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) December 7, 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)
0-26200 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 December 7, 1998, Boston Capital Tax Credit Fund IV L.P.,
a Delaware limited partnership, specifically Series 26 thereof
(the "Partnership") entered into various agreements relating to
Meridian Housing, L.P., a Mississippi limited partnership (the
"Operating Partnership"), including the Amended and Restated
Certificate and Agreement of Limited Partnership of the Operating
Partnership dated as of December 1, 1998 (the "Operating
Partnership Agreement"), pursuant to which the Partnership
acquired a limited partner interest in the Operating Partnership.
Capitalized terms used and not otherwise defined herein have
their meanings set forth in the Operating Partnership Agreement,
a copy of which is attached hereto as Exhibit (2)(a).
The Operating Partnership owns and is in the process of
rehabilitating a forty-eight (48) unit apartment complex located
at 421 Willow Ridge Drive in Meridian, Mississippi, which is
known as Lauderdale County Apartments (the "Apartment Complex").
The Apartment Complex contains twelve (12) residential buildings,
consisting of twelve (12) 1-bedroom units and thirty-six (36) 2-
bedroom units, one of which is designated as the manager's unit.
The Apartment Complex also contains an additional building
housing an office, laundry and club room. Rehabilitation of the
Apartment Complex is expected to be completed in October 1999 and
100% Occupancy is expected to be achieved in December 1999.
The Operating Partnership assumed existing permanent
financing in the amount of $1,180,629 (the "Permanent Mortgage")
from the Rural Development Rural Housing Service of the United
States Department of Agriculture ("USDA"), formerly known as the
Farmers Home Administration of the USDA. The Permanent Mortgage
bears interest at 10.75% per annum, a rate which is written down
to an effective rate of 1% per annum through an interest credit
subsidy, requires payments structured according to a 36-year
amortization schedule, and matures on July 7, 2033.
It is expected that 100% of the 47 rental apartment units
available for rent (excluding the manager's unit) in the
Apartment Complex will qualify for the low-income housing tax
credit (the "Tax Credits") under Section 42 of the Internal
Revenue Code of 1986, as amended (the "Code").
The general partners of the Operating Partnership are
Intervest Partners Corporation, a Mississippi corporation, and
The New Life Ministry, Inc., a Mississippi not-for-profit
corporation (the "General Partners"). Intervest Partners
Corporation is the Managing General Partner of the Operating
Partnership; The New Life Ministry, Inc. is the Administrative
General Partner of the Operating Partnership. The Developer of
the Apartment Complex is Intervest Development Corporation,
Intervest Construction Company is the Builder of the Apartment
Complex, and Intervest Corporation will serve as the Management
Agent of the Apartment Complex. The Intervest organization has
developed more than 26 affordable housing complexes totaling more
than 1,200 units, located primarily in Mississippi and the
southeastern United States.
The Partnership acquired its interest in the Operating
Partnership directly from the Operating Partnership in
consideration of an agreement to make a Capital Contribution of
$444,136 to the Operating Partnership in four installments as
follows:
(1) $288,705 (the "First Installment") on the latest of
(i) the Admission Date, (ii) Tax Credit Set-Aside, (iii)
Permanent Mortgage Commitment, or (iv) Phase I Compliance;
(2) $75,216 (the "Second Installment") on the latest of
(i) the Completion Date, (ii) Cost Certification, (iii)
State Designation, (iv) receipt of an updated title
insurance policy and survey satisfactory to the Investment
Limited Partner;
(3) $75,215 (the "Third Installment") on the latest of
(i) the Initial 100% Occupancy Date, (ii) Permanent Mortgage
Commencement, or (iii) the Breakeven Point; and
(4) $5,000 (the "Fourth Installment") on receipt of a
tax return and an audited financial statement for the year
in which Breakeven occurred.
The First Installment has been paid in by the Partnership.
The total Capital Contribution of the Partnership to the
Operating Partnership is based on the Operating Partnership
receiving $673,000 of Tax Credits during the 10-year period
commencing in 1999 of which 99.99% ($672,933) will be allocated
to the Partnership as the Investment Limited Partner of the
Operating Partnership.
The Partnership believes that the Apartment Complex is
adequately insured.
Ownership interests in the Operating Partnership are as
follows, subject in each case to certain priority allocations and
distributions as set forth in the Operating Partnership
Agreement:
Normal Capital Cash
Operations Transactions Flow
Managing
General
Partner .007% 30% 90% (Yrs. 1-5)
50% thereafter
Administrative
General
Partner .003% 30% 5% (Yrs. 1-5)
20% thereafter
Partnership 99.99% 39.999% 5% (Yrs. 1-5)
30% thereafter
Special
Limited
Partner 0% .001% 0% (Yrs. 1-5)
0% thereafter
The Special Limited Partner of the Operating Partnership is BCTC
94, Inc., an affiliate of the Partnership.
The Partnership used the funds obtained from the payments of
the holders of its beneficial assignee certificates to make the
acquisition of its interest in the Operating Partnership.
Boston Capital Communications Limited Partnership
("BCCLP") or an affiliate thereof will receive an Asset
Management Fee commencing in 1999 from the Operating Partnership
for services in connection with the Operating Partnership's
accounting matters and the preparation of tax returns and reports
to the Partnership in the annual amount of $1,500. The Asset
Management Fee will initially be payable from the Asset
Management Fee Escrow Account, which has been funded with $18,000
from the proceeds of the First Installment.
The Operating Partnership shall pay to the Managing General
Partner a non-cumulative fee (the "Annual Partnership Management
Fee") commencing in 1999 for services in connection with the
administration of the day-to-day business of the Operating
Partnership in an annual amount of $1,400. The Annual
Partnership Management Fee for each fiscal year of the Operating
Partnership shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a) of the Operating
Partnership Agreement to the extent Cash Flow is available
therefor for such year.
In consideration of their consultation, advice and other
services in connection with the construction and development of
the Apartment Complex and as consideration for the assignment
described in Section 6.14 of the Operating Partnership Agreement,
the Operating Partnership will pay the General Partners (or their
designee) a Construction and Development Fee in the principal
amount of $36,800. The Construction and Development Fee shall be
payable $31,800 from the proceeds of the Third Installment and
$5,000 from the proceeds of the Fourth Installment.
Intervest Construction Company, as the Builder of the
Apartment Complex, will receive a total compensation of $307,315.
Intervest Corporation, as the Management Agent of the Apartment
Complex, will receive a Management Fee equal to $62.54/month per
occupied unit, with a maximum annual compensation of $36,023.04.
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)
<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.
(2)(a) Amended and Restated Certificate and
Agreement of Limited Partnership of Meridian
Housing, L.P.
(2)(b) Certification and Agreement relating to
Meridian Housing, L.P.
(4)(a)<F2> Agreement of Limited Partnership of the
Partnership
<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.
(16) None
(17) None
(20) None
(23) None
(24) None
(27) None
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: June 30, 1999
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
MERIDIAN HOUSING, L.P.
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
Dated as of December 1, 1998
MERIDIAN HOUSING, L.P.
TABLE OF CONTENTS
Page
Preliminary Statement ................................... 1
ARTICLE I Defined Terms ................................ 1
ARTICLE II Name and Business .......................... 14
2.1 Name; Continuation ....................... 14
2.2 Office and Resident Agent ................ 14
2.3 Purpose .................................. 14
2.4 Term and Dissolution ..................... 14
ARTICLE III Mortgage, Refinancing and Disposition
of Property ..................................... 15
ARTICLE IV Partners; Capital ........................ 16
4.1 Capital and Capital Accounts ............. 16
4.2 General Partner .......................... 17
4.3 Investment Limited Partner, Special
Limited Partner, and Original Limited
Partner .................................. 17
4.4 Liability of the Limited Partners......... 18
4.5 Special Rights of the Investment
Limited Partner ........................... 18
4.6 Meetings ................................. 20
ARTICLE V Capital Contributions of the Investment
Limited Partner and the Special Limited
Partner ................................... 21
5.1 Payments ................................. 21
5.2 Return of Capital Contributions .......... 25
ARTICLE VI Rights, Powers and Duties of General
Partners .................................. 28
6.1 Authorized Acts .......................... 28
6.2 Restrictions on Authority ................ 29
6.3 Personal Services ........................ 31
6.4 Business Management and Control; Tax
Matters Partner .......................... 31
6.5 Duties and Obligations ................... 32
6.6 Representations and Warranties ........... 35
6.7 Liability on the Permanent Mortgage ...... 39
6.8 Indemnification of the General Partners .. 39
6.9 Indemnification of the Partnership and the
Limited Partners ...........................40
Page
6.10 Operating Deficits ....................... 41
6.11 Obligation to Complete the Rehabilitation
of the Apartment Complex.................. 42
6.12 Certain Payments to the General Partner
and Others ..................................44
6.13 Delegation of General Partner Authority .. 45
6.14 Assignment to Partnership ................ 45
ARTICLE VII Withdrawal of a General Partner; New
General Partner ............................ 46
7.1 Withdrawal ................................ 46
7.2 Obligation to Continue .................... 47
7.3 Withdrawal of All General Partners. ....... 47
7.4 Interest of General Partner After
Permitted Withdrawal ....................... 47
7.5 Admission of Additional General Partner(s)
under Certain Circumstances................. 48
7.6 Withdrawal of Sole General Partner........ .49
ARTICLE VIII Transferability of Limited Partner
Interests .................................. 50
8.1 Assignments ............................... 50
8.2 Substituted Limited Partner ............... 50
8.3 Restrictions .............................. 51
ARTICLE IX Working Capital; Borrowings .............. 51
9.1 Working Capital Loan ...................... 51
9.2 Borrowings ................................ 51
ARTICLE X Profits, Losses, Tax Credits,
Distributions and Capital
Accounts ....................................52
10.1 Profits, Losses and Tax Credits .......... 52
10.2 Cash Distributions Prior to Dissolution... 54
10.3 Distributions Upon Dissolution ........... 57
10.4 Special Provisions ....................... 57
10.5 Authority of the General Partners to Vary
Allocations to Preserve and Protect the
Partners' Intent ........................... 61
ARTICLE XI Management Agent ......................... 62
ARTICLE XII Books and Records, Accounting, Tax
Elections, Etc. ............................ 63
12.1 Books and Records ........................ 63
12.2 Bank Accounts ............................ 64
12.3 Auditors ................................. 64
12.4 Cost Recovery and Elections .............. 65
Page
12.5 Special Basis Adjustments ................ 65
12.6 Fiscal Year .............................. 65
12.7 Information to Partners .................. 66
12.8 Expenses of the Partnership .............. 69
ARTICLE XIII General Provisions ....................... 70
13.1 Restrictions by Reason of Section 708 of
the Code .................................... 70
13.2 Amendments to Certificate ................. 71
13.3 Notices ................................... 71
13.4 Word Meanings ............................. 71
13.5 Binding Effect ............................ 72
13.6 Applicable Law ............................ 72
13.7 Counterparts .............................. 72
13.8 Financing Regulations ..................... 72
13.9 Separability of Provisions ................ 73
13.10 Paragraph Titles ......................... 73
13.11 Extraordinary Investment Limited Partner
Expenses .................................... 73
13.12 Time of Admission ........................ 73
GUARANTY................................................. 75
Consent and Agreement ................................... 76
Schedule A .............................................. 80
MERIDIAN HOUSING, L.P.
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
MeridianHousing, L.P. (the "Partnership") was formed as a
Mississippi limited partnership pursuant to a Certificate and
Agreement of Limited Partnership dated April 2, 1998 (the
"Original Agreement") by and among Intervest Partners
Corporation, a Mississippi corporation (the "Managing General
Partner") and The New Life Ministry, Inc., a Mississippi non
profit corporation (the "Administrative General Partner")
(collectively referred to as the "General Partners") and
Intervest Corporation as the limited partner (the "Original
Limited Partner"). The Original Agreement was filed in the
Filing Office on April 9, 1998.
WHEREAS, the parties hereto now desire to enter into this
Amended and Restated Certificate and Agreement of Limited
Partnership to: (i) continue the Partnership, (ii) acknowledge
the withdrawal of the Original Limited Partner, (iii) to admit
Boston Capital Tax Credit Fund, IV, L.P. to the Partnership as
Investment Limited Partner, (iv) to admit BCTC 94, Inc. as
Special Limited Partner, (v) reassign the Interests in the
Partnership and (vi) set forth all of the provisions governing
the Partnership and the Partners herein. 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, the Original Agreement is hereby amended
and restated in its entirety, as follows:
ARTICLE I
Defined Terms
The defined terms used in this Agreement shall have the
meanings specified below:
Actual Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the Partnership
to the Investment Limited Partner for such year. The Actual
Credit shall be retroactively revised if the amount of Tax Credit
properly allocable to the Investment Limited Partner is revised
after audit or recaptured.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to Section
4.5(b) or Section 7.4.
Admission Date means the first date on which all parties
hereto shall have executed this Agreement, or, if, pursuant to
the Uniform Act, the Investment Limited Partner shall not be
deemed admitted to the Partnership on such date, then the next
date thereafter on which the Investment Limited Partner shall be
deemed to be admitted to the Partnership under the Uniform Act.
Affiliate means (A) as to the Investment Limited Partner,
the Investment General Partner or Boston Capital, (i) such
Person; (ii) each member of the Immediate Family of such Person;
(iii) each legal representative, successor or assignee of any
Person referred to in the preceding clauses (i) or (ii); (iv)
each trustee of a trust for the benefit of any Person referred to
in the preceding clauses (i) or (ii); or (v) any other Person (a)
who directly or indirectly controls, is controlled by, or is
under common control with such Person, (b) who is an officer of,
director of, partner in or trustee of, or serves in a similar
capacity with respect to, such Person or of which such Person is
an officer, director, partner or trustee, or with respect to
which such Person serves in a similar capacity, (c) who, directly
or indirectly, is the beneficial owner of ten percent (10%) or
more of any class of equity securities of such Person or of which
such Person is directly or indirectly the owner of ten percent
(10%) or more of any class of equity securities, (d) who is an
officer, director, general partner, trustee or holder of ten
percent (10%) or more of the voting securities or beneficial
interests of any Person referred to in the foregoing clauses
(v)(a), (v)(b) or (v)(c) or (e) who, whatever his title, performs
functions for such Person or any Affiliate of such Person similar
to a Chairman or member of the Board of Directors, or executive
officer such as the President, Executive Vice President or Senior
Vice President, Corporate Secretary, or Treasurer, or any Person
holding a five percent (5%) or more equity interest in such
Person, or any Person having the power to direct or cause the
direction of such Person, whether through the ownership of voting
securities, by contract or otherwise; and (B) as to any other
named Person or Persons (i) such Person; (ii) each member of the
Immediate Family of such Person; (iii) each legal representative,
successor or assignee of any Person referred to in the preceding
clauses (i) or (ii); (iv) each trustee of a trust for the benefit
of any Person referred to in the preceding clauses (i) or (ii);
or (v) any other Person (a) who directly or indirectly controls,
is controlled by, or is under common control with such Person,
(b) who owns or controls ten percent (10%) or more of the
outstanding voting securities of such Person, (c) of which ten
percent (10%) or more of the outstanding voting securities is
owned by such Person or any of the Persons referred to in the
foregoing clauses (i) through (iii), (d) who is an officer,
director, partner or trustee of such Person, or (e) for which
such Person acts in the capacity of officer, director, partner or
trustee. An Affiliate of the Investment Limited Partner or of
the Investment General Partner does not include a Person who is a
partner in a partnership or joint venture with the Investment
Limited Partner or any other Affiliate of the Investment Limited
Partner if such Person is not otherwise an Affiliate of the
Investment Limited Partner or the Investment General Partner.
For purposes of this definition, the term Affiliate shall not be
deemed to include any law firm (or member or associate thereof)
providing legal services to the Investment Limited Partner, the
Investment General Partner or any Affiliate of either of them.
Aggregate Cost means the sum of (i) the total Capital
Contributions made or anticipated to be made by the Investment
Limited Partner plus (ii) the proportionate amount of the
mortgage loans on, and other debts related to, the Apartment
Complex, which proportionate amount is equal to the Investment
Limited Partner's initial pro rata interest in the profits,
losses, and tax credits of the Partnership. The amount of the
Aggregate Cost determined upon payment of the last of the four
Installments of the Capital Contribution of the Investment
Limited Partner shall not thereafter be reduced.
Agreement means this Amended and Restated Certificate and
Agreement of Limited Partnership, including Schedule A, as
amended from time to time.
Annual Partnership Management Fee means the fee payable to
the General Partners pursuant to the provisions of Section
6.12(a).
Apartment Complex means the real property located in
Meridian, Lauderdale County, Mississippi, as more fully described
in the Mortgage, together with (i) all buildings and other
improvements constructed or to be constructed thereon and (ii)
all furnishings, equipment and personal property covered by the
Mortgage.
Applicable Federal Rate means the "applicable federal rate"
as defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section
42(b) of the Code.
Asset Management Fee means the fee payable to BCCLP or an
Affiliate thereof pursuant to Section 6.12(c).
Auditors means Grantham, Randall, Arrington & Co. of
Jackson, Mississippi, or such other firm of independent certified
public accountants as may be engaged by the General Partners with
the consent of Boston Capital for the purposes of preparing the
Partnership income tax returns, compiling the books and records
of the Partnership and reviewing financial reports of the
Partnership.
BCCLP means Boston Capital Communications Limited
Partnership, a Massachusetts limited partnership, and its
successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, its successors and assigns.
Breakeven Confirmation means the date upon which the
Investment Limited Partner receives a copy of the federal income
tax return of the Partnership for the Partnership fiscal year in
which the Breakeven Point shall have occurred.
Breakeven Point means the first time at which, as certified
by the General Partners, based upon four (4) consecutive full
calendar months of Partnership operation occurring after the
later to occur of (i) the Admission Date or (ii) Permanent
Mortgage Commencement (with each month taken individually),
during which the rental income (including government subsidies)
of the Partnership actually received on a cash basis (excluding
prepaid rent) for each of such four (4) months shall have
exceeded all the Partnership's expenses for such month on an
accrual basis (including, but not limited to, (a) all operational
costs and expenses, (b) all items payable in connection with any
Mortgage, and (c) the funding of any reserves required by FmHA
and/or 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 expense) 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 has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a then
Partner shall include a Capital Contribution previously made by
any prior Partner for the Interest of such then Partner.
Capital Transaction means any transaction the proceeds of
which are not includable in determining Cash Flow including,
without limitation, the sale or other disposition of all or
substantially all of the assets of the Partnership, but excluding
the payment of Capital Contributions.
Carryover Certification means the date upon which the
Investment Limited Partner shall have received, in a form and in
substance satisfactory to the Investment Limited Partner, the
certification of the Auditors that as of a date no later than
December 31, 1998, the Partnership had incurred capitalizable
costs with respect to the Apartment Complex of at least ten
percent (10%) of the Partnership's reasonably expected basis in
the Apartment Complex as of December 31, 2000, so that each
building in the Apartment Complex constitutes a "qualified
building" for the purposes of Section 42(h)(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
FmHA or Lender requirements and to the following adjustments:
(a) Cost recovery deductions of buildings, improvements and
personal property and amortization of any financing fees shall
not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining
profits and losses but which is not currently payable in cash
shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any 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 the later of Permanent Mortgage Commencement
or the Admission Date, 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(a) shall be deducted.
Certificate means the Original Certificate as amended from
time to time (including any amendment thereto effected by or in
connection with this Agreement.)
Class Contribution means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the
General Partners, the Investment Limited Partner, the Special
Limited Partner or any Additional Limited Partner.)
Code means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations (permanent or temporary)
issued thereunder. References herein to any Code section shall
include any successor provisions.
Commencement Date means the first day of the month in which
the Admission Date occurs.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size, type
and location of the Apartment Complex or other property.
Completion Date means the date upon which the Apartment
Complex has been completed as evidenced by the issuance by the
inspecting architect and by each governmental agency having
jurisdiction of certificates of substantial completion or
occupancy (or local equivalents) with respect to all 48 apartment
units in the Apartment Complex.
Compliance Period means the fifteen (15)-year period
commencing with the first year of the Credit Period.
Consent of the Investment Limited Partner means the prior
written consent or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in
Section 6.12(b).
Controlling Person has the meaning given to it in the
context of Section 15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited
Partner shall have received the written certification of the
Auditors, in a form and in substance satisfactory to Boston
Capital, as to the itemized amounts of the construction and
development costs of the Apartment Complex and the Eligible Basis
and Applicable Percentage pertaining to each building in the
Apartment Complex.
Credit Period has the meaning given to it in Section
42(f)(1) of the Code.
Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner as more fully described
in Section 5.1(f). Credit Recovery Loans and interest thereon
shall not be treated as loans or interest, respectively, for
accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(1). For the purposes of Article X, the term Credit
Recovery Loan shall not include any portion of such an advance
which shall have theretofore been paid to the Investment Limited
Partner.
Credit Shortfall has the meaning given to it in Section
5.1(f).
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, joint venture, trust, business trust, cooperative or
association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person or in respect of
any Controlling Person of such Person in a case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of such Person or of any Controlling Person of such Person for
any substantial part of such Person's property or of the property
of any Controlling Person of such Person, or the issuance of an
order for the winding-up or liquidation of such Person's affairs
and the continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days, or
(ii) the commencement by such Person or by any Controlling
Person of such Person of a proceeding seeking any decree, order
or appointment referred to in clause (i), the consent by such
Person to any such decree, order or the appointment, or taking of
any action by such Person in furtherance of any of the foregoing.
Filing Office means the Secretary of the State.
FmHA means U.S.D.A. Rural Development Rural Housing Service,
formerly known as the Rural Economic and Community Development
Administration, formerly known as the Farmers Home Administration
of the United States Department of Agriculture.
FmHA Loan Agreement means the FmHA Transfer and
Rehabilitation Loan Agreements by and between the Partnership and
FmHA, as amended from time to time.
General Partners means the Persons designated as the General
Partners in Schedule A and any Persons who become General
Partners as provided herein, in their capacities as general
partners of the Partnership. At any and all times where there is
only one General Partner, the term General Partners shall mean
such sole General Partner.
Hazardous Material shall have the collective meanings given
to the terms "hazardous material", "hazardous substances" and
"hazardous wastes" in the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and to the term "radioactive materials"
in the context of the Atomic Energy Act, 28 U.S.C. Sec. 2344, and
also includes any meanings given to such terms in any similar
state or local statutes, ordinances, regulations or by-laws. In
addition, the term Hazardous Material also includes oil and any
other substance known to be hazardous.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
children-in-law and grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon which
not less than one hundred percent (100%) of the 48 apartment
units in the Apartment Complex shall have been leased to and
physically occupied by tenants on such date meeting the terms of
the Minimum Set-Aside Test under executed FmHA-approved leases at
rentals meeting the requirements of the Rent Restriction Test.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be
entitled hereunder and the obligation of such Partner to comply
with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the Capital Contribution of the
Investment Limited Partner divided by 81.3% and (ii) as to any
other Partner, an amount equal to its Capital Contribution.
Investment General Partner means Boston Capital Associates
IV, L.P., a Delaware limited partnership in its capacity as the
general partners of the Investment Limited Partner, and any other
Person who may become a successor or additional general partner
of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit
Fund IV, L.P., a Delaware limited partnership, (specifically
Series __ thereof), and any Person or Persons who replace it as
Substituted Limited Partner, but shall not include any Special
Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Agreement of
Limited Partnership of the Investment Limited Partner, as amended
from time to time.
Lender means FmHA, in its capacity as maker of a Mortgage
loan, or its successors and assigns in such capacity.
Limited Partners means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
Management Agent means the management and rental agent for
the Apartment Complex.
Management Agreement means the agreement between the
Partnership and the Management Agent providing for the management
of the Apartment Complex.
Management Fee means the Management Fee to which reference
is made in Article XI.A.
Minimum Set-Aside Test means the set aside test selected by
the Partnership pursuant to Section 42(g) of the Code whereby at
least 20% of the units in the Apartment Complex must be occupied
by individuals with incomes equal to 50% or less of area median
income, as adjusted for family size.
Mortgage means the mortgage indebtedness of the Partnership
to FmHA; and where the context admits Mortgage shall mean and
include the mortgage note evidencing such indebtedness, the
mortgage or deed of trust and security agreement securing such
indebtedness, the loan agreement and all other documentation
related thereto which evidence and secure such indebtedness,
including any FmHA documentation related thereto.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate has the meaning specified in the
Preliminary Statement.
Original General Partner has the meaning specified in the
Preliminary Statement.
Original Limited Partner has the meaning specified in the
Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability
(a) that is considered non-recourse under Treasury Regulation
Section 1.1001-2 or for which the creditor's right to repayment
is limited to one or more assets of the Partnership and (b) for
which any Partner or Related Person bears the economic risk of
loss.
Partner Non-Recourse Debt Minimum Gain means the amount of
partner nonrecourse debt minimum gain and the net increase or
decrease in partner nonrecourse debt minimum gain determined in a
manner consistent with Treasury Regulations Sections 1.704-2(d)
and 1.704(g)(3).
Partnership means the limited partnership continued pursuant
to this Agreement.
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction of such
liability, and by then aggregating the amounts so computed. Such
computations shall be made in a manner consistent with Treasury
Regulation Section 1.704-2 (d).
Partnership Non-Recourse Liability means any Partnership
liability (or portion thereof) for which no Partner or Related
Person bears the Economic Risk of Loss.
Permanent Mortgage means the permanent financing provided,
or to be provided, by the FmHA for the Apartment Complex
following the completion thereof. The Permanent Mortgage is to
be assumed FmHA financing in the initial principal amount of
$1,180,629.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; (b) the principal amount and maturity date of
the Permanent Mortgage shall have been finally determined; and
(c) amortization of the Permanent Mortgage shall have commenced.
Permanent Mortgage Commitment means the first date on which
the Partnership receives the written commitment of FmHA to make
the Permanent Mortgage.
Person means any individual or Entity.
Phase I Compliance means the date on which the Investment
Limited Partner receives from the General Partner a FmHA
Environmental Report satisfactory to the Investment Limited
Partner in its sole discretion.
Project Documents means and includes the Permanent Mortgage,
the FmHA Loan Agreement, the Management Agreement, all other
instruments delivered to (or required by) FmHA and all other
documents relating to the Apartment Complex and by which the
Partnership is bound, as amended or supplemented from time to
time.
Projected Credit to the Investment Limited Partner
(Projected Credit) means $14,019 for 1999; $67,293 per annum for
the years 2000 through 2008 (inclusive); and $53,274 for 2009;
provided that the Projected Credit for 2009 shall be reduced by
the amount, if any, by which the Actual Credit for 1999 exceeds
$14,019 and provided further that upon the occurrence of any of
the events described in clauses (i), (ii) and (iii) of Section
5.1(g), the Projected Credit shall thereafter be the Revised
Projected Credit.
Prospectus means the prospectus contained in the
registration statement (File No. 33-70564) filed with the
Securities and Exchange Commission on behalf of the Investment
Limited Partner for the registration of beneficial assignee
certificates and/or limited partnership interests under the
Securities Act of 1933, as amended, in the final form in which
said prospectus is filed with said Commission and as thereafter
amended and/or supplemented from time to time pursuant to Rule
424 under said Act, or otherwise.
Qualified Basis has the meaning given to it in Section 42(c)
of the Code.
Qualified Income Offset Item means (1) an allocation of loss
or deduction that, as of the end of each year, reasonably is
expected to be made (a) pursuant to Section 704(e)(2) of the Code
to a donee of an interest in the Partnership, (b) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership of
unrealized receivables or inventory items and (2) a distribution
that, as of the end of such year, reasonably is expected to be
made to a Partner to the extent it exceeds offsetting increases
to such Partner's Capital Account which reasonably are expected
to occur during or prior to the Partnership taxable year in which
such distribution reasonably is expected to occur.
Related Person means a person related to a Partner within
the meaning of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42
of the Code whereby the gross rent charged to tenants of the low-
income units in the Apartment Complex may not exceed thirty
percent (30%) of the qualifying income levels.
Revised Projected Credit has the meaning given to it in
Section 5.1(g).
Schedule A means Schedule A to this Agreement as amended
from time to time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a 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 Mississippi.
State Designation means the date upon which the Partnership
receives the allocation by the authorized agency of the State of
a Tax Credit for the building(s) constituting the Apartment
Complex in an annual dollar amount of not less than $67,300, as
evidenced by the execution by or on behalf of such agency of
Form(s) 8609. For the purposes of determining State Designation,
each building in the Apartment Complex shall be treated as having
received an allocation of Tax Credit in an amount equal to the
lesser of (i) the amount of Tax Credit carryover allocation
received from the authorized agency of the State as to such
building or (ii) the amount of Tax Credit set forth on the Form
8609 as to such building.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted
to the Partnership as Limited Partner under Section 8.2 or
acquires the Interest of a Limited Partner pursuant to Section
5.2.
Tax Accountants means Reznick, Fedder & Silverman of
Bethesda, Maryland or such other firms of independent certified
public accountants as may be engaged by Boston Capital to review
the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant
to Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the
Partnership receives a preliminary reservation, effective for the
year 1998, the year the Apartment Complex is expected to receive
an allocation of Tax Credit, by the authorized agency of the
State of Tax Credit for the building(s) constituting the
Apartment Complex in an annual dollar amount of not less than
$67,300, which reservation shall not have expired or been revoked
prior to the date on which the First Installment is paid.
Uniform Act means the Uniform Limited Partnership Act as
adopted by the State.
Vessel has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or involuntary
withdrawal or retirement from the Partnership for any reason,
including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this
Agreement. Withdrawal shall also mean the sale, assignment,
transfer or encumbrance by a General Partner of its interest as a
General Partner. A General Partner which is a corporation or
partnership shall be deemed to have sold, assigned, transferred
or encumbered its interest as a General Partner in the event (as
a result of one or more transactions) of any sale, assignment or
other transfer (but specifically excluding any transfer occurring
pursuant to the laws of descent and distribution) of a
controlling interest in a corporate 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 Meridian Housing, 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 5750 I-55
North Frontage Road, Jackson, Mississippi 39236, 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:
J. Stephen Nail
5750 I-55 North Frontage Road
Jackson, MS 39236
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest
in, construct, rehabilitate, develop, improve, maintain, operate,
lease and otherwise deal with the Apartment Complex. The
Partnership shall operate the Apartment Complex in accordance
with any applicable FmHA regulations and requirements. The
Partnership shall not engage in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect
until April 8, 2097 or such other time as may be set forth in the
Original Agreement except that the Partnership shall be dissolved
and its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially
all of the assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt,
insane or incompetent, (if a corporation or partnership) being
dissolved or liquidated, or voluntarily or involuntarily
withdrawing from the Partnership for any reason, including an
inability to continue serving as a General Partner by law or
pursuant to the terms of this Agreement, if (i) the remaining
General Partner(s), if any, shall fail to continue the business
of the Partnership and reconstitute the Partnership as a
successor limited partnership as provided in Section 7.2 and (ii)
the Investment Limited Partner shall fail to exercise the right
provided in Section 7.3;
(c) The election to dissolve the Partnership made in
writing by the General Partners with the Consent of the
Investment Limited Partner and the approval (if required) of
FmHA;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Uniform Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners
(or for purposes of this paragraph, their trustees, receivers or
successors) shall cause the cancellation of the Certificate,
liquidate the Partnership assets and apply and distribute the
proceeds thereof in accordance with Section 10.3.
Notwithstanding the foregoing, if, during liquidation, the
General Partners shall determine that an immediate sale of part
or all of the Partnership's assets would be impermissible,
impractical or cause undue loss to the Partners, the General
Partners may defer liquidation of, and withhold from distribution
for a reasonable time, any assets of the Partnership except those
necessary to satisfy Partnership debts and obligations (except
the Working Capital Loan and Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. 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. The General
Partners shall cause the Partnership to elect promptly, to the
extent permitted and in the manner prescribed by FmHA, that all
debt service payments made by the Partnership to FmHA shall be
applied first to interest determined at the stated rate set forth
in the promissory note to FmHA, all as provided under FmHA
regulations, and then to principal due under the Permanent
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 fifty-year amortization schedule anticipated at Permanent
Mortgage Commencement), increase or refinancing of the Permanent
Mortgage may be made by the General Partners only with the
Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or substantially all the assets of the
Partnership only with the Consent of the Investment Limited
Partner. Notwithstanding the foregoing and except as set forth in
Section 6.2(a)(6), no Consent of the Investment Limited Partner
shall be required for the leasing of apartments to tenants in the
normal course of operations or the leasing of all or
substantially all the apartments to a public housing authority at
rents satisfactory to each FmHA as expressed in writing.
D. The total compensation to all Persons for the sale of
the Apartment Complex shall be limited to a Competitive Real
Estate Commission, not to exceed six percent (6%) of the contract
price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as
set forth on Schedule A. No interest shall be paid on any
Capital Contribution. No Partner shall have the right to
withdraw its Capital Contribution or to demand and receive
property of the Partnership in return for its Capital
Contribution, except as may be specifically provided in this
Agreement or required by law.
(b) An individual Capital Account shall be established and
maintained on behalf of each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in
the Partnership. In accordance with Treasury Regulation Section
1.704-1(b), the Capital Account of each Partner shall consist of
(i) the amount of cash such Partner has contributed to the
Partnership plus (ii) the fair market value of any property such
Partner has contributed to the Partnership net of any liabilities
assumed by the Partnership or to which such property is subject
plus (iii) the amount of profits or income (including tax-exempt
income) allocated to such Partner less (iv) the amount of losses
and deductions allocated to such Partner less (v) the amount of
all cash distributed to such Partner less (vi) the fair market
value of any property distributed to such Partner net of any
liabilities assumed by such Partner or to which such property is
subject less (vii) such Partner's share of any other expenditures
which are not deductible by the Partnership for Federal income
tax purposes or which are not allowable as additions to the basis
of Partnership property and shall be (viii) subject to such other
adjustments as may be required under the Code. The Capital
Account of a Partner shall not be affected by any adjustments to
basis made pursuant to Section 743 of the Code but shall be
adjusted with respect to adjustments to basis made pursuant to
Section 734 of the Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as,
and shall replace, the Capital Account of the Partner which such
Substituted Partner succeeds, and, for the purposes of this
Agreement, such Substituted Partner shall be deemed to have made
the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term
"Substituted Partner" as used in this paragraph, shall mean a
Person who shall become entitled to receive a share of the
allocations and distributions of the Partnership by reason of
such Person succeeding to all or any part of the Interest of a
Partner by assignment of all or any part of a Partner's Interest.
To the extent a Substituted Partner receives less than 100% of
the Interest of a Partner he succeeds, the original Capital
Account of such transferee Substituted Partner and his Capital
Contribution shall be in proportion to the portion of the
transferor Partner's Interest prior to the transfer which the
transferee receives, and the Capital Account of the transferor
Partner who retains a portion of his former Interest and his
Capital Contribution shall continue, and not be replaced, in
proportion to the portion of the transferor Partner's Interest
prior to the transfer which the transferor Partner retains.
Nothing in this Section 4.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or Article
VIII.
4.2 General Partner
The name, address and Capital Contribution of each General
Partner are as set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
The Original Limited Partner hereby withdraws as a limited
partner of the Partnership and acknowledges that it no longer has
any Interest in, or rights or claims against, the Partnership as
a Limited Partner as of the Admission Date. The Investment
Limited Partner and the Special Limited Partner are hereby
admitted to the Partnership as the sole Limited Partners in
substitution for the Original Limited Partner as of the Admission
Date and agrees to be bound by the terms and provisions of the
Project Documents and this Agreement. The names and addresses of
the Investment Limited Partner and the Special Limited Partner
are as set forth on Schedule A. The General Partners shall have
no authority to admit additional Limited Partners without the
Consent of the Investment Limited Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, the Special Limited
Partner and any Person who becomes an Additional Limited Partner
shall be liable for any debts, liabilities, contracts or
obligations of the Partnership and shall only be liable to pay
their respective Capital Contributions as and when the same are
due hereunder and under the Uniform Act.
4.5 Special Rights of the Investment Limited Partner
(a) Notwithstanding any other provision herein, to the
extent the law of the State is not inconsistent, each of the
Investment Limited Partner and the Special Limited Partner shall
have the right, subject to the prior written consent of FmHA (if
such consent is required) to:
(i) amend this Agreement in any particular;
(ii) dissolve the Partnership;
(iii) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of such
General Partner's obligations constituting fraud, bad faith,
negligence, misconduct or breach of fiduciary duty, or (B) upon
the occurrence of any of the following: (1) such General Partner
shall have violated any provisions of any Project Document or
other document required in connection with any Mortgage, or any
provisions of the FmHA regulations applicable to the Apartment
Complex; (2) such General Partner shall have violated any
provision of this Agreement, including, but not limited to, any
obligation to fund any Partnership expense under Section 6.10, or
such General Partner shall have violated any provision of
applicable law; (3) any Mortgage shall have gone into default; or
(4) such General Partner shall have conducted its own affairs or
the affairs of the Partnership in such a manner as would (a)
cause the termination of the Partnership for Federal income tax
purposes; or (b) cause the Partnership to be treated for Federal
income tax purposes as an association taxable as a corporation;
(iv) continue the business of the Partnership with a
substitute General Partner; and
(v) approve or disapprove the sale of all or substantially
all of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any
further action by any Partner, the Special Limited Partner 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 Partner shall determine is the minimum
appropriate interest in order to assure the continued status of
the Partnership as a partnership under the Code and under the
Uniform Act, (ii) 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 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 Additional Limited Partner. Interest, or any portion
thereof, of any removed General Partner upon payment of the
agreed or then present fair market value of such Interest or
portion thereof. Any dispute as to the value of the Interest or
portion thereof to be acquired pursuant to the immediately
preceding sentence shall be submitted to a committee composed of
three qualified real estate appraisers, one chosen by the removed
General Partner, one chosen by the successor General Partner, and
the third chosen by the two so chosen. The proceedings of such
committee shall conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall be
final and binding. The expense of arbitration shall be born
equally by the removed General Partner and the Partnership. The
method of payment to the removed General Partner shall be fair
and must protect the solvency and liquidity of the Partnership.
The method of payment will be deemed presumptively fair where it
provides for an interest-bearing promissory note coming due in no
less than five (5) years with equal installments each year. In
addition, upon removal, the Partnership must promptly pay to the
removed General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that notwithstanding
the language of Section 6.12, Article X, Article XI and any other
provision hereof, no removed General Partner or any Affiliate
thereof shall be entitled to receive any fee, compensation or
other remuneration from the Partnership, other than (i) the
above-described payment for the Interest, or portion thereof, of
the removed General Partner, and (ii) any such fee, compensation
or other remuneration which had already been earned in full prior
the date of such removal. The Partnership is not authorized to
enter into any arrangement whereby any fee, compensation or other
remuneration could be payable directly or indirectly to any
General Partner or Affiliate thereof in a manner inconsistent
with the immediately preceding sentence unless the prior written
consent of the Special Limited Partner shall have been obtained
to such particular agreement. The Partnership may offset against
any payments to a General Partner removed under this Section 4.5
any damages suffered by the Partnership as a result of any breach
of the obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a General Partner for
any obligations of the Partnership incurred after the effective
date of its removal. Each General Partner hereby grants to the
Special Limited Partner an irrevocable (to the extent permitted
by applicable law) power of attorney coupled with an interest to
execute and deliver any and all documents and instruments on
behalf of such General Partner and the Partnership as the Special
Limited Partner may deem to be necessary or appropriate in order
to effect the provisions of this Section 4.5 and to enable the
new General Partner to manage the business of the Partnership.
(c) In order to implement Section 4.5(a)(v), the General
Partners are hereby required, within five (5) days after their
receipt of any offer to purchase the Apartment Complex or all of
the Interests in the Partnership, to send a copy of such offer
(or a written description of any such oral offer) to each of the
Limited Partners. If, within thirty (30) days of its receipt of
any such copy of such an offer, the Special Limited Partner shall
send notice to the General Partners that the Special Limited
Partner desires that the Partnership accept such offer, then the
General Partners shall be required to accept such offer on behalf
of the Partnership and proceed with all deliberate speed to close
such transaction unless otherwise instructed by the Special
Limited Partner at any point prior to the closing of such
transaction. To the extent, if any, that the Special Limited
Partner shall determine, in its discretion, that the General
Partners are not proceeding appropriately with respect to any
such offer or closing, each Partner hereby grants to the Special
Limited Partner an irrevocable (to the extent permitted by law)
power of attorney coupled with an interest to execute and deliver
any and all documents and instruments on behalf of the
Partnership and any Partner as the Special Limited Partner may
deem to be necessary or appropriate in order to effect the
acceptance of and/or closing pursuant to any such offer in such a
manner as the Special Limited Partner shall, in its discretion,
determine to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than
ten percent (10%) of the then outstanding Limited Partner
Interests may call meetings of the Partnership for any matters
for which the Limited Partners may vote as set forth in this
Agreement. A list of the names and addresses of all Limited
Partners shall be maintained as part of the books and records of
the Partnership and shall be made available upon request to any
Limited Partner or his representative at his cost. Upon receipt
of a written request either in person or by certified mail
stating the purpose(s) of the meeting, the General Partners shall
provide all Limited Partners within ten (10) days after receipt
of said request, written notice (either in person or by certified
mail) of a meeting and the purpose of such meeting to be held on
a date not less then fifteen (15) nor more than sixty (60) days
after receipt of said request, at a time convenient to the
Limited Partners. All meetings shall be held at the principal
office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of
$10 shall be paid in full in cash on the Admission Date. The
Investment Limited Partner's Capital Contribution shall be paid
in cash installments (the "Installments"), as follows:
(1) $288,705 (the "First Installment") on the latest of (i)
the Admission Date, (ii) Tax Credit Set-Aside, (iii) Permanent
Mortgage Commitment, or (iv) Phase I Compliance;
(2) $75,216 (the "Second Installment") on the latest of (i)
the Completion Date, (ii) Cost Certification, (iii) State
Designation, (iv) receipt of an updated title insurance policy
and survey satisfactory to the Investment Limited Partner
(3) $75,215 (the "Third Installment") on the latest of (i)
the Initial 100% Occupancy Date, (ii) Permanent Mortgage
Commencement, or (iii) the Breakeven Point; and
(4) $5,000 (the "Fourth Installment") on receipt of a tax
return and an audited financial statement for the year in which
Breakeven occurred;
provided, however, that the General Partners shall give the
Investment Limited Partner not less than twenty-one (21) days'
written notice prior to the due date of each Installment
subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner to pay
each Installment is conditioned upon delivery by the General
Partners to the Investment Limited Partner of a written
certificate (the "Payment Certificate") stating that as of the
date of such certificate (i) all the conditions to the payment of
such Installment have been satisfied and (ii) all representations
and warranties of the General Partners contained in this
Agreement are true and correct. Except as provided in the final
sentence of this Section 5.1(b), acceptance by the Partnership of
any Installment shall constitute a confirmation that, as of the
date of payment, all such conditions are satisfied and all such
representations and warranties are true and correct. The
obligation of the Investment Limited Partner to pay the First
Installment is also conditioned upon delivery by the General
Partners to the Investment Limited Partner of both (i) a legal
opinion of independent counsel to the Partnership, which opinion
must be satisfactory to the Investment Limited Partner as to
form, content and identity of counsel and (ii) a photocopy of an
owner's title insurance policy, or an endorsement thereto, issued
to the Partnership with respect to the Apartment Complex with an
effective date on or after the Admission Date, in an insured
amount not less than $1,727,022 from a title insurance company
reasonably satisfactory to the Investment Limited Partner and
evidencing the Partnership's ownership of the Apartment Complex
subject only to such exclusions, exceptions, conditions and
stipulations as shall be acceptable to the Investment Limited
Partner, in its sole discretion. The obligation of the Investment
Limited Partner to pay the Second Installment is also conditioned
upon the receipt by the Investment Limited Partner or its counsel
of any documents requested by either of them in connection with
the Partnership. The General Partner agrees to use best efforts
to provide any such documents within five days of request. In no
event shall any Installment become due until all of the
conditions for all of the Installments listed prior to the
Installment in question in Section 5.1(a) shall have been
satisfied and all of such prior Installments shall have become
due.
(c) The Payment Certificate for each Installment shall be
dated and delivered not less than ten (10) nor more than thirty
(30) days prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise
be due, any statement required to be made in the Payment
Certificate for such Installment cannot be truthfully made, the
General Partners shall notify the Investment Limited Partner of
the reason why such statement would be untrue if made, and the
Investment Limited Partner shall not be required to pay such
Installment; provided, however, that if (i) any such statement
can subsequently be truth fully made and (ii) the Investment
Limited Partner shall not have irrevocably lost, in the good
faith judgment of the Investment General Partner, any material
tax or other benefits hereunder, then the Investment Limited
Partner shall pay such Installment to the Partnership thirty (30)
days after delivery by the General Partners to the Investment
Limited Partner of the Payment Certificate together with an
explanation of the manner in which each such statement had become
true.
(e) If with respect to any year all or a portion of which
occurs during the 60-month period commencing on the later of (i)
the Admission Date or (ii) the date on which the first building
in the Apartment Complex is placed in service for the purposes of
Section 42 of the Code (a "Reduction Year") the Actual Credit is
or was less than the Projected Credit, then the General Partners
shall pay to the Investment Limited Partner the Reduction Amount.
The Reduction Amount shall be equal to the sum of (A) the excess
of the Projected Credit for such year over the Actual Credit for
such year multiplied by .759 plus (B) the amount of any
recapture, interest or penalty payable by the limited partners
and/or the holders of beneficial assignee certificates of the
Investment Limited Partner as a result of such shortfall,
assuming that each limited partner and/or each holder of a
beneficial assignee certificate in the Investment Limited Partner
used all of the Tax Credits allocated to him in the year of
allocation and that such Person was subject to interest at the
rate set forth in Section 6621(a)(2) of the Code and to the
penalty for understatement of tax set forth in Section 6662(d) of
the Code. The Auditors shall make their determination of the
amount of the Actual Credit with respect to each Reduction Year
within thirty (30) days following the end of such year. The
Investment Limited Partner shall be eligible to be paid a
Reduction Amount as hereinabove described with respect to each
Reduction Year. Any Reduction Amount shall, at the option of the
Investment Limited Partner, either (i) first be applied to the
Installment next due to be paid by the Investment Limited
Partner, with any portion of such Reduction Amount in excess of
the amount of such Installment then being applied to succeeding
Installments, provided, that if no further Installments remain to
be paid or if the Reduction Amount shall exceed the sum of the
amounts of the remaining Installments, then the entire Reduction
Amount or the balance of the Reduction Amount, as the case may
be, shall be paid by the General Partners to the Investment
Limited Partner promptly after demand is made therefor, as a
payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event or (ii) be paid in its
entirety by the General Partners to the Investment Limited
Partner promptly after demand is made therefor, as a payment of
damages for breach of warranty, regardless of the reason for the
occurrence of such event.
(f) In the event that, for any reason, at any time after
the end of the year during which there occurs the sixty (60)-
month anniversary of the later of (i) the Admission Date or (ii)
the date on which the first building in the Apartment Complex is
placed in service for the purposes of Section 42 of the Code, the
amount of the Actual Credit shall be less than the Projected
Credit with respect to any fiscal year of the Partnership (such
difference being hereinafter referred to as a "Credit
Shortfall"), the Investment Limited Partner shall be treated as
having made a constructive advance to the Partnership with
respect to such year (a "Credit Recovery Loan"), which shall be
deemed to have been made on January 1 of such year in an amount
equal to the sum of (i) the Credit Shortfall for such year plus
(ii) the amount of any recapture, interest or penalty payable by
the limited partners and/or the holders of beneficial assignee
certificates of the Investment Limited Partner as a result of the
Credit Shortfall for such year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the
Investment Limited Partner used all of the Tax Credits allocated
to him in the year of allocation and that each such Person was
subject to interest at the rate set forth in Section 6621(a)(s)
of the Code and to the penalty for understatement of tax set
forth in Section 6662(d) of the Code. Credit Recovery Loans
shall be deemed to bear simple (not compounded) interest from the
respective dates on which such principal advances shall have been
deemed to have been made under this Section 5.1(f) at 9% per
annum. Credit Recovery Loans shall be payable by the Partnership
as provided in Section 10.2(b), Clause Fourth.
(g) In the event that (i) by May 1, 2000, the Limited
Partners shall not have received a written certification of the
Auditors in a form and in substance satisfactory for the purpose
of achieving Cost Certification and indicating that the product
of the Apartment Complex's Eligible Basis and its Applicable
Percentage is such that the Apartment Complex will be eligible to
receive Tax Credit in an annual amount of at least $67,300, or
(ii) at any time after the Completion Date the product of the
Apartment Complex's Eligible Basis and its Applicable Percentage
is determined by the Auditors, the Tax Accountants or the Service
to be such that the Apartment Complex will not be eligible to
receive Tax Credit in an annual dollar amount of at least
$67,300, then (a) the General Partners shall pay to the
Investment Limited Partner an amount equal to 99.99% of the sum
of (A) the difference between (i) $67,300 and (ii) the total
amount of Tax Credit allocated and available to the Partnership
(the "Credit Shortage") and (B) the product of (i) the Credit
Shortage and (ii) 7.59 and (b) the Projected Credit for each
year shall thereafter be redefined to mean 99.99% of the total
amount of Tax Credit actually so allocated and available to the
Partnership for such year (the "Revised Projected Credit"). Any
amount payable by the General Partners to the Investment Limited
Partner pursuant to this Section 5.1(g) shall, at the option of
the Investment Limited Partner, either (i) be applied first to
the Installment, if any, next due to be paid by the Investment
Limited Partner, and any balance of such amount payable by the
General Partners in excess of the amount of such Installment
shall be applied to succeeding Installments, if any, provided
that if such amount payable by the General Partners exceeds the
sum of the remaining Installments, if any, then an amount equal
to the amount of such excess shall be paid by the General
Partners to the Investment Limited Partner promptly after demand
is made therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event, or
(ii) be paid in its entirety by the General Partners to the
Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. If (i) all 48 apartment units in the
Apartment Complex shall not have been placed in service by
February 1, 2000, (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) or
(ii) by April 1, 2000 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) less
than 48 apartment units in the Apartment Complex shall have been
occupied by tenants meeting the terms of the Minimum Set-Aside
Test under executed leases which shall have received any
necessary Agency or Lender approvals at rental levels meeting the
requirements of the Rent Restriction Test, or (iii) Permanent
Mortgage Commencement shall not have occurred prior to May 1,
2000, (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner), or (iv) State
Designation shall not have occurred by May 1, 2000, (or any later
date fixed by the General Partner with the Consent of the
Investment Limited Partner), and by said date the General
Partners shall not have made any payment as described in the last
sentence of Section 5.1(g) or, if the Investment Limited Partner
shall have elected to have all or a portion of any payment under
Section 5.1(g) applied toward future Installment obligations of
the Investment Limited Partner, amendments to this Agreement and,
if applicable, to the Certificate shall not have been adopted
and, in the case of the Certificate, if applicable, filed in the
Filing Office, reflecting such event, or (v) the Partnership
shall fail to meet the Minimum Set-Aside Test or the Rent
Restriction Test by the close of the first year of the Credit
Period and/or fails to continue to meet either of those Tests at
any time during the sixty (60)-month period commencing on such
date or (vi) prior to Permanent Mortgage Commencement, (a)
foreclosure proceedings shall have commenced under any Mortgage
and such proceedings shall not have been dismissed within thirty
(30) days, or (b) any of the commitments of FmHA to provide the
Permanent Mortgage and/or any subsidy financing shall be
terminated or withdrawn and not reinstated or replaced within
sixty (60) days with terms equally or more favorable to the
Investment Limited Partner or terms for which the Consent of the
Investment Limited Partner and (if required) the approval of FmHA
shall have been obtained, or (vii) if (assuming the buildings
constituting the Apartment Complex are not placed in service by
December 31, 1998) by January 15, 1999, (or any later date fixed
by the General Partners with the Consent of the Investment
Limited Partner), the Investment Limited Partner shall not have
received, in form and substance satisfactory to the Investment
Limited Partner, the certification of the Auditors that as of a
date no later than December 31, 1998, the Partnership had
incurred capitalizable costs with respect to the Apartment
Complex of at least ten percent (10%) of the Partnership's
reasonably expected basis in the Apartment Complex as of December
31, 2000 so that each building in the Apartment Complex is a
"qualified building" for the purposes of Section 42 (h)(1)(E)(ii)
of the Code, or (vii) if at any time it shall be determined by
the Service or by the Tax Accountants that as of December 31,
1998 the Partnership had not incurred capitalizable costs with
respect to the Apartment Complex of at least ten percent (10%) of
the Partnership's reasonably expected basis in the Apartment
Complex as of December 31, 2000, or (ix) if by May 1, 2000, (or
any later date fixed by the General Partners with the Consent of
the Investment Limited Partner) Cost Certification shall not have
occurred, or (x) if by (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) the
Breakeven Point shall not have been achieved, or (xii) if by
Admission (or any later date fixed by the General Partners with
the Consent of the Investment Limited Partner) the Partnership
shall not have received from the duly authorized agency of the
State, a "carryover allocation" of Tax Credit pursuant to Section
42(h)(1)(E) of the Code in an annual dollar amount of not less
than $67,300, then the General Partners shall, within five (5)
days of the occurrence thereof, send to the Investment Limited
Partner and the Special Limited Partner notice of such event and
of the General Partners' obligation to repurchase the Interests
of the Investment Limited Partner and the Special Limited Partner
by paying to the Investment Limited Partner and the Special
Limited Partner an amount (the "Repurchase Amount") equal to each
such Partner's Invested Amount minus the amount, if any, of such
Partner's Capital Contribution which shall not yet have been paid
(or deemed to have been paid) to the Partnership plus the amount
of any third party costs, including, but not limited to,
attorney's fees incurred by or on behalf of such Partner in
implementing this Section 5.2(a) in the event the Investment
Limited Partner and/or the Special Limited Partner requires such
a repurchase. If either the Special Limited Partner or the
Investment Limited Partner elects to require a repurchase of its
Interest and the payment to it of an amount equal to its
Repurchase Amount, it shall send notice thereof to the
Partnership within thirty (30) days after the mailing date of the
General Partners' notice, or at any time after the occurrence of
any of the foregoing if the General Partners shall not have sent
such a notice thereof, and the General Partners shall within ten
(10) days after the Partnership receives any such notice from a
Partner requiring the purchase of its Interest repurchase the
Interest of such Partner and the Special Limited Partner by
paying to each such Partner an amount equal to its Repurchase
Amount.
(b) Lender Disapproval. If FmHA shall disapprove, or fail
to give any required approval of, the Investment Limited Partner
and/or the Special Limited Partner as a Limited Partner hereunder
within one hundred eighty (180) days of the Admission Date, then
the Partner being disapproved or not approved shall, effective as
of such time or such later time as may be selected by the Partner
being disapproved or not approved (or such other time as may be
specified by FmHA in its disapproval), at the option of the
Partner being disapproved or not approved (if not directed by
FmHA to withdraw), cease to be a Limited Partner. The General
Partners shall, within ten (10) days of the effective date of
such cessation, pay to the Partner being disapproved or not
approved an amount equal to its Invested Amount minus the amount,
if any, of such Partner's Capital Contribution which shall not
yet have been paid (or deemed to have been paid) to the
Partnership plus the amount of any third party costs, including,
but not limited to attorney's fees, incurred by or on behalf of
such Partner in implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon receipt by the
Investment Limited Partner and/or the Special Limited Partner of
the amount due to it pursuant to either Section 5.2(a) or Section
5.2(b), the Interest of such Partner shall terminate, and the
General Partners shall indemnify and hold harmless such Partner
from any losses, damages, and liabilities to which such Partner
(as a result of its participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited
Partner shall have the right to irrevocably waive its right to
have its Interest repurchased pursuant to any clause or clauses
of Section 5.2(a), or any portion thereof, at any time during
which any of such rights shall be in effect. Such a waiver shall
be exercised by delivery to the General Partners of a written
notice stating that the rights being waived pursuant to any
specified clause or clauses of Section 5.2(a), or any specified
portion thereof, are thereby waived from that date forward.
(e) Additional General Partner. If the General Partners
shall fail to make on the due date therefor any payment required
under Section 5.2(a) or Section 5.2(b), time being of the
essence, at any time thereafter the Special Limited Partner shall
have the option, exercisable in its sole discretion, to cause
itself or its designee to be admitted as an additional General
Partner, receiving from the pre-existing General Partners,
proportionally out of their Interests, in consideration of $10, a
one percent (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
or its designee as an additional General Partner, each of the
General Partners hereby agrees that all of its rights and powers
hereunder as a General Partner shall automatically be irrevocably
delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each
Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to take any action and to
execute, deliver and file or record any and all documents and
instruments on behalf of such Partner and the Partnership as the
Special Limited partner may deem necessary or appropriate in
order to effectuate the provisions of this Section 5.2(e) and to
allow the additional General Partner to manage the business of
the Partnership. The admission of the Special Limited Partner or
its designee as an additional General Partner shall not relieve
any other General Partner of any of its economic obligations
hereunder, and each other General Partner shall fully indemnify
and hold harmless the additional General Partner against any and
all losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner.
ARTICLE VI
Rights, Powers and Duties of Managing General Partner
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3, and all other
provisions of this Agreement, the General Partners for, in the
name and on behalf of the Partnership, are hereby authorized to
do the following in furtherance of the purposes of the
Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any
real or personal property;
(2) To construct, rehabilitate, operate, maintain, finance
and improve, and to own, sell, convey, assign, mortgage or lease
any real estate and any personal property;
(3) To borrow money and issue evidences of indebtedness and
to secure the same by mortgage, pledge or other lien on the
Apartment Complex or any other assets of the Partnership;
(4) To execute the Permanent Mortgage, 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
Permanent Mortgage or any other financing affecting the Apartment
Complex;
(6) To employ the Management Agent (which may be an
Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To employ their respective Affiliates to perform
services for, or sell goods to, the partnership;
(8) To execute contracts with FmHA, the State or any
subdivision or agency thereof or any other government agency to
make apartments or tenants in the Apartment Complex eligible for
any public-subsidy program;
(9) To execute leases of some or all of the apartment units
of the Apartment Complex to a public housing authority and/or to
a non-profit corporation, cooperative or other non-profit Entity;
and
(10) To enter into any kind of activity and to perform and
carry out contracts of any kind which may be lawfully carried on
or performed by a partnership and to file all certificates and
documents which may be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partners shall have no authority to perform any act in
violation of applicable law, FmHA or other government
regulations, requirements of any Lender, or the Project
Documents. In the event of any conflict between the terms of this
Agreement and any applicable FmHA or other government regulations
or requirements of any Lender, the terms of such regulations or
requirements shall govern. Neither shall the General Partners
have any authority to do any of the following acts without the
Consent of the Investment Limited Partner and the prior written
consent of the Special Limited Partner:
(1) To borrow in excess of $10,000 in the aggregate at any
one time outstanding on the general credit of the Partnership,
except borrowings constituting Subordinated Loans or the Working
Capital Loan;
(2) To borrow from the Partnership or commingle Partnership
funds with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the Apartment Complex or its use or which are
at a cost in excess of $10,000 in a single Partnership fiscal
year, except (a) replacements and remodeling in the ordinary
course of business or under emergency conditions or (b)
construction paid for from insurance proceeds;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) Following Permanent Mortgage Commencement, to increase,
decrease (except through the fifty-year amortization provided for
in the Permanent Mortgage Commencement), modify the terms of or
refinance the Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such that
the Apartment Complex would not meet the requirements of the
Minimum Set-Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the
Partnership;
(8) To terminate any agreement with FmHA;
(9) To cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect to
the Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state
bankruptcy, insolvency or similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Partnership or for any substantial
part of the Partnership's business or property, or to cause the
Partnership to consent to any such decree, relief, order or
appointment initiated by any Person other than the Partnership;
(10) To amend the Construction Contract, except for change
orders approved by the Lender;
(11) To pledge or assign any of the Capital Contribution of
the Investment Limited Partner or the proceeds thereof; or
(12) To do any act required to be approved or ratified by
all limited partners under the Uniform Act.
(b) In the event that any General Partner violates any
provision of Section 6.2(a), the Special Limited Partner, in its
sole discretion, may cause itself or its designee to be admitted
as an additional General Partner without any further action by
any other Partner. Upon any such admission of an additional
General Partner, each pre-existing General Partner shall be
deemed to have assigned proportionally to the additional General
Partner, automatically and without further action, such portion
of its General Partner interest so that the additional General
Partner shall receive not less than one-hundreth of one percent
(0.01%) interest in the profits, losses, tax credits and
distributions of the Partnership in consideration of $1.00 and
any other consideration which may be agreed upon. An additional
General Partner so admitted shall automatically become the
Managing General Partner and be irrevocably delegated all of the
power and authority of all of the General Partners pursuant to
Section 6.13. Any such additional General Partner shall have the
right to withdraw as a General Partner at any time, leaving the
pre-existing General Partners once again as the only General
Partners, the provisions of Article VII notwithstanding. Each
Partner hereby grants to the Special Limited Partner a special
power of attorney, irrevocable to the extent permitted by law and
coupled with an interest, to amend the Certificate and this
Agreement and to do anything else which, in the view of the
Special Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 6.2(b) or to enable any
additional General Partner admitted pursuant to this Section
6.2(b) to manage the business of the Partnership. The admission
of an additional General Partner shall not relieve any other
General Partner of any of its economic obligations hereunder, and
each other General Partner shall fully indemnify and hold
harmless the additional General Partner from and against any and
all losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner.
(c) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Apartment Complex.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any
salary or other direct or indirect compensation for any services
or goods provided in connection with the Partnership or the
Apartment Complex, except as may be specifically provided in
Section 6.12 and Article XI or as to which the prior written
consent of the Special Limited Partner shall have been obtained
to the precise terms thereof prior to the commencement of such
services or the provision of such goods. Any Partner may engage
independently or with others in other business ventures of every
nature and description including the ownership, operation,
management, syndication and development of competing real estate;
neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or
profits derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General
Partners shall have the exclusive right to control the business
of the Partnership. The Investment Limited Partner shall have no
right to take part in the management or control of the business
of the Partnership or to transact any business in the name of the
Partnership. No provision of this Agreement which makes the
Consent of the Investment Limited Partner a condition for the
effectiveness of an action taken by the General Partners is
intended, and no such provision shall be construed, to give the
Investment Limited Partner any participation in the control of
the Partnership business. Each of the Special Limited Partner
and the Investment Limited Partner hereby consents to the
exercise by the General Partners of the powers conferred on them
by law and this Agreement, and the General Partners agree to
exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the provisions of
this Section 6.4 be invoked by any General Partner or by any
other Person as an impediment to the ability of either the
Investment Limited Partner or the Special Limited Partner to take
any action hereunder. All Partners hereby agree that Intervest
Partners Corporation shall serve as the "Tax Matters Partner."
In the case of litigation, the Tax Matters Partner is required to
file suit in the United States Tax Court unless the Consent of
the Investment Limited Partner is obtained to file suit in the
United States Claims Court or the United States District Court.
Nothing herein shall be construed to restrict the Partnership
from engaging the Auditors to assist the Tax Matters Partner in
discharging its duties hereunder.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the
Partnership to the best of their ability, shall use their best
efforts to carry out the purpose of the Partnership, and shall
devote to the Partnership such time as may be necessary for the
proper performance of their duties and the business of the
Partnership. The General Partners shall promptly take all action
which may be necessary or appropriate for the proper development,
maintenance and operation of the Apartment Complex in accordance
with the provisions of this Agreement, the Project Documents and
applicable laws and regulations including, without limitation,
funding the Construction and Development Fee to the extent
Capital Contributions are insufficient. The General Partners are
responsible for the management and operation of the Partnership,
including the oversight of the rent-up and operational stages of
the Apartment Complex.
(b) The General Partners shall use their best efforts to
cause the Partnership to generate Cash Flow for distribution to
the Partners at the maximum realizable level in view of (i) any
applicable FmHA and other regulations, (ii) the Minimum Set-Aside
Test and (iii) the Rent Restriction Test, and, if necessary, the
General Partners shall also use their best efforts to obtain
approvals and implementation of appropriate adjustments in the
rental schedule of the Apartment Complex.
(c) The General Partners shall cause the Partnership to
obtain and keep in force, during the term of the Partnership,
comprehensive casualty insurance, including, but not limited to,
fire and other risks generally included under "extended coverage"
policies, workmen's compensation and public liability insurance
in favor of the Partnership (i) with such companies and in such
amounts as shall be satisfactory to FmHA, or, if the Apartment
Complex is no longer subject to FmHA regulation or requirements,
as shall be customary for apartment complexes similar to the
Apartment Complex and (ii) in amounts which shall be (A) no less
than those amounts which are customary in the area for apartment
complexes similar to the Apartment Complex, (B) no less than such
amounts as may be reasonably requested by the Investment Limited
Partner and/or the Special Limited Partner from time to time, and
(C) in any event, sufficient to prevent the Partnership from
becoming a co-insurer under any such policies. No deductibles on
such policies may exceed $5,000. The Partnership's fire and
other casualty insurance shall be in an amount at least equal to
the full replacement value of the Apartment Complex. The General
Partner shall cause the Partnership and all Partners to be named
as additional insured parties on a combined single limit bodily
injury and property damage liability insurance policy in the
amount of not less than $6,000,000 (of which up to $5,000,000 may
be provided under an umbrella policy). Through the Completion
Date, or such later date as may be required by FmHA, the General
Partners shall also cause the Partnership to obtain and keep in
force a builder's risk policy in favor of the Partnership in an
amount not less than the greater of (i) the full replacement
value of the Apartment Complex (excluding the value of the
underlying land, the site utilities and the foundations) or (ii)
such other amount as shall be required by FmHA. Throughout the
term of the Partnership, the General Partners shall provide
copies of all such policies (or binders) to the Investment
Limited Partner promptly after their receipt thereof. Upon the
request of the Investment Limited Partner to the General
Partners, the General Partners shall cause the applicable insurer
to name the Investment Limited Partner as an "additional insured"
on each Partnership insurance policy.
(d) The obligations of the General Partners hereunder shall
be the joint and several obligations of each General Partner.
Except as otherwise provided in Sections 4.5(b) and 7.1, such
obligations shall survive any Withdrawal of a General Partner
from the Partnership.
(e)(1) As required by FmHA and/or the Authority, the General
Partners shall establish and maintain reasonable reserves to
provide for working capital needs, improvements, replacements and
any other contingencies of the Partnership. At a minimum, the
General Partners shall cause the Partnership to annually deposit
$12,350 from its Cash Flow into replacement reserves until fully
funded at $123,500; to the extent that Cash Flow (as determined
before deduction of this reserve deposit) for any year shall be
insufficient to make such deposit in full, the General Partners
shall fund such shortfall from their own funds as a Subordinated
Loan.
(e)(2) The General Partners have established a Operating
Defecit Escrow Fund in the amount of $40,000, pursuant to a
certain Operating Defecit Escrow Fund Agreement by and between
the Partnership and Intervest Partners Corporation. Funds in the
Operating Defecit Escrow Fund shall be dispersed pursuant to the
terms of the Operating Defecit Escrow Fund Agreement.
(e)(3) The General Partners have established a Social
Services Escrow Fund in the amount of $15,000, pursuant to a
certain Social Services Escrow Agreement by and between the
Partnership and The New Life Ministry, Inc. Funds in the Social
Services Escrow Fund shall be dispersed pursuant to the terms of
the Social Services Escrow Agreement.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be admitted if
he, she or it has not first agreed to be bound by this Agreement
(and assume the obligations of a General Partner hereunder) and
by the Project Documents to the same extent and under the same
terms as the other General Partners.
(g) The General Partners shall take all actions necessary to
ensure that the Investment Limited Partner receives the full
amount of the Projected Credit, including, without limitation,
the rental of apartments to appropriate tenants and the filing of
annual certifications as may be required. In this regard, the
General Partners shall, inter alia, cause (i) the Partnership to
satisfy all requirements imposed from time to time under the Code
with respect to rental levels and occupancy by qualified tenants
by the close of the first year of the Credit Period and
throughout the Compliance Period so as to permit the Partnership
to be entitled to the Tax Credit throughout the Compliance Period
so as to permit the Partnership to be entitled to the maximum
available Tax Credit, (ii) the Partnership to comply with all
State Tax Credit monitoring procedures, (iii) all dwelling units
in the Apartment Complex to be leased for periods of not less
than six months to persons satisfying the Rent Restriction Test,
(iv) the Partnership to make all appropriate Tax Credit elections
in a timely fashion, and (v) all rental units in the Apartment
Complex to be of equal quality with comparable amenities
available to low-income tenants on a comparable basis without
separate fees.
(h) On or before the Admission Date, the General Partners
shall provide to the Investment Limited Partner either (i) an
appraisal of the Apartment Complex prepared by a competent
independent appraiser or (ii) completed FmHA 1924-13 (estimate
and certificate of actual cost) and 1930-7 (statement of budget,
income and expense) or HUD project cost and budget analysis on
Form 2264, or any successor FmHA or HUD form, any comparable form
of a state or other governmental agency, including any applicable
Tax Credit allocation agency, setting forth estimates with
respect to construction and mortgage financing costs and initial
rental income and operating expense figures for the Apartment
Complex.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations pertaining
thereto) or dispose of any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a
General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor
indirectly transport or arrange for the transport of any
Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any
General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or
from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, any Affiliate of a
General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General Partner's
receipt of any notice to such effect from any Federal, state, or
other governmental authority; and (z) upon any General Partner's
obtaining knowledge of any incurrence of any expense or loss by
any such governmental authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for
which expense or loss a lien may be imposed on the Apartment
Complex.
(j) The General Partners shall promptly request in writing
of FmHA that FmHA cause the Investment Limited Partner to be
named as an "interested party" in the Permanent Mortgage
documents, so that FmHA will notify the Investment Limited
Partner 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 Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State
and has complied with all filing requirements necessary for its
existence and to preserve the limited liability of the Investment
Limited Partner and the Special Limited Partner.
(2) No event or proceeding has occurred or is pending or
threatened which would (a) materially adversely affect the
Partnership or its properties, or (b) materially adversely affect
the ability of the General Partners or any of their Affiliates to
perform their respective obligations hereunder or under any other
agreement with respect to the Apartment Complex, other than legal
proceedings which have been bonded against without recourse to
Partnership assets in such manner as to stay the effect of the
proceedings or otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation, the
following: (x) legal actions or proceedings before any court,
commission, administrative body or other governmental authority
having jurisdiction over the zoning applicable to the Apartment
Complex; (y) labor disputes; and (z) acts of any governmental
authority.
(3) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default) has
occurred and is continuing under this Agreement or under any
material provision of the Project Documents, and the same are in
full force and effect.
(4) No Partner or Related Person bears the economic risk of
loss with respect to the Permanent Mortgage. No General Partner
has, either on its own behalf or on behalf of the Partnership,
incurred any financial responsibility with respect to the
Partnership prior to the Admission Date, other than as disclosed
in writing to the Investment Limited Partner prior to the
Admission Date.
(5) The Apartment Complex is being or has been rehabilitated
in a timely manner in conformity with the Project Documents.
There is no violation by the Partnership or the General Partners
of any zoning, environmental or similar regulation applicable to
the Apartment Complex which could have a material adverse effect
thereon, and the Partnership has complied with all applicable
municipal and other laws, ordinances and regulations relating to
such construction and use of the Apartment Complex. All
appropriate public utilities, including, but not limited to,
water, electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will be
available and operating properly for each unit in the Apartment
Complex at the time of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple
title to the Apartment Complex, subject to no material liens,
charges or encumbrances other than those which (a) are both
permitted by the Project Documents and are noted or excepted in
the title insurance policy submitted to the Investment Limited
Partner as a precondition of its funding the First Installment,
as endorsed through the Admission Date, and (b) do not materially
interfere with use of the Apartment Complex (or any part thereof)
for its intended purpose or have a material adverse effect on the
value of the Apartment Complex.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation have been
or will be duly authorized by all necessary corporate or other
action, and the consummation of any such transactions with or on
behalf of the Partnership will not constitute a breach or
violation of, or a default under, the charter or by-laws of such
Affiliate or any agreement by which such Affiliate or any of its
properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") has been duly organized, is validly existing and
in good standing under the laws of its state of incorporation and
has all requisite corporate power to be a General Partner and to
perform its duties and obligations as contemplated by this
Agreement and the Project Documents. Neither the execution and
delivery by any Corporation of this Agreement nor the performance
of any of the actions of any Corporation contemplated hereby has
constituted or will constitute a violation of (a) the articles of
organization or by-laws of such Corporation, (b) any agreement by
which such Corporation is bound or to which any of its property
or assets is subject, or (c) any law, administrative regulation
or court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of the FmHA Loan Agreement, including,
but not necessarily limited to, any account for replacement
reserves, are currently funded to the levels required by FmHA.
(11) If the only General Partner(s) are one or more
corporations, then the General Partner(s) have a net worth which
satisfies the 89-12 Requirements.
(12) All payments and expenses required to be made or
incurred in order to complete construction of the Apartment
Complex in conformity with the Project Documents, to fund any
reserves hereunder or under any other Project Document required
to be funded at or prior to the later of the Admission Date or
Permanent Mortgage Commencement, to satisfy all requirements
under the Project Documents and/or which form the basis for
determining the principal sum of the Permanent Mortgage and to
pay the Construction and Development Fee have been or will be
paid or provided for utilizing only (a) the Capital Contribution
of the Investment Limited Partner, (b) the Capital Contributions
of the General Partners in the amounts set forth on Schedule A as
of the Admission Date, (c) 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 FmHA), (d) any insurance proceeds and (e) the
funds furnished by the General Partners pursuant to Sections
6.5(a) and 6.11(a).
(13) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is
$14,019 for 1999; $67,293 per annum for the years 2000 through
2008 (inclusive); and $53,274 for 2009.
(14) The Apartment Complex is being developed in a manner
which satisfies and shall continue to satisfy, all restrictions,
including tenant income and rent restrictions, applicable to
projects generating Tax Credits.
(15) No General Partner, Affiliate of a General Partner or
Person for whose conduct any General Partner is or was
responsible has ever: (i) owned, occupied, or operated a Site or
Vessel on which any Hazardous Material was or is stored,
transported, or disposed of, except if such storage, transport or
disposition was and is at all times in compliance with all laws,
ordinances, and regulations pertaining thereto; (ii) directly or
indirectly transported, or arranged for transport, of any
Hazardous Material (except if such transport was or is at all
times in compliance with all laws, ordinances and regulations
pertaining thereto); (iii) caused or was legally responsible for
any release or threat of release of any Hazardous Material; (iv)
received notification from any Federal, state or other
governmental authority of (x) any potential, known, or threat of
release of any Hazardous Material from the Apartment Complex or
any other Site or Vessel owned, occupied, or operated by any
General Partner, by any Affiliate of a General Partner, or any
Person for whose conduct any General Partner is or was
responsible or whose liability may result in a lien on the
Apartment Complex; or (y) the incurrence of any expense or loss
by any such governmental authority or by any other Person in
connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from the
Apartment Complex or any such Site or Vessel.
(16) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on, transported, or
disposed of on the land comprising the Apartment Complex, except
to the extent any such storage, transport or disposition was at
all times in compliance with all laws, ordinances, and
regulations pertaining thereto.
(17) The Apartment Complex is being developed and will be
rented in a manner which satisfies and shall continue to satisfy
all restrictions, including tenant income and rent restrictions,
applicable to projects generating Tax Credit.
(18) No building which constitutes any part of the Apartment
Complex was last placed in service for any purpose within ten
years of the date such building was purchased by the Partnership,
the General Partners, or any of them, or any Affiliate of any
General Partner.
(19) No building which constitutes any part of the Apartment
Complex has ever been placed into service by any General Partner,
or any them, or any Person related to the General Partners or any
of them, within the meaning of Section 42 of the Code.
(20) No building which constitutes any part of the Apartment
Complex has received an allocation of low-income housing tax
credit for which the fifteen year compliance period is still in
effect.
(21) Within the ten years prior to the Partnership's
acquisition of the Apartment Complex, no rehabilitation work has
been performed, on any building which constitutes any part of the
Apartment Complex, the cost for which was greater than 25% of
such building's adjusted basis.
(22) The total cost of rehabilitation expenses, as that term
is defined in Section 42 of the Code, incurred during any 24
month period with respect to each building constituting any part
of the Apartment Complex was equal to, or greater than, the
greater of (a) ten percent (10%) of such building's unadjusted
basis, or $3,000 per low-income housing unit in such building.
(23) The Partnership has fulfilled all requirements set
forth in Section 42 of the Code for each building to qualify for
the acquisition and rehabilitation tax credits as set forth in
said Section.
(24) On or before the Admission date, the General Partners
shall have made capital contributions in the aggregate amount of
$100.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at
any time bear the Economic Risk of Loss for the payment of any
portion of any Mortgage, and the General Partners shall not
permit any other Partner or any Related Person to bear the
Economic Risk of Loss for the payment of any portion of any
Mortgage.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any
loss suffered by the Partnership which arises out of any action
or inaction of any General Partner or Affiliate thereof if such
General Partner or Affiliate thereof in good faith determined
that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute
negligence or misconduct of such General Partner or Affiliate
thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership, provided
that all of the following conditions are met: (i) such General
Partner has determined, in good faith, that the course of conduct
which caused the loss, judgment, liability, expense or amount
paid in settlement was in the best interests of the Partnership;
and (ii) such loss, judgment, liability, expense or amount paid
in settlement was not the result of negligence or misconduct on
the part of the General Partner or Affiliate thereof; and (iii)
such indemnification or agreement to hold harmless is recoverable
only out of the assets of the Partnership, and not from the
Limited Partners.
(c) Notwithstanding the above, no General Partner or any
Affiliate thereof performing services for the Partnership or any
broker-dealer shall be indemnified for any losses, liabilities or
expenses arising from or out of an alleged violation of Federal
or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving securities
laws violations as to the particular indemnitee and, the court
approves the indemnification of such litigation costs, (ii) such
claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee
and, the court approves the indemnification of such litigation
costs or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and the
court finds that indemnification of the settlement and related
costs should be made. In any claim for indemnification for
Federal or state securities law violations, the party seeking
indemnification shall, prior to seeking court approval for such
indemnification, place before the court the positions of the
Securities and Exchange Commission, the Mississippi Securities
Division, and any other applicable state securities administrator
with respect to the issue of indemnification for securities law
violations.
(d) The Partnership shall not incur the cost of the portion
of any insurance, other than public liability insurance, which
insures any party against any liability as to which such party is
herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of the General
Partner under this Section 6.8 only if the loss involves activity
in which such Affiliates acted in the capacity of a General
Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on behalf
of the Partnership who (i) directly or indirectly controls, is
controlled by or is under common control with a General Partner;
(ii) owns or controls ten percent (10%) or more of the
outstanding voting securities of a General Partner; (iii) is an
officer, director, partner or trustee of a General Partner; or
(iv) if a General Partner is an officer, director, partner or
trustee, is any company for which such General Partner acts in
any such capacity.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partners will indemnify and hold the
Partnership and the Limited Partners harmless from and against
any and all losses, damages and liabilities which the Partnership
or any Limited Partner may incur by reason of the (a) past,
present or future actions or omissions of the General Partner or
any of their Affiliates, or (b) any liabilities to which either
the Partnership or the Apartment Complex is subject; provided,
however, that the foregoing indemnification shall not apply to
(i) any Mortgage or (ii) necessary contractual obligations
incurred pursuant to FmHA requirements in connection with the
operation of the Apartment Complex in the ordinary course of
business.
(b) Notwithstanding the foregoing, no General Partner shall
be liable to a Limited Partner or the Partnership for any act or
omission for which the Partnership is required to indemnify such
General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold
the Investment Limited Partner harmless from and against any
claim brought or threatened against the Investment Limited
Partner or loss (as well as from any and all attorneys' fees and
expenses incurred in connection with any such claim or loss) on
account of the presence of any Hazardous Material at the
Apartment Complex. Any claim or loss described in the
immediately preceding sentence may be defended, compromised,
settled, or pursued by the Investment Limited Partner with
counsel of the Investment Limited Partners' selection, but at the
expense of the General Partners. Notwithstanding anything else
set forth herein, this indemnification shall survive the
withdrawal of any General Partner and/or the termination of this
Agreement.
6.10 Operating Defecits
Subject to the prior written consent of any Agency (if such
consent shall be required under applicable Agency regulations),
the General Partner shall be obligated from the later to occur of
(i) Permanent Mortgage Commencement or (ii) the Admission Date to
advance funds to meet operating expenses and debt service of the
Partnership which exceed operating income available for the
payment thereof. The General Partner shall be obligated for a
period of thirty-six (36) months, commencing upon Breakeven, to
advance funds up to a maximum amount outstanding each year equal
to $50,000. In the event that the General Partner shall fail to
make any such advance as aforesaid, the Partnership shall utilize
amounts (the "Applied Fees") otherwise payable to the General
Partner or Affiliates thereof under Section 6.12 to meet the
obligations of the General Partner pursuant to this Section 6.10.
Such Applied Fees shall also constitute payment and satisfaction
of the corresponding amounts payable to the General Partner or
Affiliates thereof under Section 6.12 and/or Article X, with the
proceeds thereof being applied to such obligations, and the
obligation of the Partnership to make such installment payments
to the General Partner or the Affiliates thereof pursuant to
Section 6.12 and/or Article X being deemed satisfied to the
extent thereof and (b) the Special Limited Partner shall have the
option, exercisable in its sole discretion, to cause it or one or
more of its designees to be admitted to the Partnership as
additional General Partner(s). An additional General Partner so
admitted shall automatically, without the need for any further
action by any Partner, become the Managing General Partner and be
delegated all of the power and authority of all of the General
Partners pursuant to Section 6.13, and each Partner hereby grants
to any such additional General Partner a power of attorney,
coupled with an interest and irrevocable to the extent permitted
by law, to execute and deliver any and all instruments and
documents which it believes to be necessary or appropriate in
order to accomplish the purposes of this Section 6.10 and to
manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General
Partner of any of its obligations hereunder, and each other
General Partner shall fully indemnify and hold harmless each
additional General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in settlement
of any claims sustained in connection with its capacity as a
General Partner. For the purpose of this Section 6.10, all
expenses shall be paid on a sixty (60)-day current basis.
Moreover, the General Partners may in their discretion at any
time advance funds to the Partnership to pay operating expenses
and/or debt service of the Partnership in order to facilitate the
Partnership's compliance with the Rent Restriction Test. All
advances pursuant to this Section 6.10 (including any Applied
Fees) shall be Subordinated Loans repayable without interest in
accordance with the provisions of Article X. The form and
provisions of all Subordinated Loans shall conform to any
applicable rules and regulations.
6.11 Obligation to Complete the Rehabilitation of the Apartment
Complex
(a) The General Partners shall complete the construction of
the Apartment Complex substantially in accordance with the plans
and specifications approved by FmHA 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 shall
cause all necessary certificates of occupancy for all apartment
units in the Apartment Complex to be obtained, all in accordance
with the Project Documents. If the proceeds of the Permanent
Mortgage, the net rental income, if any, of the Apartment Complex
generated prior to the later of Permanent Mortgage Commencement
or the Admission Date and which is permitted by FmHA to be
utilized for any of the purposes hereinafter set forth, the
Capital Contribution of the Investment Limited Partner, the
Capital Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, and any insurance
proceeds arising out of casualties prior to the later of
Permanent Mortgage Commencement or the Admission Date as
available from time to time are insufficient to (i) acquire and
complete the construction of the Apartment Complex and satisfy
all other obligations, all as provided in the first sentence of
this Section 6.11(a), (ii) make the special distributions to the
General Partners described in Section 10.2(c), (iii) pay the
Construction and Development Fee, (iv) arrive at Permanent
Mortgage Commencement in conformity with the Project Documents,
(v) discharge all Partnership liabilities and obligations arising
out of any casualty giving rise to any such insurance proceeds,
and (vi) provide for all other payments and expenses required to
be made or incurred through the later of Permanent Mortgage
Commencement or the Admission Date, including the funding of any
reserves required hereunder or under any other Project Document,
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 FmHA, be reimbursed at or prior to the later of
Permanent Mortgage Commencement or the Admission Date only out of
the proceeds designated in this sentence available from time to
time after payment of all costs described in this sentence. Any
amounts not reimbursed through the later of Permanent Mortgage
Commencement or Admission Date only out of the proceeds of the
Capital Contribution of the Investment Limited Partner as
provided in Section 5.1 shall not be reimbursable or otherwise
change the Interest of any Person in the Partnership but shall be
borne by the General Partners; provided, however, that,
notwithstanding the foregoing, to the extent any such amounts
represent items which are properly included in the Partnership's
Qualified Basis and result in an increase in the amount of Tax
Credit allocated and available to the Partnership over and above
the amount of Tax Credit required in order to achieve State
Designation ("Includable Items"), the General Partners shall make
an additional Capital Contribution in the amount of the
Includable Items and the Partnership shall utilize the proceeds
of such additional Capital Contribution to pay the Includable
Items. In the event that the General Partners shall fail to fund
any such deficiency as required by this Section 6.11(a), an
amount not in excess of the next installment of the Construction
and Development Fee due to the General Partners or any of their
Affiliates under Section 6.12 or any other provision hereof shall
be applied by the Partnership to meet such obligation of the
General Partners, and, to the extent there may still be a
deficiency, any amounts otherwise payable as the Annual
Partnership Management Fee or distributable to the General
Partners pursuant to Article X shall be so applied. Any such
application of funds as described in the immediately preceding
sentence shall constitute a payment of the amount of the Fee or
such other item which such funds had been earmarked to pay, and
the obligation of the General Partners to advance such amount
under this Section 6.11(a) shall be satisfied to the extent of
such application.
(b) The completion of the Apartment Complex shall be secured
by a completion bond in an amount at least equal to the full
amount of the construction contract for the Apartment Complex or
by other security satisfactory to the Investment Limited Partner,
which other security may include, but shall not be limited to,
the following:
(i) a written guaranty of completion by a Person, supported
by financial statements demonstrating sufficient net worth or
adequately collateralized by other real or personal properties or
other Persons' guarantees; and/or
(ii) a retention of a reasonable portion of the Capital
Contribution of the Investment Limited Partner and/or fees to the
General Partner as a potential offset in the event the General
Partners do not perform in accordance with this Agreement.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the Managing General
Partner a non-cumulative fee (the "Annual Partnership Management
Fee") commencing in 1999 for their services in connection with
the administration of the day to day business of the Partnership
in the amount of $1,400. The Annual Partnership Management Fee
for each fiscal year of the Partnership shall be payable from
Cash Flow in the manner and priority set forth in Section 10.2(a)
to the extent Cash Flow is available therefor for such year.
(b) In consideration of their consultation, advice and other
services in connection with the construction and development of
the Apartment Complex and as consideration for the assignment
described in Section 6.14, the Partnership shall pay to the
General Partners (or their designee) a construction and
development fee (the "Construction and Development Fee") in the
principal amount of $36,800 which fee shall be earned in full as
to each building in the Apartment Complex as of the date such
building is completed. The Construction and Development Fee
shall be payable $31,800 from the proceeds of the Third
Installment and $5,000 from the proceeds of the Fourth
Installment Any portion of the Construction and Development Fee
which shall not have been paid after payment of the Installments
shall be payable from cash flow as set forth in Section 10.2, or
as provided elsewhere in this Agreement, with the deferred
developer's fee being paid in full by the tenth year of
operations. Any amount remaining to be paid at that time will be
paid in full by the General Partner, and will be considered a
capital contribution to the Partnership as of the date which is
six months after it shall have been earned shall accrue interest
at the Applicable Federal Rate in effect at the time earned from
the date earned through the date of payment; any such interest
shall be payable in accordance with the provisions of Article X.
(c) Upon Admission, the Partnership shall pay $18,000 into
an Asset Management Fee Escrow Account from the proceeds of the
First Installment. The Partnership shall pay to BCCLP or an
Affiliate thereof a fee (the "Asset Management Fee") commencing
in 1999 for its services in connection with the Partnership's
accounting matters relating to the Investment Limited Partner and
assisting with the preparation of tax returns and the reports
required by Section 12.7 in the amount of $1,500. The Asset
Management Fee shall be payable from the Asset Management Fee
Escrow Account.
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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 and
amendments thereto; or
(5) As to any act or failure to act by the Partnership or as
to any other matter whatsoever involving the Partnership or any
Partner.
6.14 Assignment to Partnership
The General Partners hereby transfer and assign to the
partnership all of their right, title, and interest in and to the
Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts
with architects, supervising architects, engineers and
contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings
heretofore prepared or obtained in connection with the Apartment
Complex; (iii) all governmental commitments and approvals
obtained, and applications therefor, including, but not limited
to, those relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with respect to
any agreements with FmHA; and (vi) any other work product related
to the Apartment Complex and/or the Partnership.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the Partnership
(other than by reason of death or adjudication of incompetence or
insanity) or sell, assign or encumber its Interest without the
Consent of the Investment Limited Partner and all the other
General Partners except that if the Special Limited Partner or a
designee thereof becomes a General Partner pursuant to Section
4.5(b), Section 5.2(e), Section 6.2 (b) or Section 6.10, it shall
not require the consent of any other General Partner to transfer
all or any portion of its interest as a General Partner, other
than as may be required under the Uniform Act. In the event of
any Withdrawal by a General Partner in violation of this Section
7.1, such General Partner, in addition to being subject to any
and all other legal remedies which may be pursued by the
Partners, shall forfeit to the Special Limited Partner or its
designee, such General Partner's Interest and all unpaid fees
from the Partnership and shall remain liable for all of the
Withdrawing 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 shall be one of
more corporations (or partnerships with corporations as sole
general partners), they shall be obligated to have a net worth
which satisfies the 89-12 Requirements. If the General Partners
shall at any time fail to meet the requirements of this Section
7.1(b), then they shall be deemed to have withdrawn from the
Partnership in violation of the provisions of this Section 7.1
and shall be subject to the provisions of Section 7.1(a).
Notwithstanding the foregoing, the provisions of this Section
7.1(b) shall not apply to the Special Limited Partner or its
designee in the event it becomes the sole General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining
General Partners shall have the right and obligation to continue
the business of the Partnership employing its assets and name,
all as contemplated by the 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
Partner or its designee of such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is
no remaining General Partner, the Investment Limited Partner and
the Special Limited Partner may elect to reconstitute the
Partnership and continue the business of the Partnership for the
balance of the term specified in Section 2.4 by selecting a
successor General Partner. If the Investment Limited Partner and
the Special Limited Partner elect to reconstitute the Partnership
pursuant to this Section 7.3 and admit the designated successor
General Partner, the relationship among the then Partners shall
be governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in
Section 4.5(b), the Withdrawing General Partner hereby covenants
and agrees to transfer to the remaining General Partners or to a
successor General Partner selected in accordance with Section
7.3, as the case may be, such portion of the Withdrawing General
Partner's Interest as such remaining or successor General
Partners may designate, such transfer to be made in consideration
of the payment by the transferee of either the agreed value of
such Interest or, if such value is not agreed to, the fair market
value of such Interest as determined by a committee of three
qualified real estate appraisers, one selected by the Withdrawing
General Partner, one selected by the transferee and a third
selected by the other two. The portion of the Withdrawing
General Partner's Interest designated to be transferred in
accordance with the provisions of this Section 7.4 shall be
sufficient to ensure the continued treatment of the Partnership
as a partnership under the Code and as a limited partnership
under the Uniform Act, and, for the purposes of Article X, shall
be deemed to be effective as of the date of Withdrawal, but the
Partnership shall not make any distributions to the designated
transferee until the transfer shall have been made. Any holder
of any portion of the Interest of a Withdrawing General Partner
which is not designated to be transferred to the remaining or
successor General Partners pursuant to the provisions of this
Section 7.4 shall become an Additional Limited Partner but (i)
with the same share of the profits, losses, tax credits, Cash
Flow and other distributions to which the holder of such Interest
was entitled when held as a General Partner Interest, and (ii)
shall not participate in the votes or Consents of the Investment
Limited Partner hereunder. The admission of any successor or
additional General Partner shall be subject to the consent of
FmHA (if required) and the Consent of the Investment Limited
Partner.
7.5 Admission of Additional General Partner(s) under
Certain Circumstances
In the event each of the General Partners is a corporation
and the General Partners at any time, or from time to time, fail
to have a net worth which satisfies the 89-12 Requirements, the
Special Limited Partner or its designee(s) shall be admitted (and
each hereby agrees to be admitted), automatically and without
further action by them or any Partner, as additional General
Partner(s), notwithstanding any other provision of this
Agreement. The General Partners hereby agree to take all action
necessary to implement this Section 7.5. Further, the General
Partners agree in such event to give prompt written notice
thereof to each Lender and to FmHA. If any Lender or FmHA
rejects the admission of any additional General Partner so
admitted as a General Partner, then such additional General
Partner shall withdraw as a General Partner promptly after an
additional General Partner acceptable to each Lender and FmHA is
admitted to the Partnership. Simultaneously with such admission,
each of the previously admitted General Partners shall be deemed
to have assigned proportionally to the additional General
Partner(s), automatically and without further action, such
portion of its General Partner Interest so that the additional
General Partner shall receive not less than a one percent (1%)
interest (or such greater percentage as may be required either
(i) in the opinion of the Tax Accountants, to assure the
partnership status of the Partnership for Federal income tax
purposes or (ii) by FmHA) in the profits, losses, tax credits and
distributions of the Partnership in consideration of $1.00 and
any other consideration which may be agreed upon. An additional
General Partner so admitted shall automatically become the
Managing General Partner and be irrevocably delegated all of the
power and authority of all of the General Partners pursuant to
Section 6.13. Each such additional General Partner shall remain
a General Partner until a Lender or FmHA shall object thereto in
writing or until such time as, in the opinion of the Tax
Accountants, the Partnership would continue to be treated as a
partnership for Federal income tax purposes notwithstanding their
Withdrawal. At such time, each such additional General Partner
may, at its option, then Withdraw without the approval of the
Limited Partners upon reassignment of its entire Interest to the
remaining General Partners. Each partner hereby grants to the
Special Limited Partner a special power of attorney, irrevocable
to the extent permitted by law and coupled with an interest, to
amend the Certificate and this Agreement and to do anything else
which, in the view of the Special Limited Partner, may be
necessary or appropriate to accomplish the purposes of this
Section 7.5 or to manage the business of the Partnership. The
admission of an additional General Partner shall not relieve any
other General Partner of any of its economic obligations
hereunder, and each other General Partner shall fully indemnify
and hold harmless the additional General Partner from and against
any and all losses, judgments liabilities, expenses and amounts
paid in settlement of any claims sustained in connection with its
capacity as a General Partner.
7.6 Withdrawal of Sole General Partner
Notwithstanding any other provision of this Article VII to
the contrary, and except as provided in Section 4.5, in the event
that (a) any sole General Partner shall Withdraw from the
Partnership and (b) neither the Special Limited Partner nor the
Investment Limited Partner or its designee becomes the successor
General Partner hereunder, J. Stephen Nail and Rodney H. Dudley
hereby agree, subject only to the approval of FmHA, if required,
to make a Capital Contribution of $100 to the Partnership and
become the successor General Partner hereunder. The Investment
Limited Partner and the Special Limited Partner hereby consent to
J. Stephen Nail and Rodney H. Dudley becoming the successor
General Partners subject only to (i) compliance, at the time of
succession, with the representations set forth in Sections 6.6(8)
and 6.6(11), to the extent applicable, and (ii) the stockholders,
officers and directors of Intervest Development Corporation at
that time consisting of only J. Stephen Nail and Rodney Dudley
and the Investment Limited Partner and the Special Limited
Partner hereby agree to execute and deliver any amendments to
this Agreement and/or the Certificate which are necessary to
carry out the provisions of this Section 7.6. The entire
Interest of the Withdrawing General Partner as a General Partner
hereunder shall be automatically transferred to the successor
General Partner hereunder immediately upon the admission of the
successor General Partner to the Partnership.
In the event that J. Stephen Nail and Rodney H. Dudley are
unable to meet the requirements set forth in the immediately
preceding paragraph to the extent applicable, the selection of a
successor General Partner shall be made in accordance with
Section 7.3.
Further, the General Partners agree in such event to give
prompt written notice thereof to FmHA. If FmHA rejects the
admission of J. Stephen Nail and/or Rodney H. Dudley as a General
Partner, then J. Stephen Nail and/or Rodney H. Dudley shall
withdraw as a General Partner promptly after an additional
General Partner acceptable to FmHA is admitted to the
Partnership. J. Stephen Nail and Rodney H. Dudley hereby agree
to use best efforts to obtain such an additional General Partner
acceptable to FmHA.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of
descent and distribution) or Section 8.1(b), no Limited Partner
may assign all or any part of its Interest without the written
consent of the General Partners, the giving or withholding of
which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the General
Partners, may assign to any Person all or any portion of the
economic benefits of the ownership of its Interest; provided,
however, that such assignment shall not be binding on the
Partnership until there shall have been filed with the
Partnership by registered mail certified copies of an executed
and acknowledged assignment and the written acceptance by the
assignee of all the terms and provisions of this Agreement; if
such assignment and acceptance are not so filed, the Partnership
need not recognize such assignment for any purpose. An assignee
of a Limited Partner who does not become a Substituted Limited
Partner shall have, and shall only have, the right to receive the
share of allocations and distributions of the Partnership to
which the assigning Limited Partner would have been entitled with
respect to the Interest (or portion thereof) so assigned if no
such assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges
of a Limited Partner. Where the assignee does not become a
Substituted Limited Partner, the Partnership shall recognize such
assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this Article
VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to Section
8.3, the General Partners may, however, in their sole discretion,
permit an assignee to become a Substituted Limited Partner. The
consent of the General Partners to an assignment of a Limited
Partner Interest under Section 8.1 shall not, in and of itself,
constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General
Partners to signify the agreement of such Substituted Limited
Partner to be bound by all the provisions of this Agreement and
shall pay the Partnership's reasonable legal fees and filing
costs in connection with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would
violate Section 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partners may, in addition to any other
requirement they may impose, require as a condition of any
Disposition that the transferor (i) assume all costs incurred by
the Partnership in connection therewith and (ii) furnish the
Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition in
contravention of any of the provisions of this Section 8.3 shall
be void and ineffectual and shall not bind or be recognized by
the Partnership.
ARTICLE IX
Borrowings
9.1 Borrowings
All Partnership borrowings shall be subject to the terms of
this Agreement, including, but not limited to, the restrictions
of Section 6.2, and may be made from any source, including
Partners and their Affiliates. Any Partnership borrowings from
any Partner shall be subject to the prior written consent of FmHA
(if required under applicable FmHA 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 9.1 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. Funds
provided by the General Partners to the Partnership pursuant to
Section 6.11(a) shall not constitute borrowings for the purposes
of this Section 9.1 or for any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions
and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4, for each
Partnership fiscal year or portion thereof, all profits, tax-
exempt income, losses, non-deductible non-capitalizable
expenditures, and tax credits incurred or accrued on or after the
Commencement Date, other than those arising from a Capital
Transaction, shall be allocated 99.99% to the Investment Limited
Partner, .007% to the Managing General Partner and .003% to the
Administrative General Partner.
(b) Except as otherwise specifically provided in this
Article, all profits and losses arising from a Capital
Transaction shall be allocated to the Partners as follows:
As to profits:
First, that portion of profits (including any profits
treated as ordinary income for Federal income tax purposes) shall
be allocated to the Partners who have negative Capital Account
balances in proportion to the amounts of such balances, provided
that no profits shall be allocated to a Partner under this Clause
First to increase any such Partner's Capital Account above zero;
Second, profits in excess of the amounts allocated under
Clause First above shall be allocated to the General Partners in
an amount equal to the amount of cash distributed or available to
be distributed to them pursuant to Clause Second of Section
10.2(b) as to the particular Capital Transaction;
Third, profits in excess of the amounts allocated under
Clauses First and Second above shall be allocated to the
Investment Limited Partner in an amount equal to the amount of
cash required to pay to the Investment Limited Partner the full
amount (including interest) of the Credit Recovery Loans;
Fourth, profits in excess of the amounts allocated under
Clauses First, Second and Third above shall be allocated (i) to
the Investment Limited Partner in an amount equal to the sum of
(a) its Invested Amount plus (b) the full amount (including
interest) of any Credit Recovery Loans and (ii) to each other
Limited Partner in an amount equal to the amount of its
respective Invested Amount, reduced (but not below zero) in the
case of each Limited Partner (whether under clause (i) or clause
(ii) by the sum of (A) the total amount of all prior cash made to
such Limited Partner pursuant to Section 10.2(b), Clause Fifth
plus (B) the positive balance in the Capital Account of such
Limited Partner prior to the allocation made pursuant to this
Clause Fourth;
Fifth, profits in excess of the amounts allocated under
Clauses First, Second, Third and Fourth above shall be allocated
to each General Partner in the amount of its respective paid-in
Capital Contribution, reduced (but not below zero) by the sum of
(i) the total amount of distributions previously made to it
pursuant to Section 10.2(b), Clause Eighth after the application
of the first paragraph of Section 10.2(b) to credit amounts
distributed under Clause Second of Section 10.2(b) against
amounts distributable under Clause Eighth of Section 10.2(b) (and
not including the amounts so credited) plus (ii) the positive
balance in such General Partner's respective Capital Accounts
prior to the allocations made pursuant to this Clause Fifth; and
Sixth, profits in excess of the amounts allocated under
Clauses First, Second, Third, Fourth, and Fifth above shall be
allocated to the Partners in the same percentages as cash is
distributed under Clause Tenth of Section 10.2(b) after the
application of the final sentence of Section 10.2(b) to credit
amounts distributed under Clause Second of Section 10.2(b)
against amounts distributable under said Clause Tenth (and not
including the amounts so credited.)
As to losses:
First, an amount of losses shall be allocated to the
Partners to the extent and in such proportions as shall be
necessary such that, after giving effect thereto, the respective
balances in all Partners' Capital Accounts shall be in the ratio
of 99.99% for the Investment Limited Partner, .007% to the
Managing General Partner and .003% to the Administrative General
Partner;
Second, an amount of losses shall be allocated to the
Partners until the balance in each Partner's Capital Account
equals the amount of such Partner's Capital Contribution (after
the allocation under Clause First above);
Third, an amount of losses shall be allocated to the
Partners to the extent of and in proportion to such Partners'
Capital Account balances (after the allocations under Clauses
First and Second above); and
Fourth, any remaining amount of losses after the allocations
under Clauses First, Second and Third above shall be allocated to
the Partners in accordance with the manner in which they bear the
Economic Risk of Loss; provided, however, that no Partner bears
an Economic Risk of Loss, then any remaining losses shall be
allocated 99.99% to the Investment Limited Partner, .007% to the
Managing General Partner and .003% to the Administrative General
Partner.
(c) Notwithstanding the foregoing provisions of Sections
10.1(a) and 10.1(b), in no event shall any losses be allocated to
the Investment Limited Partner, the Special Limited Partner or
any additional General Partner admitted pursuant to any Section
4.5(b), Section 5.2(e), Section 6.2(b), Section 6.10 or Section
7.5, if and to the extent that such allocation would cause, as of
the end of the Partnership taxable year, the negative balance in
the Investment Limited Partner's Capital Account to exceed such
Partner's share of Partnership Minimum Gain plus such Partner's
share, if any of Partner Non-Recourse Debt Minimum Gain. Any
losses which are not allocated to a Partner by virtue of the
application of this Section 10.1(c) shall be allocated to the
General Partners, excluding any General Partner which shall have
been admitted pursuant to any of Section 4.5(b), Section 5.2(e),
Section 6.2(b), Section 6.10 or Section 7.5. 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 FmHA approval (if required), Cash Flow for each
fiscal year or portion thereof of the Partnership shall be
applied as follows:
First, to the repayment of any Subordinated Loans;
Second, to the payment of any deferred developer's fee as
described in Section 6.12(b).
Third, to the payment of the Annual Partnership Management
Fee attributable to such year;
Fourth, to the payment of the Social Services Fee, as
described in Section 6.12(d), attributable to such year; and
Fifth, the balance thereof, if any, shall be distributed
annually, within seventy-five (75) days after the end of the
fiscal year, as follows: (i) from Admission until the Calendar
Year ending five (5) years from Admission, 90% to the Managing
General Partner, 5% to the Administrative General Partner and 5%
to the Investment Limited Partner and (ii) for all years
thereafter 50% to the Managing General Partner, 20% to the
Administrative General Partner and 30% to the Investment Limited
Partner; provided, however, that during such time as FmHA
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
FmHA regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall
determine from time to time that cash is available for
distribution from a Capital Transaction, such cash shall be
applied or distributed as follows:
First, to the payment of all matured debts and liabilities
of the Partnership (including, but not limited to, all expenses
of the Partnership incident to the Capital Transaction),
excluding (i) debts and liabilities of the Partnership to
Partners or their Affiliates and (ii) all unpaid fees owing to
the General Partners or their Affiliates; and to the
establishment of any reserves which the General Partners and the
Auditors shall deem reasonably necessary for contingent,
unmatured or unforeseen liabilities or obligations of the
Partnership;
Second, if the Permanent Mortgage is in place at the time of
such Capital Transaction of if such Capital Transaction
constitutes a refinancing of the Permanent Mortgage, to the
General Partners in an aggregate amount equal to 5% of the
proceeds remaining after the payment of the items set forth in
Clause First of this Section 10.2(b);
Third, to the payment to the Investment Limited Partner of
the full amount (including interest) of any Credit Recovery
Loans;
Fourth, to the payment to each Limited Partner of an amount
equal to its Invested Amount, in each case minus any prior
distributions made to such Partner under this Clause Fourth, but
never an amount less than zero;
Fifth, to the repayment of any Subordinated Loans;
Sixth, to the repayment of any then-unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them, including,
but not limited to, accrued and unpaid interest on the
Construction and Development Fee and the Annual Partnership
Management Fee for the fiscal year of the Capital Transaction,
but excluding the Working Capital Loan; provided, however, that
any debts or obligations to be repaid to any Limited Partner or
Affiliate thereof pursuant to this Clause Sixth shall be repaid
prior to the repayment of any such debts or obligations to any
General Partner or Affiliate thereof;
Seventh, to the Investment Partnership an amount equal to
the paid-in Capital Contributions;
Eighth, to the repayment to the General Partners of their
paid-in Capital Contributions minus any prior distributions made
to them under this Clause Eighth and under Section 10.2(c), but
never an amount less than zero;
Ninth, to each partner in an amount equal to the positive
balance in his capital account after adjustments pursuant to
Clauses First through Eighth of this Section 10.2(b); and
Tenth, any balance 39.999% to the Investment Limited
Partner, .001% to the Special Limited Partner, 30% to the
Managing General Partner and 30% to the Administrative General
Partner.
Notwithstanding the foregoing, however, for the purpose of
determining the amounts to be distributed under Clauses Seventh
and Ninth for a particular Capital Transaction, any distribution
to the General Partners under Clause Second for such Capital
Transaction shall be credited against and reduce any
distributions which would otherwise be made to the General
Partners under Clauses Eighth and Tenth (with such credit
operating first against Clause Eighth distributions and then
against Clause Tenth distributions); and the amount not
distributed to the General Partners under Clauses Eighth and
Tenth as a result thereof shall be distributed as if it were
additional proceeds of such Capital Transaction. Any proceeds of
a Capital Transaction distributed to the General Partners under
Clause Second which are not currently credited against a
distribution to the General Partners under either of Clause
Eighth or Clause Tenth from such Capital Transaction shall be
applied as additional credits against any distributions to the
General Partners under either Clauses Eighth and Tenth which may
be the result of any future Capital Transactions.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall be
distributed to the Partners in accordance with the positive
balances in their Capital Accounts after taking into account all
Capital Account adjustments for the Partnership taxable year,
including adjustments to Capital Accounts pursuant to Sections
10.1(b) and 10.3(b). In the event that a General Partner or
Additional Limited Partner has a negative balance in its Capital
Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership taxable year in which such
liquidation occurs, such Partner shall pay to the Partnership in
cash an amount equal to the negative balance in such Partner's
Capital Account. Such payment shall be made by the end of such
taxable year (or, if later, within 90 days after the date of such
liquidation) and shall, upon liquidation of the Partnership, be
paid to recourse creditors of the Partnership or distributed to
other Partners in accordance with the positive balances in their
Capital Accounts.
(b) With respect to assets distributed in kind to the
Partners in liquidation or otherwise, (i) any unrealized
appreciation or unrealized depreciation in the values of such
assets shall be deemed to be profits and losses realized by the
Partnership immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be
allocated to the Partners in accordance with Section 10.1(b), and
any property so distributed shall be treated as a distribution of
an amount in cash equal to the excess of such fair market value
over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered. For the purposes
of this Section 10.3(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market
value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of
the Code), and the Partnership's adjusted basis for such assets
as determined under Regulation Section 1.704-1(b). This Section
10.3(b) is merely intended to provide a rule for allocating
unrealized gains and losses upon liquidation or other
distribution event, and nothing contained in this Section 10.3(b)
or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be
selected by the General Partner with the Consent of the
Investment Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
profits, tax exempt income, losses, non-deductible non-
capitalizable expenditures, tax credits and cash distributions
shared by a class of Partners shall be shared by each Partner in
such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of
Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article
X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses from
extraordinary events which are not recovered from insurance or
otherwise (collectively "Recourse Obligations") in respect of any
Partnership taxable year, then the calculation and allocation of
profits and losses shall be adjusted as follows: first, an amount
of deductions attributable to the Recourse Obligations shall be
allocated to the General 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-l(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain,
loss, deduction or credit entering into the computation thereof,
as determined in accordance with the accounting methods followed
by the Partnership and computed in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). Profits and losses for
Federal income tax purposes shall be allocated in the same manner
as set forth in this Article X, except as provided in Section
10.4(b)(iv).
(vi) If there is a net decrease in Partnership Minimum Gain
during a Partnership taxable year, each Partner will be allocated
items of income and gain for such year (and, if necessary,
subsequent years) in 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 this Section 10.4(b)(vi)
shall be in accordance with Treasury Regulation Section 1.704-
2(f). This provision is a "minimum gain chargeback" within the
meaning of Treasury Regulation Section 1.704-2(f) and shall be
construed as such.
(vii) If there is a net decrease in Partner Non-Recourse
Debt Minimum Gain during a Partnership taxable year, then each
Partner with a share of the minimum gain attributable to such
debt at the beginning of such year will be allocated items of
income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Partner's share of the net
decrease in Partner Non-Recourse Debt Minimum Gain chargeback to
the extent that any of the exceptions provided in Treasury
Regulation Section 1.704-2(i)(4) applied consistently with
Treasury Regulation Section 1.704-2(f)(2)-(5) 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 or a Related
Person to such Partner bears the Economic Risk of Loss, then such
Partner shall be allocated items of income and gain in an amount
and manner sufficient to eliminate such negative balance as
quickly as possible. For purposes of this Section 10.4(b)(viii),
a Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
(ix) In the event that any fee payable to the General
Partner or any Affiliate thereof shall instead be determined to
be a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for Federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions from
Capital Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4(b)(vi) or Section 10.4(b)(vii).
(5) Capital Accounts shall be increased by any qualified
income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by allocations of
profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of
profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that the
Partners' Capital Accounts reflect the amounts they would have
reflected if adjustments required by Sections 10.4(b)(vi),
10.4(b)(vii) and 10.4(b)(viii) had not occurred.
10.5 Authority of the General Partners to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items
thereof) shall be determined and allocated in accordance with
this Agreement to the fullest extent permitted by Section 704(b)
of the Code. In order to preserve and protect the determinations
and allocations provided for in this Agreement, the General
Partners are hereby authorized and directed to allocate profits,
tax-exempt income, losses, nondeductible non-capitalizable
expenditures and credits (and items thereof) arising in any year
differently than otherwise provided for in this Agreement to the
extent that allocating profits, tax-exempt income, losses,
nondeductible non-capitalizable expenditures or credits (or any
item thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive
share of profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, or credits (or any item thereof) not
to be permitted by Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder. Any allocation made pursuant
to this Section 10.5 shall be deemed to be a complete substitute
for any allocation otherwise provided for in this Agreement, and
no amendment of this Agreement or approval of any Partner shall
be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partners are authorized to act only
after having been advised in writing by the Tax Accountants that,
under Section 704(b) of the Code, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum
modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the then-
current year or in any preceding year, each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures, and credits (or any
item thereof) is determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of
the Code.
(c) If the General Partners are required by Section 10.5(a)
to make any New Allocation in a manner less favorable to the
Limited Partners than is otherwise provided for herein, then the
General Partners are authorized and directed, only after having
been advised in writing by the Tax Accountants that such an
allocation is permitted by Section 704(b) of the Code, to
allocate profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, and credits (and any item thereof)
arising in later years in such manner so as to bring the
allocations of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures, and credits (and each item
thereof) to the Limited Partners as nearly as possible to the
allocations thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under
Section 10.5(a) and Section 10.5(c) in reliance upon the advice
of the Tax Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partners to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
ARTICLE XI
Management Agent
A. The General Partner shall engage the Management Agent to
manage the Apartment Complex pursuant to the Management
Agreement. The Management Agent shall receive a Management Fee of
those amounts payable from time to time by the Partnership to the
Management Agent for management services in accordance with a
management contract approved by FmHA or, when the Apartment
Complex is not subject to FmHA regulation, in accordance with a
reasonable and competitive fee arrangement. From and after the
Admission Date, the Partnership shall not enter into any
Management Agreement or modify or extend any Management Agreement
unless (i) the General Partners shall have obtained the prior
written consent of the Special Limited Partner to the identity of
the Management Agent and the terms of the Management Agreement or
the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30)
days' notice by the Partnership in the event of any change in the
identity of the General Partners.
B. Notwithstanding the foregoing, however, should the
Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property
management, rent-up or leasing fees shall be paid to the
Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser
of (i) fees competitive in price and terms with those of non-
affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably
be available to the Partnership, or (ii) five percent (5%) of the
gross revenues of the Apartment Complex. No duplicate property
management fees shall be paid to any Person.
C. If (i) the Management Agent is the General Partner or an
Affiliate of the General Partner, and (a) the Apartment Complex
shall be subject to a substantial building code violation which
shall not have been cured within six months after notice from the
applicable governmental agency or department or (b) the
Partnership shall not have Cash Flow of at least $500 during any
year after 1998, or (ii) an Event of Bankruptcy shall occur with
respect to the Management Agent, or (iii) the Management Agent
shall commit willful misconduct or gross negligence in its
conduct of its duties and obligations under the Management
Agreement or (iv) there is any change in the identity of the
General Partners, or (v) the Management Agent is cited by FmHA,
any Tax Credit monitoring or compliance agency of the State or
any other governmental agency for a violation or alleged
violation of any applicable rules, regulations or requirements,
including, but not limited to, non-compliance with the Minimum
Set-Aside Test, the Rent Restriction Test or any other Tax
Credit-related provision, then upon request by the Special
Limited Partner and subject to FmHA approval, if required, the
General Partners must cause the Partnership to promptly terminate
the Management Agreement with the Management Agent and appoint a
new Management Agent selected by the Special Limited Partner,
which new Management Agent shall not be not an Affiliate of the
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 FmHA approval, if required, the
Partnership shall not enter into any future management
arrangement or renew or extend any existing management
arrangement unless such arrangement is terminable without penalty
upon the occurrence of the events described in this Article XI.
D. The General Partners shall have the duty to manage the
Apartment Complex during any period when there is no Management
Agent.
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. The General Partners shall maintain and store all
original tenant files in fire proof cabinets in a secure
location. Microfiche or other similar storage technologies that
are acceptable to the Investment Limited Partner may also be
utilized.
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 FmHA) 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 FmHA or Mortgage requirements, in
interest-bearing accounts or invested in United States Government
obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partners, all tax returns of the Partnership. Prior to the
filing of the Partnership tax returns, and in no event later than
February 20 of each year, the Auditors shall deliver the tax
returns for such year to the Tax Accountants for their review and
comment. If a dispute arises between the Auditors and the Tax
Accountants over the proper preparation of the tax returns and
such dispute cannot be resolved by the Auditors and the Tax
Accountants by March 1 of such year, then the Tax Accountants
shall make the final decision on whether any changes are
necessary. The Partnership shall reimburse BCCLP for all costs
and expenses paid to the Tax Accountants for the aforementioned
services.
(b) The Auditors shall annually review FmHA 19308 reports to
the Partners and audit and certify all annual financial reports
to the Partners, both in accordance with generally accepted
auditing standards.
(c) If the Partnership fails to fulfill any of its
obligations under Section 12.7(a)(i) and/or Section 12.7(a)(ii)
within the time periods set forth therein, at any time thereafter
upon notice from the Special Limited Partner that a change in the
identity of the Auditors is desired, the General Partners, on
behalf of the Partnership, shall promptly terminate the
Partnership's engagement of the Auditors, and the prior written
consent of the Special Limited Partner must be received to the
appointment of replacement Auditors. If no such consent is
received to the appointment of replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to
replace the Auditors, then the Special Limited Partner shall
appoint replacement Auditors of its own choosing, the cost of
which shall be borne by the Partnership as a Partnership expense
as approved by FmHA. All Partners hereby grant to the Special
Limited Partner a special power of attorney, irrevocable to the
extent permitted by law, coupled with an interest, to so appoint
replacement Auditors and to anything else which in the view of
the Special Limited Partner may be necessary or appropriate to
accomplish the purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to
use, so far as permitted by the provisions of the Code,
accelerated cost recovery methods. However, the Partnership may
change to another method of cost recovery if such other method
is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner and the limited partners and/or
holders of beneficial assignee certificates thereof.
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partners in such
manner as will, in the opinion of the Auditors, be most
advantageous to the Investment Limited Partner and the limited
partners and/or holders of beneficial assignee certificates
thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the
Interest of the Investment Limited Partner or a transfer of all
or any part of an interest of a partner and/or holders of
beneficial assignee certificates of the Investment Limited
Partner, the Partnership shall elect, upon the request of the
Investment Limited Partner, pursuant to Section 754 of the Code,
to adjust the basis of the Partnership property. Any adjustments
made pursuant to said Section 754 shall affect only the successor
in interest to the transferring Partner or partner or holder of
beneficial assignee certificate thereof. Each Partner will
furnish the Partnership all information necessary to give effect
to such election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the
calendar year. The books of the Partnership shall be kept on an
accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
fiscal year of the Partnership:
(i) Within sixty (60) days after the end of each fiscal year
of the Partnership, (A) an audited balance sheet as of the end of
such fiscal year, a statement of income, a statement of partners'
equity, and a statement of cash flows, each for the year then
ended, all of which, except the statement of cash flows, shall be
prepared in accordance with generally accepted accounting
principles, and (B) an audited report of the activities of the
Partnership during the period covered by the report. With
respect to any distribution to the Investment Limited Partner,
the report called for shall separately identify distributions
from (1) Cash Flow from operations during the period, (2) Cash
Flow from operations during a prior period which had been held as
reserves, (3) proceeds from disposition of property and
investments, (4) lease payments on net leases with builders and
sellers, (5) reserves from the gross proceeds of the Capital
Contribution of the Investment Limited Partner, (6) borrowed
monies, and (7) transactions outside of the ordinary course of
business with a description thereof.
(ii) Within forty-five (45) days after the end of each
fiscal year of the Partnership, all information relating to the
Partnership and/or the Apartment Complex which is necessary, in
the view of the Tax Accountants, for the preparation of the
Limited Partners' Federal income tax returns.
(iii) Within thirty (30) days after the end of each quarter
of a fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended, which
may be unaudited;
(C) a statement of cash flows for the quarter then ended,
which may be unaudited;
(D) a certification of the General Partners that the
Apartment Complex and its tenants are in compliance with all
applicable federal, state, and local requirements and
regulations;
(E) a low-income housing tax credit monitoring form, a copy
of the rent roll for the Apartment Complex, a statement of income
and expenses, an operating statement and an Occupancy/Rental
Report, all in the form specified by BCCLP;
(F) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities
during the quarter covered by the report and
(b) Within sixty (60) days after the end of each fiscal year
of the Partnership a copy of the annual report to be filed with
the United States Treasury concerning the status of the Apartment
Complex as low-income housing and, if required, a certificate to
the appropriate state agency concerning the same.
(c) Upon the written request of the Investment Limited
Partner for further information with respect to any matter
covered in item (a) or item (b) above, the General Partners shall
furnish such information within thirty (30) days of receipt of
such request.
(d) Prior to October 15 of each year, the Partnership shall
send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the tax credits, profits
and losses of the Partnership for Federal income tax purposes for
the current fiscal year. Such estimate shall be prepared by the
General Partners and the Auditors.
(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 Tax Credit allocations to any Limited Partner,
or
(iv) any Partner has pledged or collateralized its Interest
in the Partnership,
the General Partner shall send the Investment Limited Partner a
detailed report of such event.
(f) After the Admission Date, the Partnership shall send to
the Investment Limited Partner, on or before the tenth day of
each month, the monthly housing credit monitoring form, and
copies of all applicable periodic reports covering the status of
project operations from the previous period, as may be required
by FmHA.
(g) On or before May 1st of each of the Partnership's fiscal
years, the Partnership shall send to the Investment Limited
Partner a report on operations, in the form supplied by BCCLP.
(h) Upon receipt, the Partnership shall send to the
Investment Limited Partner copies of the Form(s) 8609 evidencing
the Tax Credit allocation. Promptly after Permanent Mortgage
Commencement, the General Partners shall send to BCCLP a closing
binder containing photocopies of the fully-executed versions of
all documents signed in connection with the Permanent Mortgage.
The General Partners hereby consent to the relevant FmHA District
Office, as well as any other applicable FmHA office, providing
BCCLP with copies of all material communications between any such
office and the General Partners and/or the Partnership,
including, but not limited to, any notices of default. From and
after any date upon which the General Partners receive notice
from the Investment Limited Partner that the Investment Limited
Partner would like copies of the monthly rent rolls for the
Apartment Complex to be sent to BCCLP, the General Partners shall
send copies of the rent rolls to BCCLP no later than ten (10)
days after the expiration of each month.
(i) If the earlier of (A) the Completion Date or (B) the
date upon which tenants first occupied apartment units in the
Apartment Complex after the rehabilitation of such units shall
have occurred six months or more prior to the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership, then the General Partners shall cause to be prepared
and delivered to the Investment Limited Partner within sixty (60)
days of the Admission Date the following items:
(i) An unaudited statement of income of the Partnership for
the year (or such shorter period as there may be from the date of
the most recent audited statement of income of the Partnership)
ended on the date upon which the Investment Limited Partner
acquired its Interest in the Partnership; and
(ii) An unaudited statement of income of the Partnership for
any fiscal year of the Partnership ending between (A) the earlier
of (1) the Completion Date or (2) the date upon which tenants
first occupied apartment units in the Apartment Complex after the
rehabilitation of such units and (B) the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership.
(j) Within thirty (30) days of the Completion Date, the
General Partners shall prepare, or cause the Auditors to prepare,
and deliver to each Limited Partner a Tax Credit basis worksheet
for each building in the Apartment Complex, all in a form
specified by BCCLP.
(k) By December 1 of each year, the Partnership shall send
to the Investment Limited Partner the Property's operating budget
for the following year.
(l) If the General Partners do not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or Section
12.7(a)(ii) within the time periods set forth therein, the
General Partners may be required by the Investment Limited
Partner to pay as damages the sum of $200 per day (plus interest
at a rate equal to the general base rate of interest established
by The First National Bank of Boston or its successors and
assigns and announced by it as the rate charged by it to its
prime commercial customers on short-term unsecured borrowings as
its "base rate" from time to time in effect plus 3%) to the
Investment Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General
Partners, and failure to so pay shall constitute a material
default of the General Partners hereunder. In addition, if the
General Partners shall so fail to pay, the General Partners and
their Affiliates shall forthwith cease to be entitled to the
Annual Partnership Management Fee, and to the payment of any Cash
Flow or Capital Transaction proceeds to which they may otherwise
be entitled hereunder. Such payments of the Annual Partnership
Management Fee, Cash Flow and Capital Transaction proceeds shall
be restored only upon the payment of such damages in full, and
any amount of such damages not so paid shall be deducted against
payments of the Annual Partnership Management Fee, Cash Flow and
Capital Transaction proceeds otherwise due to the General
Partners or their Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly
to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for
the sale of goods or services or the lending of money to the
Partnership or the General Partners, except for (i) management
services, subject to the restrictions set forth in Article XI.B.,
(ii) loans made by, or guaranteed by, the Investment General
Partner or any of its Affiliates, and (iii) those dealings,
contracts or provision of services described in the Investment
Partnership Agreement or in the Offering Memorandum.
Extraordinary circumstances shall only be presumed to exist where
there is an emergency situation requiring immediate action and
the services required are not immediately available from
unaffiliated parties. All services rendered under such
circumstances must be rendered pursuant to a written contract
which must contain a clause allowing termination without penalty
on sixty (60) days' notice. Goods and services provided under
such circumstances must be provided at the lesser of actual cost
or the price charged for such goods or services by independent
parties.
(c) In the event extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partner nor any of its Affiliates
shall provide such services unless it believes it has an adequate
staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partner. Any such services
must be reasonable for and necessary to the Investment Limited
Partner, actually furnished to the Investment Limited Partner,
and provided at the lower of ten percent (10%) of the
construction contract rate with respect to the Apartment Complex
or ninety percent (90%) of the competitive price charged for such
services by independent parties for comparable goods and services
in the same geographic location (except that in the case of
transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the
lesser of costs or the compensation, price or fee of any other
Person rendering comparable services as aforesaid). Cost of
services as used herein means the pro rata cost of personnel,
including an allocation of overhead directly attributable to such
personnel, based on the amount of time such personnel spent on
such services or other method of allocation acceptable to the
accountants for the Investment Limited Partner.
(d) All services provided by the Investment General Partner
or any Affiliate thereof pursuant to Section 12.8(c) must be
rendered pursuant to the Investment Partnership Agreement or a
written contract which precisely describes the services to be
rendered and all compensation to be paid and shall contain a
clause allowing termination without penalty upon sixty (60) days'
notice to the Investment General Partner by a vote of a majority
in interest of the limited partners and assignees of beneficial
interests in the Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership
to the Investment General Partner or its Affiliates except as
described in the Investment Partnership Agreement or in the
Offering Memorandum.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior
to the proposed date of the Disposition, could, in the opinion of
tax counsel to the Partnership, result in the termination of the
Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the
Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1 shall
be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing
provisions of this Section 13.1, however, the Investment Limited
Partner may waive the provisions of this Section 13.1 at any time
as to a Disposition or series of Dispositions, and in the event
of such a waiver, this Section 13.1 shall have no force or effect
upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner
shall have received any distributions under Article X, the
General Partners shall file an amendment to this Agreement
reducing by the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment
Limited Partner as stated in the last previous amendment to this
Agreement. 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 this Agreement need be filed by the
General Partners if the Certificate is not required to and does
not identify the Limited Partners or their Capital Contributions
in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in
writing and shall be deemed adequately given if actually
delivered or if sent by registered or certified mail, postage
prepaid, to the party for whom such notice is intended at such
party's last address of record on the Partnership books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to
a subdivision in which such words appear unless the context
otherwise requires. The singular shall include the plural, and
vice versa, and each gender (masculine, feminine and neuter)
shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers
to the corresponding Section or Article of this Agreement, unless
specified otherwise. References to Treasury Regulations
(permanent or temporary) or Revenue Procedures shall include any
successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties
hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and
all so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties have not
signed the original or the same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a)
each of the provisions of this Agreement shall be subject to, and
the General Partners covenant to act in accordance with, the
Project Documents; (b) the Project Documents shall govern the
rights and obligations of the Partners, their heirs, executors,
administrators, successors and assigns to the extent expressly
provided therein; (c) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the
possession and control of the Apartment Complex and no right to
collect the rent therefrom shall pass to any Person who is not,
or does not become, bound by the Project Documents and other FmHA
documents in a manner satisfactory to the FmHA; (d) no amendment
to any provision of the Project Documents shall become effective
without the prior written consent of FmHA (if required); and (e)
the affairs of the Partnership shall be subject to FmHA
regulation and no action shall be taken which would require the
consent or approval of FmHA 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 FmHA (if such consent is then required).
No amendment to this Agreement relating to matters governed by
FmHA regulations or requirements shall become effective until the
prior written consent of FmHA (if required) to such amendment
shall have been obtained.
Any conveyance or transfer of title to all or any portion of
the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of FmHA rules and regulations applicable
thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered
separable and (a) if for any reason any provision is determined
to be invalid, such invalidity shall not impair the operation of
or affect those portions of this Agreement which are valid, and
(b) if for any reason any provision would cause the Investment
Limited Partner to be bound by the obligations of the Partnership
(other than the rules and regulations of FmHA and the
requirements of any other Lender), such provision or provisions
shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only
with the Consent of the Investment Limited Partner and the prior
written consent of the Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses
Any and all costs and expenses incurred by the Investment
Limited Partner and/or the Special Limited Partner in connection
with exercising rights and remedies against the General Partners
with respect to this Agreement, including without limitation,
reasonable attorneys' fees, shall be paid by the General Partners
on demand. All amounts due to the Investment Limited Partner
and/or the Special Limited Partner pursuant to this provision
shall bear interest from demand at a rate of 9%.
If any General Partner breaches any provision of this
Agreement, the Investment Limited Partner and/or the Special
Limited Partner may employ an attorney or attorneys to protect
its rights hereunder, and the General Partners shall pay on
demand the reasonable attorneys' fees and expenses incurred by
the Investment Limited Partner and/or the Special Limited
Partner, whether or not a legal action is actually commenced
against any General Partner by reason of such breech. All
amounts due to the Investment Limited Partner and/or the Special
Limited Partner pursuant to this provision shall bear interest
from demand at a rate equal to 9%.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been
admitted to the Partnership as of the Commencement Date for all
purposes of this Agreement, including Article X hereof; provided,
however, that if regulations are issued under the Code or an
amendment to the Code is adopted which would require, in the
opinion of the Auditors, that the Investment Limited Partner be
deemed admitted on a date other than as of the Commencement Date,
then the General Partners shall select a permitted admission date
which is most favorable to the Investment Limited Partner.
REST OF PAGE INTENTIONALLY LEFT BLANK
WITNESS the execution hereof under seal as of the 1st day of
December, 1998.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER: GENERAL PARTNERS:
INTERVEST CORPORATION THE NEW LIFE MINISTRY, INC.
By:/s/Rodney H. Dudley
Rodney H. Dudley By: /s/Nigel H. Cuffie
Vice President Nigel H. Cuffie, its President
INTERVEST PARTNERS CORPORATION
By: /s/Rodney H. Dudley
Rodney H. Dudley, its Vice-President
INVESTMENT LIMITED PARTNER: SPECIAL LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT BCTC 94, Inc.
FUND IV, L.P. ,
a Delaware limited
partnership
By: /s/Bonnie Kate Fox,
By: /s/Boston Capital Associates Attorney-In-Fact
IV, L.P., For John P. Manning,
its general partner its President
By: /s/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 general partner
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the
foregoing Amended and Restated Agreement and Certificate of
Limited Partnership notwithstanding any provision of the
Management Agreement to the contrary.
INTERVEST CORPORATION
By: /s/Rodney Dudley
Rodney Dudley, its Vice-President
GUARANTY
The undersigned unconditionally guarantees the performance
by the General Partner of all of its obligations under Sections
5.1, 5.2, 6.5, 6.10, 6.11(a) and 12.7(l) of the Second Amended
and Restated Agreement and Certificate of Limited Partnership and
hereby waive any right to require that any action be brought
against any other Person or to require that resort be made to any
security prior to enforcement of this guaranty. The obligations
of the undersigned hereunder shall be binding upon the respective
heirs, executors and legal representatives of the undersigned.
Execution of this Agreement by the undersigned is solely for the
purposes of undertaking this guaranty and shall not be deemed to
make the undersigned a partner of the partnership.
/s/Rodney H. Dudley
Rodney H. Dudley, Individually
/s/ J. Stephen Nail
J. Stephen Nail, Individually
STATE OF MS )
) SS.
COUNTY OF HINDS )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named Rodney H.
Dudley, known to me to be the person who executed the foregoing
instrument, and, being duly sworn, acknowledged that the
statements therein are true and that he did sign the same as his
free act and deed.
WITNESS my hand and official seal this 27th day of November, 1998.
/s/Julie H. Holbrook
Notary Public
Julie H. Holbrook
Name (Printed)
My Commission Expires: 7/11/2001
My County of Residence: Hinds
STATE OF MS )
) SS.
COUNTY OF HINDS )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named J. Stephen
Nail, known to me to be the person who executed the foregoing
instrument, and, being duly sworn, acknowledged that the
statements therein are true and that he did sign the same as his
free act and deed.
WITNESS my hand and official seal this 27th day of
November, 1998.
Julie H. Holbrook
Notary Public
Julie H. Holbrook
Name (Printed)
My Commission Expires: 7/11/2001
My County of Residence: HINDS
STATE OF MS )
)SS.
COUNTY OF HINDS )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named Rodney H.
Dudley, known to me to be Vice-President of Intervest Partners
Corporation and Intervest Corporation, who, being duly sworn,
acknowledged that he did sign the foregoing instrument, that the
statements therein contained are true and that the same is the
duly authorized free act and deed of Intervest Partners
Corporation and Intervest Corporation.
WITNESS, my hand and official seal this 27th day of November, 1998.
Julie H. Holbrook
Notary Public
Julie H. Holbrook
Name (Printed)
My Commission Expires: 7/11/2001
My County of Residence: HINDS
STATE OF MS )
)SS.
COUNTY OF HINDS )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named Nigel H.
Cuffie, known to me to be President of The New Life Ministry,
Inc., who, being duly sworn, acknowledged that he did sign the
foregoing instrument, that the statements therein contained are
true and that the same is the duly authorized free act and deed
of The New Life Ministry, Inc.
WITNESS, my hand and official seal this 27th day of November, 1998.
Julie H. Holbrook
Notary Public
Julie H. Holbrook
Name (Printed)
My Commission Expires: 7/11/2001
My County of Residence: HINDS
COMMONWEALTH OF MASSACHUSETTS )
)SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said
County and Commonwealth, personally appeared the above-named
Bonnie Kate Fox, known to me to be attorney-in-fact for John P.
Manning, a general partner of C&M Associates d/b/a Boston Capital
Associates, which is the general partner of Boston Capital
Associates IV, L.P., Boston Capital Associates IV, L.P. being the
general partner of Boston Capital Tax Credit Fund IV, L.P., who,
being duly sworn, acknowledged that she did sign the foregoing
instrument, that the statements therein contained are true and
that the same is the duly authorized free act and deed of Boston
Capital Tax Credit Fund IV, L.P.
WITNESS, my hand and official seal this 7th day of December, 1998.
________________________
Notary Public
________________________
Name (Printed)
My Commission Expires: 6/30/2000
My County of Residence: Essex
COMMONWEALTH OF MASSACHUSETTS )
)SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said
County and Commonwealth, personally appeared the above-named
Bonnie Kate Fox, known to me to be attorney-in-fact for John P.
Manning, President of BCTC 94, Inc., who, being duly sworn,
acknowledged that she did sign the foregoing instrument as her
free act and deed and the free act and deed of BCTC 94, Inc.
WITNESS, my hand and official seal this 7th day of December, 1998.
_______________________
Notary Public
_______________________
Name (Printed)
My Commission Expires: 6/30/2000
My County of Residence: Essex
MERIDIAN HOUSING, L.P.
Schedule A
As of December 1, 1998
General Partner Capital Contributions
The New Life Ministry, Inc. $10
419 South State Street
Jackson, MS 39207
Intervest Partners Corporation $100
5750 I-55 North Frontage Rd.
Jackson, MS 39211
Special
Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution*
Boston Capital Tax $444,136 $288,705
Credit Fund IV, L.P.
c/o Boston Capital
Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
_________________________
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to
adjustment and are due at the times and subject to the conditions
set forth in the Agreement to which this Schedule is attached.
BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
MERIDIAN WEST POINT HOUSING, L.P.
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of DecemberSeptember 1,
19986, by MERIDIAN HOUSING, L.P., a Mississippi limited
partnership (the "Operating Partnership"); The New Life Ministry,
Inc. (the "Administrative General Partner") and Intervest
Partners Corporation (the "Managing General Partner")
(collectively referred to as the "Operating General Partners")
and Intervest Corporation (the "Original Limited Partner") for
the benefit of BOSTON CAPITAL TAX CREDIT FUND IV, L.P., a
Delaware limited partnership (the "Investment Partnership"),
BOSTON CAPITAL ASSOCIATES IV, L.P., a Delaware limited
partnership ("Boston Capital"), PERKINS, SMITH & COHEN, LLP. and
certain other persons or entities described herein.
WHEREAS, the Operating Partnership proposes to admit the
Investment Partnership as a limited partner thereof pursuant to a
Amended and Restated Certificate & Agreement of Limited
Partnership of the Operating Partnership dated as of December 1,
1998 the "Operating Partnership Agreement"), in accordance with
which the Investment Partnership will make substantial capital
contributions to the Operating Partnership;
WHEREAS, the Investment Partnership and Boston Capital have
relied upon certain information and representations described
herein in evaluating the merits of investment by the Investment
Partnership in the Operating Partnership; and
WHEREAS, Perkins, Smith & Cohen, LLP as counsel for the
Investment Partnership, will rely upon such information and
representations in connection with its delivery of certain
opinions with respect to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to
enter into the Operating Partnership Agreement and become a
limited partner of the Operating Partnership, and for $1.00 and
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Operating Partnership, the
Operating General Partner and the Original Limited Partner hereby
agree as follows for the benefit of the Investment Partnership,
Boston Capital, Perkins, Smith & Cohen, LLP and certain other
persons hereinafter described.
1. Representations, Warranties and Covenants of the
Operating Partnership and the Operating General
Partners
The Operating Partnership and the Operating General Partner
jointly and severally represent, warrant and certify to the
Investment Partnership, Boston Capital, and Perkins, Smith &
Cohen, LLP. that, with respect to the Operating Partnership, as
of the date hereof:
1.01 The Operating Partnership is duly organized
and in good standing as a limited partnership pursuant to the
laws of the state of its formation with full power and authority
to own its apartment complex (the "Apartment Complex") and
conduct its business; the Operating Partnership, the Operating
General Partner and the Original Limited Partner have the power
and authority to enter into and perform this Certification and
Agreement; the execution and delivery of this Certification and
Agreement by the Operating Partnership, the Operating General
Partner and the Original Limited Partner have been duly and
validly authorized by all necessary action; the execution and
delivery of this Certification and Agreement, the fulfillment of
its terms and consummation of the transactions contemplated
hereunder do not and will not conflict with or result in a
violation, breach or termination of or constitute a default under
(or would not result in such a conflict, violation, breach,
termination or default with the giving of notice or passage of
time or both) any other agreement, indenture or instrument by
which the Operating Partnership or the Operating General Partner
or Original Limited Partner are bound or any law, regulation,
judgment, decree or order applicable to the Operating Partnership
or the Operating General Partner or the Original Limited Partner
or any of their respective properties; this Certification and
Agreement constitutes the valid and binding agreement of the
Operating Partnership, the Operating General Partner and the
Original Limited Partner, enforceable against each of them in
accordance with its terms.
1.02 The Operating General Partner has delivered
to the Investment Partnership, Boston Capital or their affiliates
all documents and information which would be material to a
prudent investor in deciding whether to invest in the Operating
Partnership. All factual information, including without
limitation the information set forth in Exhibit A hereto,
provided to the Investment Partnership, Boston Capital or their
affiliates either in writing or orally, did not, at the time
given, and does not, on the date hereof, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which
they are made. Since the date of the financial statements for the
Operating General Partner, if any, previously delivered, there
has been no material adverse change in the financial position of
the Operating General Partner. The estimates of occupancy rates,
operating expenses, depreciation and tax credits set forth on
Exhibit A are reasonable in light of the knowledge and experience
of the Operating General Partner.
1.03 As of the date hereof, each of the
representations contained in Exhibit B attached hereto is true,
accurate and complete as to each of the Operating Partnership,
the Operating General Partner and the Original Limited Partner
and as to any of their affiliates, any of their predecessors and
their affiliates' predecessors, any of their directors, officers,
general partners and/or beneficial owners of ten per cent (10%)
or more of any class of their equity securities (beneficial
ownership meaning the power to vote or direct the vote and/or the
power to dispose or direct the disposition of such securities),
as the case may be, and any promoters presently connected with
any of them in any capacity.
1.04 Each of the representations and warranties
contained in the Operating Partnership Agreement is true and
correct in all material respects as of the date hereof.
1.05 Each of the material covenants and agreements
of the Operating Partnership and the Operating General Partner
contained in the Operating Partnership Agreement has been duly
performed to the extent that performance of any covenant or
agreement is required on or prior to the date hereof.
1.06 All conditions to admission of the Investment
Partnership as the investment limited partner of the Operating
Partnership contained in the Operating Partnership Agreement have
been satisfied.
1.07 No material default has occurred and is
continuing under the Operating Partnership Agreement or any of
the Project Documents (as said term is defined in the Operating
Partnership Agreement) for the Operating Partnership.
1.08 The Operating General Partner agrees to take
all actions necessary to claim the Projected Credit, including,
without limitation, the filing of Form(s) 8609 with the Internal
Revenue Service.
1.09 No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
1.10 The Operating Partnership has the sole
responsibility to pay all maintenance and operating costs,
including all taxes levied and all insurance costs, attributable
to the Apartment Complex.
1.11 The Operating Partnership, except to the
extent it is protected by insurance and excluding any risk borne
by lenders, bears the sole risk of loss if the Apartment Complex
is destroyed or condemned or there is a diminution in the value
of the Apartment Complex.
1.12 No person or entity except the Operating
Partnership has the right to any proceeds, after payment of all
indebtedness, from the sale, refinancing, or leasing of the
Apartment Complex.
1.13 No Operating General Partner is related in
any manner to the Investment Partnership, nor is any Operating
General Partner acting as an agent of the Investment Partnership.
1.14 The Apartment Complex contains no substance
known to be hazardous, such as hazardous waste, lead-based paint,
asbestos, methane gas, urea formaldehyde insulation, oil, toxic
substances, underground storage tanks, polychlorinated biphenyls
(PCBs), and radon; the Apartment Complex is not affected by the
presence of oil, toxic substances, or other pollutants that could
be a detriment to the Apartment Complex nor is the Operating
Partnership in violation of any local, state, or federal law or
regulation; and no violation of the Clean Air Act, Clean Water
Act, Resource Conservation and Recovery Act, Toxic Substance
Control Act, Safe Drinking Water Control Act, Comprehensive
Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing.
Neither the Operating Partnership nor the Operating General
Partner or Original Limited Partner have received any notice from
any source whatsoever of the existence of any such hazardous
condition relating to the Apartment Complex or of any violation
of any local, state or federal law or regulation with respect to
the Apartment Complex.
1.15 The fair market value of the Apartment
Complex exceeds the total amount of indebtedness encumbering the
Apartment Complex and is expected to continue to do so throughout
the term of such indebtedness.
2. Indemnification
2.01 The Operating General Partner (for purposes
of this Section 2.01, the "Indemnifying Parties" or,
individually, an "Indemnifying Party") agree to indemnify and
hold harmless the Investment Partnership and Boston Capital (for
purposes of this Section 2.01, the "Indemnified Parties" or,
individually, an "Indemnified Party") and each officer, director,
employee and person, if any, who controls any party against any
losses, claims, damages or liabilities (collectively,
"Liabilities"), joint or several, to which any Indemnified Party
or such officer, director, employee or controlling person may
become subject, insofar as such Liabilities or actions in respect
thereof arise out of or are based upon (i) a breach by such
Indemnifying Party of any of his representations, warranties or
covenants to such Indemnified Party or any such of its officers,
directors, employees or controlling persons under this
Certification and Agreement or (ii) liability under any statute,
regulation, ordinance, or other provision of federal, state, or
local law or any civil action pertaining to the protection of the
environment or otherwise pertaining to public health or employee
health and safety, including, without limitation, protection from
hazardous waste, leadbased paint, asbestos, methane gas, urea
formaldehyde insulation, oil, toxic substance, underground
storage tanks, polychlorinated biphenyls (PCBs), and radon; and
to reimburse each such Indemnified Party and each such officer,
director, employee or controlling person for any legal or other
expenses reasonably incurred by it or them in connection with
investigating or defending against any such Liability or action;
provided, however, that the Indemnifying Party shall not be
required to indemnify any Indemnified Party or any such officer,
director, employee or controlling person for any payment made to
any claimant in settlement of any Liability or action unless such
payment is approved by the Indemnifying Party or by a court
having jurisdiction of the controversy. This indemnity agreement
shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the
termination of any agreement which refers to this indemnity and
shall be in addition to any liability which the Indemnifying
Party may otherwise have.
2.02 No Indemnifying Party shall be liable under
the indemnity agreements contained in Section 2.01 unless the
Indemnified Party shall have notified the Indemnifying Party in
writing within forty-five (45) business days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Indemnified Party or any
such of its officers, directors, employees or controlling
persons, but failure to notify an Indemnifying Party of any such
claim shall not relieve it from any liability which it may have
to the Indemnified Party or any such of its officers, directors,
employees or controlling persons against whom action is brought
otherwise than on account of its indemnity agreement contained in
Section 2.01. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so
elects, in accordance with arrangements satisfactory to the other
Indemnifying Party or parties similarly notified, to assume the
defense thereof, with counsel who shall be satisfactory to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons and any other Indemnified
Parties who are defendants in such action; and after notice from
the Indemnifying Party to such Indemnified Party or any such of
its officers, directors, employees or controlling persons of its
election so to assume the defense thereof and the retaining of
such counsel by the Indemnifying Party, the Indemnifying Party
shall not be liable to such Indemnified Party or any such of its
officers, directors, employees or controlling persons for any
legal or other expenses subsequently incurred by such Indemnified
Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other
than the reasonable costs of investigation.
3. Miscellaneous
3.01 This Certification and Agreement is made
solely for the benefit of the Operating Partnership, the
Operating General Partner, the Original Limited Partner, Boston
Capital, Perkins, Smith & Cohen, LLP, and the Investment
Partnership (and, to the extent provided in Section 2, the
officers, directors, partners, employees and controlling persons
referred to therein), and their respective successors and
assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement.
3.02 This Certification and Agreement may be
executed in several counterparts, each of which shall be deemed
to be an original, all of which together shall constitute one and
the same instrument.
3.03 Terms defined in the Operating Partnership
Agreement and used but not otherwise defined herein shall have
the meanings given to them in the Operating Partnership
Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
OPERATING PARTNERSHIP:
MERIDIAN HOUSING, L.P.
By: The New Life Ministry, Inc.,
Its general partner
By: /s/Nigel H. Cuffie
Nigel H. Cuffie, its duly
authorized President
By: Intervest Partners Corporation,
Its general partner
By: /s/Rodney H. Dudley
Rodney H. Dudley, its duly
authorized Vice-President
OPERATING GENERAL PARTNER:
The New Life Ministry, Inc.
By: /s/ Nigel H. Cuffie
Nigel H. Cuffie, its duly
authorized President
Intervest Partners Corporation
By: /s/ Rodney H. Dudley
Rodney H. Dudley, its duly
authorized Vice-President
ORIGINAL LIMITED PARTNER:
Intervest Corporation,
By: /s/ Rodney H. Dudley
Rodney H. Dudley, its duly
authorized Vice-President
Exhibit A
MERIDIAN HOUSING, L.P.
FACT SHEET
1. Sources and Uses of Funds
A. Sources
Assumed Financing $1,180,629
G.P. Capital $ 100
I.L.P. Capital $ 444,136
TOTAL SOURCES $1,624,865
B. Uses
Building Acquisition Cost $1,058,797
Construction Cost $ 307,315
Land $ 72,000
Soft Costs $ 76,953
Asset Mgmt. Reserve Escrow $ 18,000
Social Services Escrow $ 15,000
Operating Reserve Escrow $ 40,000
Development Fee $ 36,800
TOTAL USES $1,624,865
1. Permanent Financing (Assumed)
A. Lender RECD
B. Mortgage Amount: $1,180,629
C. Loan Agreement: December 9, 1998
D. Assumption Date: December 9, 1998
E. Interest Rate: ________%
F. Term: 36 years
G. Amortization: __ years
2. Eligible Basis: $397,068 (Rehab.)
$1,058,797 (Acquisition)
3. Qualified Basis: $397,068 (Rehab.)
$1,058,797 (Acquisition)
4. Operating General Partner
Capital Contribution: $100
5. Working Capital Loan
Amount: $0
6. Type of Credit: 3.57% (Rehab.)
8.32% (Acquisition)
7. Rent-up Schedule:
25% occupancy as of September 1, 1999
50% occupancy as of October 1, 1999
75% occupancy as of November 1, 1999
100% occupancy as of December 1, 1999
8. Projected Credit to the
Investment Partnership (99.99%) $672,933
A. $14,019 for 1999;
B. $67,293 per annum
for each of the
years 2000 through
2008; and
D. $53,274 for 2009.
9. Total Projected Credit to the
Operating Partnership (100%) $673,000
A. $14,021 for 1999;
B. $67,300 per annum
for each of the years 2000
through 2008; and
D. $53,279 for 2009.
10. Tax Credit Approval:
A. Application:
1. Date: April 15, 1998
2. Amount $68,254
B. Reservation
1. Date: October 1, 1998
2. Amount: $68,254
11. Apartment Complex:
A. Name: Lauderdale County Properties
B. Address: 421 Willow Ridge Drive
Meridian, MS 39301
C. County: Lauderdale
D. Type of Project: Family
12. Area Median Income (1997): $33,700
13. Type of Apartments:
Unit Basic Utility Market
Number Sq. Ft. Rent Allowance Rent
1-Bedroom 12 ___ $240 $75 $354
2-Bedroom 36* ___ $288 $91 $402
* one unit is designted as the Manager's unit and, thus, unrentable.
14. Annual Operating Expenses
(beginning 2001): $95,620
15. Replacement Reserve Account
A. Annual: $12,350
B. Total: $123,500
16. Operating Reserves Escrow $40,000
Social Services Escrow $15,000
Asset Management Fee Escrow $18,000
17. Amount of Annual Asset Management
to Boston Capital: $1,500 from Escrow Account
18. Amount of Annual Partnership $1,400
Management Fee
19. Amount of Total Depreciable
Base Allocated to Personal
Property: $28,427 (2%)
20. Completion Date: _________, 19__
21. Total Capital Contribution of
Investment Partnership: $444,136
22. Schedule of Capital Contributions
A. $288,705 on the latest to occur of (i) Tax Credit Set
Aside, (ii) closing of the Construction Mortgage Loan, (iii)
receipt of commitment acceptable to Boston Capital for the
Permanent Mortgage Loan, or (iv) Admission Date.
B. $75,216 on the latest of (i) State Designation, (ii)
Completion, (iii) Cost Certification, (iv) receipt of an updated
title insurance policy and survey satisfactory to Investment
Limited Partner or (v) receipt of updated insurance certificates
satisfactory to the Investment Limited Partner;
C. $75,215 on the latest of (i) the Initial 100% Occupancy Date,
(ii) Permanent Mortgage Commencement or (iii) Breakeven;
D. $5,000 on receipt of a tax return and audited financial
statement for the year in which Breakeven occurred.
23. Fees and Other Items to be paid from Capital Contributions
Construction and Development Fee: $36,800
Direct Development Costs: $389,336
Asset Management Fee Escrow: $18,000
24A. Managing General Partner: Intervest Partners
Corporation
Address: 5750 I-55 N. Frontage
P.O. Box 12791
Jackson, MS 39236
Telephone Number: (601) 956-6000
Contact Person: Rodney H. Dudley
24B. Administrative General Partner: The New Life Ministry, Inc.
Address: 419 South State Street
Jackson, MS
Telephone Number:
Contact Person: Nigel H. Cuffie
Cash Cash
Flow Flow
25. Ownership Interests Normal Capital 1st 5 There-
Operations Transactions Years after
Managing G.P.: 0.007% 30% 90% 50%
Administrative G.P.: 0.003% 30% 5% 20%
Special Limited Partner: 0% .001% 0% 0%
Investment Partnership: 99.99% 39.999% 5% 30%
26. Management Agent: Intervest Corporation
Contact Person: Rodney H. Dudley
Address: 5750 I-55 N. Frontage
P.O. Box 12791
Jackson, MS 39236
Telephone Number: (601) 956-6000
Amount of Fees: $62.54/month per occupied unit.
Max. ann. compensation of
$36,023.04.
27. Builder: Intervest Construction
Address: 5750 I-55 N. Frontage
P.O. Box 12791
Jackson, MS 39236
Telephone Number: (601) 956-6000
Amount of Compensation: $307,315
Builder's Profit: $22,764
28. Architect: Marion M. Fox
Address: 330 East Madison
P.O.Box 167
Houston, MS 38851
Phone:
Amount of Fee: $18,439
29. Auditor and Tax Return Preparer: Grantham, Randall,
Arrington & Co.
6360 I-55 North
Suite 404, IBM Bldg.
Jackson, MS 39211
Contact: Alan Arrington
Phone: (800) 870-1229
Fax: (601) 957-8717
30. Federal Taxpayer ID Number: ______________
31. Building Breakdown:
A. # of Units 48
B. # of Buildings 13
C. BIN
cc:Boston Capital Communications Limited Partnership Accounting
Department
Exhibit B
Certificate of Operating Partnership,
Operating General Partner and Original Limited
Partner Re: Lack of Disqualifications
The Operating Partnership, its Operating General Partner and
its Original Limited Partner (as identified on the Certification
and Agreement to which this Certificate is attached as Exhibit B)
hereby represent to you that neither (i) the Operating
Partnership, (ii) any predecessor of the Operating Partnership,
(iii) any of the Operating Partnership's affiliates ("affiliate"
meaning a person that controls or is controlled by, or is under
common control with, the Operating Partnership), (iv) any sponsor
(meaning any person who (1) is directly or indirectly
instrumental in organizing the Operating Partnership or (2) will
directly or indirectly manage or participate in the management of
the Operating Partnership or (3) will regularly perform, or
select the person or entity who will regularly perform, the
primary activities of the Operating Partnership), (v) any
officer, director, principal or general partner of the Operating
Partnership or of any sponsor, (vi) any officer, director,
principal, promoter or general partner of the Operating General
Partner, (vii) any beneficial owner of ten per cent or more of
any class of the equity securities of the Operating Partnership
or of any sponsor (beneficial ownership meaning the power to vote
or direct the vote and/or the power to dispose or direct the
disposition of such securities), (viii) any promoter of the
Operating Partnership (meaning any person who, acting alone or in
conjunction with one or more other persons, directly or
indirectly has taken, is taking or will take the initiative in
founding and organizing the business of the Operating Partnership
or any person who, in connection with the founding and organizing
of the business or enterprise of the Operating Partnership,
directly or indirectly receives in consideration of services or
property, or both services and property, ten per cent or more of
any class of securities of the Operating Partnership or ten per
cent or more of the proceeds from the sale of any class of such
securities; provided, however, a person who receives such
securities or proceeds either solely as underwriting commissions
or solely in consideration of property shall not be deemed a
promoter if such person does not otherwise take part in founding
and organizing the enterprise) presently connected with the
Operating Partnership in any capacity:
(1) Has filed a registration statement which is the subject
of any pending proceeding or examination under the securities
laws of any jurisdiction, or which is the subject of any refusal
order or stop order thereunder entered within five years prior to
the date hereof;
(2) Has been convicted of or pleaded nolo contendere to a
misdemeanor or felony or, within the last ten years, been held
liable in a civil action by final judgment of a court based upon
conduct showing moral turpitude in connection with the offer,
purchase or sale of any security, franchise or commodity (which
term, for the purposes of this Certificate shall hereinafter
include commodity futures contracts) or any other aspect of the
securities or commodities business, or involving racketeering,
the making of a false filing or a violation of Sections 1341,
1342 or 1343 of Title 18 of the United States Code or arising out
of the conduct of the business of an issuer, underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
involving theft, conversion, misappropriation, fraud, breach of
fiduciary duty, deceit or intentional wrongdoing including, but
not limited to, forgery, embezzlement, obtaining money under
false pretenses, larceny fraudulent conversion or
misappropriation of property or conspiracy to defraud, or which
is a crime involving moral turpitude, or within the last five
years of a misdemeanor or felony which is a criminal violation of
statutes designed to protect consumers against unlawful practices
involving insurance, securities, commodities, real estate,
franchises, business opportunities, consumer goods or other goods
and services;
(3) Is subject to (a) any administrative order, judgment or
decree entered within five years prior to the date hereof entered
or issued by or procured from a state securities commission or
administrator, the Securities and Exchange Commission ("SEC"),
the Commodities Futures Trading Commission or the U.S. Postal
Service, or to (b) any administrative order or judgment, arising
out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
involving deceit, theft, fraud or fraudulent conduct, or breach
of fiduciary duty, or which is based upon a state banking,
insurance, real estate or securities law or (c) has been the
subject of any administrative order, judgment or decree in any
state in which fraud, deceit, or intentional wrongdoing,
including, but not limited to, making untrue statements of
material fact or omitting to state material facts, was found;
(4) Is subject to any pending proceeding in any jurisdiction
relating to the exemption from registration of any security or
offering, or to any order, judgment or decree in which
registration violations were found or which prohibits, denies or
revokes the use of any exemption from registration in connection
with the offer, purchase or sale of securities, or to an SEC
censure or other order based on a finding of false filing;
(5) Is subject to any order, judgment or decree of any court
or regulatory authority of competent jurisdiction entered within
five years prior to the date hereof, temporarily, preliminarily
or permanently restraining or enjoining such persons from
engaging in or continuing any conduct or practice in connection
with any aspect of the securities or commodities business or
involving the making of any false filing or arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, or investment adviser, or which
restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to
conduct alleged to have violated section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an
exchange registered as a national securities exchange, an
association registered as a national securities association, or
any self-regulatory organization registered pursuant to the
Securities Exchange Act of 1934, or a Canadian securities
exchange, or association or self-regulatory organization
operating under the authority of the Commodity Futures Trading
Commission, or is subject to any currently effective order or
order entered within the past five years of the SEC, the
Commodity Futures Trading Commission or any state securities
administrator denying registration to, or revoking or suspending
the registration of, such person as a broker-dealer, agent,
futures commission merchant, commodity pool operator, commodity
trading adviser or investment adviser or associated person of any
of the foregoing, or prohibiting the transaction of business as a
broker-dealer or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding before the
SEC or any state securities commission or any regulatory
authority willfully made or caused to be made any statement which
was at the time and in the light of the circumstances under which
it was made false or misleading with respect to any material
fact, or has willfully omitted to state in any such application,
report or proceeding any material fact which is required to be
stated therein or necessary in order to make the statements made,
in the light of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the Securities
Act of 1933, the Securities Exchange Act of 1934, the Trust
Indenture Act of 1939, the Investment Advisers Act of 1940, the
Investment Company Act of 1940, the Commodity Exchange Act of
1974 or the securities laws of any state, or any predecessor law,
or of any rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any of
the statutes or rules or regulations referred to in subsection
(8) hereof;
(10) Has failed reasonably to supervise his agents, if he is
a broker-dealer, or his employees, if he is an investment
adviser, but no person shall be deemed to have failed in such
supervision if there have been established procedures, and a
system for applying such procedures, which would reasonably be
expected to prevent and detect, insofar as practicable, any
violation of statutes, rules or orders described in subsection
(8) and if such person has reasonably discharged the duties and
obligations incumbent upon him by reason of such procedures and
system without reasonable cause to believe that such procedures
and system were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state securities
administrator within five years prior to the date hereof or is
subject to a currently effective United States Postal Service
fraud order or has engaged in dishonest or unethical practices in
the securities business or has taken unfair advantage of a
customer or is the subject of sanctions imposed by any state or
federal securities agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his
obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his
customers, or has not sufficient financial responsibility to
carry out the obligations incident to his operations or has been
adjudged a bankrupt or made a general assignment for the benefit
of creditors; or
(13) Is selling or has sold, or is offering or has offered
for sale, in any state securities through any unregistered agent
required to be registered under the Pennsylvania Securities Act
of 1972, as amended (the "Pennsylvania Act") or for any broker-
dealer or issuer with knowledge that such broker-dealer or issuer
had not or has not complied with the Pennsylvania Act.
If the Operating Partnership is subject to the requirements
of Section 12, 14 or 15(d) of the Securities Exchange Act of
1934, then the Operating Partnership has filed all reports
required by those Sections to be filed during the 12 calendar
months preceding the date hereof (or for such shorter period that
the Operating Partnership was required to file such reports).
