursed at or prior to the later of Permanent
Mortgage Commencement or the Second 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 Permanent Mortgage Commencement or
from the proceeds of the Capital Contribution of the Limited
Partners as provided in Section 5.1 shall not be reimbursable or
otherwise change the Interest of any Person in the Partnership
but shall be borne by the General Partners; provided, however,
that notwithstanding the foregoing, to the extent any such
amounts 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 (1996) and State Designation (1997) ("Includable
Items"), the General Partners shall make an additional Capital
Contribution in the amount of the Includable Items and the
Partnership shall utilize the proceeds of such additional Capital
Contribution to pay the Includable Items. In the event that the
General Partners shall fail to fund any such deficiency as
required by this Section 6.11, an amount not in excess of the
Construction and Development Fee due to the General Partners or
any of their Affiliates under Section 6.12 or any other provision
hereof shall be applied by the Partnership to meet such
obligation of the General Partners, and to the extent there shall
still be a deficiency, any amounts otherwise payable as the
Annual Partnership Management Fee or distributable to the General
Partners pursuant to Article X may also be so applied. Any such
application of funds as described in the immediately preceding
sentence shall constitute a payment of the amount of the Fee or
such other item which such funds had been earmarked to pay, and
the obligation of the General Partners to advance such amount
under this Section 6.11 shall be satisfied to the extent of such
application.
6.12 Certain Payments to the General Partners and Others
(a) In consideration of their consultation, advice and
other services in connection with the construction and
development of the Apartment Complex, the Partnership agreed to
pay to the General Partners (or their designee) a construction
and development fee (the "Construction and Development Fee") in
the principal amount of $410,029, which fee shall be earned in
full as to each building in the Apartment Complex as of the date
that such building is completed. The Construction and
Development Fee shall be paid $246,951 from the proceeds of the
Loan Advance, $79,509 from the proceeds of the First Installment
and $36,278 from the proceeds of the Second Installment and
$47,291 from the proceeds of the Third Installment. Any portion
of the Construction and Development Fee which shall not have been
paid as of the date which is six months after it shall have been
earned shall accrue interest at the Applicable Federal Rate in
effect at the time earned from the date earned through the date
of payment; any such interest shall be payable in accordance with
the provisions of Article X.
(b) The Partnership shall pay to BCAMLP or an Affiliate
thereof a fee (the "Asset Management Fee") commencing in 1997 for
its services in connection with the Partnership's accounting
matters relating to the Investment Limited Partners and assisting
with the preparation of tax returns and the reports required by
Section 12.7 in the annual amount of the lesser of (i) $1,500 or
(ii) one-half of one per cent (0.5%) of the Aggregate Cost of the
Apartment Complex. The Asset Management Fee shall be payable
from Cash Flow in the manner and priority set forth in Section
10.2(a); provided, however, that if in any fiscal year commencing
with 1997, Cash Flow is insufficient to pay the full amount of
the Asset Management Fee, the unpaid portion thereof shall accrue
and be payable on a cumulative basis in the first year in which
there is sufficient Cash Flow or from the proceeds of a Capital
Transaction as provided in Article X. To the extent Cash Flow in
any year is insufficient to pay an Asset Management Fee of at
least $750, the amount of such deficiency shall be paid directly
by the General Partners to BCAMLP or an Affiliate thereof from
their own funds. To the extent that there is sufficient Cash
Flow in any year commencing with 1997 to pay all or a portion of
the Asset Management Fee but such amount cannot be paid by the
Partnership due to any restrictions on distributions imposed by
MHDC, then the amount of the Asset Management Fee payable but for
the MHDC restriction shall be paid directly by the General
Partners to BCAMLP or an Affiliate thereof from their own funds.
(c) Upon any sale of the Apartment Complex, the General
Partners (or their designee) shall receive a fee for preparing
the Apartment Complex for sale (the "Sales Preparation Fee") in
an amount equal to five per cent (5%) of the gross sales price of
the Apartment Complex. However, notwithstanding the foregoing,
the total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real Estate
Commission, not to exceed six per cent (6%) of the contract price
for the sale of the Apartment Complex. The General Partners or
their Affiliates may act as exclusive listing agents of the
Apartment Complex.
(d) The Partnership shall pay to the General Partners a fee
(the "Annual Partnership Management Fee") commencing in 1997 for
their services in connection with the administration of the day
to day business of the Partnership in an annual amount equal to
the lesser of (i) $5,000 per annum or (ii) the excess of (A) one-
half of one-percent (0.5%) of the Aggregate Cost of the Apartment
Complex over (B) the amount of the Asset Management Fee
attributable to such year. The Annual Partnership Management Fee
for each fiscal year of the Partnership shall be payable from
Cash Flow in the manner and priority set forth in
Section 10.2(a); provided, however, that if any fiscal year
commencing with 1997, Cash Flow is insufficient to pay the full
amount of the Annual Partnership Management Fee, the unpaid
portion thereof shall accrue and be payable on a cumulative basis
in the first year in which there is sufficient Cash Flow or from
the proceeds of a Capital Transaction as provided in Article X.
(e) The Partnership shall pay to the Management Agent a
management incentive fee (the "Management Incentive Fee") of
$11,846.50 per annum (plus accrued interest earned thereon) if
such annual fee is earned in accordance with the terms and
provisions of the Management Incentive Agreement. The
Partnership will apply funds provided by the Class A Limited
Partner to fund the annual Management Incentive Fee. Any funds
so applied shall be treated at the time of application as a
Conditional Capital Contribution paid by the Class A Limited
Partner to the Partnership and then applied by the Partnership to
pay the Management Incentive Fee.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or
duties hereunder to another General Partner or General Partners.
Every contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder that
at the time of the delivery thereof (a) the Partnership was in
existence, (b) this Agreement had not been amended in any manner
so as to restrict the delegation of authority among General
Partners (except as shown in certificates or other instruments
duly filed in the Filing Office) and (c) the execution and
delivery of such instrument was duly authorized by the General
Partners. Any Person may always rely on a certificate addressed
to him and signed by any General Partner hereunder:
(1) As to who are the General Partners or Limited Partners
hereunder;
(2) As to the existence or nonexistence of any fact which
constitutes a condition precedent to acts by the General Partners
or in any other manner germane to the affairs of the Partnership;
(3) As to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) As to the authenticity of any copy of this Agreement,
the Certificate and amendments thereto; or
(5) As to any act or failure to act by the Partnership or
as to any other matter whatsoever involving the Partnership or
any Partner.
6.14 Additional Right of General Partners and Affiliates to
Operate and Further Develop Nearby Property
The Partners acknowledge that the land on which the
Apartment Complex is situated is nearby or adjacent to a parcel
(the "Nearby Land") which is owned or may be acquired by
Affiliates of the General Partners.
The General Partners or their Affiliates may operate and
further develop the Nearby Land as an apartment or housing
complex or otherwise; provided, however, that the General
Partners shall not develop nor permit any other Person or
Affiliate to develop any such Nearby Land (or portion thereof)
within a one mile radius of the Apartment Complex if such
development would materially adversely affect the operation of
the Apartment Complex.
The Partnership shall also be authorized to grant whatever
easements may reasonably be necessary for the General Partners or
their Affiliates to operate and further develop the Nearby Land,
including, but not limited to, easements for right-of-way,
ingress and egress, sanitary sewers, storm drains and utilities;
provided, however, that the grant or use of such easements shall
not in any way diminish the fair market value of the Apartment
Complex or disrupt the operations of the Partnership, unless the
General Partners shall have obtained the Consent of the
Investment Limited Partners thereto. All costs with respect to
such easements, including, without limitation, legal, filing and
construction costs, shall be borne solely by the General Partners
or their Affiliates (other than the Partnership).
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the Partnership
(other than by reason of death or adjudication of incompetence or
insanity) or sell, assign or encumber his or its interest without
the Consent of the Investment Limited Partners and all the other
General Partners, except that if the Special Limited Partner or a
designee becomes a General Partner pursuant to Section 4.5(b) or
Section 5.2(e), it shall not require the consent of any other
General Partner to transfer all or any portion of its interest as
a General Partner, other than as may be required under the
Uniform Act. In the event of any Withdrawal by a General Partner
in violation of this Section 7.1, such General Partner, in
addition to being subject to any and all other legal remedies
which may be pursued by the Partners, shall forfeit to the
Special Limited Partner or its designee, such General Partner's
Interest and all unpaid fees from the Partnership and shall
remain liable for all of the Withdrawing General Partner's
obligations under this Agreement. In addition, upon such
Withdrawal and transfer, the Special Limited Partner or its
designee shall automatically become a General Partner without
further action by the Withdrawing General Partner or any other
Partner, and each Partner hereby consents to such transfer and to
the admission of the Special Limited Partner or its designee as a
General Partner in such a situation. Such transfer shall occur
automatically upon such Withdrawal without further action by such
Withdrawing General Partner.
(b) If at any time the only General Partners of the
Partnership shall be one or more corporations or LLCs (or
partnerships with corporations as sole general partners), they
shall be obligated to have a net worth which satisfies the 89-12
Requirements. If the General Partners shall at any time fail to
meet the requirements of this Section 7.1(b), then they shall be
deemed to have withdrawn from the Partnership in violation of the
provisions of this Section 7.1 and shall be subject to the
provisions of Section 7.1(a). Notwithstanding the foregoing, the
provisions of the Section 7.1(b) shall not apply to the Special
Limited Partner in the event it becomes the sole General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining
General Partners shall have the right and obligation to continue
the business of the Partnership employing its assets and name,
all as contemplated by the Uniform Act. Within 30 days after
they obtain knowledge of the Withdrawal of a General Partner, the
remaining General Partners shall notify the Investment 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 Partners,
the Special Limited Partner and the Missouri 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. The
Missouri Limited Partner hereby delegates to the Special Limited
Partner the right to act on its behalf in connection with this
paragraph and hereby grants the Special Limited Partner a power
of attorney to act on its behalf in connection with this Section
7.3. If the Investment Limited Partners and the Special Limited
Partner elect to reconstitute the Partnership pursuant to this
Section 7.3 and admit the designated successor General Partner,
the relationship among the then Partners shall be governed by
this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in
Section 4.5(b), the Withdrawing General Partner hereby covenants
and agrees to transfer to the remaining General Partners or to a
successor General Partner selected in accordance with
Section 7.3, as the case may be, such portion of the Withdrawing
General Partner's Interest as such remaining or successor General
Partners may designate, such transfer to be made in consideration
of the payment by the transferee of either the agreed value of
such Interest, or if such value is not agreed to, the fair market
value of such Interest as determined by a committee of three
qualified real estate appraisers, one selected by the Withdrawing
General Partner, one selected by the transferee and a third
selected by the other two. The portion of the Withdrawing
General Partner's Interest designated to be transferred in
accordance with the provisions of this Section 7.4 shall be
sufficient to ensure the continued treatment of the Partnership
as a partnership under the Code and as a limited partnership
under the Uniform Act, and, for the purposes of Article X, shall
be deemed to be effective as of the date of Withdrawal, but the
Partnership shall not make any distributions to the designated
transferee until the transfer has 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
Partners hereunder. The admission of any successor or additional
General Partner shall be subject to the consent of MHDC (if
required) and the Consent of the Investment Limited Partners.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of
descent and distribution) or Section 8.1(b), no Limited Partner
may assign all or any part of its Interest without the written
consent of the General Partners, the giving or withholding of
which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the General
Partners, may assign to any Person all or any portion of its
economic benefits of ownership of its Interest; provided,
however, that such assignment shall not be binding on the
Partnership until there shall have been filed with the
Partnership by registered mail certified copies of an executed
and acknowledged assignment and the written acceptance by the
assignee of all the terms and provisions of this Agreement; if
such assignment and acceptance are not so filed, the Partnership
need not recognize such assignment for any purpose. An assignee
of a Limited Partner who does not become a Substituted Limited
Partner shall have, and shall only have, the right to receive the
share of allocations and distributions of the Partnership to
which the assigning Limited Partner would have been entitled with
respect to the Interest (or portion thereof) so assigned if no
such assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges
of a Limited Partner. Where the assignee does not become a
Substituted Limited Partner, the Partnership shall recognize such
assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of his
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 them
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 MHDC (if
required under applicable MHDC 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, such
loans shall be an obligation of the Partnership and (except for
advances required by Section 6.11 and Subordinated Loans) shall
be repayable to such Partner on the same basis and with the same
rate of interest as would be applicable to a comparable loan to
the Partnership from a third party.
ARTICLE X -- Profits, Losses, Tax Credits, Distributions and
Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4 hereof, for
each Partnership fiscal year or portion thereof, (i) 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 85.328% to the Class A Limited
Partner, 13.672% to the Class B Limited Partner and 1% to the
General Partners and (ii) all Missouri Low-Income Housing Tax
Credits allocated on or after the Commencement Date shall be
allocated 100% to the Missouri Limited Partner. Notwithstanding
the foregoing however, to the extent that the Accountants, the
Auditors, the Tax Accountants and/or the Service reach the
conclusion that the allocation of 100% of the Missouri Low-Income
Housing Tax Credits to the Missouri Limited Partner could lead to
the allocation or distribution of any Partnership item in a ratio
different from that otherwise provided herein, the allocation of
the Missouri Low-Income Housing Tax Credits shall be altered so
as to eliminate any such effect upon the allocation or
distribution of any other Partnership item.
(b) Except as otherwise specifically provided in this
Article, all profits and losses arising from a Capital
Transaction shall be allocated to the Partners as follows:
As to profits:
First, that portion of profits (including any profits
treated as ordinary income for federal income tax purposes) shall
be allocated to the Partners who have negative Capital Account
balances in proportion to the amounts of such balances, provided
that no profits shall be allocated to a Partner under this Clause
First to increase any such Partner's Capital Account above zero;
Second, profits in excess of the amounts allocated under
Clauses First above shall be allocated to (i) the Class A Limited
Partner in an amount equal to the amount of cash required to pay
to the Class A Limited Partner the full amount (including
interest) of any Class A Limited Partner's Credit Recovery Loans
and (ii) the Class B Limited Partner in an amount equal to the
amount of cash required to pay the Class B Limited Partner the
full amount (including interest) of any Class B Limited Partner's
Credit Recovery Loans; and
Third, profits in excess of the amounts allocated under
Clauses First and Second above shall be allocated to the Partners
in the same percentages as cash is distributed under Clause
Eighth of Section 10.2(b).
As to losses:
First, an amount of losses shall be allocated to the
Partners to the extent and in such proportions as shall be
necessary such that, after giving effect thereto, the respective
balances in all Partners' Capital Accounts shall be in the ratio
of 85.328% for the Class A Limited Partner, 13.672% for the
Class B Limited Partner and 1% for the General Partners;
Second, an amount of losses shall be allocated to the
Partners until the balance in each Partner's Capital Account
equals the amount of his Capital Contribution (after the
allocation under Clause First above);
Third, an amount of losses shall be allocated to the
Partners to the extent of and in proportion to such Partners'
Capital Account balances (after the allocations under Clauses
First and Second above); and
Fourth, any remaining amount of losses after the allocations
under Clauses First, Second and Third above shall be allocated to
the Partners in accordance with the manner in which they bear the
Economic Risk of Loss associated with such loss; provided,
however, that in the event that no Partner bears an Economic Risk
of Loss, then any remaining losses shall be allocated 85.328% to
the Class A Limited Partner, 13.672% to the Class B Limited
Partner and 1% to the General Partners.
(c) Notwithstanding the foregoing provisions of
Sections 10.1(a) and 10.1(b), in no event shall any losses be
allocated to the Investment Limited Partners, the Missouri
Limited Partner, the Special Limited Partner or any additional
General Partner admitted pursuant to Section 4.5(b) or Section
5.2(e), if and to the extent that such allocation would cause, as
of the end of the Partnership taxable year, the negative balance
in such Partner's Capital Account to exceed such Partner's share
of Partnership Minimum Gain plus such Partner's share, if any, of
Partner Non-Recourse Debt Minimum Gain. Any losses which are not
allocated to a Partner by virtue of the application of this
Section 10.1(c) shall be allocated to the General Partners,
excluding any General Partner admitted pursuant to Section 4.5(b)
or Section 5.2(e). For purposes of this Section 10.1(c), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Lender approval (if required), Cash Flow for each
fiscal year or portion thereof of the Partnership shall be
applied as follows:
First, to the payment of the Asset Management Fee for such
year and for any previous year(s) for which it has not been paid
in full;
Second, to the repayment of any Subordinated Loans;
Third, in an amount not to exceed $5,000 to the payment of
any accrued and unpaid interest on the Construction and
Development Fee;
Fourth, in an amount not to exceed the difference between
(i) $5,000 and (ii) the amount of Cash Flow for such year applied
under Clause Third above, to the payment of the Annual
Partnership Management Fee attributable to such year;
Fifth, to the extent in any previous year(s) the General
Partners have received less than $5,000 under Clauses Third and
Fourth above combined and such deficiency has not previously been
paid, then the amount of any such deficiency shall be paid under
this Clause Fifth; and
Sixth, the balance thereof, if any, shall be distributed
annually, within 75 days after the end of the fiscal year,
25.855% to the Class A Limited Partner, 4.145% to the Class B
Limited Partner and 70% to the General Partners; provided,
however, that during such time as MHDC 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 MHDC 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 and costs,
fees, and commissions incident to the sale of the Apartment
Complex), 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
Accountants shall deem reasonably necessary for contingent,
unmatured or unforeseen liabilities or obligations of the
Partnership;
Second, to the payment to the Class A Limited Partner and
the Class B Limited Partner, respectively, of the full amount
(including interest) of any Class A Limited Partner's Credit
Recovery Loans and/or Class B Limited Partner's Credit Recovery
Loans;
Third, to the payment of any accrued and unpaid Asset
Management Fee;
Fourth, to the payment of any accrued and unpaid Partnership
Management Fee;
Fifth, to the repayment of any Subordinated Loans;
Sixth, to the payment to the General Partner of any accrued
and unpaid interest on the Construction and Development Fee;
Seventh, in the event of the sale of the Apartment Complex,
to the payment of the Sales Preparation Fee; and
Eighth, any balance 25.848% to the Class A Limited Partner,
4.142% to the Class B Limited Partner, .01% to the Special
Limited Partner, 69.99% to the General Partners and .01% to the
Missouri Limited Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall be
distributed to the Partners in accordance with the positive
balances in their Capital Accounts after taking into account all
Capital Account adjustments for the Partnership taxable year,
including adjustments to Capital Accounts pursuant to
Sections 10.1(b) and 10.3(b). In the event that a General
Partner or the Additional Limited Partner has a negative balance
in its Capital Account following the liquidation of the Part-
nership or such Partner's Interest, after taking into account all
Capital Account adjustments for the Partnership taxable year in
which such liquidation occurs, such Partner shall pay to the
Partnership in cash an amount equal to the negative balance in
such Partner's Capital Account. Such payment shall be made by
the end of such taxable year (or, if later, within 90 days after
the date of such liquidation) and shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or
distributed to other Partners in accordance with the positive
balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the
Partners in liquidation or otherwise, (i) any unrealized
appreciation or unrealized depreciation in the values of such
assets shall be deemed to be profits and losses realized by the
Partnership immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be
allocated to the Partners in accordance with Section 10.1(b), and
any property so distributed shall be treated as a distribution of
an amount in cash equal to the excess of such fair market value
over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered. For the purposes
of this Section 10.3(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market
value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of
the Code), and the Partnership's adjusted basis for such assets
as determined under Regulation Section 1.704-1(b). This Section
10.3(b) is merely intended to provide a rule for allocating
unrealized gains and losses upon liquidation or other
distribution event, and nothing contained in this Section 10.3(b)
or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be
selected by the General Partners with the Consent of the
Investment Limited Partners.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, tax credits and cash distributions
shared by a class of Partners shall be shared by each such
Partner in such class in the ratio of such Partner's paid-in
Capital Contribution to the paid-in Class Contribution of the
class of Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses from
extraordinary events which are not recovered from insurance or
otherwise (collectively "Recourse Obligations") in respect of any
Partnership taxable year, then the calculation and allocation of
profits and losses shall be adjusted as follows: first, an
amount of deductions attributable to the Recourse Obligations
shall be allocated to the General Partners; and second, the
balance of such deductions shall be allocated as provided in
Section 10.1(a).
(ii) If any profit arises from the sale or other disposition
of any Partnership asset which shall be treated as ordinary
income under the depreciation recapture provisions of the Code,
then the full amount of such ordinary income shall be allocated
among the Partners in the proportions that the Partnership
deductions from the depreciation giving rise to such recapture
were actually allocated. In the event that subsequently-enacted
provisions of the Code result in other recapture income, no
allocation of such recapture income shall be made to any Partner
who has not received the benefit of those items giving rise to
such other recapture income.
(iii) If the Partnership shall receive any purchase
money indebtedness in partial payment of the purchase price of
the Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or
Section 10.3, the distributions of the cash portion of such
purchase price and the principal amount of such purchase money
indebtedness hereunder shall be allocated among the Partners in
the following manner: On the basis of the sum of the principal
amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds distributable
to each class of Partners based on Section 10.2(b) or
Section 10.3, as applicable, treating cash payments and purchase
money indebtedness principal interchangeably for this purpose,
and the respective classes shall receive such respective
percentages of the net cash purchase price and purchase money
principal. Payments on such purchase money indebtedness retained
by the Partnership shall be distributed in accordance with the
respective portions of principal allocated to the respective
classes of Partners in accordance with the preceding sentence,
and if any such purchase money indebtedness shall be sold, the
sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with Treasury Regulation Section 1.704-1(b) and its
basis computed for federal income tax purposes shall be shared
among the Partners so as to take account of such variation in a
manner consistent with the principles of Section 704(c) of the
Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain,
loss, deduction or credit entering into the computation thereof,
as determined in accordance with the accounting methods followed
by the Partnership and computed in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). Profits and losses for
federal income tax purposes shall be allocated in the same manner
as set forth in this Article X, except as provided in
Section 10.4(b)(iv).
(vi) If there is a net decrease in Partnership Minimum Gain
during a Partnership taxable year, each Partner will be allocated
items of income and gain for such year (and, if necessary,
subsequent years) in proportion to, and to the extent of, an
amount equal to such Partner's share of the net decrease in
Partnership Minimum Gain during the year, before any other
allocation of Partnership items for such taxable year. A Partner
shall not be subject to this mandatory allocation of income or
gain to the extent that any of the exceptions provided in
Treasury Regulation Section 1.704-2(f)(2)-(5) applies. All
allocations pursuant to this Section 10.4(b)(vi) shall be in
accordance with Treasury Regulation Section 1.704-2(f). This
provision is a "minimum gain chargeback" within the meaning of
Treasury Regulation 1.704-2(f) and shall be construed so as to be
interpreted 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(h)(4) applied
consistently with Treasury Regulation Section 1.704-2(f)(2)-(5)
applies. Such allocations shall be made in a manner consistent
with the requirements of Treasury Regulation
Section 1.704-2(i)(4) under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in
Section 705(a)(2)(B) of the Code made (1) pursuant to
Section 704(e)(2) of the Code to a donee of an Interest,
(2) pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (3) pursuant to Regulation
Section 1.751-1(b)(2)(ii) as a result of a distribution by the
Partnership of unrealized receivables or inventory items or (b) a
distribution, and such allocation and/or distribution would cause
the negative balance in such Partner's Capital Account to exceed
(i) such Partner's share of Partnership Minimum Gain plus
(ii) the amount of such Partner's obligation, if any, to restore
a negative balance in such Partner's Capital Account plus (iii)
such Partner's share of Partner Non-Recourse Debt Minimum Gain
with respect to which such Partner or a Related Person to such
Partner bears the Economic Risk of Loss, then such Partner shall
be allocated items of income and gain in an amount and manner
sufficient to eliminate such negative balance as quickly as
possible. For purposes of this Section 10.4(b)(viii), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
(ix) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined to
be a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions from
Capital Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4(b)(vi) or 10.4(b)(vii).
(5) Capital Accounts shall be increased by any qualified
income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by allocations of
profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of
profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that the
Partners' Capital Accounts reflect the amounts they would have
reflected if adjustments required by Sections 10.4(b)(vi),
10.4(b)(vii) and 10.4(b)(viii) had not occurred.
10.5 Authority of the General Partners to Vary Allocations
to Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items
thereof) shall be determined and allocated in accordance with
this Agreement to the fullest extent permitted by Section 704(b)
of the Code. In order to preserve and protect the determinations
and allocations provided for in this Agreement, the General
Partners are hereby authorized and directed to allocate profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any year
differently than otherwise provided for in this Agreement to the
extent that allocating profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive
share of profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures or credits (or any item thereof) not
to be permitted by Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder. Any allocation made pursuant
to this Section 10.5 shall be deemed to be a complete substitute
for any allocation otherwise provided for in this Agreement, and
no amendment of this Agreement or approval of any Partner shall
be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partners are authorized to act only
after having been advised in writing by the Tax Accountants that,
under Section 704(b) of the Code, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum
modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the
then-current year or in any preceding year, each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (or any
item thereof) is determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of
the Code and the Treasury Regulations thereunder.
(c) If the General Partners are required by Section 10.5(a)
to make any New Allocation in a manner less favorable to the
Limited Partners than is otherwise provided for herein, then the
General Partners are authorized and directed, only after having
been advised in writing by the Tax Accountants that such an
allocation is permitted by Section 704(b) of the Code, to allo-
cate profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures and credits (and any item thereof)
arising in later years in such manner so as to bring the
allocations of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures and credits (and each item
thereof) to the Limited Partners as nearly as possible to the
allocations thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under
Section 10.5(a) and Section 10.5(c) in reliance upon the advice
of the Tax Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partners to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
ARTICLE XI
Management Agent
A. Subject to Article XI.C., the General Partners shall
have the exclusive right to engage the Management Agent (which
may be a General Partner or an Affiliate thereof if approved by
MHDC) to manage the Apartment Complex pursuant to the Management
Agreement. The Management Agent shall receive a Management Fee
of those amounts payable from time to time by the Partnership to
the Management Agent for management services in accordance with a
management contract approved by MHDC or, when the Apartment
Complex is not subject to MHDC regulation, in accordance with a
reasonable and competitive fee arrangement. In addition, the
Management Agent may earn a Management Incentive Fee as described
in Section 6.12(e).
B. Notwithstanding the foregoing, however, should the
Investment General Partners or an Affiliate thereof perform
property management services for the Partnership, property
management, rent-up or leasing fees shall be paid to the
Investment General Partners or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser
of (i) fees competitive in price and terms with those of non-
affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably
be available to the Partnership, or (ii) 5% of the gross revenues
of the Apartment Complex. No duplicate property management fees
shall be paid to any Person.
C. If (i) the Management Agent is a General Partner or an
Affiliate of a General Partner, and 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 (ii) an Event of
Bankruptcy shall occur with respect to the Management Agent, or
(iii) the Management Agent shall commit willful misconduct or
gross negligence in its conduct of its duties and obligations
under the Management Agreement, then, upon request by the Special
Limited Partner and subject to MHDC 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 MHDC approval, if required, the
Partnership shall not enter into any future management arrange-
ment unless such arrangement is terminable upon the occurrence of
the events described in this Article XI.
D. The General Partners shall have the duty to manage the
Apartment Complex during any period when there is no Management
Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which
are required under the Uniform Act or by any governmental agency
having jurisdiction and may maintain such other books and records
as the General Partners in their discretion deem advisable.
Every Limited Partner, or its duly authorized representatives,
shall at all times have access to the records of the Partnership
at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records.
A list of the names and addresses of all of the Limited Partners
shall be maintained as part of the books and records of the
Partnership and shall be mailed to any Limited Partner upon
request. A reasonable charge for copy work may be charged by the
Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in
the Partnership's name with such financial institutions as the
General Partners shall determine. Withdrawals shall be made only
in the regular course of Partnership business on such signature
or signatures as the General Partners may determine. All
deposits (including security deposits and other funds required to
be escrowed by MHDC) 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 MHDC or Mortgage
requirements and applicable State law, in interest-bearing
accounts or invested in United States Government obligations
maturing within one year. The General Partners shall not be
obligated to maximize the interest rates received on Partnership
funds.
12.3 Accountants and Auditors
(a) The Accountants 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 Accountants shall deliver the
tax returns for such year to the Tax Accountants for their review
and comment. If a dispute arises between the Accountants and the
Tax Accountants over the proper preparation of the tax returns
and such dispute cannot be resolved 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 BCAMLP
for all costs and expenses paid to the Tax Accountants for the
aforementioned services arising as a result of such a dispute.
(b) The Auditors (who may also be the Accountants) shall
audit and certify all annual financial reports to the Partners in
accordance with generally accepted auditing standards.
(c) In the event that either the Accountants or the
Auditors fail to perform their duties on a timely basis, the
Special Limited Partner may require the removal thereof and the
Special Limited Partner reserves the right to approve the
replacement thereof. If a dispute arises between the Special
Limited Partner and the General Partners with respect to the
replacement of an Accountant or Auditor, such dispute will be
subject to resolution by an arbitration proceeding conforming to
the rules of the American Arbitration Association, the decision
of which shall be final and binding, and the cost of which shall
be borne equally by the Special Limited Partner and the General
Partners.
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 Partners and the limited partners and/or
holders of beneficial assignee certificates thereof.
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partners in such
manner as will, in the opinion of the Accountants, be most
advantageous to the Investment Limited Partners and the limited
partners and/or holders of beneficial assignee certificates
thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the
Interest of an Investment Limited Partner or a transfer of all or
any part of an interest of a partner and/or holder of beneficial
assignee certificate of an Investment Limited Partner, the
Partnership shall elect, upon the request of the Investment
Limited Partners, 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 Cash Flow statement,
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 Partners, 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 Partners,
(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 which is necessary, in
view of the Tax Accountants, for the preparation of the Limited
Partners' federal income tax returns.
(iii) Within thirty (30) days after the end of each
quarter of a fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended, which
may be unaudited;
(C) a Cash Flow Statement of the quarter then ended, which
may be unaudited;
(D) a low-income housing credit monitoring form, rent rolls
and occupancy/rental report in the form specified by BCAMLP; and
(E) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities
during the quarter covered by the report.
(b) Within sixty (60) days after the end of each fiscal
year of the Partnership a copy of the annual report to be filed
with the United States Treasury concerning the status of the
Apartment Complex as low-income housing and, if required, a
certificate to the appropriate state agency concerning the same.
(c) Upon the written request of the Investment Limited
Partners for further information with respect to any matter
covered in item (a) or item (b) above, the General Partners shall
furnish such information within 30 days of receipt of such
request.
(d) Prior to October 15 of each year, the Partnership shall
send to the Investment Limited Partners an estimate of the
Investment Limited Partners' share of the tax credits, profits
and losses of the Partnership for federal income tax purposes for
the current fiscal year. Such estimate shall be prepared by the
General Partners and the Auditors.
(e) Within 15 days after the end of any calendar quarter
during which
(i) there is a material default by the Partnership under
the Project Documents or in payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially different
from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions, or
(iv) any Partner has pledged or collaterized its Interest in
the Partnership,
the General Partners shall send the Investment Limited Partners a
detailed report of such event.
(f) After the First Admission Date, the Partnership shall
send to the Investment Limited Partners, on or before the tenth
day of each month, the monthly housing credit monitoring form,
and copies of all applicable periodic reports covering the status
of project operations from the previous period, as may be
required by MHDC.
(g) On or before May 1 of each of the Partnership's fiscal
years, the Partnership shall send to the Investment Limited
Partners a report on operations, in the form supplied by the
Investment Limited Partners.
(h) Upon the completion of the construction of the
Apartment Complex, the Partnership shall send to the Investment
Limited Partners a copy of the Form(s) 8609 evidencing the Tax
Credit allocation.
(i) If the earlier of (A) the Completion Date or (B) the
date upon which tenants first occupied apartment units in the
Apartment Complex shall have occurred six months or more prior to
the date upon which the Investment Limited Partners acquired
their Interests in the Partnership, then the General Partners
shall cause to be prepared and delivered to the Investment
Limited Partners within 60 days of the First 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 Partners
acquired its Interest in the Partnership; and
(ii) An audited statement of income of the Partnership for
any fiscal year of the Partnership ending between (A) the earlier
of (1) the Completion Date or (2) the date upon which tenants
first occupied apartment units in the Apartment Complex and
(B) the date upon which the Investment Limited Partners acquired
their Interests in the Partnership.
(j) If at any time within the first 120 months after the
First Admission Date the General Partners do not cause the
Partnership to fulfill its obligations under Section 12.7(a)(i)
and/or Section 12.7(a)(ii) within the time periods set forth
therein, the General Partners shall pay as damages the sum of
$100 per day for the first 10 days thereafter, $150 per day for
the next 10 days thereafter and by an amount increasing by $50
per day each tenth day thereafter (plus interest at a rate equal
to the general base rate of interest established by The First
National Bank of Boston or its successors and assigns and
announced by it as the rate charged by it to its prime commercial
customers on short-term unsecured borrowings as its "base rate"
from time to time in effect plus 3%) to the Investment Limited
Partners until such obligations shall have been fulfilled;
provided, however, that no monetary penalty will accrue if
failure of the Partnership to fulfill its reporting obligations
is attributable to force majeure. Such damages shall be paid
forthwith by the General Partners, and failure to so pay shall
constitute a material default of the General Partners hereunder.
In addition, if the General Partners shall so fail to pay, the
General Partners shall forthwith cease to be entitled to the
Annual Partnership Management Fee and to the payment of any Cash
Flow or Capital Transaction proceeds to which they may otherwise
be entitled hereunder. Such payments of the Annual Partnership
Management Fee, Cash Flow and Capital Transaction proceeds shall
be restored only upon the payment of such damages in full, and
any amount of such damages not so paid shall be deducted against
payments of the Annual Partnership Management Fee, Cash Flow and
Capital Transaction proceeds otherwise due to the General
Partners.
(k) 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 BCAMLP.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed
directly to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partners nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for
the sale of goods or services or the lending of money to the
Partnership or the General Partners, except for (i) management
services, subject to the restrictions set forth in Article XI.B.,
(ii) loans made by, or guaranteed by, the Investment General
Partners or any of their Affiliates, and (iii) those dealings,
contracts or provision of services described in the Investment
Partnership Agreements or the Prospectus. Extraordinary
circumstances shall only be presumed to exist where there is an
emergency situation requiring immediate action and the services
required are not immediately available from unaffiliated parties.
All services rendered under such circumstances must be rendered
pursuant to a written contract which must contain a clause
allowing termination without penalty on sixty (60) days' notice.
Goods and services provided under such circumstances must be
provided at the lesser of actual cost or the price charged for
such goods or services by independent parties.
(c) In the event extraordinary circumstances arise, the
Investment General Partners and their Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partners nor any of their
Affiliates shall provide such services unless it believes it has
adequate staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partners. Any such services
must be reasonable for and necessary to the Investment Limited
Partners, actually furnished to the Investment Limited Partners,
and provided at the lower of 10% of the construction contract
rate with respect to the Apartment Complex or 90% of the
competitive price charged for such services by independent
parties for comparable goods and services in the same geographic
location (except that in the case of transfer agent, custodial
and similar banking-type fees, and insurance fees, the
compensation, price or fee shall be at the lesser of costs or the
compensation, price or fee of any other Person rendering
comparable services as aforesaid). Cost of services as used
herein means the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel,
based on the amount of time such personnel spent on such services
or other method of allocation acceptable to the accountants for
the Investment Limited Partners.
(d) All services provided by the Investment General
Partners or any Affiliate thereof pursuant to Section 12.8(c)
must be rendered pursuant to the Investment Partnership
Agreements or a written contract which precisely describes the
services to be rendered and all compensation to be paid and shall
contain a clause allowing termination without penalty upon sixty
(60) days' notice to the Investment General Partners by a vote of
a majority in interest of the limited partners and assignees of
beneficial interests in the Investment Limited Partners.
(e) No compensation or fees may be paid by the Partnership
to the Investment General Partners or their Affiliates except as
described in the Investment Partnership Agreements or in the
Prospectus.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior
to the proposed date of the Disposition, could, in the opinion of
tax counsel to the Partnership, result in the termination of the
Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the
Investment Limited Partners' 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
Partners 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 120 days after the end of any fiscal year in which
the Investment Limited Partners 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 Con-
tribution of the Investment Limited Partners as stated in the
last previous amendment to the Certificate. However, Schedule A
shall not be amended on account of any such distribution.
The Partnership shall amend the Certificate at least once
each calendar quarter to effect the substitution of substituted
Limited Partners, although the General Partners may elect to do
so more frequently. In the case of assignments, where the
assignee does not become a Substituted Limited Partner, the
Partnership shall recognize the assignment not later than the
last day of the calendar month following receipt of notice of
assignment and all documentation required in connection therewith
hereunder.
Notwithstanding the foregoing provisions of this Section
13.2, no such amendments to the Certificate need be filed by the
General Partners if the Certificate is not required to and does
not identify the Limited Partners or their Capital Contributions
in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in
writing and shall be deemed adequately given if actually
delivered or if sent by registered or certified mail, postage
prepaid, to the party for whom such notice is intended at such
party's last address of record on the Partnership books. Notice
shall be deemed received upon actual receipt or, if receipt shall
be refused, upon refusal.
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
the masculine gender shall include the feminine and neuter, and
vice versa, unless the context otherwise requires. References to
"Sections" and "Articles" refer to Sections and Articles of this
Agreement, unless otherwise specified. References to any
Treasury Regulations (permanent or temporary) or Revenue
Procedures shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties
hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and
all so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties have not
signed the original or the same counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in effect,
(a) each of the provisions of this Agreement shall be subject to,
and the General Partners covenant to act in accordance with, the
Project Documents; (b) the Project Documents shall govern the
rights and obligations of the Partners, their heirs, executors,
administrators, successors and assigns to the extent expressly
provided therein; (c) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the
possession and control of the Apartment Complex and no right to
collect the rent therefrom shall pass to any Person who is not,
or does not become, bound by the Project Documents and other MHDC
documents in a manner satisfactory to MHDC; (d) no amendment to
any provision of the Project Documents shall become effective
without the prior written consent of MHDC (if required); and
(e) the affairs of the Partnership shall be subject to MHDC
regulation and no action shall be taken which would require the
consent or approval of MHDC unless the same is first obtained.
No new Partner shall be admitted to the Partnership, and no
Partner shall withdraw from the Partnership or be substituted for
without the consent of MHDC (if such consent is then required).
No amendment to this Agreement relating to matters governed by
MHDC regulations or requirements shall become effective until the
prior written consent of MHDC (if required) to such amendment
shall have been obtained.
(b) Any conveyance or transfer of title to all or any
portion of the Apartment Complex required or permitted under this
Agreement shall in all respects be subject to all conditions,
approvals and other requirements of MHDC rules and regulations
applicable thereto.
(c) The Partnership is authorized to execute all documents
required by MHDC with respect to the Partnership's loan,
construction, development and operation of the Apartment Complex,
subject to the Permanent Mortgage, the Project Documents, and all
other agreements with MHDC. All incoming Partners as a condition
to receiving Interests, shall, by execution of a counterpart
hereof, agree to be bound by such documents in the same manner
and on the same terms as the other Partners. Upon the
Partnership's dissolution, no title or right to possession and
control of the Apartment Complex and no right to collect the
rents therefrom shall pass to any Person not bound by such MHDC
documents in the same manner as the Partners. If there is any
inconsistency between this Agreement and such MHDC documents and
regulations, the MHDC documents and regulations shall prevail.
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, or
(b) if for any reason any provision would cause the Investment
Limited Partners to be bound by the obligations of the
Partnership (other than the rules and regulations of MHDC and the
requirements of any other Lender), such provision or provisions
shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only
with the Consent of the Investment Limited Partners and the prior
written consent of the Special Limited Partner.
13.12 Time of Admission
Each of the Investment Limited Partners, the Missouri
Limited Partner and the Special 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 Accountants, that the Investment Limited
Partner, the Missouri Limited Partner and/or the Special 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 such Limited
Partner(s).
WITNESS the execution hereof under seal effective as of the
1st day of January, 1998.
GENERAL PARTNER: CLASS A LIMITED PARTNER:
JEFFREY E. SMITH PARTNERSHIPS, BOSTON CAPITAL CORPORATE TAX
L.C. CREDIT FUND V, A LIMITED
PARTNERSHIP
By: /s/Patt Bess
Pat Bess, Vice President By: BCCTC Associates V
its general partner
MISSOURI LIMITED PARTNER:
MISSOURI AFFORDABLE HOUSING By: BCCTC Associates V,
FUND VI, L.P. Inc., its manager
By: Jeffrey E. Smith Partnerships, L.C., By:/s/Bonnie Kate Fox
its general partner Bonnie Kate Fox
Attorney-In-Fact for
By: /s/Pat Bess John P. Manning,
Pat Bess, Vice President President
SPECIAL LIMITED PARTNER: CLASS B LIMITED PARTNER:
BCCC, INC. BOSTON CAPITAL TAX CREDIT FUND
IV L.P. (SERIES 27)
By: /s/Bonnie Kate Fox
Bonnie Kate Fox, Attorney- By: Boston Capital Associates IV, L.P.
In- Fact for John P. its general partner
Manning, President
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,
a Partner
GUARANTY
The undersigned, Jeffrey E. Smith, individually, and as
Trustee of the Jeffrey E. Smith Revocable Inter Vivos Trust,
unconditionally jointly and severally guarantee the performance
by the General Partners of all their obligations under Sections
5.1, 5.2, 6.5, 6.10, 6.11 and 12.7(j) of the Second Amended and
Restated Agreement of Limited Partnership of Harrisonville
Heights, L.P. dated effective as of January 1, 1998 and hereby
waive any right to require that any action be brought against any
other Person or to require that resort be made to any security
prior to enforcement of this guaranty. The obligations of the
undersigned hereunder shall be binding upon the respective heirs,
executors and legal representatives of the undersigned.
Execution of this Agreement by the undersigned is solely for the
purpose of undertaking this guaranty and shall not be deemed to
make the undersigned a Partner of the Partnership.
/s/Patt Bess
PAT BESS, AS ATTORNEY-IN-FACT
FOR JEFFREY E. SMITH
JEFFREY E. SMITH REVOCABLE
INTER VIVOS TRUST
By: /s/Patt Bess
Pat Bess, As Attorney-In-Fact
for Jeffrey E. Smith, Trustee
HARRISONVILLE HEIGHTS, L.P.
Schedule A
As of
January 1, 1998
Total Agreed-To Paid-In
General Partner Capital Contribution* Capital Contribution*
Jeffrey E. Smith Partnerships,
L.C $100.00 $100.00
11000 South Airport Drive
P.O. Box 7688
Building No. 1, South Wing
Columbia, MO 65205
Missouri Limited Partner
Missouri Affordable Housing Fund VI,
L.P $220,672.00 $220,672.00
11000 South Airport Drive
P.O. Box 7688
Building No. 1, South Wing
Columbia, MO 65205
Special Limited Partner
BCCC, Inc. $10.00 $10.00
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, MA 02108-4406
Class A Limited Partner
Boston Capital Corporate Tax $1,257,866.00 $1,257,866.00
Credit Fund V, A Limited
Partnership
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, MA 02108-4406
Class B Limited Partner
Boston Capital Tax Credit $185,529.00 $185,529.00
Fund IV L.P. (Series 27)
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, MA 02108-4406
_________________
*Paid-In Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution, if any, 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. This Schedule A does not include contingent
obligations to fund additional capital contributions, including
but not limited to the obligations of the General Partners
pursuant to Section 6.11 or the obligation of the Class A Limited
Partner to make Conditional Capital Contribution.
HARRISONVILLE HEIGHTS, L.P.
EXHIBIT A
LEGAL DESCRIPTION
The land is situated in the County of Cass, State of Missouri and
is described as follows:
LOT 1, HARRISONVILLE HEIGHTS, A SUBDIVISION IN CASS COUNTY,
MISSOURI, ACCORDING TO THE RECORDED PLAT THEREOF, FILED IN PLAT
BOOK 14 AT PAGE 13.
SECOND AMENDED AND RESTATED
MANAGEMENT INCENTIVE AGREEMENT
This Second Amended and Restated Management Incentive
Agreement (the "Agreement") has been made and entered into
effective as of the 1st day of January, 1998, by and between
Harrisonville Heights, L.P., a Missouri limited partnership (the
"Partnership") and Fairway Management, Inc., a Missouri
corporation (the "Management Agent"). This Agreement amends and
restates in its entirety the Amended and Restated Management
Incentive Agreement dated effective as of October 1, 1996
previously entered into between the Partnership and the
Management Agent.
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Partnership and
the Management Agent agree as follows:
(1) Definitions: As used in this Agreement, the following
terms shall have the following meanings:
"Annual Incentive Amount" means the amount of Eleven
Thousand Eight Hundred Forty-Six Dollars and Fifty Cents
($11,846.50) for each Measurement Year.
"Apartment Complex" means the multi-family housing project
owned by the Partnership which is located in Harrisonville, Cass
County, Missouri and which is known as "Harrisonville Heights
Apartments."
"Base Fee" means the fees and compensation payable to the
Management Agent pursuant to the Management Agreement on a
monthly basis.
"Class Limited Partner" means Boston Capital Corporate Tax
Credit Fund V, A Limited Partnership, a Massachusetts limited
partnership.
"Class B Limited Partner" means Boston Capital Tax Credit
Fund IV L.P., a Delaware limited partnership, specifically
Series 27 thereof.
"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.
"Compliance Period" means the fifteen-year period defined in
Section 42(i) of the Code as in effect at the time the Apartment
Complex is placed in service.
"Credit Period" has the meaning given to it in Section
42(f)(1) of the Code.
"Escrow Agent" means Boone County National Bank, a Missouri
banking corporation, whose address is 720 East Broadway,
Columbia, Missouri 65201, and its duly appointed successors.
"Escrow Agreement" means the Second Amended and Restated
Escrow Agreement by and among the Partnership, the Management
Agent, the Class A Limited Partner and the Escrow Agent.
"Escrowed Funds" means the sum of One Hundred Eighteen
Thousand Four Hundred Sixty-Five Dollars ($118,465) which is to
be deposited by the Class A Limited Partner with the Escrow Agent
and which shall be disbursed in the manner specified in this
Agreement and in the Escrow Agreement.
"Fiscal Year" means the calendar year (January 1 through
December 31).
"General Partner" means Jeffrey E. Smith Partnerships, L.C.,
a Missouri limited liability company.
"Investment Limited Partners" means the Class A Limited
Partner and the Class B Limited Partner.
"Management Agreement" means the agreement entered into or
to be entered into by and between the Management Agent and the
Partnership concerning the management of the Apartment Complex on
a day to day basis.
"Management Incentive Fee" means the Annual Incentive
Amount, plus interest accrued thereon (if any), conditionally
payable to the Management Agent for each of the Measurement Years
of the Compliance Period.
"Measurement Year" means the twelve-month period commencing
with the fifth anniversary of the date the Apartment Complex is
placed in service (or the sixth anniversary of the date the
Apartment Complex is placed in service in the event the first day
of the year of the Credit Period which is applicable to any
building in the Apartment Complex is deferred until the year
after the year in which such building is placed in service), and
each twelve-month period subsequent thereto with the first day of
each such twelve-month period being the anniversary of the date
the Apartment Complex is placed in service, through and including
the twelve-month period with or within which the Compliance
Period ends.
"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.
"Missouri Limited Partner" means Missouri Affordable Housing
Fund VI, L.P., a Missouri limited partnership.
"Non-Accrual Period" means the five-year period commencing
with the date the Apartment Complex is placed in service, or the
six-year period commencing with the date the Apartment Complex is
placed in service in the event the first day of the year of the
Credit Period which is applicable to any building in the
Apartment Complex is deferred until the year after the year in
which such building is placed in service, during which period the
Management Agent will not accrue any rights to payment of the
Management Incentive Fee other than accrued interest thereon.
"Occupancy Ratio" means the percentage of occupancy of the
apartment units in the Apartment Complex as compared to the
maximum theoretically possible occupancy, determined annually.
The maximum theoretical occupancy shall be 100%, and the
occupancy of the Apartment Complex at any point in time shall be
determined by dividing the total number of apartment units in the
Apartment Complex available for rental by the number of apartment
units then occupied by tenants obligated to pay rent under
arrangements which meet the Minimum Set-Aside Test and the Rent
Restriction Test and are consistent with the duties and
obligations of the General Partner set forth in Section 6.5(b) of
the Partnership Agreement. Apartment units in the Apartment
Complex available for rental at any given time shall not include
(i) any apartment units damaged or destroyed by fire, flood or
other casualty or natural disaster if such apartment units are
being expeditiously restored within a reasonable time period, or
(ii) any apartment units unavailable due to governmental agency
action outside of the control of the Management Agent if such
apartment units are being expeditiously made to conform to the
requirements of the applicable government agency so as to permit
occupancy within a reasonable time period.
"Parties" means the Partnership and the Management Agent
"Partnership Agreement" means the Second Amended and
Restated Agreement of Limited Partnership of the Partnership
dated effective as of January 1, 1998, by and among the General
Partner, the Missouri Limited Partner, the Special Limited
Partner and the Investment Limited Partners.
"Rent Restriction Test" means the test pursuant to Section
42 of the Code whereby the gross rents charged to tenants of the
low-income units in the Apartment Complex may not exceed 30% of
the qualifying income levels.
"Special Limited Partner" means BCCC, Inc., a Massachusetts
corporation.
(2) Recitals of Pertinent Facts: This Agreement has been
entered into in view of the following facts which the Parties
believe are true, to wit:
(a) The Partnership was formed to own the Apartment
Complex. The Partnership is governed by the Partnership
Agreement, the General Partner is the general partner of the
Partnership, and the current limited partners of the Partnership
are the Missouri Limited Partner, the Special Limited Partner and
the Investment Limited Partners.
(b) The Apartment Complex is low-income multi-family
housing project located in Harrisonville, Cass County, Missouri.
The Apartment Complex has been developed and will be operated in
such a manner as to make it eligible for certain favorable tax
treatment, including state and federal income tax credits
pursuant to the Code and the Revenue Laws of the State of
Missouri. However, the Apartment Complex must be managed and
operated in a manner so as to continually qualify as a "low-
income housing project" under the Code and under said revenue
laws during the Compliance Period. The Partnership desires to
assure the compliance of the Apartment Complex with all pertinent
laws governing said income tax credits during the Compliance
Period.
(c) The Management Agent is experienced in providing
management services to low-income housing projects similar to the
Apartment Complex. The Management Agent is willing to provide
management services to the Apartment Complex, but desires to
receive compensation for extraordinary services rendered with
respect to the Apartment Complex which are above and beyond those
for which provisions are made in the Management Agreement.
(d) The fees payable pursuant to this Agreement will be in
addition to the Base Fee. However, the fees payable pursuant to
this Agreement will be payable by the Partnership from the
Escrowed Funds (and interest accrued thereon), and shall not be
paid out of operating revenues of the Apartment Complex.
(3) Payment of the Annual Incentive Amount: At anytime
after the close of a Measurement Year, the Management Agent may
certify to the Partnership, the Class A Limited Partner and the
Escrow Agent, in the form of a written payment certification (the
"Annual Payment Certification"), that the Management Agent has
earned the Annual Incentive Amount for a Measurement Year. Both
the Partnership and the Class A Limited Partner (or either of
them) shall have the right to dispute such Annual Payment
Certification and to notify the Escrow Agent in writing that the
Class A Limited Partner and/or the Partnership does not believe
that the Management Agent has earned the Annual Incentive Amount
for said Measurement Year. However, in the event that both the
Class A Limited Partner and/or the Partnership fail to dispute or
otherwise protest the certifications in the Annual Payment
Certification within ten (10) business days of the date of
receipt of said Annual Payment Certification from the Management
Agent, then as soon as possible after the expiration of said ten
(10) business day period, the Partnership and the Class A Limited
Partner shall be deemed to have instructed the Escrow Agent to
distribute to the Management Agent from the Escrowed Funds an
amount equal to the Annual Incentive Amount, plus all accrued
interest on the Escrowed Funds at the time of each such
disbursement. If the Annual Incentive Amount has not been
determined to have been earned by the Management Agent pursuant
to the terms of this Agreement for that Measurement Year in the
opinion of either the Partnership or the Class A Limited Partner,
then the Escrow Agent shall not disburse any Escrowed Funds until
receiving written instructions from both the Class A Limited
Partner and the Partnership to do so. The Class A Limited
Partner agrees to deposit in a separate escrow account funds
sufficient to fund the Annual Incentive Amount for each of the
ten Measurement Years pursuant to paragraph 5 of this Agreement.
Said funds (and the interest accrued thereon) shall be held
subject to the Escrow Agreement for the purposes set forth in the
Partnership Agreement and this Agreement, including the payment
by the Partnership to the Management Agent of that portion of the
Management Incentive Fee earned by the Management Agent during
that period of time during which the Management Agent manages the
day-to-day operations of the Apartment Complex.
(4) Supplemental Agreement: This Agreement is supplemental
to the Management Agreement and it will not amend, modify or
replace in any manner the terms and conditions of the Management
Agreement. Instead, the purpose of this Agreement is to set
forth such additional parameters, duties, and obligations of the
Management Agent and to provide for a method of compensating the
Management Agent from the Partnership's capital for extraordinary
services in managing the Apartment Complex during the Compliance
Period.
(5) Escrow Agreement: The Class A Limited Partner shall
deposit the Escrowed Funds with the Escrow Agent at the time set
forth in the Escrow Agreement. The Escrow Agent named in the
Escrow Agreement shall hold and disburse the Escrowed Funds
pursuant to the terms of the Escrow Agreement, the Partnership
Agreement and this Agreement. The Escrow Agent has agreed to
invest the Escrowed Funds in an interest-bearing account and to
hold and disburse the Escrowed Funds pursuant to the terms of the
Escrow Agreement, the Partnership Agreement and this Agreement.
The terms and conditions of the Escrow Agreement are incorporated
herein by reference.
(6) Accrual of Rights to Management Incentive Fee: The
Partnership and the Management Agent agree that the Management
Agent must provide the additional management services described
in paragraph 7 of this Agreement, in addition to fulfilling those
terms and obligations set forth in the Management Agreement, in
order to be entitled to receive the Management Incentive Fee.
The Management Agent shall not accrue any rights to a Management
Incentive Fee during the Non-Accrual Period. If for any reason
the Management Agent ceases to manage the day-to-day operations
of the Apartment Complex during the term of this Agreement and
before all Annual Incentive Amounts have been paid to the
Management Agent, then the Management Agent shall forfeit all
rights to receive any unpaid portions of the Management Incentive
Fee referred to in this Agreement, and in this regard, each
year's Annual Incentive Amount shall not be deemed earned until
the last day of the Measurement Year to which said payment
relates. Furthermore:
(a) Notwithstanding the fact that the Annual Incentive
Amount payments which are payable to the Management Agent
pursuant to this Agreement will not commence until after the Non-
Accrual Period, all accrued interest on the Escrowed Funds held
during the Non-Accrual Period shall be paid at the end of each
Fiscal Year of the Non-Accrual Period to the Management Agent,
and such interest shall be reported for federal and state income
tax purposes as income to the Management Agent at the end of each
such Fiscal Year for so long as the Management Agent manages the
Apartment Complex pursuant to the Management Agreement. The
Management Agent's right to receive such interest shall terminate
contemporaneously with the termination of this Agreement.
(b) If the Management Agent continues to manage the
Apartment Complex and in addition thereto complies with and
performs the additional services specified in paragraph 7 of this
Agreement throughout a Measurement Year, then the Management
Agent shall be entitled to accrue and be paid an amount not to
exceed the Annual Incentive Amount, plus all then accrued
interest on the Escrowed Funds, as of the last day of such
Measurement Year.
(c) If for any reason the Management Agent ceases to manage
the day-to-day operations of the Apartment Complex prior to the
end of the Compliance Period, then only that portion of the
Management Incentive Fee which shall have been earned by the
Management Agent at the time the Management Agent ceases to
manage the day-to-day operations of the Apartment Complex shall
be payable to the Management Agent. Furthermore, if in any
Measurement Year during which the Management Agent is managing
the day-to-day operations of the Apartment Complex the Management
Agent does not fulfill each of the criteria set forth in
paragraph 7 below, then the Management Agent shall not receive
the Management Incentive Fee amount for that Measurement Year and
the Annual Incentive Amount which would have been applied to fund
the Management Incentive Fee for such Measurement Year shall not
be paid to the Management Agent, but, instead, shall be disbursed
to the Class A Limited Partner by the Escrow Agent, together with
the accrued but unpaid interest on the Escrowed Funds, from the
Escrowed Funds of the Class A Limited Partner held pursuant to
the terms of the Escrow Agreement.
(d) Interest which accrues on the Escrowed Funds during all
periods of time in which this Agreement is in effect shall be
reported to the Internal Revenue Service by the Escrow Agent
under the federal taxpayer identification number of the
Management Agent. However, in the event that in any year such
accrued interest is actually paid to the Class A Limited Partner,
then the Escrow Agent shall report to the Internal Revenue
Service the amount of any such interest actually paid to the
Class A Limited Partner from the Escrowed Funds as interest
income earned by the Class A Limited Partner and not the
Management Agent. Until the termination of the Management
Agent's management of the Apartment Complex, interest which
accrues on the Escrowed Funds during the Non-Accrual Period shall
be paid at the end of each Fiscal Year pursuant to the provisions
of subparagraph (a) above, and interest which accrues on the
Escrowed Funds during each Measurement Year shall be paid on the
last day of such Measurement Year pursuant to the provisions of
subparagraph (b) above.
(7) Management Criteria: The Management Incentive Fee
payable pursuant to this Agreement shall not be paid to the
Management Agent as to any Measurement Year unless the Management
Agent, in such Measurement Year, satisfies each of the following,
to wit:
(a) The Partnership must have paid during such Measurement
Year the guaranteed portion of the "Asset Management Fee" (as
such term is defined in the Partnership Agreement) for each
Fiscal Year all or part of which is included in such Measurement
Year, and such fee shall have been paid for each Fiscal Year all
or part of which is included in such Measurement Year.
(b) Operating revenues of the Partnership for such
Measurement Year shall have been applied to fund any required
annual payments to reserve accounts specified under the
Management Agreement, the Partnership Agreement or any other
"Project Document" (as such term is defined in the Partnership
Agreement).
(c) There shall have been (i) successful completion of all
Apartment Complex maintenance inspections required by any Lender
or government agency, and (ii) completion of all required
Apartment Complex maintenance.
(d) There must be timely filing of all compliance reports
required by any state or federal government agencies having
jurisdiction over the Apartment Complex; provided, however, that
in the event that any such report is not timely filed as a result
of the failure of such agency to effectively provide notice of
the nature, form, content or timing of a required report, the
Management Agent shall have a reasonable time following any
notice to the Partnership by such agency to cure such failure,
provided that such a cure is permitted by such agency without
penalty upon the Apartment Complex or the Partnership.
(e) The average Occupancy Ratio for the Apartment Complex
during the Measurement Year must equal or exceed 85%, or if such
occupancy is less than 85%, then the average Occupancy Ratio must
equal or exceed the average Occupancy Ratio for similar apartment
developments in the same geographical area as the Apartment
Complex during said Measurement Year.
For purposes of this paragraph 7, operating revenues shall
be deemed to include rents, interest and other amounts actually
received by the Partnership in the ordinary course of business,
and insurance, casualty or other payments actually received by
the Partnership as a result of casualty, natural disaster,
condemnation or other business interruption. Also, for purposes
of this paragraph 7, subordinated loans may be applied to fund
items otherwise required to be funded by operating revenues
pursuant to paragraph (a) through (c) above.
(8) Effect: This Agreement shall be effective as of the
date first written above, and shall remain in effect so long as
the Management Agreement, or any extension, renewal or substitute
thereof shall be in effect during the Compliance Period;
provided, however, that in no event shall this Agreement be
interpreted to provide for more than ten (10) Measurement Years.
The Management Incentive Fee shall be payable to the Management
Agent or any successor or assign of the Management Agent;
provided, the Management Incentive Fee shall only be paid to that
person or entity responsible for the management of the day-to-day
operations of the Apartment Complex, and then only if the
criteria for such payment as set forth in paragraph 7. above is
met.
(9) Governing Law: This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of
the State of Missouri.
(10) Counterparts: This Agreement may be executed in
multiple counterparts, each of which shall be considered an
original and all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have set their hands
effective as of the date first above written.
PARTNERSHIP: MANAGEMENT AGENT:
HARRISONVILLE HEIGHTS, L.P. FAIRWAY MANAGEMENT, INC.
By: Jeffrey E. Smith Partnerships, /s/Patt Bess
L.C., its General Partner Pat Bess, Vice President
By: /s/Patt Bess
Pat Bess, Vice President
SECOND AMENDED AND RESTATED
ESCROW AGREEMENT
This Second Amended and Restated Escrow Agreement (the
"Agreement") is entered into by and among Harrisonville Heights,
L.P., a Missouri limited partnership (the "Partnership"); Fairway
Management, Inc., a Missouri corporation ("the "Management
Agent"); Boston Capital Corporate Tax Credit Fund V, A Limited
Partnership, a Massachusetts limited partnership (the "Class A
Limited Partner"); and Boone County National Bank, a Missouri
banking corporation (the "Escrow Agent"). Capitalized terms used
herein and not otherwise defined shall have the meanings set
forth in the Second Amended and Restated Agreement of Limited
Partnership of the Partnership dated effective as of
January 1, 1998 (the "Partnership Agreement"). This Agreement
amends and restates in its entirety the Amended and Restated
Escrow Agreement dated effective as of October 1, 1996 previously
entered into by and among the Partnership, the Class A Limited
Partner and the Escrow Agent.
WHEREAS, subject to the terms and conditions of the
Partnership Agreement, the Class A Limited Partner has agreed to
make a Basic Capital Contribution of $1,257,866 in consideration
of its admission to the Partnership as a limited partner thereof;
WHEREAS, pursuant to the terms of the Second Amended and
Restated Management Incentive Agreement dated effective as of
January 1, 1998 (the "Management Incentive Agreement"), the
Management Agent has the right to earn a Management Incentive Fee
during each of the Measurement Years (as defined in the
Management Incentive Agreement);
WHEREAS, the Class A Limited Partner has an obligation under
Section 6.12(e) of the Partnership Agreement to make a
Conditional Capital Contribution to the Partnership in the amount
necessary to permit the Partnership to fund the Escrow Account
pursuant to the terms and conditions of the Management Incentive
Agreement;
WHEREAS, the amount of Conditional Capital Contribution
which is required to be made to the Partnership by the Class A
Limited Partner is $118,465 and said amount (hereinafter referred
to as the "Escrowed Funds") will be held by the Escrow Agent
pursuant to the terms of this Escrow Agreement in order to
provide the funds necessary to pay the Management Incentive Fee
as it is earned by the Management Agent;
WHEREAS, the Class A Limited Partner has agreed to provide
the Escrowed Funds in order to secure its obligation to fund the
Conditional Capital Contribution;
WHEREAS, the Class A Limited Partner, the Management Agent
and the Partnership agree that the Escrow Agent shall act as the
depository for the receipt, safe-keeping and disbursement of the
Escrowed Funds; and
WHEREAS, the Escrow Agent hereby agrees to act as the
depository for the receipt, safe-keeping and disbursement of the
Escrowed Funds pursuant to the terms and provisions of this
Escrow Agreement.
NOW, THEREFORE for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, it is
hereby agreed as follows:
(i) The Class A Limited Partner hereby agrees to wire the
Escrowed Funds to the Escrow Agent within three (3)
business days of the Partnership's meeting the payment
obligations for the Second Installment as set forth in
Article V of the Partnership Agreement. The Escrowed
Funds will be wired pursuant to the following
instructions:
Wire to: Boone County National Bank
8th and Broadway
P.O. Box 678
Columbia, Missouri 65205
Attention: James L. Bornhauser, Vice President
ABA No.: 081500859
For Deposit to:
Account Name: Boston Capital Corporate Tax Credit
Fund V, A Limited Partnership/Harrisonville
Heights, L.P.
Account No.: 1027530
(ii) The Escrow Agent hereby agrees to carry out the
provisions of this Agreement pursuant to the terms set
forth herein. Furthermore, the Escrow Agent hereby
agrees to deposit the Escrowed Funds in an interest
bearing money-market account, said interest to be
payable to the Management Agent during each of the
years of the Non-Accrual Period (as defined in the
Management Incentive Agreement) and to the recipient of
the Escrowed Funds during each Measurement Year (as
defined in the Management Incentive Agreement) at the
times and as more fully specified in the Management
Incentive Agreement. The Partnership hereby agrees to
pay any fees which may be charged by the Escrow Agent
in consideration of the services provided by the Escrow
Agent hereunder. The federal taxpayer identification
number of the Management Agent (#43-1681075) shall be
used to report any interest income payable with respect
to the Escrowed Funds during the term of this
Agreement, all as specified in the Management Incentive
Agreement; provided, however, in the event that in any
year accrued interest is actually paid to the Class A
Limited Partner, then the Escrow Agent shall report
such interest to the Internal Revenue Service as
interest income payable to the Class A Limited Partner
and not the Management Agent.
(iii) The following annual payment conditions (the "Annual
Payment Conditions") have been established by the
Partnership for the release to the Management Agent of
the portion of the Management Incentive Fee due in each
Measurement Year:
(a) The Partnership must have paid during such
Measurement Year the guaranteed portion of the
"Asset Management Fee" (as such term is defined in
the Partnership Agreement) for each Fiscal Year
(as defined in the Management Incentive Agreement)
all or part of which is included in such
Measurement Year, and such fee shall have been
paid for each Fiscal Year all or part of which is
included in such Measurement Year.
(b) Operating revenues of the Partnership for such
Measurement Year shall have been applied to fund
any required annual payments to reserve accounts
specified under the Management Agreement, the
Partnership Agreement or any other "Project
Document" (as such term is defined in the
Partnership Agreement).
(c) There shall have been: (i) successful completion
of all Apartment Complex maintenance inspections
required by any Lender or government agency; and
(ii) completion of all required Apartment Complex
maintenance.
(d) There must be timely filing of all compliance
reports required by any state or federal
government agencies having jurisdiction over the
Apartment Complex; provided, however, that in the
event that any such report is not timely filed as
a result of the failure of such agency to
effectively provide notice of the nature, form,
content or timing of a required report, the
Management Agent shall have a reasonable time
following any notice to the Partnership by such
agency to cure such failure, provided that such a
cure is permitted by such agency without penalty
upon the Apartment Complex or the Partnership.
(e) The average Occupancy Ratio (as defined in the
Management Incentive Agreement) for the Apartment
Complex during the Measurement Year must equal or
exceed 85%, or if such occupancy is less than 85%,
then the average Occupancy Ratio must equal or
exceed the average Occupancy Ratio for similar
apartment developments in the same geographical
area as the Apartment Complex during said
Measurement Year.
For purposes of this paragraph (iii), operating
revenues shall be deemed to include rents,
interest and other amounts actually received by
the Partnership in the ordinary course of
business, and insurance, casualty or other
payments actually received by the Partnership as a
result of casualty, natural disaster, condemnation
or other business interruption. Also, for
purposes of this paragraph (iii), subordinated
loans may be applied to fund items otherwise
required to be funded by operating revenues
pursuant to paragraph (a) through (c) above.
If in any of the Measurement Years the Annual
Payment Conditions for release to the Management
Agent of the portion of the Management Incentive
Fee attributable to such Measurement Year are not
met, then the Escrow Agent shall promptly return
such portion of the Escrowed Funds (plus accrued
interest thereon) to the Class A Limited Partner.
(iv) The Management Agent will provide each of the Class A
Limited Partner, the Partnership and the Escrow Agent
with an annual payment certification during each of the
Measurement Years (the "Annual Payment Certification")
which indicates whether or not all of the Annual
Payment Conditions have been met for the Measurement
Year at issue. The Management Agent agrees that it
will forward each Annual Payment Certification to the
Class A Limited Partner by both United States mail and
by facsimile transmission on the date of issuance of
each Annual Payment Certification. The Partnership,
the Management Agent and the Escrow Agent also agree
that the Class A Limited Partner and the Partnership
shall have ten (10) business days from their receipt of
any Annual Payment Certification to notify the Escrow
Agent in writing (facsimile transmission being
acceptable for this purpose) of any objections they may
have to the release of any portion of the Escrowed
Funds pursuant to the Annual Payment Certification.
(v) Assuming that no written objection to any release has
been delivered to the Escrow Agent by the Class A
Limited Partner and/or the Partnership within ten (10)
business days of their receipt of any Annual Payment
Certification, the Escrow Agent hereby agrees to
promptly disburse Escrowed Funds in an amount equal to
$11,846.50 plus the accrued interest on funds held in
the Escrow Account as of the last day in each
Measurement Year (after such ten (10) business day
waiting period) to either the Management Agent or the
Class A Limited Partner, as indicated in the Annual
Payment Certification, pursuant to instructions to be
provided by the Management Agent in the Annual Payment
Certification during each of the Measurement Years. If
the Escrow Agent receives written objection from the
Class A Limited Partner and/or the Partnership with
respect to any release of Escrowed Funds, then the
Escrow Agent shall continue to hold such Escrowed Funds
in escrow until such time as it receives written
authorization from the Partnership and the Class A
Limited Partner as to the release of such Escrowed
Funds. Any dispute between the Partnership, the
Management Agent and the Class A Limited Partner with
respect to the release of Escrowed Funds which cannot
be resolved by such parties shall be settled by
arbitration in accordance with the arbitration rules of
the American Arbitration Association. The expenses of
arbitration shall be born equally by the Partnership,
the Management Agent and the Class A Limited Partner
and the decision of the arbitrator shall be final and
binding. Any and all Escrowed Funds disbursed to the
Management Agent pursuant to this Agreement shall be
deemed to have been contributed as Conditional Capital
Contribution made by the Class A Limited Partner to the
Partnership, the proceeds of which then being deemed as
applied by the Partnership to fund the Management
Incentive Fee, all pursuant to the Management Incentive
Agreement and Section 6.12(e) of the Partnership
Agreement.
(vi) The Partnership, the Management Agent and the Class A
Limited Partner hereby agree that the Escrow Agent has
no duty to determine any controversy which may arise
between the Partnership, the Management Agent and/or
the Class A Limited Partner. With respect to any
release of Escrowed Funds hereunder, the Escrow Agent
is to rely solely and exclusively without any further
investigation on the written instructions provided to
the Escrow Agent by the Management Agent in the Annual
Payment Certification, except as provided in the second
sentence of paragraph (v) above. The Partnership, the
Management Agent and the Class A Limited Partner agree
that the Escrow Agent will not be held liable for
following any written instructions provided by the
Management Agent in the Annual Payment Certification
(except as provided in the second sentence of paragraph
(v) above) with respect to the release of the Escrowed
Funds which are not objected to in a timely manner by
the Class A Limited Partner or the Partnership.
The Partnership, the Management Agent and the Class A
Limited Partner also hereby agree that the Escrow Agent
is not a party to or bound by any provision of the
Partnership Agreement or any other agreement which may
have formed the basis for this Escrow Agreement or any
other agreement between the Partnership, the Management
Agent and the Class A Limited Partner or any third
party, and the Escrow Agent's duties are limited to the
duties as Escrow Agent hereby expressly undertaken.
(vii) Notwithstanding any other provision of this Agreement
to the contrary, if the Escrow Agent has been notified
in writing by the Class A Limited Partner that a
repurchase event has taken place under the Partnership
Agreement, then the Escrow Agent shall promptly return
the Escrowed Funds (plus all accrued interest thereon)
to the Class A Limited Partner pursuant to instructions
to be provided to the Escrow Agent by the Class A
Limited Partner.
(viii) The parties hereto agree that this Agreement shall
terminate on March 31, 2011. If any portion of the
Escrowed Funds (plus accrued interest thereon) shall
not have been released to the Management Agent or the
Class A Limited Partner by March 31, 2011, then the
Escrow Agent shall promptly return any such Escrowed
Funds (plus accrued interest thereon) to the Class A
Limited Partner.
(ix) Notwithstanding the foregoing provisions of this Escrow
Agreement, the Partnership, the Management Agent and
the Class A Limited Partner shall have the right from
time to time and at any time to remove the Escrow Agent
as the "Escrow Agent" pursuant to this Agreement and to
appoint another Escrow Agent which is mutually
acceptable to the Partnership, the Management Agent and
the Class A Limited Partner. Furthermore, the
Partnership, the Management Agent and the Class A
Limited Partner may from time to time amend the terms
of this Escrow Agreement without the consent of the
Escrow Agent. However, if the Escrow Agent does not
consent to the terms and conditions of such amendment,
then the Escrow Agent may promptly resign and deliver
the Escrowed Funds to the Class A Limited Partner or to
such other successor Escrow Agent as shall have been
appointed by the Partnership, the Management Agent and
the Class A Limited Partner at such time or times.
(x) It is hereby agreed that this Agreement may be executed
in several counterparts, all of which shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement effective as of the 1st day of January, 1998.
PARTNERSHIP: CLASS A LIMITED PARTNER:
HARRISONVILLE HEIGHTS, L.P. BOSTON CAPITAL CORPORATE TAX
CREDIT FUND V, A LIMITED
By: Jeffrey E. Smith Partnerships, PARTNERSHIP
L.C., its General Partner
By:/s/Patt Bess By: BCCTC Associates V Limited
Pat Bess, Vice President Partnership, its general partner
ESCROW AGENT: By: BCCTC Associates V, LLC, its
general partner
BOONE COUNTY NATIONAL BANK
By: BCCTC Associates V, Inc.
By:/s/James L. Bornhauser its manager
James L. Bornhauser, Vice
President
By: /s/Bonnie Kate Fox
Attorney-In-Fact for
John P. Manning,
President
MANAGEMENT AGENT:
FAIRWAY MANAGEMENT, INC.
By: /s/Patt Bess
Pat Bess, Vice President
