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)
June 1, 1998
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26200 04-3208648
(Commission Fle 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
As of June 1, 1998 Boston Capital Tax Credit Fund IV L.P.,
a Delaware limited partnership, specifically Series 32 thereof (the
"Partnership") entered into various agreements relating to Pearl
Partners, L.P., a Mississippi limited partnership (the "Operating
Partnership"), including the First Amended and Restated Agreement
of Limited Partnership of the Operating Partnership dated as of June
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
constructing a one hundred ninety-two (192) unit apartment complex
located on the southwest corner of Pearson Road and Small Drive in
Pearl, Mississippi, which is known as Colony Park Apartments (the
"Apartment Complex"). The Apartment Complex consists of twenty-
four (24) buildings containing thirty-two (32) 1-bedroom units, one
hundred four (104) 2-bedroom units and fifty-six (56) 3-bedroom
units. Amenities include a community building/clubhouse, swimming
pool and playground. Construction of the Apartment Complex is
expected to be completed in June, 2000 and 100% Occupancy is
expected to be achieved in October, 2000.
The Operating Partnership is currently receiving combined
construction and permanent financing in the amount of $8,000,000
from the Mississippi Home Corporation ("Issuer") in the form of a
loan (the "Bond Loan") of the proceeds of tax-exempt variable rate
bonds ("Bonds") issued by the Issuer. The Bonds were issued for a
28-year term and bear interest at a variable rate initially set at 3.7%.
The Bonds are credit-enhanced with respect to the payment of
principal and interest thereon by a letter of credit in the amount of
$8,150,000 (the "Letter of Credit") furnished by AmSouth Bank,
N.A., and are subject to redemption upon the expiration of the Letter
of Credit. The Letter of Credit has a term of three years, excluding
two, one-year options, and carries an annual fee of 1.375%. It is
assumed that the General Partner will replace the Bonds at
construction completion with a Federal National Mortgage
Association enhanced, fixed-rate bond.
It is expected that 100% of the rental apartment units in the
Apartment Complex will qualify for the low-income housing tax
credit (the "Tax Credits") under Section 42 of the Internal Revenue
Code of 1986, as amended (the "Code").
The general partner of the Operating Partnership is Colony
Park, LLC, a Mississippi limited liability company (the "General
Partner"). The members of the General Partner are J.H. Thames, Jr.
(75%), and Rodney F. Triplett, Jr. (25%). J.H. Thames, Jr. is the
controlling Member and Manager of the General Partner. Mr. Thames
is also the sole principal of Unicorp, Inc. which is the Builder of the
Apartment Complex, and of Park Management, Inc., which is the
Management Agent of the Apartment Complex. Colony Park, LLC
will also serve as the Developer of the Apartment Complex. The
Thames organization has extensive development, construction and
project management experience. As of June 1, 1998, the Thames
organization had completed approximately 58 properties totaling more
than 2,631 units, of which 1,606 units were qualified for Tax Credits.
Also, as of June 1, 1998, the Thames organization had an additional
15 multi-family housing complexes, containing approximately 1,927
units, under development.
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 $2,712,643 to the
Operating Partnership in four installments as follows:
$1,356,321 (the "First Installment") on the latest to occur of (A) the
Admission Date; (B) the Bond Loan Full Funding Date; (C) Tax
Credit Set-Aside; or (D) receipt of a Permanent Mortgage Loan
Commitment satisfactory to the Special Limited Partner;
$813,793 (the "Second Installment") on the 50% Completion Date;
$271,264 (the "Third Installment") on the latest to occur of (A) State
Designation; (B) the Completion Date; (C) Cost Certification; (D)
receipt of updated insurance certificates in form and substance
satisfactory to the Special Limited Partner; (E) receipt by the Special
Limited Partner of an updated Title Policy in form and substance
satisfactory to the Special Limited Partner, which policy in no event
shall contain a survey exception; (F) receipt by the Special Limited
Partner of an Estoppel Letter from each Lender; or (G) receipt by the
Special Limited Partner of the Contractor Pay-Off Letter; and
$271,264 (the "Fourth Installment") on the latest to occur of (A) the
Initial 100% Occupancy Date; (B) New Permanent Loan
Commitment; (C) Rental Achievement; or (D) termination and
expiration of the Letter of Credit Documents, including full
satisfaction of all obligations of the Partnership under the Letter of
Credit Documents.
The First and Second Installments have been paid in by the
Partnership.
The total Capital Contribution of the Partnership to the
Operating Partnership is based on the Operating Partnership receiving
$3,767,940 of Tax Credits during the 12-year period commencing in
1999 of which 99.99% ($3,767,560) 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
General Partner 01% 80% 90%
Partnership 99.99% 19.999% 10%
Special Limited
Partner 0% 001% 0%
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.
The Special Limited Partner, or an Affiliate thereof, will
receive an Asset Management Fee commencing in 2000 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 $8,000. The Asset
Management Fee for each Fiscal Year will be payable from Cash
Flow in the manner and priority set forth in Section 10.2(a) of the
Operating Partnership Agreement; provided, however, that if in any
Fiscal Year, Cash Flow is insufficient to pay the full amount of the
Asset Management Fee, the General Partner shall advance the amount
of such deficiency to the Partnership as a Subordinated Loan. If for
any reason the Asset Management Fee is not paid in any Fiscal Year,
the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first Fiscal Year in which there is sufficient
Cash Flow or Capital Proceeds as provided in Article X of the
Operating Partnership Agreement.
The Operating Partnership shall pay to the General Partner a
fee (the "Partnership Management Fee") commencing in 2000 for
services in connection with the administration of the day-to-day
business of the Operating Partnership in an annual amount equal to
$32,000. The Partnership Management Fee for each Fiscal Year of
the Operating Partnership shall be payable from Cash Flow in the
manner and priority set forth in Section 10.2(a) of the Operating
Partnership Agreement. If for any reason the Partnership
Management Fee is not paid in any Fiscal Year, the unpaid portion
thereof shall accrue and be payable on a cumulative basis in the first
Fiscal Year in which there is sufficient Cash Flow or Capital Proceeds
as provided in Article X of the Operating Partnership Agreement.
In consideration of its consultation, advice and other services
in connection with the construction and development of the
Apartment Complex and as consideration for the assignment
described in Section 6.14 of the Operating Partnership Agreement, the
Operating Partnership will pay the Developer a Development Fee in
the principal amount of $1,200,567. The Development Fee shall be
initially paid out of certain specified proceeds available from
mortgage loans, net rental income prior to the Completion Date,
Capital Contributions and casualty insurance proceeds; any unpaid
amount of such Development Fee shall be paid out of Cash Flow as
set forth in Section 10.2(a) of the Operating Partnership Agreement.
If the Development Fee has not been fully paid the tenth (10th)
anniversary of the Completion Date, the General Partner shall make a
Capital Contribution to the Operating Partnership in an amount
sufficient to enable the Operating Partnership to pay any unpaid
portion of the Development Fee.
The Builder of the Apartment Complex will receive a total
compensation of $8,122,681 which includes Builder's Profit of
$453,044. The Management Agent of the Apartment Complex will
receive a Management Fee equal to 5% of collected rents.
Item 7. Exhibits.
(c) Exhibits.
(1)(a)
Form of Dealer-Manager Agreement
between Boston Capital Services, Inc. and the Registrant (including, as
an exhibit thereto, the form of Soliciting Dealer
Agreement)
(2)(a) First Amended and Restated Agreement of Limited
Partnership of Pearl Partners, L.P.
(2)(b) General Partner's Payment Certificate (First Installment)
relating to Pearl Partners, L.P.
(2)(c) Development Agreement by and between Pearl Partners, L.P.,
and Colony Park, LLC
(4)(a)
Agreement of Limited Partnership of the Partnership.
(16) None
(17) None
(20) None
(23) None
(24) None
(27) None
Incorporated by reference to Exhibit (1) to
Registration Statement No.33-70564 on Form S-11, as filed with the
Securities and Exchange Commission.
Incorporated by reference to Exhibit (4) to Registration
Statement No. 33-70564 on Form S-11, as filed with the
Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereto duly authorized.
Dated: November 18, 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
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of June 1, 1998
TABLE OF CONTENTS
Dated as of June 1, 1998 1
TABLE OF CONTENTS 3
PEARL PARTNERS, L.P. 7
FIRST AMENDED AND RESTATED 7
AGREEMENT OF LIMITED PARTNERSHIP 7
Preliminary Statement 7
ARTICLE I 7
Defined Terms 7
ARTICLE II 27
Name and Business 27
ARTICLE III 30
Mortgage, Refinancing and Disposition of Property 30
ARTICLE IV 31
Partners; Capital 31
ARTICLE V 35
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner 35
ARTICLE VI 41
Rights, Powers and Duties of General Partner 41
ARTICLE VII 58
Withdrawal of a General Partner; New General Partners 58
ARTICLE VIII 61
Transferability of Limited Partner Interests 61
ARTICLE IX 63
Borrowings 63
ARTICLE X 63
Profits, Losses, Tax Credits, Distributions and
Capital Accounts 63
ARTICLE XI 72
Management Agent 72
ARTICLE XII 74
Books and Records, Accounting, Tax Elections, Etc. 74
ARTICLE XIII 80
General Provisions 80
PEARL PARTNERS, L.P. 85
As of June 1, 1998 85
EXHIBIT A 86
LEGAL DESCRIPTION 86
EXHIBIT B 87
PROJECTED RENTS 87
EXHIBIT C 88
DUE DILIGENCE RECOMMENDATIONS 88
EXHIBIT D 89
INSURANCE REQUIREMENTS 89
PEARL PARTNERS, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Pearl Partners, L.P. (the "Partnership") was formed as a Mississippi
limited partnership pursuant to a Limited Partnership Agreement
dated March 2, 1995 (the "Original Agreement") by and between
COLONY PARK, LLC, a Mississippi limited liability company
("CPLLC"), as general partner (the "General Partner") and SUZAN B.
THAMES as the limited partner (the "Original Limited Partner"), and
a Certificate of Mississippi Limited Partnership (the "Certificate")
filed in the Filing Office on March 2, 1995.
The parties desire to amend and restate the Original Agreement to (i)
provide for the withdrawal from the Partnership of the Original
Limited Partner, (ii) provide for the admission of BOSTON CAPITAL
TAX CREDIT FUND IV L.P., a Delaware limited partnership
("BCTCF"), as the Investment Limited Partner, (iii) provide for the
admission of BCTC 94, INC., a Delaware corporation as the Special
Limited Partner, and (iv) more fully set forth the rights and
obligations of the Partners.
In consideration of the mutual agreements set forth herein, it is agreed
and certified, and the Original Agreement is hereby amended and
restated in its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the meanings
specified below:
"Act" means the Revised Uniform Limited Partnership Act as in
effect in the State.
"Actual Credit" means, with respect to a particular Fiscal Year, the
total amount of Tax Credit properly allocable by the Partnership to
the Investment Limited Partner for such Fiscal Year. The Actual
Credit shall be retroactively revised if the amount of Tax Credit
properly allocable to the Investment Limited Partner is revised as the
result of an audit or is recaptured.
"Additional Limited Partner" means any holder of an Interest
designated as an Additional Limited Partner pursuant to the provisions
of Section 4.5(b) or Section 7.4.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of the relevant Fiscal Year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provisions of this
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(i)
and 1.704-2(i)(5), respectively; and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations and shall be interpreted consistently
therewith.
"Admission Date" means the first date on which all parties hereto
shall have executed this Agreement.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses and fees,
including court costs and reasonable attorneys' fees and expenses.
"Affiliate" means as to a specified Person, (i) such Person; (ii) each
member of the Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred to in the
preceding clauses (i) or (ii); (iv) each trustee of a trust for the benefit
of any Person referred to in the preceding clauses (i) or (ii); or (v) any
other Person (a) who directly or indirectly controls, is controlled by,
or is under common control with such Person, (b) who is an officer
of, director of, partner in or trustee of, or serves in a similar capacity
with respect to, such Person or of which such Person is an officer,
director, partner or trustee, or with respect to which such Person
serves in a similar capacity, (c) who, directly or indirectly, is the
beneficial owner of ten percent (10%) or more of any class of equity
securities of such Person or of which such Person is directly or
indirectly the owner of ten percent (10%) or more of any class of
equity securities, (d) who is an officer, director, general partner,
trustee or holder of ten percent (10%) or more of the voting securities
or beneficial interests of any Person referred to in the foregoing
clauses (v) (b) or (v) (c), or (e) who, whatever such Person's title,
performs functions for such Person or any Affiliate of such Person
similar to a Chairman or member of the Board of Directors, or
executive officer such as the President, Executive Vice President or
Senior Vice President, Corporate Secretary, or Treasurer, or any
Person holding a five percent (5%) or more equity interest in such
Person, or any Person having the power to direct or cause the
direction of such Person whether through the ownership of voting
securities, by contract or otherwise. An Affiliate of any Investment
Limited Partner or of any Investment General Partner does not include
a Person who is a partner in a Partnership or joint venture with any
Investment Limited Partner or any other Affiliate of any Investment
Limited Partner if such Person is not otherwise an Affiliate of any
Investment Limited Partner or any Investment General Partner. For
purposes of this definition, the term Affiliate shall not be deemed to
include any law firm (or member or associate thereof) providing legal
services to any Investment Limited Partner, any Investment General
Partner, the General Partner or any Affiliate of any of them.
"AFR" means the "applicable federal rate" as defined and determined
in the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency or any other Governmental
Authority with jurisdiction over the Apartment Complex, or the
business and operations of the Partnership.
"Agreement" means this First Amended and Restated Agreement of
Limited Partnership, including Schedule A, as amended from time to
time.
"Allocation Regulations" means the Treasury Regulations issued
under Sections 704(b) and 752 of the Code, as the same may be
modified or amended from time to time. In the event that the
Allocation Regulations are revised or amended subsequent to the date
of this Agreement, references herein to sections or paragraphs of the
Allocation Regulations shall be deemed to be references to the
applicable sections or paragraphs of the Allocation Regulations as
then in effect.
"AmSouth Assignment and Pledge" means that certain Assignment
and Pledge of Tax and Insurance, Capital Reserve and Payment
Escrow Accounts dated June 1, 1998, by and between AmSouth and
the Partnership.
"AmSouth Assignment and Pledge of Equity Fund Account" means
that certain assignment and pledge dated June 1, 1998, by the
Partnership and the Trustee as assignors and AmSouth.
"AmSouth Credit Agreement" means that certain Letter of Credit
Agreement, dated June 1, 1998, by and between AmSouth and the
Partnership, as amended.
"AmSouth Letter of Credit" means that certain irrevocable direct-pay
letter of credit to be delivered by AmSouth to the Trustee pursuant to
the terms of the AmSouth Credit Agreement in a principal amount of
not less than $8,105,000.
"AmSouth Letter of Credit Commitment" means that certain
commitment dated March 4, 1998, by the Bank to issue the AmSouth
Letter of Credit.
"AmSouth Letter of Credit Documents" means the AmSouth Letter of
Credit Commitment, the AmSouth Letter of Credit, the AmSouth
Credit Agreement, the AmSouth Pledge Agreement, the AmSouth
Assignment and Pledge of Equity Fund Account, the AmSouth
Assignment and Pledge, the AmSouth Security Agreement and any
other document executed by the AmSouth, the Partnership and/or the
Bond Lender in connection with the delivery of the AmSouth Letter
of Credit.
"AmSouth Pledge Agreement" means that certain Pledge Agreement
dated June 1, 1998, by the Partnership and the Trustee.
"AmSouth Security Agreement" means that certain Security
Agreement for Interest in Partnership dated June 1, 1998 by and
between the Partnership and AmSouth.
"Apartment Complex" means the real property located in Pearl,
Rankin County, Mississippi, as more fully described in Exhibit A
attached hereto, together with (i) all buildings and other
improvements constructed or to be constructed thereon and (ii) all
furnishings, equipment and personal property located thereon or
otherwise covered by the Mortgages.
"Applicable Percentage" has the meaning set forth in Section 42(b) of
the Code.
"Applied Amounts" shall have the meaning set forth in Section 6.10.
"Asset Management Fee" means the fee payable to BCTCF or an
Affiliate thereof pursuant to the provisions of Section 6.12(b).
"Assignee" shall have the meaning set forth in Section 4.1(c).
"Auditors" means Bob Robinson, CPA of Jackson, Mississippi, or
such other firm of independent certified public accountants as may be
engaged by the General Partner with the Consent of the Special
Limited Partner for the purposes of preparing the Partnership's income
tax returns, auditing the books and records of the Partnership and
certifying financial reports of the Partnership.
"BCTC 94" means BCTC 94, Inc., a Delaware corporation, and its
successors.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, and its successors.
"Best Knowledge" shall mean and include, in the case of a specified
Person, (i) actual knowledge and (ii) that knowledge which a prudent
businessperson (including, in the case of an Entity, the general or
managing partners, officers, directors and key employees of such
Entity) should have obtained in the management of his or her business
affairs after making due inquiry and exercising due diligence with
respect thereto. In connection therewith, the knowledge (both actual
and constructive) of any general or managing partner, director, officer
or key employee of an Entity shall be deemed to be the knowledge of
the Entity.
"Bond Documents" means the Indenture, the Bonds, the Bond Loan
Agreement, the Bond Loan Mortgage, and all other documents and
instruments executed and delivered in connection with the issuance
and sale of the Bonds.
"Bond Lender" means Mississippi Home Corporation.
"Bond Loan" means the loan in the amount of $8,000,000 to be
provided by the Bond Lender to the Partnership pursuant to the terms
of the Bond Loan Documents.
"Bond Loan Agreement" means the Loan Agreement dated June 1,
1998, by and between the Bond Lender and the Partnership, as
amended.
"Bond Loan Documents" means the Bond Documents, the Bond Loan
Note, the Bond Loan Mortgage, the Bond Loan Agreement, the Letter
of Credit Documents and all other documents executed and/or
delivered in connection with the Bond Loan.
"Bond Loan Full Funding Date" means the date on which the proceeds
of the Bond Loan on deposit in the Construction Fund (as defined in
the Indenture) are available to be distributed by the Trustee to pay
Project Costs (as defined in the Indenture) on a dollar for dollar basis
with funds on deposit in the Equity Fund (as defined in the Indenture)
as set forth in Section 5.03(b) of the Indenture.
"Bond Loan Note" means the promissory note executed by the
Partnership to evidence its obligations with respect to the Bond Loan,
which note is or shall be secured by the Bond Loan Mortgage.
"Bonds" means the $8,000,000 of Multifamily Housing
Adjustable/Fixed Rate Revenue Bonds (Colony Park Apartments)
Series 1998-I issued by Mississippi Home Corporation.
"Capital Account" has the meaning set forth in Section 4.1(b).
"Capital Contribution" means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each
Partner, as set forth in Schedule A. Any reference in this Agreement
to the Capital Contribution of a then Partner shall include a Capital
Contribution previously made by any prior Partner for the Interest of
such then Partner.
"Capital Proceeds" means the proceeds of a Capital Transaction.
"Capital Transaction" means a refinancing of any Partnership
indebtedness or a sale, exchange, eminent domain taking, damage or
destruction (whether insured or uninsured), insured title defect or
other disposition of all or any portion of the Apartment Complex
(other than an event generating proceeds of any business or rental
interruption insurance), but excluding the payment of Capital
Contributions.
"Cash Available for Debt Service Requirements" for any period,
means the excess of (i) all cash actually received by the Partnership
on a cash basis from normal operations during such period, but
specifically excluding the proceeds of insurance (other than business
or rental interruption insurance), loans, Capital Transactions or
Capital Contributions over (ii) all cash requirements of the Partnership
properly allocable to such period of time on an accrual basis (not
including distributions to Partners out of Cash Flow of the Partnership
or fees payable from Cash Flow) and, on an annualized basis, all
projected expenditures, including those of a seasonal nature, which
might reasonably be expected to be incurred on an unequal basis
during a full annual period of operation as determined by the Auditors
but specifically excluding Debt Service Requirements. For purposes
of this definition, (i) cash requirements of the Partnership shall
include to the extent not otherwise covered above, full funding of
reserves (including, without limitation, funding of the Replacement
Reserve), normal repairs, real estate taxes at fully assessed levels
assuming a fully improved property and necessary capital
improvements and (ii) if free rent or other rental concessions shall
have been granted to tenants, the calculation of rental revenues under
clause (i) of the preceding sentence shall be adjusted so that the effect
of such concessions is amortized equally over the term of all leases
(excluding renewal periods) to which it applies.
"Cash Expenditures" means all disbursements of cash during a
specified Fiscal Year (other than distributions to Partners), including,
without limitation, payment of operating expenses, payment of
principal and interest on any Partnership indebtedness (other than
payments of principal and interest on any Subordinated Loans or
Voluntary Loans), the cost of repairs to the Apartment Complex,
amounts allocated to reserves by the General Partner and the payment
of any fees other than the Asset Management Fee, the Partnership
Management Fee and the Development Fee. In addition, the net
increase during such Fiscal Year in any escrow account or reserve
maintained by or for the Partnership shall be considered a Cash
Expenditure during such Fiscal Year. The term Cash Expenditures
shall not include Development Costs. Cash Expenditures payable to
Partners or Affiliates of Partners shall be paid after Cash Expenditures
payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash
Expenditures. Cash Flow shall be determined separately for each
Fiscal Year or portion thereof.
"Cash Receipts" means all cash receipts of the Partnership from
whatever source derived other than from a Capital Transaction,
including, without limitation, rental revenues, government subsidy
payments. In addition, the net reduction in any Fiscal Year in the
amounts of any escrow account or reserve maintained by or for the
Partnership (including, without limitation, the Replacement Reserve)
shall be considered a cash receipt of the Partnership for such Fiscal
Year. Notwithstanding the foregoing, at the election of the General
Partner, Cash Receipts received near the end of a Fiscal Year and
intended for use in meeting the Partnership's obligations (including
the cost of acquiring assets or paying debts or expenses) in the
subsequent Fiscal Year shall not be deemed to be received until such
following Fiscal Year.
"Certificate" shall have the meaning set forth in the Preliminary
Statement.
"Class Contribution" means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partner, the
Investment Limited Partner, the Special Limited Partner or any
Additional Limited Partner).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations (permanent and temporary) issued
thereunder. References herein to any Code section shall include any
successor provisions.
"Commencement Date" means the first day of the month in which the
Admission Date occurs.
"Competitive Real Estate Commission" means that real estate or
brokerage commission paid for the purchase or sale of the Apartment
Complex or other Partnership property which is reasonable, customary
and competitive in light of the size, type and location of the
Apartment Complex or other property.
"Completion Date" means the later of: (i) the date the Investment
Limited Partner shall have received copies of all requisite certificates
or permits permitting occupancy of 100% of the apartments units in
the Apartment Complex as issued by each Agency having jurisdiction;
provided, however, that if such certificates or permits are of a
temporary nature, the Completion Date shall not be deemed to have
occurred unless the General Partner certifies to the Investment
Limited Partner that any work remaining to be completed is for so-
called "punch list items" and the General Partner knows of no reason
why permanent certificates of occupancy will not be issued upon
completion of such "punch list items"; or (ii) the date as of which the
Inspecting Consultant certifies that the work to be performed by the
Contractor under the Construction Contract is substantially complete.
Any representation by the General Partner under this Agreement that
the Completion Date has occurred shall be subject to confirmation by
the Special Limited Partner pursuant to a physical inspection of the
Apartment Complex; provided, however, that in the event that the
Special Limited Partner does not make such physical inspection of the
Apartment Complex within ten (10) business days after having
received a written representation of the General Partner that the
Completion Date has occurred, then the Special Limited Partner will
be deemed to have waived the physical inspection requirement.
"50% Completion Date" means the date on which the Inspecting
Architect has certified that not less than 50% of the work to be
performed by the Contractor, pursuant to the terms of the
Construction Contract has been substantially completed in accordance
with the Plans and Specifications.
"Compliance Period" means the fifteen (15)-year period commencing
with the first year of the Credit Period.
"Consent of the Investment Limited Partner" means the prior written
consent or approval of the Investment Limited Partner which, unless
otherwise specifically provided herein, may be given or withheld in its
sole discretion. The Consent of the Investment Limited Partner shall
be exercised by and through the Investment General Partner, acting in
the name and on behalf of the Investment Limited Partner.
"Consent of the Special Limited Partner" means the prior written
consent or approval of the Special Limited Partner which, unless
otherwise specifically provided herein, may be given or withheld in its
sole discretion.
"Construction Contract" means the construction contract dated as of
April 2, 1998, by and between the Contractor and the Partnership, as
amended.
"Construction Permitting Date" means the first date upon which the
Partnership shall have received the Requisite Approvals for the
commencement of the construction of the Apartment Complex in
accordance with the Plans and Specifications therefor.
"Contractor" means Unicorp, Inc., a Mississippi corporation, and its
successors.
"Contractor Pay-Off Letter" means a letter in form and substance
reasonably satisfactory to the Special Limited Partner delivered by the
Contractor to the Partnership which certifies that (i) all amounts due
to the Contractor from the Partnership have been paid, (ii) the
Partnership is not in default under the Construction Contract and (iii)
the Contractor has paid in full each materialman and subcontractor
who performed work on the Apartment Complex.
"Controlling Person" has the meaning set forth in Section 15 of the
Securities Act of 1933, as amended.
"Cost Certification" means the date upon which each Limited Partner
shall have received the written certification of the Auditors, in a form
and in substance satisfactory to the Special Limited Partner, as to the
itemized amounts of the construction and development costs of the
Apartment Complex and the Actual Credit pertaining to each building
in the Apartment Complex.
"CPLLC" means Colony Park, LLC, a Mississippi limited liability
company, and its successors.
"Credit Agency" means the Mississippi Home Corporation, and its
successors.
"Credit Approval" means the written determinations to be issued
pursuant to Sections 42(m)(1)(D) and 42(m)(2)(D) of the Code
approving low-income housing tax credits for the Project in an
amount of not less than $380,512.
"Credit Period" has the meaning set forth in Section 42(f)(1) of the
Code.
"Credit Recovery Loan" means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully described in
Section 5.1(g). Credit Recovery Loans and interest thereon shall not
be treated as loans or interest, respectively, for accounting, tax or
liability purposes or for the purposes of Section 6.2(a)(i). For the
purposes of Article X, the term Credit Recovery Loan shall not
include any portion of such a deemed advance which shall have
theretofore been paid to the Investment Limited Partner.
"Credit Shortfall" shall have the meaning set forth in Section 5.1(g).
"Debt Service Coverage Ratio" means, for any period with each
month considered individually, a fraction, the numerator of which is
the Cash Available for Debt Service Requirements with respect to
such period and the denominator of which is the Debt Service
Requirements for such period. The achievement by the Partnership of
a specified Debt Service Coverage Ratio shall be confirmed by the
Auditors and shall be subject to the approval of the Special Limited
Partner, which shall not be unreasonably withheld, provided, however,
that no objection by the Special Limited Partner to the determination
of the Auditors shall be valid unless the General Partner is notified of
such objection, and the specific reasons therefor, within seven (7)
business days following the receipt by the Special Limited Partner of
the Auditor's determination letter and in the event that the Special
Limited Partner does not so notify the General Partner within such
seven business day period, the Special Limited Partner will be deemed
to have waived its right to object to such determination.
"Debt Service Requirements" means for any period, all debt service,
reserve, mortgage insurance premium, tax and insurance escrows
and/or other cash requirements imposed with respect to the Mortgage
or any other indebtedness (except for the Subordinated Loans and
Voluntary Loans) properly allocable to such period of time on an
annualized accrual basis as determined by the Auditors.
"Deficit Restoration Obligation" means, for each Partner, the sum of
(i) any amounts which such Partner is obligated to restore to the
Partnership in accordance with the provisions of Sections 1.704-
1(b)(2)(ii)(c), 1.704-1(b)(2)(ii)(h) or any other applicable provisions
of the Allocation Regulations, (ii) such Partner's Share of Partnership
Minimum Gain if any, and (iii) such Partner's Share of Partner
Nonrecourse Debt Minimum Gain, if any.
"Developer" means CPLLC, in its capacity as an independent
developer and not as a General Partner, and its successors.
"Development Agreement" means the Development Agreement, dated
as of June 1, 1998, by and between the Developer and the Partnership.
"Development Costs" means any and all costs and expenses necessary
to (i) cause the construction of the Apartment Complex to be
completed, in a good and workmanlike manner, free and clear of all
mechanics', materialmen's or similar liens, in accordance with the
Plans and Specifications, (ii) equip the Apartment Complex with all
necessary and appropriate fixtures, equipment and articles of personal
property (including, without limitation, refrigerators and ranges), (iii)
obtain all required certificates of occupancy for the apartment units
and other space in the Apartment Complex, (iv) pay the Development
Fee, (v) finance the construction of the Apartment Complex and
achieve the Completion Date in accordance with the provisions of the
Project Documents, (vi) discharge all Partnership liabilities and
obligations arising out of any casualty generating insurance proceeds
for the Partnership, (vii) fund any Partnership reserves required
hereunder or under any of the Project Documents, and (viii) pay any
other costs or expenses necessary to achieve the Completion Date and
Rental Achievement.
"Development Fee" means the fees payable by the Partnership to the
Developer pursuant to the terms of the Development Agreement for
its services in connection with the development and construction of
the Apartment Complex.
"Disposition" (including the forms Dispose and Disposing) means, as
to a specified Partner, the assignment, sale, transfer, exchange or other
disposition of all or any part of its Interest.
"Disposition Fee" means a fee payable to the Developer from Capital
Proceeds in the amount set forth in the Capital Disposition
Agreement.
"Due Diligence Recommendations" means those developmental
recommendations set forth on Exhibit C hereto.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section 42(d) of the
Code.
"Entity" means any Person, general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, cooperative or association.
"Escrow Agreement" means that certain Agreement Concerning
Requisitions entered into by and among the Partnership, AmSouth and
the Investment Limited Partner, the terms of which will govern the
disbursement of the First and Second Installment.
"Estoppel Letter" means an estoppel letter in form and substance
reasonably satisfactory to the Special Limited Partner delivered to the
Partnership from each Lender which certifies as to each Mortgage
Loan (i) that there is no default ongoing pursuant to the Mortgage
Loan Documents, (ii) the amounts of interest and principal paid on
such Mortgage Loan to date and (ii) the outstanding principal balance
of such Mortgage Loan, as applicable.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial
part of his property, or ordering the winding-up or liquidation of his
affairs and the continuance of any such decree or order unstayed and
in effect for a period of sixty (60) consecutive days;
(ii) the commencement by such Person of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or the consent by him to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or similar official) of such Person or for any
substantial part of his property, or the making by him of any
assignment for the benefit of creditors, or the taking of corporate
action by the Person in furtherance of any of the foregoing; or
(iii) the commencement against such Person of an involuntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, which has not been vacated, discharged or bonded
within sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in Section 5.1(h).
"Extended Use Agreement" means the extended use housing
commitment to be executed by the Partnership in accordance with the
requirements of the Credit Agency and the provisions of Section
42(h)(6)(A) of the Code.
"Filing Office" means the Office of the Secretary of State of the State
of Mississippi.
"Fiscal Year" means the twelve (12)-month period which begins on
the first day of January and ends on the thirty-first day of December
of each calendar year (or ends on the date of final dissolution for the
year in which the Partnership is wound up or dissolved).
"General Partner" means CPLLC and any Person who becomes a
General Partner as provided herein, in its capacity as a general partner
of the Partnership. At any and all times where there is more than one
General Partner, the term General Partner shall mean such General
Partners.
"Governmental Authority" means the Housing Authority, the Credit
Agency or any other federal, state or local governmental authority
having jurisdiction over the particular matter to which reference is
being made.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as
determined by the General Partner, as of the following times: (a) the
acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership; and (c) the liquidation
of the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Allocation Regulations; provided, however, that the
adjustments pursuant to clauses (a) and (b) above shall be made only
if the General Partner reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of
the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the
date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Section 1.704-
1(b)(2)(iv)(m) of the Allocation Regulations and Section 4.1 hereof;
provided, however, that Gross Asset Values shall not be adjusted
pursuant to this clause (iv) to the extent that the General Partner
determines that an adjustment pursuant to clause (ii) hereof is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this clause (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section (i), (ii) or (iv) hereof, such Gross Asset Value
shall thereafter be adjusted by the depreciation taken into account
with respect to such asset for purposes of computing Profits or Losses.
"Guarantor(s)" means individually and collectively, each of J.H.
Thames, Jr. and Rodney F. Triplett, Jr. and their respective
successors.
"Guaranty" means the Guaranty, dated as of June 1, 1998, of the
Guarantor of all of the obligations of the General Partner hereunder
and of the Developer as set forth in the Development Agreement, as
amended.
"Hazardous Material" has the collective meanings given to the terms
"hazardous material", "hazardous substances", "hazardous wastes",
toxic substances" and analogous terms, in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and to the term "radioactive
materials" in the context of the Atomic Energy Act, 28 U.S.C. Sec.
2344, and also includes any meanings given to such terms in any
similar state or local statutes, ordinances, regulations or by-laws. The
term Hazardous Material also includes oil and any other substance
known to be hazardous.
"Immediate Family" means with respect to any Person, such Person's
spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, children, children-in-
law, grandchildren and grandchildren-in-law.
"Includable Items" shall have the meaning set forth in Section 6.11.
"Indenture" means the Trust Indenture dated as of June 1, 1998, by
and between the Mississippi Home Corporation and the Trustee.
"Initial Adjustment Date" shall have the meaning set forth in Section
5.1(e).
"Initial 100% Occupancy Date" means the first date on which not less
than 100% of the 192 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
leases at rentals meeting the requirements of the Rent Restriction
Test.
"Initial Operating Period" means the period commencing upon Cost
Certification and ending on the fifth anniversary of the Completion
Date.
"Inspecting Consultant" means the consultant retained by any Lender
to monitor the progress of the construction of the Apartment Complex
and to certify as to the completion of such construction.
"Installment" means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
"Insurance Requirements" means the insurance which the General
Partners are required to cause the Partnership to maintain during the
term of the Partnership as set forth on Exhibit D hereto.
"Interest" means the entire interest of a Partner in the Partnership at
any particular time, including the right of such Partner to any and all
benefits to which a Partner may be entitled hereunder and the
obligation of such Partner to comply with the terms of this
Agreement.
"Invested Amount" means (i) as to the Investment Limited Partner, an
amount equal to the Capital Contribution of the Investment Limited
Partner divided by 0.73 and (ii) as to any other Partner, an amount
equal to its paid-in Capital Contribution.
"Investment General Partner" means Boston Capital Associates IV
L.P., a Delaware limited partnership, in its capacity as the general
partner of the Investment Limited Partner, and any other Person who
may become a successor or additional general partner of the
Investment Limited Partner.
"Investment Limited Partner" means BCTCF and any Person or
Persons who replace it as Substituted Limited Partner, but shall not
include any Additional Limited Partner.
"Investment Partnership Agreement" means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from time
to time.
"Lender" means any Person (other than the General Partner or its
Affiliates) who makes a loan to the Partnership, whether or not such
loan is secured by a Mortgage, or the successors and assigns of such
Person in such capacity.
"Letter of Credit" means the AmSouth Letter of Credit.
"Letter of Credit Documents" means the AmSouth Letter of Credit
Documents.
"Limited Partners" means the Investment Limited Partner, the Special
Limited Partner and any Additional Limited Partner.
"Liquidating Event" shall have the meaning set forth in Section 2.4.
"LURA" means the Land Use Restriction Agreement dated June 1,
1998, by and between the Bond Lender and the Partnership.
"Managing General Partner" means any Person designated as such
pursuant to the provisions of Section 6.4.
"Management Agent" means Park Management, Inc., a Mississippi
corporation in its capacity as the initial management and rental agent
for the Apartment Complex, and any successor management and
rental agent designated or appointed at any time.
"Management Agreement" means the agreement between the
Partnership and the Management Agent dated as of April 1, 1998
providing for the management of the Apartment Complex.
"Management Fee" means the Management Fee to which reference is
made in Section 11.1.
"Material Agreement" means any agreement to which the Partnership
is a party or to which the Apartment Complex is subject, the
termination of which would have a material adverse impact on the
Apartment Complex or the business and operations of the Partnership.
"Material Event" means the occurrence of any of the following events:
(i) a material breach by a General Partner (or any of its
Affiliates) in the performance of any of its obligations under this
Agreement, or any of the Material Agreements;
(ii) a Terminating Event as to any General Partner or an Event of
Bankruptcy as to the Partnership;
(iii) a material violation by any General Partner of its fiduciary
duties as a General Partner of the Partnership;
(iv) a violation by any General Partner of any law, regulation or
order applicable to the General Partner or the Partnership which has or
may have a material adverse effect on the Partnership or the
Apartment Complex;
(v) a material breach by the Partnership or any General Partner
(or any of their respective Affiliates) under any Project Document or
other material agreement or document affecting the Partnership or the
Apartment Complex;
(vi) the failure to achieve the Completion Date by December 31,
2000;
(vii) the failure to begin the Credit Period by January 1, 2001;
(viii) the commencement of foreclosure proceedings with respect
to any Mortgage, which have not been withdrawn or dismissed within
thirty (30) days after the date of such commencement;
(ix) the failure of the General Partner to make any payment
required to be made to the Investment Limited Partner pursuant to the
provisions of Section 5.1(e) or (f); or
(x) the fraud, bad faith, gross negligence, or willful misconduct
by a General Partner.
"Minimum Set-Aside Test" means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least
40% of the units in the Apartment Complex must be occupied by
individuals with incomes equal to 60% or less of area median income,
as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the Partnership
evidenced by any Note and secured by any mortgage on the
Apartment Complex from the Partnership to any Lender; and, where
the context admits, the term "Mortgage" shall mean and include any
of the mortgages securing said indebtedness and any other documents
pertaining to said indebtedness which were required by the Lender as
a condition to making such Mortgage Loan. In case any Mortgage is
replaced by any subsequent mortgage or mortgages, such term shall
refer to any such subsequent mortgage or mortgages. The term
"mortgage" means any mortgage, mortgage deed, deed of trust, deed
to secure debt or any similar security instrument, and "foreclose" and
words of like import include the exercise of a power of sale under a
mortgage or comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by any Lender
and secured by a Mortgage.
"Mortgage Loan Documents" means the Bond Loan Documents
and/or the New Permanent Loan Documents.
"New Allocation" shall have the meaning set forth in Section 10.5(b).
"New Permanent Loan Commitment" means the commitment for a
New Permanent Loan or a new Letter of Credit, as the case may be.
"New Permanent Loan" means any permanent loan provided by the
Permanent Lender to the Partnership on the New Permanent Loan
Conditions pursuant to the terms of the New Permanent Loan
Documents.
"New Permanent Loan Conditions" means, with respect to a proposed
New Permanent Loan, that (a) such Mortgage Loan (i) has a term
which expires after the end of the Compliance Period, (ii) bears
interest at a fixed annual rate and (iii) is nonrecourse, unless otherwise
approved by the Special Limited Partner, and (b) when such New
Permanent Loan is in place, the Debt Service Coverage Ratio of the
Partnership is projected to be not less than 1.15 to 1.00, where such
Debt Service Coverage Ratio is based upon projected operating
expenses for the Apartment Complex reasonably approved by the
Special Limited Partner.
"New Permanent Loan Documents" means the New Permanent Note,
the New Permanent Mortgage and all other documents executed
and/or delivered in connection with the New Permanent Loan.
"New Permanent Mortgage" means the Mortgage securing the
Partnership's obligations under the New Permanent Note.
"New Permanent Note" means the Note to be executed by the
Partnership to evidence its obligations with respect to the New
Permanent Loan, which Note shall be secured by the New Permanent
Mortgage.
"Nonrecourse Debt" or "Nonrecourse Liability" means any
indebtedness for which none of the Partners has any Economic Risk of
Loss other than through his or its interest in the Partnership Property
securing such indebtedness, as defined in Section 1.752-1(a)(2) of the
Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section 1.704-
2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to a Lender
evidencing a Mortgage Loan, and shall also mean and include any
Note supplemental to said original Note issued to a Lender or any
Note issued to a Lender in substitution for any such original Note.
"Operating Deficit" means, for any specified period of time, the
amount by which the Cash Receipts of the Partnership are less than
the amount necessary to pay all Cash Expenditures of the Partnership.
"Operating Profits or Losses" means, with respect to any Fiscal Year,
the Profits or Losses of the Partnership for such Fiscal Year other than
Profits or Losses from a Capital Transaction.
"Original Agreement" has the meaning set forth in the Preliminary
Statement.
"Original Limited Partner" has the meaning set forth in the
Preliminary Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth
in Sections 1.704-2(i)(2) and (3) of the Allocation Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued pursuant to this
Agreement.
"Partnership Items" shall have the meaning set forth in Section
10.4(b)(xvi).
"Partnership Management Fee" shall have the meaning set forth in
Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in Section
1.704-2(d) of the Allocation Regulations.
"Payment Certificate" shall have the meaning set forth in Section
5.1(b)
"Percentage Interests" means the interests of the Partners in Profits
and Losses, tax-exempt income, non-deductible, non-capitalizable
expenditures and Tax Credits, as set forth in Schedule A.
"Permanent Lender" means any Lender providing permanent
financing for the Apartment Complex who has been approved by the
Special Limited Partner and the General Partner, except as otherwise
provided in Section 3.2.
"Person" means any individual or Entity.
"Plans and Specifications" means the plans and specifications for the
construction of the Apartment Complex, including, without limitation,
specifications for materials, and all properly approved amendments
and modifications thereof.
"Prime Rate" means the rate of interest announced from time to time
by the Wall Street Journal as its base rate.
"Profits or Losses" shall have the meaning set forth in Section
10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan
Documents, this Agreement, the Development Agreement, the
Extended Use Agreement, the Guaranty, the Letter of Credit
Documents, the Management Agreement, the Agreement Concerning
Requisitions, the Supplemental Management Agreement, the Capital
Disposition Agreement, all other instruments delivered to (or required
by) any Lender and all other documents relating to the Apartment
Complex and by which the Partnership is bound, as amended or
supplemented.
"Projected Credit" means $58,868 for 1999, $349,285 for 2000,
$376,756 per annum for each of the Fiscal Years 2001 through 2008
(inclusive), $317,888 for 2009 and $27,472 for 2010; provided,
however, that the Projected Credit for 2009 shall be reduced by the
amount, if any, by which the Actual Credit for 1999 exceeds $58,868
and provided further that the Projected Credit for 2010 shall be
reduced by the amount, if any, by which the Actual Credit for 2000
exceeds $349,285 and provided, further, upon the occurrence of any
of the events described in Section 5.1(e), the Projected Credit shall
thereafter be the Revised Projected Credit.
"Projected Rents" means the rents described in Exhibit B attached
hereto and made a part hereof.
"Qualified Basis" has the meaning set forth in Section 42(c) of the
Code.
"Qualified Income Offset Item" means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to be
made (a) pursuant to Section 704(e)(2) of the Code to a donee of an
interest in the Partnership, (b) pursuant to Section 706(d) of the Code
as the result of a change in any Partner's Interest, or (c) pursuant to
Treasury Regulation Section 1.751-1(b)(2)(ii) as the result of a
distribution by the Partnership of unrealized receivables or inventory
items and (2) a distribution that, as of the end of such year, reasonably
is expected to be made to a Partner to the extent it exceeds offsetting
increases to such Partner's Capital Account which reasonably are
expected to occur during or prior to the Partnership taxable year in
which such distribution reasonably is expected to occur.
"Recapture Amount" shall have the meaning set forth in Section 10.6.
"Recapture Event" shall have the meaning set forth in Section 10.6(a).
"Reconstitution Period" shall have the meaning set forth in Section
7.2(b).
"Recourse Obligations" shall have the meaning set forth in Section
10.4(b)(i).
"Reduction Amount" shall have the meaning set forth in Section
5.1(f).
"Reduction Year" shall have the meaning set forth in Section 5.1(f).
"Regulations" means the rules and regulations applicable to the
Apartment Complex or the Partnership of the Credit Agency, the City
of Pearl, Mississippi and any other Governmental Authority having
jurisdiction over the Partnership and/or the Apartment Complex.
"Related Person" means a Person related to a Partner within the
meaning of Treasury Regulation Section 1.752-4(b).
"Remaining Interest" shall have the meaning set forth in Section
7.4(d).
"Rent Restriction Test" means the test pursuant to Section 42 of the
Code whereby the gross rent charged to tenants of the low-income
units in the Apartment Complex may not exceed thirty percent (30%)
of the qualifying income levels.
"Rental Achievement" means the first time following three (3)
consecutive full calendar months of operations , two prior to the
Completion Date and one month after the Completion Date (with each
month considered individually) that the Apartment Complex generates
a 1.15 to 1.00 Debt Service Coverage Ratio; provided, however, that
for the purposes of this Rental Achievement definition only, Debt
Service Requirements shall be deemed to include full debt service
payments of principal and interest in respect of the Bond Loan
regardless of whether such principal payments are required to be paid
for the month in question.
"Replacement Reserve" shall have the meaning set forth in Section
6.5(e).
"Repurchase Amount" shall have the meaning set forth in Section
5.2(a).
"Requisite Approvals" means any required approvals of each Lender
and Agency to an action proposed to be taken by the Partnership.
"Revised Projected Credit" has the meaning set forth in Section 5.1(e).
"Schedule A" means Schedule A to this Agreement, as amended from
time to time.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means, for each
Partner an amount equal to his or its "share of partner nonrecourse
debt minimum gain" as determined in accordance with Section 1.704-
2(i)(5) of the Allocation Regulations.
"Share of Partnership Minimum Gain" means for each Partner, an
amount equal to his or its "share of partnership minimum gain" as
determined in accordance with Section 1.704-2(g) of the Allocation
Regulations.
"Site" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and shall also include any
meaning given to it in any similar state or local statutes, ordinances,
regulations or by-laws.
"Special Limited Partner" means BCTC 94, and any Person who
becomes a Special Limited Partner as provided herein, in its capacity
as a special limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage Loans,
(ii) the net rental income, if any, generated by the Apartment
Complex prior to the Completion Date which is permitted by the
Lenders to be applied to the payment of Development Costs, (iii) the
Capital Contributions of the Investment Limited Partner, (iv) the
Capital Contributions of the General Partner in the amounts set forth
in Schedule A as of the Admission Date, and (v) any insurance
proceeds arising out of casualties occurring prior to the Completion
Date.
"State" means the State of Mississippi.
"State Designation" means the date on which the Partnership receives
an allocation in proper form pursuant to Section 42 of the Code from
the Credit Agency of the Tax Credits, as evidenced by the execution
by or on behalf of the Credit Agency of one or more Form(s) 8609.
For the purposes of determining State Designation, each building in
the Apartment Complex shall be treated as having received an
allocation of Tax Credit in an amount equal to the lesser of (i) the
amount of Tax Credit carryover allocation received from the Credit
Agency as to such building or (ii) the amount of Tax Credits set forth
on the Form 8609 as to such building.
"Subordinated Loan" means any loan made by the General Partner to
the Partnership pursuant to Section 6.5(e), Section 6.10 or any other
provision of this Agreement which specifies advances to be made as a
Subordinated Loan.
"Subordinated Loan Period" shall have the meaning set forth in
Section 6.10.
"Substituted Limited Partner" means any Person who is admitted to
the Partnership as Limited Partner under Section 8.2 or acquires the
Interest of a Limited Partner pursuant to Section 5.2.
"Successor" shall have the meaning set forth in Section 7.5(a).
"Syndication Expenses" means all expenditures classified as
syndication expenses pursuant to Treasury Regulation Section 1.709-
2(b). Syndication Expenses shall be taken into account under this
Agreement at the time they would be taken into account under the
Partnership's method of accounting if they were deductible expenses.
"Tax Accountants" means Reznick, Fedder & Silverman of Bethesda,
Maryland or such other firms of independent certified public
accountants as may be engaged by the Special Limited Partner to
review the Partnership income tax returns.
"Tax Credit" means the low-income housing tax credit described in
Section 42 of the Code.
"Tax Credit Set-Aside" means the date on which the Partnership
receives the Credit Approval in a form reasonably satisfactory to the
Special Limited Partner from the Credit Agency and the Housing
Authority.
"Terminating Event" means the death or permanent disability of, or a
Final Determination of insanity or incompetence as to, an individual
General Partner (unless the Consent of the Special Limited Partner to
a substitute General Partner is received, and such substitute General
Partner is admitted to the Partnership by the first to occur of (i) the
sixtieth day following such event or (ii) such earlier date as is
necessary to prevent a dissolution of the Partnership under the Act),
the Bankruptcy or dissolution of a General Partner, the transfer of all
of its Partnership Interest by a General Partner, or the voluntary or
involuntary withdrawal of the General Partner from the Partnership.
For purposes of the foregoing, an individual General Partner shall be
deemed to be permanently disabled if he or she becomes disabled
during the term of this Agreement through any illness, injury, accident
or condition of either a physical or psychological nature and, as a
result, is unable to perform substantially all of his or her duties and
responsibilities hereunder for one hundred twenty (120) days during
any period of three hundred sixty-five (365) consecutive calendar
days. Involuntary withdrawal shall occur whenever a General Partner
may no longer continue as a General Partner by law or pursuant to any
terms of this Agreement. In the case of a General Partner which is an
Entity, a transfer of a majority of the voting stock (or other beneficial
interest) of the General Partner to a Person who is not an Affiliate of
the General Partner or any Entity constituting the General Partner
shall be deemed to be a transfer by the General Partner of its
Partnership Interest.
"Title Policy" means the owner's title insurance policy, or at the
option of the Special Limited Partner an endorsement thereto,
effective as of February 18, 1998, in the amount of not less than
$10,817,743 issued by First American Title Insurance Company to the
Partnership, evidencing the Partnership's ownership of the Apartment
Complex subject only to such exclusions, exceptions, conditions and
stipulations as may be approved by the Special Limited Partner in its
sole discretion and endorsed with a zoning endorsement, non-
imputation endorsement and a Fairway endorsement.
"Trustee" means First Tennessee Bank National Association, or any
successor trustee serving as such under the Indenture.
"Vessel" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and shall also include any
meaning given to it in any similar state or local statutes, ordinances,
regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in Article IX.
"Withdrawal" (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy,
dissolution, liquidation, or voluntary or involuntary withdrawal or
retirement from the Partnership for any reason, including whenever a
General Partner may no longer continue as a General Partner by law
or pursuant to any terms of this Agreement. Withdrawal also shall
mean the sale, assignment, transfer or encumbrance by a General
Partner of its interest as a General Partner other than a pledge of
assignment by a General Partner of its Interest required pursuant to
the terms of the Bond Loan Documents and as approved in writing by
the Special Limited Partner. A General Partner which is a
corporation, limited liability company or partnership shall be deemed
to have sold, assigned, transferred or encumbered its interest as a
General Partner in the event (as a result of one or more transactions)
of any sale, assignment or other transfer (but specifically excluding
any transfer occurring pursuant to the laws of descent and
distribution) or encumbrance of a controlling interest in a corporate or
limited liability company General Partner or of a general partner
interest in a General Partner which is a partnership to a Person who is
not an Affiliate of the General Partner. For purposes of this definition
of Withdrawal, the term "controlling interest" shall mean the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Pearl Partners, L.P. The Partners agree
to continue the Partnership which was formed pursuant to the
provisions of the Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is c/o 2001 Airport
Road, Suite 304,P.O. Box 741, Jackson, MS 39205-0741, at which
office there shall be maintained those records required by the Act to
be kept by the Partnership. The Partnership may have such other or
additional offices as the General Partner shall deem desirable. The
General Partner may at any time change the location of the principal
office and shall give due notice thereof to the Limited Partners,
provided that doing so shall not adversely affect the Investment
Limited Partner for tax purposes.
(b) The resident agent for the Partnership in the State for service
of process is as follows:
J.H. Thames, Jr.
2001 Airport Road, Suite 304
P.O. Box 741
Jackson, MS 39205-0741
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in, secure
financing for, construct, rehabilitate, develop, improve, maintain,
operate, lease and otherwise deal with the Apartment Complex. The
Partnership shall operate the Apartment Complex in accordance with
any applicable Regulations. The Partnership shall not engage in any
other business or activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and effect until
December 31, 2045, except that the Partnership shall be dissolved and
its assets liquidated prior to such date upon the first to occur of the
following events ("Liquidating Events"):
(i) The sale or other disposition of all or substantially all of the
assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless the Partnership
is continued as provided in Section 7.2(a);
(iii) The election to dissolve the Partnership made in writing by
the General Partner with the Consent of the Investment Limited
Partner and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of the Partnership
by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not reconstituted
pursuant to the provisions of Section 7.2 or Section 7.3.
(b) Upon the dissolution of the Partnership, the General Partner
(or for purposes of this paragraph, its trustees, receivers or successors)
shall cause the cancellation of the Certificate and shall liquidate the
Partnership assets and apply and distribute the proceeds thereof in
accordance with the provisions of Section 10.3, unless the Investment
Limited Partner elects to reconstitute the Partnership and continue its
business as provided in Section 7.2 or 7.3, in which case the
Partnership assets shall be transferred to the new Partnership as
provided in such Section. Notwithstanding the foregoing, if, during
liquidation, the General Partner shall determine that an immediate
sale of part or all of the Partnership's assets would be impermissible,
impractical or cause undue loss to the Partners, the General Partner
may defer liquidation of, and withhold from distribution for a
reasonable time, any assets of the Partnership except those necessary
to satisfy Partnership debts and obligations (other than Subordinated
Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The Partnership shall be authorized to obtain the Bond Loan and the
Letters of Credit pursuant to the Bond Loan Documents and the Letter
of Credit Documents, as applicable, to finance the acquisition,
development and construction of the Apartment Complex. The
General Partner and its Affiliates, jointly and severally, are hereby
authorized to incur personal liability for the repayment of funds
advanced by the Bond Lender, AmSouth Bank (and interest thereon)
pursuant to the Bond Loan Documents and the Letter of Credit
Documents. However, unless otherwise approved by the Special
Limited Partner, neither the General Partner nor any Related Person
shall at any time bear, nor shall the General Partner permit any other
Partner or any Related Person to bear, the Economic Risk of Loss for
the payment of any portion of any Mortgage Loan unless, prior to the
effectiveness of the transaction in which such Economic Risk of Loss
is created or assumed, the General Partner shall have obtained, at the
expense of the Partnership, an opinion from reputable tax counsel, in
form and substance reasonably satisfactory to the Special Limited
Partner, to the effect that such Economic Risk of Loss will not result
in the reallocation of Tax Credits or Losses from the Investment
Limited Partner and the Special Limited Partner to the General
Partner.
3.2 Refinancings
The Partnership may decrease, increase or refinance any Mortgage
Loan and may make any required transfer or conveyance of
Partnership assets for security or mortgage purposes, provided,
however, any such decrease, increase or refinancing of any Mortgage
Loan (except for the borrowing of the New Permanent Loan on the
New Permanent Loan Conditions and the borrowing of the original
principal amount of the Bond Loan and the Letter of Credit) may be
made by the General Partner only with the Consent of the Special
Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise transfer or
convey all or substantially all the assets of the Partnership only with
the Consent of the Special Limited Partner. Notwithstanding the
foregoing and except as set forth in Section 6.2(a)(vi), no Consent of
the Special Limited Partner shall be required for the execution and
delivery of the Bond Loan Documents and the Letter of Credit
Documents, the leasing of apartments to tenants in the normal course
of operations or the leasing of all or substantially all the apartments to
a public housing authority at rents satisfactory to any Agency or
Lender as expressed in writing, provided (subject to the Rent
Restriction Test) that such rents are not less than the Projected Rents.
3.4 Real Estate Commissions
The total compensation to all Persons for the sale of the Apartment
Complex shall be limited to a Competitive Real Estate Commission,
which shall not exceed ten percent (10%) of the contract price for the
sale of the Apartment Complex or such fee as is reasonable and
customary in Pearl, Mississippi.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the aggregate amount
of the cash and the Gross Asset Value of property contributed by the
General Partner and by the Limited Partners as set forth in Schedule
A. No interest shall be paid by the Partnership on any Capital
Contribution to the Partnership. Schedule A shall be amended from
time to time to reflect the withdrawal or admission of Partners, any
changes in the Partnership Interests held by a Partner arising from the
transfer of an Interest to or by such Partner and any change in the
amounts to be contributed or agreed to be contributed by any Partner.
No Partner shall have the right to withdraw or receive a return of any
of its Capital Contributions except as set forth in this Agreement.
(b) An individual Capital Account shall be established and
maintained for each Partner, including any additional or substituted
Partner who shall hereafter receive an interest in the Partnership. The
Capital Account of each Partner shall be maintained in accordance
with the following provisions:
(i) To each Partner's Capital Account there shall be credited
such Partner's Capital Contributions, such Partner's distributive share
of Profits, and any items in the nature of income or gain that are
specially allocated pursuant to Section 10.4 hereof, and the amount of
any Partnership liabilities that are assumed by such Partner or that are
secured by any Partnership Property distributed to such Partner;
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Partnership Property
distributed to such Partner pursuant to any provision of this
Agreement, such Partner's distributive share of Losses, and any items
in the nature of expenses or losses that are specially allocated pursuant
to Section 10.4 hereof, and the amount of any liabilities of such
Partner that are assumed by the Partnership or that are secured by any
property contributed by such Partner to the Partnership.
In the event that the Gross Asset Values of Partnership assets are
adjusted pursuant to this Agreement, the Capital Accounts of all
Partners shall be adjusted simultaneously to reflect the aggregate net
adjustment as if the Partnership recognized gain or loss equal to the
amount of such aggregate net adjustment.
(c) The original Capital Account established for any Assignee
(as hereinafter defined) shall be in the same amount as, and shall
replace, the adjusted Capital Account of the Partner which such
Assignee succeeds, and, for the purpose of the Agreement, such
Assignee shall be deemed to have made the Capital Contribution, to
the extent actually paid in, of the Partner which such Assignee
succeeds. The term "Assignee," as used in this paragraph, shall mean
a Person who shall become entitled to receive a share of the Profits,
Losses, Tax Credits and distributions of the Partnership by reason of
such Person succeeding to the Interest of a Partner by assignment of
all or any part of an Interest. To the extent an Assignee receives less
than 100% of the Interest of a Partner, such Assignee's Capital
Account and Capital Contribution shall be in proportion to the
Partnership Interest such Assignee receives, and the Capital Account
and Capital Contribution of the Partner who retains a partial interest
in the Partnership shall continue, and not be replaced, in proportion to
the Partnership Interest such Partner retains.
(d) The foregoing provisions and other provisions of this
Agreement relating to the maintenance of the Capital Accounts are
intended to comply with the Allocation Regulations, and shall be
interpreted and applied in a manner consistent with such Allocation
Regulations.
4.2 General Partner
The name, address and Capital Contribution of the General Partner are
as set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
(a) The Original Limited Partner hereby withdraws as a limited
partner of the Partnership and acknowledges that she no longer has
any Interest in, or rights or claims against, the Partnership as a Partner
as of the Admission Date.
(b) Each of the Special Limited Partner and the Investment
Limited Partner is hereby admitted to the Partnership as a Limited
Partner in substitution for the Original Limited Partner as of the
Admission Date and agrees to be bound by the terms and provisions of
the Project Documents and this Agreement. The name and address of
the Investment Limited Partner and the Special Limited Partner are as
set forth on Schedule A.
(c) Except as otherwise specifically set forth in Sections 4.5 or
7.4, the General Partner shall have no authority to admit additional
Limited Partners without the Consent of the Investment Limited
Partner.
4.4 Liability of the Limited Partners
Neither the Investment Limited Partner, the Special Limited Partner
nor any Person who becomes an Additional Limited Partner shall be
liable for any debts, liabilities, contracts or obligations of the
Partnership; such Persons shall be liable only to pay their respective
Capital Contributions as and when the same are due hereunder and
under the Act. After its Capital Contribution shall be fully paid, no
Limited Partner shall, except as otherwise required by the Act, be
required to make any further capital contributions or payments or lend
any funds to the Partnership.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other than
Section 13.8), to the extent the law of the State is not inconsistent, the
Special Limited Partner shall have the right, subject to any Requisite
Approvals, to:
(i) amend this Agreement provided, however, that no such
amendment affect the vested rights (including, without limitation, the
right to receive any fees, allocable share of Cash Flow or other
distributions, or Profits or Losses and Tax Credits hereunder) or
increase any of the liabilities or obligations of any General Partner
without its prior written consent;
(ii) dissolve the Partnership provided, however, that such
dissolution shall not be caused by the Special Limited Partner unless
the General Partner has violated a material provision of any Project
Document, which violation has not been cured within any applicable
cure period specified;
(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, gross negligence,
wilful misconduct or breach of fiduciary duty, or (B) upon the
occurrence of a Material Event.
(iv) continue the business of the Partnership with a substitute
General Partner, provided that the General Partner has been removed
pursuant to Section 4.5(a)(iii) above; 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 for cause pursuant to
Section 4.5(a)(iii),
(i) without any further action by any Partner, the Special
Limited Partner shall cause an Affiliate automatically to become a
General Partner (the "Substitute General Partner") and acquire in
consideration of a cash payment of $100 such portion of the Interest
of the removed General Partner as counsel to the Special Limited
Partner shall determine is the minimum appropriate interest in order to
assure the continued status of the Partnership as a partnership under
the Code and under the Act,
(ii) the economic Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new status of
the Special Limited Partner as a Substitute General Partner,
(iii) the Substitute General Partner shall automatically be
irrevocably delegated all of the powers and duties of the General
Partners pursuant to Section 6.13. A General Partner so removed 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, and
(iv) The Substitute General Partner or any Affiliate approved by
such Substitute General Partner shall have the option, exercisable in
its sole discretion, to acquire the remainder of the Interest 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 Substitute General
Partner or the Investment Limited Partner, as the case may be, and the
third chosen by the two so chosen. The proceedings of such
committee shall conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall be final and
binding. The expense of arbitration shall be born equally by the
removed General Partner and the Partnership. The method of
payment to the removed General Partner shall be fair and must protect
the solvency and liquidity of the Partnership. The method of payment
will be deemed presumptively fair where it provides for an interest-
bearing promissory note coming due in no less than five (5) years with
equal installments each year. In addition, upon removal, the
Partnership must promptly pay to the removed General Partner all
amounts then accrued and owing to the removed General Partner;
provided, however, that notwithstanding the language of Section 6.12,
Article X, Article XI and any other provision hereof, no removed
General Partner or any Affiliate thereof shall be entitled to receive
any fee, compensation or other remuneration from the Partnership,
other than (x) the above-described payment for the Interest, or portion
thereof, of the removed General Partner, and (y) 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.
(c) The General Partner is hereby required, within fifteen (15)
days after its receipt of any offer to purchase the Apartment Complex
or all of the Interests in the Partnership, to send a copy of such offer
(or a written description of any such oral offer) to each of the Limited
Partners. In connection with any proposed sale of the Apartment
Complex, the Special Limited Partner (or its designee) shall have the
right to (i) receive and review copies of all documents relating to the
proposed sale, (ii) participate in the negotiations of the terms and
conditions of the proposed sale, (iii) meet with the proposed
purchaser, (iv) solicit proposals for alternative offers for the
Apartment Complex, and (v) provide such other services in
connection with the proposed sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten
percent (10%) of the then outstanding Limited Partner Interests may
call meetings of the Partnership for any matters for which the Limited
Partners may vote as set forth in this Agreement. A list of the names
and addresses of all Limited Partners shall be maintained as part of
the books and records of the Partnership and shall be made available
upon request to any Limited Partner or his representative at his cost.
Upon receipt of a written request either in person or by certified mail
stating the purpose(s) of the meeting, the General Partner shall
provide all Limited Partners within ten (10) days after receipt of said
request, written notice of a meeting and the purpose of such meeting
to be held on a date not less than fifteen (15) nor more than sixty (60)
days after receipt of said request, at a time and place convenient to the
Limited Partners.
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 in the aggregate amount of
$2,712,643 shall be paid in cash installments (the "Installments"), as
follows:
(i) $1,356,321 (the "First Installment") on the latest to occur of
(A) the Admission Date, (B) the Bond Loan Full Funding Date; (C)
Tax Credit Set-Aside; or (D) receipt of a Permanent Mortgage Loan
Commitment satisfactory to the Special Limited Partner.
(ii) $813,793 (the "Second Installment") on the 50% Completion
Date.
(iii) $271,264 (the "Third Installment") on the latest to occur of
(A) State Designation; (B) the Completion Date; (C) Cost
Certification; (D) receipt of updated insurance certificates in form and
substance satisfactory to the Special Limited Partner; (E) receipt of an
updated Title Policy in form and substance satisfactory to the Special
Limited Partner, which policy in no event shall contain a survey
exception; (F) receipt by the Investment Limited Partner of an
Estoppel Letter from each Lender, or (G) receipt by the Investment
Limited Partner of a Contractor Pay-Off letter.
(iv) $271,264 (the "Fourth Installment") on the latest to occur of
(A) the Initial 100% Occupancy Date; (B) New Permanent Loan
Commitment; (C) Rental Achievement, [or (D) termination and
expiration of the Letter of Credit Documents, including full
satisfaction of all obligations of the Partnership under the Letter of
Credit Documents.
provided, however, that (x) the General Partner shall give the
Investment Limited Partner not less than fourteen (14) days' written
notice prior to the due date of each Installment subsequent to the First
Installment, and (y) no Installment shall be due unless and until all
conditions to the payment of all prior Installments have been satisfied.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the General Partner to the
Investment Limited Partner of a written certificate (the "Payment
Certificate") stating that as of the date of such certificate (i) all the
conditions to the payment of such Installment and each prior
Installment have been satisfied, (ii) all representations and warranties
of the General Partner contained in this Agreement are true and
correct and (iii) no event has occurred which suspends or terminates
the obligations of the Investment Limited Partner to pay Installments
under this Agreement which has not been cured as herein provided,
(iv) no event has occurred which, with the giving of notice, would
oblige the General Partner to repurchase the Interests of the
Investment Limited Partner pursuant to Section 5.2(a). Except as
provided in the final sentence of this Section 5.1(b), acceptance by the
Partnership of any Installment shall constitute a confirmation that, as
of the date of payment, all such conditions are satisfied and all such
representations and warranties are true and correct. The obligation of
the Investment Limited Partner to pay the First Installment is also
conditioned upon delivery by the General Partner to the Investment
Limited Partner of (x) a legal opinion of independent counsel to the
Partnership, the General Partner, the Developer and the Guarantors,
which opinion(s) must be satisfactory to the Investment Limited
Partner as to form, content and identity of counsel and (y) a
photocopy of a binding commitment, in form and substance
satisfactory to the Special Limited Partner, to issue the Title Policy
and endorsements thereto in form and substance satisfactory to the
Special Limited Partner. In no event shall any Installment become
due until all of the conditions for all of the Installments listed prior to
the Installment in question in Section 5.1(a) shall have been satisfied
and all of such prior Installments shall have become due.
Notwithstanding the foregoing, however, if at any time prior to the
date when an Installment becomes due and payable, the Partnership
has an Operating Deficit which the General Partner would be required
to fund pursuant to Section 6.10, then the Investment Limited Partner
may, at its option, waive the requirement of the delivery of the
Payment Certificate or any other condition with respect to part or all
of such Installment and pay such part or all of such Installment,
provided that the proceeds of the amount so paid are used by the
Partnership to fully fund such Operating Deficit; provided, however,
that if the proceeds of such amount so paid are designated in Section
6.12 to be used to pay fee(s), then such proceeds shall be utilized to
pay such fee(s) and the recipient(s) thereof shall be required to, and
hereby agree to, utilize the proceeds of such fee(s) to fund such
Operating Deficit, in which case the Investment Limited Partner is
hereby authorized to directly fund such Operating Deficit, with the
funds so applied being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be dated
and delivered not less than ten (10) nor more than thirty (30) days
prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise be
due, any statement required to be made in the Payment Certificate for
such Installment cannot be truthfully made in any material respect, the
General Partner shall notify the Investment Limited Partner of the
reason why such statement would be untrue if made, and the
Investment Limited Partner shall not be required to pay such
Installment; provided, however, that if (i) any such statement can
subsequently be truthfully made and (ii) the Investment Limited
Partner shall not have irrevocably lost, in the good faith judgment of
the Investment General Partner, any material tax or other benefits
hereunder (other than tax benefits for which the Investment Limited
Partner has been fully compensated pursuant to the provisions of
paragraphs (e), (f) and (g) of this Section 5.1), then the Investment
Limited Partner shall pay such Installment to the Partnership thirty
(30) days after delivery by the General Partner to the Investment
Limited Partner of the Payment Certificate together with an
explanation of the manner in which each such statement had become
true.
(e) In the event that as of or any time prior to Cost Certification
(the "Initial Adjustment Date"), the Investment Limited Partner shall
receive a written certification of the Auditors indicating that the
aggregate Actual Credit during the Credit Period will be less than the
aggregate Projected Credit during the Credit Period, then (i) the next
succeeding Installments of the Capital Contributions of the Investment
Limited Partner shall be reduced by an amount equal to the product of
(X) the difference between (1) the aggregate Projected Credit during
the Credit Period and (2) the aggregate Actual Credit during the
Credit Period and (Y) 0.80, and (ii) the Projected Credit for each
Fiscal Year shall thereafter be redefined to mean the Actual Credit, as
so determined (the "Revised Projected Credit"). Any such reduction
pursuant to this Section 5.1(e) shall be made first to the Installment, if
any, next due to be paid by the Investment Limited Partner, and any
balance of such amount payable by the General Partner in excess of
the amount of such Installment shall be applied to succeeding
Installments, if any, provided that if the amount of any such
reductions exceeds the sum of the remaining Installments, if any, then
an amount equal to the amount of such excess shall be paid by the
General Partner to the Investment Limited Partner 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
(unless such reduction was caused by an act or omission of the
Investment Limited Partner or its Affiliates, in which event no such
reduction or payment shall be required). No reduction of any
Installment or any payment by the General Partner pursuant to this
Section 5.1(e) shall be deemed to be a Capital Contribution by the
General Partner to the Partnership, nor shall any such payment
constitute a return of capital to the Investment Limited Partner.
(f) If with respect to any Fiscal Year all or a portion of which
occurs during the Initial Operating Period, the Actual Credit is or was
less than the Projected Credit (or the Revised Projected Credit, if
applicable) for such Fiscal Year (a "Reduction Year"), then the
General Partner shall pay to the Investment Limited Partner the
Reduction Amount. The Reduction Amount shall be equal to the sum
of (A) the excess of the Projected Credit (or the Revised Projected
Credit, if applicable) for such Fiscal Year over the Actual Credit for
such Fiscal Year multiplied by 0.80 plus (B) the Recapture Amount as
determined pursuant to Section 10.6 and, to the extent not already
accounted for, any interest or penalties payable by the limited partners
and/or holders of beneficial assignee certificates of the Investment
Limited Partner as a result of such shortfall or Recapture Event,
assuming that each limited partner and/or holder of a beneficial
assignee certificate in the Investment Limited Partner used all of the
Tax Credits allocated to it in the Fiscal Year of allocation. The
Auditors shall make their determination of the amount of the Actual
Credit with respect to each Reduction Year within thirty (30) days
following the end of such Fiscal Year. The Investment Limited
Partner shall be eligible to be paid a Reduction Amount as
hereinabove described with respect to each Reduction Year. Any
Reduction Amount shall first be applied to the Installment next due to
be paid by the Investment Limited Partner, with any portion of such
Reduction Amount in excess of the amount of such Installment then
being applied to succeeding Installments, provided that if no further
Installments remain to be paid or if the Reduction Amount shall
exceed the sum of the amounts of the remaining Installments, then the
entire Reduction Amount or the balance of the Reduction Amount, as
the case may be, shall be paid by the General Partner to the
Investment Limited Partner 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 (unless such reduction was
caused by an act or omission of the Investment Limited Partner or its
Affiliates, in which event no Reduction Amount shall be payable).
No payment by the General Partner pursuant to this Section 5.1(f)
shall be deemed to be a Capital Contribution to the Partnership nor
shall any such payment constitute a return of capital to the Investment
Limited Partner.
(g) In the event that, for any reason, at any time after the end of
the Initial Operating Period, the amount of the Actual Credit shall be
less than the Projected Credit (or the Revised Projected Credit, if
applicable) with respect to any Fiscal Year of the Partnership (such
difference being hereinafter referred to as a "Credit Shortfall"), the
Investment Limited Partner shall be treated as having made a
constructive advance to the Partnership with respect to such Fiscal
Year (a "Credit Recovery Loan"), which shall be deemed to have been
made on January 1 of such Fiscal Year in an amount equal to the sum
of (A) the Credit Shortfall for such Fiscal Year plus (B) the Recapture
Amount as determined pursuant to Section 10.6 and, to the extent not
already accounted for, any interest or penalties payable by the limited
partners and/or the holders of beneficial assignee certificates of the
Investment Limited Partner as a result of the Credit Shortfall for such
Fiscal Year, assuming that each limited partner and/or holder of a
beneficial assignee certificate in the Investment Partnership used all
of the Tax Credits allocated to him in the Fiscal Year of allocation.
Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such
principal advances shall have been deemed to have been made under
this Section 5.1(g) at a rate of nine percent (9%) per annum. Credit
Recovery Loans shall be payable by the Partnership as provided in
Section 10.2(b), Clause Third.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. Upon the occurrence of any of the events
(a "Repurchase Event") listed below in this Section 5.2(a), within five
(5) days of the occurrence thereof, the General Partner shall send to
the Investment Limited Partner and the Investment Limited Partner
notice of such event and of the General Partner's obligation to
repurchase the Interests of the Investment Limited Partner by paying
to the Investment Limited Partner an amount in cash (the "Repurchase
Amount") equal to each such Partner's Invested Amount minus the
portion, if any, of such Partner's Capital Contribution which shall not
yet have been paid (or deemed to have been paid) to the Partnership
plus the amount of any third-party costs, including, without limitation,
attorney's fees incurred by or on behalf of such Partner in
implementing this Section 5.2(a) in the event the Investment Limited
Partner requires such a repurchase plus interest thereon at the AFR
commencing on the fifth (5th) day after delivery of the notice referred
to in the next sentence. If the Investment Limited Partner elects to
require a repurchase of its Interest and the payment to it of an amount
equal to its Repurchase Amount, it shall send notice thereof to the
Partnership within sixty (60) days after the mailing date of the
General Partner's notice, or at any time after the occurrence of any of
the foregoing if the General Partner shall not have sent a notice
thereof, and the General Partner shall within thirty (30) days after the
Partnership receives any such notice from a Partner requesting the
purchase of its Interest repurchase the Interest of such Partner by
paying to such Partner an amount equal to its Repurchase Amount. If,
following receipt of the General Partner's notice, the Investment
Limited Partner fails to send notice to the General Partner by the end
of such 30-day period requesting the General Partner to purchase its
Interest, the Investment Limited Partner, as the case may be, shall be
deemed to have waived its right to cause the General Partner to
purchase its Interest as a result of the event described in the General
Partner's notice. No such waiver, however, shall affect the right of the
Investment Limited Partner to cause the General Partner to purchase
its Interest upon the occurrence of any other event described in this
Section 5.2(a), or upon any subsequent occurrence of the event
described in the General Partner's notice. The Repurchase Events are
as follows:
(i) each of the buildings in the Apartment Complex shall not
have been placed in service by December 31, 2000; or
(ii) by December 31, 2000, the Completion Date shall not have
occurred; or
(iii) construction or operation of the Apartment Complex shall
have been enjoined by a final order (from which no further appeals
are possible) of a court having jurisdiction and such injunction shall
continue for a period of ninety (90) days; or
(iv) State Designation shall not have occurred by January 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 Partner shall
not have made any payment as described in the next to last sentence
of Section 5.1(e) or, if the Investment Limited Partner shall have
elected to have all or a portion of any payment under Section 5.1(e)
applied toward future Installment obligations of the Investment
Limited Partner, amendments to this Agreement shall not have been
adopted and filed in the Filing Office, reflecting such event; or
(v) if by the date which is twelve (12) months following the
Completion Date, Rental Achievement shall not have been achieved;
or
(vi) the Partnership shall fail to meet the Minimum Set-Aside
Test or the Rent Restriction Test by the close of the first year of the
Credit Period and/or fails to continue to meet either of such tests at
any time during the sixty (60)-month period commencing on such
date; or
(vii) (A) foreclosure proceedings shall have commenced under
any Mortgage and such proceedings shall not have been dismissed
within thirty (30) days, (B) any of the commitments of a Lender to
provide a Mortgage Loan and/or any subsidy financing shall be
terminated or withdrawn and not reinstated or replaced within sixty
(60) days with terms at least as favorable to the Partnership or terms
for which the Consent of the Investment Limited Partner and any
Requisite Approvals shall have been obtained, or (C) the Bond
Lender, acting in good faith and in accordance with the provisions of
the Bond Loan Documents, shall have irrevocably refused to make
any further advances under the Bond Loan Documents and such
decision shall not have been reversed or the Bond Lender replaced
within thirty (30) days; or
(viii) at any time the General Partner fails to advance Subordinated
Loans and such failure continues for ten (10) days; or
(ix) any action is commenced to foreclose any mechanics, or any
other lien (other than the lien of a Mortgage) against the Apartment
Complex and such action has not within thirty (30) days been either
bonded against in such a manner as to preclude the holder of such lien
from having any recourse to the Apartment Complex or to the
Partnership for payment of any debt secured thereby, or affirmatively
insured against by the title insurance policy or an endorsement thereto
issued to the Partnership by a reputable title insurance company
(which insurance company will not have indemnity from or recourse
against Partnership assets by reason of any loss it may suffer by
reason of such insurance) in an amount satisfactory to the Investment
Limited Partner; or
(x) a casualty occurs resulting in substantial destruction of all or
a portion of the Apartment Complex, and the insurance proceeds (if
any) are insufficient to restore the Apartment Complex or the
Apartment Complex is not so restored within twenty-four (24) months
following such casualty.
(b) Lender/Agency Disapproval. If any Agency or Lender shall
disapprove, or fail to give any required approval of, the Investment
Limited Partner and/or the Special Limited Partner as a Limited
Partner hereunder within one hundred eighty (180) days of the
Admission Date, then the Partner being disapproved or not approved
shall, effective as of such time or such later time as may be elected by
the Partner being disapproved or not approved as may be specified by
such Agency or Lender in its disapproval, at the option of the Partner
being disapproved or not approved (if not directed by such Agency or
Lender to withdraw), cease to be a Limited Partner. The General
Partner shall, within ten (10) days of the effective date of such
cessation, pay to the Partner being disapproved or not approved an
amount equal to its Invested Amount minus the amount, if any, of
such Partner's Capital Contribution which shall not yet have been paid
(or deemed to have been paid) to the Partnership plus the amount of
any third party costs, including, but not limited to attorney's fees,
incurred by or on behalf of such Partner in implementing this Section
5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner of the
amount due to it pursuant to either Section 5.2(a) or Section 5.2(b),
the Interest of such Partner shall terminate, and the General Partner
shall indemnify and hold harmless such Partner from and against any
Adverse Consequences to which such Partner (as a result of its
participation hereunder) may be subject, provided that such Adverse
Consequences do not result from such Partner's acts or omissions.
(d) Waiver of Repurchase Right. Each of the Investment
Limited Partner and the Special Limited Partner shall have the right to
irrevocably waive its right to have its Interest repurchased pursuant to
any clause or clauses of Section 5.2(a), or any portion thereof, at any
time during which any of such rights shall be in effect. Such a waiver
shall be exercised by delivery to the General Partner of a written
notice stating that the rights being waived pursuant to any specified
clause or clauses of Section 5.2(a), or any specified portion thereof,
are thereby waived for a specified period of time.
(e) Additional General Partner. If the General Partner shall fail
to make on the due date therefor any payment required under Section
5.2(a) or Section 5.2(b), time being of the essence, at any time
thereafter the Special Limited Partner shall have the option,
exercisable in its sole discretion, to cause itself or its designee to be
admitted as an additional General Partner, receiving from the existing
General Partner, in consideration of the payment of ten dollars
($10.00), a one one-hundredth of one per cent (0.01%) interest in the
Profits, Losses, Tax Credits and distributions of the Partnership, with
the Special Limited Partner retaining its status as such and its
economic interest in the Partnership as the Special Limited Partner (or
its designee as an additional General Partner). If the Special Limited
Partner exercises the option described in this Section 5.2(e), each of
the other General Partner hereby agrees that all of its rights and
powers hereunder as a General Partner shall automatically be
irrevocably delegated to the Special Limited Partner pursuant to
Section 6.13 without the necessity of any further action by any
Partner. Each Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to take any action and to execute,
deliver and file or record any and all documents and instruments on
behalf of such Partner and the Partnership as the Special Limited
Partner may deem necessary or appropriate in order to effectuate the
provisions of this Section 5.2(e) and to allow the additional General
Partner to manage the business of the Partnership. The admission of
the Special Limited Partner or its designee as an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner shall
fully indemnify and hold harmless the additional General Partner on
an after-tax basis from and against any and all Adverse Consequences
sustained by such additional General Partner in connection with its
status as a General Partner (other than Adverse Consequences arising
solely from the gross negligence or willful misconduct of such
additional General Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3, Section 6.15 and
all other provisions of this Agreement, the General Partner for, in the
name and on behalf of the Partnership, is hereby authorized, in
furtherance of the purposes of the Partnership:
(i) to acquire by purchase, lease, exchange or otherwise any real
or personal property;
(ii) to construct, rehabilitate, operate, maintain, finance and
improve, and to own, sell, convey, assign, mortgage or lease any real
estate and any personal property;
(iii) to borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment
Complex or any other assets of the Partnership;
(iv) to execute the Mortgage Loan Documents and the other
Project Documents and all such other documents as the General
Partner deems to be necessary or appropriate in connection with the
acquisition, development, construction and financing of the
Apartment Complex;
(v) subject to Section 3.2, to prepay in whole or in part,
refinance or modify any Mortgage Loan or other financing affecting
the Apartment Complex;
(vi) to employ the Management Agent (which may be an Affiliate
of the General Partner) and, subject to the provisions of Article XI, to
pay reasonable compensation for its services;
(vii) to employ its Affiliates to perform services for, or sell goods
to, the Partnership provided that (except with respect to any contract
specifically authorized by this Agreement) the terms of any such
transaction with an Affiliate shall not be less favorable to the
Partnership than would be arrived at by unaffiliated parties dealing at
arms' length;
(viii) to execute contracts with any Agency, the State or any
subdivision or agency thereof or any other Governmental Authority to
make apartments or tenants in the Apartment Complex eligible for
any public-subsidy program;
(ix) to execute leases of some or all of the apartment units of the
Apartment Complex to individuals and/or to a public housing
authority and/or to a non-profit corporation, cooperative or other non-
profit Entity;
(x) to employ or engage such engineers, architects, technicians,
accountants, attorneys and other Persons, as may be necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership; and
(xi) to enter into any kind of activity and to perform and carry out
contracts of any kind which may be lawfully carried on or performed
by a partnership and to file all certificates and document which may
be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partner shall have no authority to perform any act in violation
of the Act, any other applicable law, Agency or other government
regulations, the requirements of any Lender, or the Project
Documents. In the event of any conflict between the terms of this
Agreement and any applicable Regulations or requirements of any
Lender, the terms of such Regulations or the requirements of such
Lender, as the case may be, shall govern. Subject to the provisions of
Section 6.2(b), the General Partner, acting in its capacity as General
Partner, shall not have the authority, without the Consent of the
Special Limited Partner:
(i) to have unsecured borrowings in excess of twenty thousand
dollars ($20,000.00) in the aggregate at any one time outstanding,
except borrowings constituting Subordinated Loans or Credit
Recovery Loans;
(ii) to borrow from the Partnership or commingle Partnership
funds with the funds of any other Person;
(iii) following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the character or use of the Apartment Complex or
which cost in excess of twenty thousand dollars ($20,000.00) in a
single Fiscal Year, except (x) replacements and remodeling in the
ordinary course of business or under emergency conditions or (y)
construction paid for from insurance proceeds;
(iv) to acquire any real property in addition to the Apartment
Complex;
(v) except as otherwise provided in Article III, to increase,
decrease or modify the terms of or refinance any Mortgage Loan, such
Consent of the Special Limited Partner not to be unreasonably
withheld;
(vi) to rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the
Minimum Set-Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a proceeding seeking
any decree, relief, order or appointment in respect to the Partnership
under the federal bankruptcy laws, as now or hereafter constituted, or
under any other federal or state bankruptcy, insolvency or similar law,
or the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the Partnership or for any
other substantial part of the Partnership's business or property, or to
cause the Partnership to consent to any such decree, relief, order or
appointment initiated by any Person other than the Partnership;
(x) to execute contracts with any Agency, the State or any
subdivision or agency thereof or any other Governmental Authority to
make apartments or tenants in the Apartment Complex eligible for
any public-subsidy program;
(xi) to amend in any material respect any construction or
rehabilitation contract;
(xii) to pledge or assign any of the Capital Contributions of the
Investment Limited Partner or the proceeds thereof (except to the
extent required by the terms of the Bond Loan Documents and the
Letter of Credit Documents and agreed to in writing by the Special
Limited Partner);
(xiii) to amend any Project Document, or to permit any party
thereunder to waive any provision thereof, to the extent that the effect
of such amendment or waiver would be to materially eliminate,
diminish or defer any obligation or undertaking of the Partnership, the
General Partner or its Affiliates which accrues, directly or indirectly,
to the benefit of, or provides additional security or protection to, the
Investment Limited Partner (notwithstanding that the Investment
Limited Partner is neither a party to nor express beneficiary of such
provision or was not a partner when such provision became effective);
(xiv) to approve any changes to the plans and specifications for the
Apartment Complex which would result, either individually or in the
aggregate, in an overall development cost increase or decrease in
excess of $25,000;
(xv) to permit the merger, termination or dissolution of the
Partnership; or
(xvi) to do any act required to be approved or ratified by all
limited partners under the Act.
(b) In the event that any General Partner violates any provision
of Section 6.2(a), the Special Limited Partner in its sole discretion
and without prejudice to its rights under Sections 405(b) and 7.6(a),
may cause itself or its designee to be admitted as an additional
General Partner without any further action by any other Partner.
Upon any such admission of an additional General Partner, each
existing General Partner shall be deemed to have assigned
proportionally to the additional General Partner, automatically and
without further action, such portion of its General Partnership Interest
so that the additional General Partner shall receive not less than a one
one-hundredth of one percent (0.01%) interest in the Profits, Losses,
Tax Credits and distributions of the Partnership in consideration of
one dollar ($1.00) and any other consideration which may be agreed
upon. An additional General Partner so admitted shall automatically
become the Managing General Partner and shall be irrevocably
delegated all of the power and authority of all of the General Partner
pursuant to Section 6.13. Any such additional General Partner shall
have the right to withdraw as a General Partner at any time, leaving
the prior General Partner once again as the only General Partner, the
provisions of Article VII notwithstanding. Each Partner hereby grants
to the Special Limited Partner a special power of attorney, irrevocable
to the extent permitted by law and coupled with an interest, to amend
this Agreement and to do anything else which, in view of the Special
Limited Partner, may be necessary or appropriate to accomplish the
purposes of this Section 6.2(b) or to enable any additional General
Partner admitted pursuant to this Section 6.2(b) to manage the
business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner on an
after-tax basis shall fully indemnify and hold harmless the additional
General Partner from and against any and all Adverse Consequences
sustained by the additional General Partner in connection with its
status as a General Partner (other than Adverse Consequences arising
solely from the gross negligence or wilful misconduct of such
additional General Partner).
(c) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive any salary or
other direct or indirect compensation for any services or goods
provided in connection with the Partnership or the Apartment
Complex, except as may be specifically provided in Section 6.12,
Section 6.15 and Article XI or as to which the Consent of the Special
Limited Partner shall have been obtained to the precise terms thereof
prior to the commencement of such services or the provision of such
goods. Any Partner may engage independently or with others in other
business ventures of every nature and description, including the
ownership, operation, management, syndication and development of
real estate; neither the Partnership nor any other Partner shall have
any rights in and to such independent ventures or the income or profits
derived therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the General
Partner shall have the exclusive right to control the business of the
Partnership. If at any time there is more than one General Partner, the
powers and duties of the General Partners hereunder shall be
exercised in the first instance by a Managing General Partner who,
subject to the terms and provisions of this Agreement, shall manage
the business and affairs of the Partnership. The Managing General
Partner may bind the Partnership by executing and delivering, in the
name and on behalf of the Partnership, any documents which this
Agreement authorizes the General Partners to execute hereunder
without the requirement that any other General Partner execute such
documents. The initial Managing General Partner shall be CPLLC; if
it is unwilling or unable to serve in such capacity or shall cease to be a
General Partner, the remaining General Partners may from time to
time designate a new Managing General Partner. If for any reason no
designation is in effect, the powers of the Managing General Partner
shall be exercised by a majority in interest of the General Partners.
Any action required or permitted to be taken by a corporate General
Partner hereunder may be taken by such of its proper officers or
agents as it shall validly designate for such purpose.
(b) The Managing General Partner shall have control over the
business of the Partnership and shall have all rights, powers and
authority conferred by law as necessary, advisable or consistent in
connection therewith. Without limiting the generality of the
foregoing, the Managing General Partner shall have the right, power
and authority to execute any documents relating to the acquisition,
financing, construction, operation and sale of all or any portion of the
Apartment Complex with the prior approval of the other General
Partners, if any. The Managing General Partner shall be responsible
for administering any construction loan draw requests for the
development of the Apartment Complex.
(c) Neither the Investment Limited Partner nor the Special
Limited Partner shall have any right to take part in the management or
control of the business of the Partnership or to transact any business in
the name of the Partnership. No provision of this Agreement which
makes the Consent of the Investment Limited Partner or the Consent
of the Special Limited Partner a condition for the effectiveness of an
action taken by the General Partner is intended, and no such
provisions shall be construed, to give the Investment Limited Partner
or the Special Limited Partner, as the case may be, any participation
in the control of the Partnership business. Each of the Special
Limited Partner and the Investment Limited Partner hereby consents
to the exercise by the General Partner of the powers conferred on it by
law and this Agreement, and the General Partner agrees to exercise
control of the business of the Partnership only in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, in no
event may the provisions of this Section 6.4 be invoked by any
General Partner or by any other Person as a defense against or as an
impediment to the ability of either the Investment Limited Partner or
the Special Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of the
Partnership to the best of its ability, shall use its best efforts to carry
out the purpose of the Partnership, and shall devote to the Partnership
such time as may be necessary for the proper performance of its duties
and the business of the Partnership. The General Partner shall
promptly take all action which may be necessary or appropriate for
the proper development, construction, maintenance and operation of
the Apartment Complex in accordance with the provisions of this
Agreement, the Project Documents and any applicable laws and
Regulations. The General Partner is responsible for the management
and operation of the Partnership, including the oversight of the rent-up
and operational stages of the Apartment Complex.
(b) Subject to the provisions of Section 6.5(g), the General
Partner shall use its diligent good faith efforts to cause the Partnership
to generate Cash Flow for distribution to the Partners at the maximum
realizable level in view of (i) any applicable Regulations, (ii) the
Minimum Set-Aside Test, (iii) the Rent Restriction Test and (iv) the
Projected Rents, and, if necessary, the General Partner also shall use
its best efforts to obtain approvals and implementation of appropriate
adjustments in the rental schedule of the Apartment Complex.
(c) The General Partner shall cause the Partnership to obtain and
keep in force, during the term of the Partnership, insurance policies in
accordance with the Insurance Requirements set forth on Exhibit C
hereto. Throughout the term of the Partnership, the General Partner
shall provide copies of all such policies (or binders) to the Investment
Limited Partner within thirty (30) days after their receipt thereof. The
General Partner shall cause the applicable insurer to name the
Investment Limited Partner as an "additional insured" on each
Partnership insurance policy. Each Partnership insurance policy shall
include a provision requiring the insurance company to notify the
Investment Limited Partner in writing no less than thirty (30) days
prior to any cancellation, non-renewal or material change in the terms
and conditions of coverage. The General Partner shall review
regularly all of the Partnership and Apartment Complex insurance
coverage to insure that it is adequate and continuing. In particular,
the General Partner shall review at least annually the insurance
coverage required by this Section 6.5(c) to insure that it is in an
amount at least equal to the then current full replacement value of the
Apartment Complex.
Without limitation of the foregoing, the General Partner shall deliver
to the Investment Limited Partner on or before the Admission Date
one or more certificates or memoranda of insurance, in form
reasonably acceptable to the Investment Limited Partner, evidencing,
(i) the existence of the insurance policies and coverages specified on
Exhibit C, (ii) that the Partnership and its Partners (including the
Investment Limited Partner) are named insured on such policies, and
(iii) that such insurance policies will not be cancelled by the insurers
except within thirty (30) days' written notice to the Investment
Limited Partner. From time to time following the Admission Date,
the General Partner shall deliver to the Investment Limited Partner
such further certificates or memoranda of insurance as the Investment
Limited Partner may reasonably require to confirm that such
insurance and notice provisions with respect to insurance under this
Agreement have been complied with.
(d) If at any time there is more than one General Partner, the
obligations of the General Partners hereunder shall be the joint and
several obligations of each General Partner. Except as otherwise
provided in Sections 4.5(b) and 7.1, such obligations shall survive any
Withdrawal of a General Partner from the Partnership.
(e) The General Partner shall establish and maintain reasonable
reserves (the "Replacement Reserve") to provide for working capital
needs, improvements, replacements and any other contingencies of
the Partnership. At a minimum, beginning on January 1, 1999, the
General Partner shall cause the Partnership to deposit $16.67 per
month for each unit leased during such year from Cash Flow into the
Replacement Reserve; beginning on January 1, 2001, the General
Partner shall cause the Partnership to annually deposit $38,400 ($200
per unit per annum) from Cash Flow into the Replacement Reserve; to
the extent that Cash Flow (as determined before deduction of such
reserve deposit) for any Fiscal Year shall be insufficient to make such
deposit in full, the General Partner shall fund such shortfall from its
own funds as a Subordinated Loan.
(f) Each General Partner shall be bound by the provisions of the
Project Documents, and no additional General Partner shall be
admitted if he, she or it has not first agreed to be bound by this
Agreement (and assume the obligations of a General Partner
hereunder) and by the Project Documents to the same extent and
under the same terms as each of the other General Partners.
(g) The General Partner shall take all actions appropriate to
ensure that the Investment Limited Partner receives the full amount of
the Projected Credit, including, without limitation, the rental of
apartments to appropriate tenants and the filing of annual
certifications as may be required. In this regard, the General Partner
shall, inter alia, cause (i) the Partnership to satisfy the Minimum Set-
Aside Test, the Rent Restriction Test and all other requirements
imposed from time to time under the Code with respect to rental
levels and occupancy by qualified tenants by the close of the first year
of the Credit Period and throughout the Compliance Period so as to
permit the Partnership to be entitled to the maximum available Tax
Credit (ii) the Partnership to comply with all State Tax Credit
monitoring procedures, (iii) all dwelling units in the Apartment
Complex to be leased for initial periods of not less than six months to
individuals satisfying the Rent Restriction Test, (iv) the Partnership to
make all appropriate Tax Credit elections in a timely fashion, and (v)
all rental units in the Apartment Complex to be of equal quality with
comparable amenities available to low-income tenants on a
comparable basis without separate fees.
(h) On or before the Admission Date, the General Partner shall
provide to the Special Limited Partner either (i) an appraisal of the
Apartment Complex prepared by a competent independent appraiser
or (ii) completed FmHA Forms 1924-13 (estimate and certificate of
actual cost) and 1930-7 (statement of budget, income and expense) or
HUD project cost and budget analysis on Form 2264, or any successor
FmHA or HUD form, any comparable form of a state or other
Governmental Authority, including any applicable Credit Agency,
setting forth estimates with respect to construction, rehabilitation and
mortgage financing costs and initial rental income and operating
expense figures for the Apartment Complex.
(i) The General Partner shall (i) not store or dispose of (except
in compliance with all laws, ordinances, and regulations pertaining
thereto) any Hazardous Material at the Apartment Complex, or at or
on any other Site or Vessel owned, occupied, or operated either by
any General Partner, any Affiliate of a General Partner, or any Person
for whose conduct any General Partner is or was responsible; (ii)
neither directly nor indirectly transport or arrange for the transport of
any Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide the
Investment Limited Partner with written notice (x) upon any General
Partner's obtaining knowledge of any potential or known release, or
threat of release, of any Hazardous Material at or from the Apartment
Complex or any other Site or Vessel owned, occupied, or operated by
any General Partner, any Affiliate of a General Partner or any Person
for whose conduct any General Partner is or was responsible or whose
liability may result in a lien on the Apartment Complex; (y) upon any
General Partner's receipt of any notice to such effect from any federal,
state, or other Governmental Authority; and (z) upon any General
Partner's obtaining knowledge of any incurrence of any expense or
loss by any such government authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for which
expense or loss a lien may be imposed on the Apartment Complex.
(j) The General Partner shall promptly request in writing of any
Lender that such Lender cause the Special Limited Partner to be
named as an "interested party" in the applicable Mortgage Loan
Documents, so that such Lender will notify the Special Limited
Partner of any default under the applicable Mortgage or the General
Partner shall itself notify the Special Limited Partner of any such
default.
(k) The General Partner shall provide the Special Limited
Partner with a true and accurate copy of each Bond Loan requisition
and any supporting documents and information which has been
submitted for approval by the Bond Lender or the Bank (whether
submitted before or after the Admission Date).
(l) The General Partner shall have a fiduciary responsibility for
the safekeeping and use of all funds and assets of the Partnership,
whether or not in its immediate possession or control. The General
Partner shall not employ, or permit another to employ, such funds or
assets in any manner except for the exclusive benefit of the
Partnership. No General Partner shall contract away the fiduciary
duty owed at common law to the Limited Partners.
6.6 Representations and Warranties
The General Partner represents and warrants to the Investment
Limited Partner and the Special Limited Partner as follows:
(a) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State and
has complied with all filing requirements necessary for its existence
and to preserve the limited liability of the Investment Limited Partner
and the Special Limited Partner.
(b) No event or proceeding has occurred or is pending or, is to
the Best Knowledge of the General Partner, threatened which would
(i) materially adversely affect the Partnership or its properties, or (ii)
materially adversely affect the ability of the General Partner or any of
its Affiliates to perform their respective obligations hereunder or
under any other agreement with respect to the Apartment Complex,
other than legal proceedings which have been bonded against without
recourse to Partnership assets in such manner as to stay the effect of
the proceedings or otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation, the
following: (x) legal actions or proceedings before any court,
commission, administrative body or other Governmental Authority
having jurisdiction over the zoning applicable to the Apartment
Complex; (y) labor disputes; and (z) acts of any Governmental
Authority.
(c) No default (or event which, with the giving of notice or the
passage of time or both, would constitute a default) has occurred and
is continuing under this Agreement or under any material provision of
the Project Documents, and the Project Documents are in full force
and effect.
(d) Except as specifically permitted under Section 3.1, no
Partner or Related Person bears (or will bear) the Economic Risk of
Loss with respect to any Mortgage Loan. No General Partner has,
either on its own behalf or on behalf of the Partnership, incurred any
financial obligation with respect to the Partnership prior to the
Admission Date, other than as disclosed in writing to the Special
Limited Partner prior to the Admission Date.
(e) The Apartment Complex will be, is being or has been
constructed in a timely manner in substantial conformity with the
Project Documents. To the Best Knowledge of the General Partner,
there is no violation by the Partnership or the General Partner of any
zoning, environmental or similar regulation applicable to the
Apartment Complex which could have a material adverse effect
thereon, and the Partnership has complied and will comply with all
applicable municipal and other laws, ordinances and regulations
relating to such construction and use of the Apartment Complex. All
appropriate public utilities, including, but not limited to, water,
electricity, gas (if called for in the Plans and Specifications), and
sanitary and storm sewers, are or will be available and operating
properly for each unit in the Apartment Complex at the time of the
initial occupancy of such unit, except for Acts of God or acts beyond
the control of the General Partner.
(f) The Partnership owns good and marketable fee simple title to
the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (i) are both permitted by the
Project Documents and are noted or excepted in the Title Policy, (ii)
do not materially interfere with use of the Apartment Complex (or any
part thereof) for its intended purpose or, other than the permitted
Mortgages, have a material adverse effect on the value of the
Apartment Complex, or (iii) have been bonded or insured against in
such a manner as to preclude the holder of such lien or such surety or
insurer from having any recourse to the Apartment Complex or the
Partnership for payment of any debt secured thereby, which bond(s) or
insurance have been approved by the Lenders.
(g) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or limited
liability company have been or will be duly authorized by all
necessary corporate or other actions, and the consummation of any
such transactions with or on behalf of the Partnership will not
constitute a breach or violation of, or a default under, the charter or
by-laws of such Affiliate or any agreement by which such Affiliate or
any of its properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(h) Any General Partner (or partner or member of a General
Partner) which is a corporation or limited liability company (a
"Corporation/LLC") has been duly organized, is validly existing and
in good standing under the laws of its state of organization and has all
requisite corporate and other power to be a General Partner and to
perform its duties and obligations as contemplated by this Agreement
and the Project Documents. Neither the execution and delivery by
any Corporation/LLC of this Agreement nor the performance of any
of the actions of any Corporation/LLC contemplated hereby has
constituted or will constitute a violation of (a) the articles of
incorporation, operating agreement, by-laws and any other
organizational documents of such Corporation/LLC, (b) any
agreement by which such Corporation/LLC is bound or to which any
of its property or assets is subject, or (c) any law, administrative
regulation or court decree.
(i) No Event of Bankruptcy has occurred with respect to the
Partnership, any General Partner or the Developer.
(j) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by any Agency or Lender.
(k) The aggregate net worth of the General Partner and the
Guarantor is not less than $1,000,000.
(l) All anticipated payments and expenses required to be made
or incurred in order to complete the construction of the Apartment
Complex in conformity with the Project Documents, to fund any
reserves hereunder or under any other Project Document required to
be funded at or prior to the Completion Date, to satisfy all
requirements under the Project Documents and to pay the
Development Fee and all other fees, have been or will be paid or
provided for utilizing only (i) the funds available from the Bond Loan,
(ii) the Capital Contributions of the Investment Limited Partner, (iii)
the Capital Contributions of the General Partner in the amounts set
forth on Schedule A as of the Admission Date, (iv) the available net
rental income, if any, earned by the Partnership prior to the
Completion Date (to the extent that it is permitted to be used for such
purposes by any Agency or Lender), (v) any Cash Flow generated
subsequent to the Completion Date (to the extent provided in Section
10.2(a)), (vi) any insurance proceeds and (vii) any funds furnished by
the General Partner pursuant to Sections 6.5(e) and 6.11(a).
(m) The aggregate amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is
$58,868 for 1999, $359,937 for 2000, $376,794 per annum for each of
the Fiscal Years 2001 through 2008 (inclusive), $317,926 for 2009
and $16,857 for 2010; provided, however, that the Projected Credit
for 2009 shall be reduced by the amount, if any, by which the Actual
Credit for 1999 exceeds $58,868 and provided further that the
Projected Credit for 2010 shall be reduced by the amount, if any, by
which the Actual Credit for 2000 exceeds $359,937, provided,
however, that the General Partner shall have no liability to the
Investment Limited Partner or the Special Limited Partner for any
breach of the representation contained in this paragraph (m) if (but
only to the extent that) the adjuster provisions set forth in Sections
5.1(e), (f) and (g) have become operative and all required payments or
adjustments have been made thereunder in accordance with the terms
thereof.
(n) The Apartment Complex will be, is being or has been
constructed and operated in a manner which satisfies Section 42 of the
Code and shall continue to satisfy all existing and anticipated
restrictions applicable to projects generating Tax Credits.
(o) The General Partner has provided the Investment Limited
Partner with a complete copy of "Phase I" hazardous waste site
assessment report for the Apartment Complex. No General Partner,
Affiliate of a General Partner or Person for whose conduct any
General Partner is or was responsible has ever: (i) owned, occupied,
or operated a Site or Vessel on which any Hazardous Material was or
is stored, transported, or disposed of, except if such storage, transport
or disposition was and is at all times in compliance with all laws,
ordinances, and regulations pertaining thereto; (ii) directly or
indirectly transported, or arranged for transport, of any Hazardous
Material (except if such transport was and is at all times in
compliance with all laws, ordinances and regulations pertaining
thereto); (iii) caused or was legally responsible for any release or
threat of release of any Hazardous Material; (iv) received notification
from any federal, state or other Governmental Authority of (x) any
potential, known, or threat of release of any Hazardous Material from
the Apartment Complex or any other Site or Vessel owned, occupied,
or operated by any General Partner, by any Affiliate of a General
Partner, or by any Person for whose conduct any General Partner is or
was responsible or whose liability may result in a lien on the
Apartment Complex; or (y) the incurrence of any expense or loss by
any such Governmental Authority or by any other Person in
connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from the
Apartment Complex or any such Site or Vessel.
(p) To the Best Knowledge of the General Partner, no Hazardous
Material was ever or is now stored on, transported, or disposed of on
the land comprising the Apartment Complex, except to the extent any
such storage, transport or disposition was at all times in compliance
with all laws, ordinances, and regulations pertaining thereto.
(q) The General Partner has fulfilled and will continue to fulfill
all of its duties and obligations under Section 6.5.
(r) Certifications have been obtained or will be obtained in a
timely fashion from the Credit Agency and the Housing Authority, to
the extent required in accordance with Code Sections 42(m)(1)(D) and
42(m)(2)(D), which confirm their determinations that (i) the
Apartment Complex satisfies the requirements for allocation of Tax
Credits under the qualified allocation plan applicable to the area in
which the Apartment Complex is located, and (ii) the Tax Credits to
be claimed with respect to the Apartment Complex do not exceed the
amount necessary for the financial feasibility of the Apartment
Complex and its viability as a qualified low-income housing project
throughout the Compliance Period.
(s) At least 50% of the aggregate basis of the Apartment
Complex has been or will be financed by the proceeds of bonds (i) the
interest from which is exempt from federal income taxation under
Section 103 of the Code, (ii) which are taken into account under
Section 146 of the Code and (iii) which will be redeemed within a
reasonable period using principal payments on the bond loan.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall at any time
bear the Economic Risk of Loss for the payment of any portion of any
Mortgage Loan, and the General Partner shall not permit any other
Partner or any Related Person to bear the Economic Risk of Loss for
the payment of any portion of any Mortgage Loan, except as may be
expressly permitted pursuant to the provisions of Article III or with
the Consent of the Special Limited Partner.
6.8 Indemnification of the General Partner
(a) Except as provided by Article V, no General Partner or any
Affiliate thereof shall have liability to the Partnership or to any
Limited Partner for any loss suffered by the Partnership which arises
out of any action or inaction of any General Partner or Affiliate
thereof if such General Partner or Affiliate thereof in good faith
determined that such course of conduct was in the best interest of the
Partnership and such course of conduct did not constitute gross
negligence or willful misconduct of such General Partner or Affiliate
thereof.
(b) A General Partner or any Affiliate thereof shall be
indemnified by the Partnership from and against any Adverse
Consequences sustained in connection with the business and
operations of the Partnership, provided that all of the following
conditions are met: (i) such General Partner has determined, in good
faith, that the course of conduct which caused the loss, judgment,
liability, expense or amount paid in settlement was in the best
interests of the Partnership; and (ii) such Adverse Consequences were
not the result of gross negligence or willful misconduct on the part of
such General Partner or Affiliate thereof; and (iii) such
indemnification or agreement to hold harmless is recoverable only out
of the assets of the Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer
shall be indemnified for any Adverse Consequences arising from or
out of an alleged violation of federal or state securities laws unless
there has been a successful adjudication on the merits of each count
involving securities laws violations as to the particular indemnitee and
the court finds that indemnification of the settlement and related costs
should be made. In any claim for indemnification for federal or state
securities law violations, the party seeking indemnification shall, prior
to seeking court approval for such indemnification, place before the
court the positions of the Securities and Exchange Commission, the
Massachusetts Securities Division and any other applicable state
securities administrator with respect to the issue of indemnification
for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance or course of
construction insurance, which insures any party against any liability as
to which such party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves an activity in
which such Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term "Affiliate"
shall mean (i) any Person performing services on behalf of the
Partnership who (x) directly or indirectly controls, is controlled by or
is under common control with a General Partner; (y) owns or controls
ten percent (10%) or more of the outstanding voting securities of a
General Partner or (z) is an officer, director, partner, member,
manager or trustee of a General Partner; and (ii) any Person for whom
the General Partner acts as an officer, director, partner or trustee. For
purposes of this Section 6.8 only, the term "controls" and any form of
such term shall mean the power to direct the management and policies
of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partner will indemnify and hold the Partnership
and the Limited Partners harmless from and against any and all
Adverse Consequences which the Partnership or any Limited Partner
may incur by reason of (i) the past, present or future actions or
omissions of the General Partner or any of its Affiliates constituting
gross negligence or willful misconduct, or (ii) any liabilities to which
either the Partnership or the Apartment Complex is subject other than
(x) any Mortgage or (y) necessary contractual obligations incurred
pursuant to the requirements of any Agency or Lender in connection
with the operation of the Apartment Complex in the ordinary course
of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission
for which the Partnership is required to indemnify such General
Partner under Section 6.8, except as provided by Article V.
(c) The General Partner shall indemnify, defend, and hold the
Limited Partners harmless on an after-tax basis from and against any
Adverse Consequences related to or arising out of the presence of any
Hazardous Material at the Apartment Complex (other than any
Adverse Consequences resulting from the acts or omissions of the
Limited Partners). Any claim or loss described in the immediately
preceding sentence may be defended, compromised, settled, or
pursued by the Limited Partners with counsel of the Limited Partners'
selection, but at the expense of the General Partner. Notwithstanding
anything else set forth herein, this indemnification shall survive the
withdrawal of any General Partner and/or the termination of this
Agreement.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner shall be
obligated during the period from Rental Achievement until the later of
the third (3rd) anniversary of Rental Achievement or the closing of
the New Permanent Loan (the "Subordinated Loan Period") to
promptly advance funds to eliminate any Operating Deficit. In the
event that the General Partner shall fail to make any such advance as
aforesaid, (a) the Partnership shall utilize amounts (the "Applied
Amounts") otherwise payable to the General Partner or its Affiliates
under Section 6.12 and/or Article X to meet the obligations of the
General Partner pursuant to this Section 6.10, with such utilization of
Applied Amounts constituting payment and satisfaction of the
corresponding amounts payable to the General Partner or its Affiliates
under Section 6.12 and/or Article X, with the proceeds thereof being
applied to such obligations, and with the obligation of the Partnership
to make such payments to the General Partner or its Affiliates
pursuant to Section 6.12 and/or Article X being deemed to have been
satisfied to the extent thereof and (b) the Special Limited Partner shall
have the option, exercisable in its sole discretion, to cause it or one or
more of its designees to be admitted to the Partnership as additional
General Partner(s). An additional General Partner so admitted shall
automatically, without the need for any further action by any Partner,
become the Managing General Partner and shall be delegated all of
the powers and authority of all of the General Partners pursuant to
Section 6.13, and each Partner hereby grants to any such additional
General Partner a power of attorney, coupled with an interest and
irrevocable to the extent permitted by law, to execute and deliver any
and all instruments and documents which it believes to be necessary
or appropriate in order to accomplish the purposes of this Section 6.10
and to manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General Partner
of any of its economic obligations hereunder, and each other General
Partner shall indemnify and hold harmless the additional General
Partner from and against any and all Adverse Consequences sustained
in connection with the additional General Partner's status as a General
Partner (other than Adverse Consequences arising solely out of the
negligence or misconduct of such additional General Partner). For the
purpose of this Section 6.10, all expenses shall be paid on a sixty (60)-
day current basis. Moreover, the General Partner may in its sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in order to
facilitate the Partnership's compliance with the Rent Restriction Test.
All advances pursuant to Section 6.5(e) and this Section 6.10
(including any Applied Amounts), shall constitute non-interest-
bearing Subordinated Loans. Subordinated Loans shall be repaid in
accordance with the provisions of Article X. The form and provisions
of all Subordinated Loans shall conform to any applicable
Regulations.
6.11 Obligation to Complete the Construction of the Apartment
Complex
(a) The Developer and the General Partner shall be obligated to
complete the construction of the Apartment Complex and achieve
Rental Achievement in the manner set forth in this Agreement and the
Development Agreement.
(b) The completion of the Apartment Complex shall be secured
by the Guaranty.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as compensation
for the Developer's services in connection with the development and
construction of the Apartment Complex, the Partnership shall pay to
the Developer a development fee (the "Development Fee") in the
amount and at the times set forth in the Development Agreement. If
the Development Fee has not been fully paid by the tenth (10th)
anniversary of the Completion Date, the General Partner shall make a
Capital Contribution to the Partnership in an amount sufficient to
enable the Partnership to pay any unpaid portion of the Development
Fee.
(b) The Partnership shall pay to the Special Limited Partner or
an Affiliate thereof a fee (the "Asset Management Fee") commencing
in 2000 for its services in connection with the Partnership's accounting
matters relating to the Investment Limited Partner and assisting with
the preparation of tax returns and the reports required by Section 12.7
in the annual amount of $8,000. The Asset Management Fee shall be
payable from Cash Flow in the manner and priority set forth in
Section 10.2(a); provided however, that if in any Fiscal Year, Cash
Flow is insufficient to pay the full amount of the Asset Management
Fee, the General Partner shall advance the amount of such deficiency
to the Partnership as a Subordinated Loan. If for any reason the Asset
Management Fee is not paid in any Fiscal Year, the unpaid portion
thereof shall accrue and be payable on a cumulative basis in the first
Fiscal Year in which there is sufficient Cash Flow or Capital Proceeds
as provided in Article X.
(c) In consideration of the services of the General Partner in
managing the day-to-day business and affairs of the Partnership, the
Partnership shall pay to the General Partner an annual fee (the
"Partnership Management Fee") commencing in 2000 in the amount
of $32,000, payable from Cash Flow in the manner set forth in Section
10.2(a). If for any reason the Partnership Management Fee is not paid
in any Fiscal Year, the unpaid portion thereof shall accrue and be
payable on a cumulative basis in the first Fiscal Year in which there is
sufficient Cash Flow or Capital Proceeds as provided in Article X.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or duties
hereunder to another General Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in favor
of every Person relying thereon or claiming thereunder that at the time
of the delivery thereof (i) the Partnership was in existence, (ii) this
Agreement had not been amended in any manner so as to restrict the
delegation of authority among General Partners (except as shown in
certificates or other instruments duly filed in the Filing Office) and
(iii) the execution and delivery of such instrument was duly
authorized by the General Partners. Any Person may always rely on a
certificate addressed to him and signed by any General Partner
hereunder:
(1) as to who are the General Partners or Limited Partners
hereunder;
(2) as to the existence or nonexistence of any fact which
constitutes a condition precedent to acts by the General Partners or in
any other manner germane to the affairs of the Partnership;
(3) as to who is authorized to execute and deliver any instrument
or document of the Partnership;
(4) as to the authenticity of any copy of this Agreement and any
amendments thereto; or
(5) as to any act or failure to act by the Partnership or as to any
other matter whatsoever involving the Partnership or any Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and assign to
the Partnership all of their right, title and interest in and to the
Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts with
architects, supervising architects, engineers and contractors with
respect to the development of the Apartment Complex; (ii) all plans,
specifications and working drawings heretofore prepared or obtained
in connection with the Apartment Complex; (iii) all governmental
commitments and approvals obtained, and applications therefore,
including, but not limited to those relating to planning, zoning,
building permits and Tax Credits; (iv) any and all commitments with
respect to any Mortgage(s); and (v) any and all contracts or rights with
respect to any agreements with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may act as
Management Agent upon the terms and conditions set forth in Article
XI.
(b) The General Partner or any Affiliates thereof shall have the
right to contract or otherwise deal with the Partnership for the sale of
goods or services to the Partnership in addition to those set forth
herein, if (i) compensation paid or promised for such goods or
services is reasonable (i.e., at fair market value) and is paid only for
goods or services actually furnished to the Partnership, (ii) the goods
or services to be furnished shall be reasonable for and necessary to the
Partnership, (iii) the fees, terms and conditions of such transaction are
at least as favorable to the Partnership as would be obtainable in an
arm's-length transaction, and (iv) no agent, attorney, accountant or
other independent consultant or contractor who also is employed on a
full-time basis by the General Partner or any Affiliate shall be
compensated by the Partnership for his services. Any contract
covering such transactions shall be in writing and shall be terminable
without penalty on sixty (60) days written notice. Any payment made
to the General Partner or any Affiliate for such goods or services shall
be fully disclosed to all Limited Partners in the reports required under
Article XII. Neither the General Partner nor any Affiliate shall, by the
making of lump-sum payments to any other Person for disbursement
by such other Person, circumvent the provisions of this Section
6.15(b).
6.16 Tax Matters Partner
(a) The General Partner hereby is designated as Tax Matters
Partner of the Partnership, and shall engage in such undertakings as
are required of the Tax Matters Partner of the Partnership as provided
in treasury regulations pursuant to Section 6231 of the Code. Each
Partner, by the execution of this Agreement, consents to such
designation of the Tax Matters Partner and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) The Tax Matters Partner hereby is authorized, but not
required:
(i) to enter into any settlement agreement with the Service with
respect to any tax audit or judicial review, in which agreement the
Tax Matters Partner may expressly state that such agreement shall
bind the other Partners, except that such settlement agreement shall
not bind any Partner who (within the time prescribed pursuant to the
Code and treasury regulations thereunder) files a statement with the
Service providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on the behalf of such
Partner;
(ii) in the event that a notice of final administrative adjustment at
the Partnership level of any item required to be taken into account by
a Partner for tax purposes (a "Final Adjustment") is mailed to the Tax
Matters Partner, to seek judicial review of such Final Adjustment,
including the filing of a petition for readjustment with the Tax Court,
the District Court of the United States for the district in which the
Partnership's principal place of business is located, or the United
States Claims Court;
(iii) to intervene in any action brought by any other Partner for
judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment with the
Service at any time and, if any part of such request is not allowed by
the Service, to file an appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(v) to enter into an agreement with the Service to extend the
period for assessing any tax which is attributable to any item required
to be taken into account by a Partner for tax purposes, or an item
effected by such item; and
(vi) to take any other action on behalf of the Partners or the
Partnership in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or Regulations.
(c) The Partnership shall indemnify and reimburse the Tax
Matters Partner for all expenses, including legal and accounting fees,
claims, liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax liability
of the Partners. The payment of all such expenses shall be made
before any distributions are made from Cash Flow or any
discretionary reserves are set aside by the General Partner. The
General Partner shall have the obligation to provide Partnership funds
for such purpose, but only to the extent of available Partnership
resources. The taking of any action and the incurring of any expense
by the Tax Matters Partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole discretion
of the Tax Matters Partner and the provisions on limitations of
liability of the General Partner and indemnification set forth in
Section 6.8 of this Agreement shall be fully applicable to the Tax
Matters Partner in its capacity as such.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Voluntary Withdrawal
No General Partner shall have the right to Withdraw voluntarily from
the Partnership or to sell, assign or encumber its Interest without the
Consent of the Investment Limited Partner and each of the other
General Partners (if any) and, if required, any Requisite Approvals.
7.2 Reconstitution
In the event of the Withdrawal of a General Partner, the Partnership
shall not be dissolved or required to be wound up if (i) at the time of
such Withdrawal there is at least one remaining General Partner and
that General Partner carries on the business of the Partnership (any
such remaining General Partner being hereby authorized to carry on
the business of the Partnership), or (ii) within ninety (90) days after
such Withdrawal all remaining Partners agree in writing to continue
the business of the Partnership and to the appointment, effective as of
the date of such Withdrawal, of one or more additional General
Partners. Within ten (10) days after the occurrence of such
Withdrawal, the remaining General Partners, if any, shall notify the
Investment Limited Partner thereof:
(i) The reconstituted limited partnership shall continue until the
occurrence of a Liquidating Event as provided in Section 2.4;
(ii) If the successor General Partner is not a former General
Partner, then the provisions of Section 7.4(d) shall apply; and
(iii) All necessary steps shall be taken to cancel this Agreement
and the Certificate and to enter into a new partnership agreement and
certificate of limited partnership, and the successor General Partner
shall be obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the remaining
General Partners may designate a Person to become a successor
General Partner to the Withdrawing General Partner. Any Person so
designated, subject to any Requisite Approvals, the Consent of the
Investment Limited Partner and, if required by the Act or any other
applicable law, the consent of any other Partner so required, shall
become a successor General Partner upon his written agreement to be
bound by the Project Documents and by the provisions of this
Agreement.
(b) If any Withdrawal shall occur at a time when there is no
remaining General Partner and the Partners do not unanimously elect
to continue the business of the Partnership in accordance with the
provisions of clause (ii) of Section 7.2(a) above, then the Investment
Limited Partner shall have the right, subject to any Requisite
Approvals, to designate a Person to become a successor General
Partner upon his written agreement to be bound by the Project
Documents and by the provisions of this Agreement.
(c) If the Investment Limited Partner elects to reconstitute the
Partnership and admit a successor General Partner pursuant to this
Section 7.3, the relationship of the Partners in the reconstituted
Partnership shall be governed by this Agreement.
7.4 Interest of Predecessor General Partner
(a) No assignee or transferee of all or any part of the Interest as a
General Partner of a General Partner shall have any automatic right to
become a General Partner. Until the acquisition of the Interest of a
Withdrawing General Partner pursuant to Section 7.4(d) or 7.6, such
Interest shall be deemed to be that of an assignee and the holder
thereof shall be entitled only to such rights as an assignee may have as
such under the laws of the State.
(b) Anything herein contained to the contrary notwithstanding,
any General Partner who Withdraws voluntarily in violation of
Section 7.1 shall remain liable for all of its obligations under this
Agreement, for all its other obligations and liabilities hereunder
incurred or accrued prior to the date of its Withdrawal and for any loss
or damage which the Partnership or any of its Partners may incur as a
result of such Withdrawal (except as provided in Section 6.8(a)).
(c) The estate (which term, for purposes of this Section 7.4(c),
shall include the heirs, distributees, estate, executors, administrators,
guardian, committee, trustee or other personal representative) of a
Withdrawn General Partner shall be liable for all his liabilities and
obligations hereunder, except as provided in this Section 7.4(c). In
the event of the death, insanity or incompetency of a General Partner,
his estate shall remain liable for all of his obligations and liabilities
hereunder incurred or accrued prior to the date of such event, and for
any damages arising out of any breach of this Agreement by him, but
his estate shall not have any obligation or liability on account of the
business of the Partnership or the activities of the other General
Partners after his death, insanity or incompetency unless it becomes a
General Partner pursuant to Section 7.3(a).
(d) The Disposition of the General Partner Interest of a General
Partner who or which Withdraws voluntarily in compliance with this
Agreement shall be accomplished in such manner as shall be
acceptable to the remaining General Partners and shall be approved by
Consent of the Investment Limited Partner. Except as provided in the
preceding sentence, upon the Withdrawal of a General Partner (other
than a General Partner who or which is removed as such pursuant to
Section 4.5), such Withdrawn General Partner shall be deemed to
have automatically transferred to the remaining General Partners, in
proportion to their respective General Partner Interests, or, if there
shall be no remaining General Partner, then to the Partnership for the
benefit of the remaining Partners, all or such portion of the General
Partner Interest of such Withdrawn General Partner which, when
aggregated with the existing General Partner Interests of all such
remaining General Partners, will be sufficient to assure such
remaining General Partners a 0.01% interest in all Profits, Losses, Tax
Credits and distributions of the Partnership under Article X. No
documentation shall be necessary to effectuate such transfer, which
shall be automatic, and no consideration shall be payable therefor.
For the purposes of Article X, the effective date of the transfer
pursuant to the provisions of this Section 7.4(d) of the General Partner
Interest of a Withdrawn General Partner shall be deemed to be the
date on which such Withdrawal occurs. That portion of the General
Partner Interest (the "Remaining Interest") of the Withdrawing
General Partner which shall not have been transferred pursuant to this
Section 7.4(d) (except in respect of a removed General Partner), shall
be retained by such Withdrawing General Partner (or pass to legal
representatives thereof) who or which shall have the status of a special
Limited Partner, but with the right to receive only that share of the
Profits, Losses, Tax Credits and distributions of the Partnership to
which the Withdrawing General Partner, as such, would have been
entitled had he or it remained, reduced to the extent of the General
Partner Interest transferred hereunder, but such Withdrawing Partner
(or his or its legal representatives, as the case may be) shall not be
considered to be a Special Limited Partner for the purpose of
exercising any rights reserved to the Special Limited Partner under
this Agreement or sharing the benefits allocated to the Special
Limited Partner under Article X hereof and shall not participate in the
votes or consents of the Limited Partners hereunder; provided,
however, that in the case of a General Partner who or which
Withdraws involuntarily without violation of this Agreement, the
Partnership shall have the option (but not the obligation), exercisable
by notice to the holder of such Interest within six (6) months
following the date of such Withdrawal, to acquire the Remaining
Interest of such Withdrawing General Partner (or the Special Limited
Partner Interest deriving therefrom) in accordance with the valuation
and payment provisions of Section 7.6.
7.5 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant to the
preceding provisions of this Article VII, Schedule A shall be amended
to reflect such admission and an amendment to the Certificate, also
reflecting such admission, shall be filed as required by the Act.
(b) Each Partner hereby consents to and authorizes any
admission or substitution of a General Partner or any other
transaction, including, without limitation, the continuation of the
Partnership business, which has been authorized under the provisions
of this Agreement, and hereby ratifies and confirms each amendment
of this Agreement necessary or appropriate to give effect to any such
transaction.
7.6 Valuation and Sale of Interest of Former General Partner
(a) Subject to the provisions of Section 7.4(d), if the business of
the Partnership is continued after the Withdrawal of a General Partner,
or if, following such event, the Partnership is reconstituted and
continued, in each case as contemplated by this Agreement, the
Partnership shall purchase such General Partner's Interest if such
removal is without cause or if such Withdrawal is not in violation of
this Agreement (which term, and words of like import, as used in this
Section 7.6 shall refer only to the "Remaining Interest" of such
Withdrawing General Partner as defined in Section 7.4(d) in all cases
where applicable) each for a price equal to the fair market value
thereof. Such fair market value shall be determined by two
independent appraisers, one selected by the former General Partner or
its representative and one by the Partnership. If such appraisers are
unable to agree on the value of the former General Partner's Interest,
they shall jointly appoint a third independent appraiser whose
determination shall be final and binding. The appraisers may act with
or without a hearing, and the cost of the appraisal will be shared
equally between such former General Partner and the Partnership. If a
General Partner is removed by the Investment Limited Partner for
cause, or if a General Partner has voluntarily withdrawn from the
Partnership in contravention of the terms of this Agreement, the
General Partner shall forfeit its Interest to the Partnership, not as a
penalty but as liquidated damages to compensate the Partnership for
the action of such General Partner leading to its removal, or for the
fact of its violation of the terms of this Agreement.
(b) Promptly after the determination of the purchase price of a
former General Partner's Interest pursuant to Section 7.6(a), the
Partnership shall deliver to such former General Partner a promissory
note of the Partnership for such purchase price, payable in five equal
consecutive annual installments commencing on the first anniversary
of the date of such note. Such promissory note shall bear simple
interest at the rate per annum which is at all times the AFR, payable
on the last day of each calendar quarter during which such note is
outstanding. Within one hundred twenty (120) days after the
determination of the purchase price of the former General Partner's
Interest, the Partnership may, with the consent of all remaining
General Partners and the Consent of the Investment Limited Partner,
sell such Interests to one or more Persons, who may be Affiliates of
the remaining General Partner or General Partners, and admit such
Person or Persons to the Partnership as substitute General Partners;
provided, however, that the purchase price to be paid to the
Partnership for the Interest of the former General Partner shall not be
less than its purchase price as determined by the appraisal and, if
applicable, arbitration described above. Such substitute General
Partners may pay said purchase price in installments in the manner set
forth above in this Section 7.6(b).
7.7 Designation of New General Partners
The General Partner may, with the written consent of all Partners, at
any time designate new General Partners, each with such Interest as a
General Partner in the Partnership as the General Partner may specify,
subject to any Requisite Approvals.
Any new General Partner shall, as a condition of receiving any
interest in the Partnership property, agree to be bound by the Project
Documents and any other documents required in connection therewith
and by the provisions of this Agreement, to the same extent and on the
same terms as any other General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent
and distribution) or pursuant to the provisions of Section 8.1(b), no
Limited Partner may assign all or any part of its Interest without the
written consent of the General Partner, the giving or withholding of
which is exclusively within its discretion.
(b) A Limited Partner, without the consent of the General
Partner, may assign to any Person all or any portion of the economic
benefits of the ownership of such Limited Partner's Interest; provided,
however, that such assignment shall not be binding on the Partnership
until there shall have been filed with the Partnership by registered
mail certified copies of an executed and acknowledged assignment
and the written acceptance by the assignee of all the terms and
provisions of this Agreement; if such assignment and acceptance are
not so filed, the Partnership need not recognize such assignment for
any purpose. An assignee of a Limited Partner who does not become
a Substituted Limited Partner shall have the right to receive the
allocable share of any Profits, Losses, Tax Credits or distributions of
the Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof) so
assigned if no such assignment had been made by such Limited
Partner. Any assigning Limited Partner whose permitted assignee
becomes a Substituted Limited Partner shall thereupon cease to be a
Limited Partner and shall no longer have any of the rights or
privileges of a Limited Partner. Where the assignee does not become
a Substituted Limited Partner, the Partnership shall recognize such
assignment not later than the last day of the calendar month following
receipt of notice of assignment and all documentation required in
connection therewith.
(c) Each assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further assignment of its Interest shall
be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to the provisions of
Section 8.3, the General Partner may, in its sole discretion, permit an
assignee to become a Substituted Limited Partner. The consent of the
General Partner to an assignment of a Limited Partner's Interest under
Section 8.1 shall not, in and of itself, constitute its consent to the
admission of the assignee as a Substituted Limited Partner under this
Section 8.2.
(b) Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General Partner
to signify the agreement of such Substituted Limited Partner to be
bound by all the provisions of this Agreement and shall pay the
Partnership's reasonable legal fees and filing costs in connection with
its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be made if
such Disposition would violate the provisions of Sections 8.1, 8.2 or
13.1.
(b) In no event shall all or any part of a Limited Partner Interest
be Disposed of to a minor (other than to a descendant by reason of
death) or to an incompetent.
(c) The General Partner may, in addition to any other
requirement it may impose, require as a condition of any Disposition
of a Limited Partner Interest that the transferor (i) assume all costs
incurred by the Partnership in connection therewith and (ii) furnish the
Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition of a
Limited Partner Interest in contravention of any of the provisions of
this Section 8.3 shall be void and ineffectual and shall not bind or be
recognized by the Partnership.
(e) Notwithstanding any other provision contained in this Article
VIII, if at any time there is more than one Investment Limited Partner,
each Investment Limited Partner shall have a right of first refusal to
purchase the Interest of any other Investment Limited Partner who
wishes to sell or otherwise transfer its Interest at a price equal to and
on terms identical to those of the prospective purchaser thereof, to the
extent reasonably practical, and shall have at least fifteen (15)
business days in which to exercise such right after receiving notice
thereof. If there shall be more than two non-selling or transferring
Investment Limited Partners, each of which desires to exercise such a
right of first refusal, they may do so pro rata or, to the extent one does
not so desire to exercise such right, to the extent of the entire Interest
being so sold or transferred.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement and the Project Documents and may be made from any
source, including Partners and their Affiliates. Any Partnership
borrowings from any Partner shall be subject to any Requisite
Approvals. If any Partner shall lend any monies to the Partnership,
the amount of any such loan shall not increase such Partner's Capital
Contribution. If any Partner shall so lend monies, each such loan (a
"Voluntary Loan") shall be an obligation of the Partnership and
(except for Subordinated Loans) shall be repayable to such Partner on
the same basis and with the same rate of interest as would be
applicable to a comparable loan to the Partnership from a third party.
Funds advanced by the General Partner to the Partnership pursuant to
the provisions of Section 6.10 shall not constitute borrowings for the
purposes of this Article IX or for any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and Section 10.4,
for each Partnership Fiscal Year or portion thereof, all Operating
Profits and Losses, tax-exempt income, losses, non-deductible non-
capitalizable expenditures and Tax Credits incurred or accrued on or
after the Commencement Date shall be allocated ninety-nine and
ninety-nine one hundredths percent (99.99%) to the Investment
Limited Partner and one one-hundredth of one percent (0.01%) to the
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; and
Second, Profits in excess of the amounts allocated under Clause First
above shall be allocated to and among the Partners in the same
percentages as cash is distributed under Clauses Sixth, Seventh, and
Eighth of Section 10.2(b);
As to Losses:
First, an amount of Losses shall be allocated to the Partners to the
extent and in such proportions as shall be necessary such that, after
giving effect thereto, the respective balances in all Partners' Capital
Accounts shall be in the ratio of 99.99% for the Investment Limited
Partner and 0.01% for the General Partner;
Second, an amount of Losses shall be allocated to the Partners until
the balance in each Partner 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 allocation under
Clauses First, Second and Third above shall be allocated to the
Partners in accordance with the manner in which they bear the
Economic Risk of Loss associated with such Loss; provided, however,
that in the event that no Partner bears an Economic Risk of Loss then
any remaining Losses shall be allocated 99.99% to the Investment
Limited Partner and 0.01% to the General Partner.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals and the provisions of the Bond
Loan Documents and Letter of Credit Documents, Cash Flow for each
Fiscal Year or portion thereof shall be applied as follows (i) prior to
the Completion Date, Cash Flow shall be deposited with the Trustee
to be disbursed pursuant to the Trust Indenture and (ii) from and after
the Completion Date:
First, to the payment of the Asset Management Fee in accordance
with Section 6.12 for such Fiscal Year and for any previous Fiscal
Year(s) as to which the Asset Management Fee shall not yet have
been paid in full;
Second, to the payment of any unpaid portion of the Development
Fee;
Third, to the payment of any Subordinated Loans;
Fourth, to the payment of the Partnership Management Fee for such
Fiscal Year and for any previous Fiscal Year(s) as to which the
Partnership Management Fee shall not yet have been paid in full; and
Fifth, the balance thereof, if any, shall be distributed annually,
seventy-five (75) days after the end of the Fiscal Year, 10% to the
Investment Limited Partner and 90% to the General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution, if Capital Proceeds are available for distribution
from a Capital Transaction, such Capital Proceeds shall be applied or
distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the
Partnership incident to such Capital Transaction), excluding (i) debts
and liabilities of the Partnership to Partners or their Affiliates, (ii) all
unpaid fees owing to the General Partner or its Affiliates and (iii)
notes delivered and payable pursuant to Section 7.8(b)(i) and (ii); and
to the establishment of any reserves which the General Partner and the
Auditors shall deem reasonably necessary for contingent, unmatured
or unforeseen liabilities or obligations of the Partnership;
Second, to the payment of any accrued and unpaid Asset Management
Fees;
Third, to the payment to the Investment Limited Partner of the full
amount (including interest) of any Credit Recovery Loans;
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the repayment of any remaining unpaid debts and liabilities
owed to Partners or Affiliates thereof by the Partnership for
Partnership obligations (exclusive of Credit Recovery Loans and
Subordinated Loans) to any of them, including, but not limited to,
accrued and unpaid amounts due in respect of any and all fees
(including but not limited to the Development Fee and the Partnership
Management Fee) due and payable to the General Partner or its
Affiliates as set forth in Section 6.12; provided, however, that any
debts or obligations to be repaid to any Limited Partner or Affiliate
thereof pursuant to this Clause Fifth shall be repaid prior to the
repayment of any such debts or obligations to any General Partner or
Affiliate thereof;
Sixth, to the payment to each Limited Partner of an amount equal to
its Invested Amount, in each case minus any prior distributions made
to such Partner under this Clause Sixth, but never an amount less than
zero;
Seventh, to the payment to each General Partner of an amount equal
to its Invested Amount in each case minus any prior distributions
made to such Partner under this Clause Seventh, but never an amount
less than zero; and
Eighth, subject to the provisions of Section 10.3(a), any balance
19.999% to the Investment Limited Partner, .001% to the Special
Limited Partner and 80% to the General Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the Partnership,
the remaining assets of the Partnership shall be distributed to the
Partners in accordance with the positive balances in their Capital
Accounts after taking into account all Capital Account adjustments for
the Partnership Fiscal Year, including adjustments to Capital
Accounts pursuant to Sections 10.1(b) and 10.3(b). In the event that a
General Partner 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 Fiscal Year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount
equal to the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such Fiscal Year (or, if later,
within ninety (90) days after the date of such liquidation) and shall,
upon liquidation of the Partnership, be paid to recourse creditors of
the Partnership or distributed to other Partners in accordance with the
positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be Profits
and Losses realized by the Partnership immediately prior to the
liquidation or other distribution event; and (ii) such Profits and Losses
shall be allocated to the Partners in accordance with the provisions of
Section 10.1(b), and any property so distributed shall be treated as a
distribution of an amount in cash equal to the excess of such fair
market value over the outstanding principal balance of and accrued
interest on any debt by which the property is encumbered. For the
purposes of this Section 10.3(b), the terms "unrealized appreciation"
or "unrealized depreciation" shall mean the difference between the
fair market value of such assets, taking into account the fair market
value of the associated financing (but subject to the provisions of
Section 7701(g) of the Code), and the Partnership's adjusted basis for
such assets as determined under the applicable provisions of the
Allocation Regulations. This Section 10.3(b) is merely intended to
provide a rule for allocating unrealized gains and losses upon
liquidation or other distribution event, and nothing contained in this
Section 10.3(b) or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market value of
such assets shall be determined by an appraiser to be selected by the
General Partner with the Consent of the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all Profits,
tax-exempt income, Losses, non-deductible non-capitalizable
expenditures, Tax Credits and cash distributions shared by a class of
Partners shall be shared by each Partner in such class in the ratio of
such Partner's paid-in Capital Contribution to the paid-in Class
Contribution of the class of Partners of which such Partner is a
member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or Partner
Nonrecourse Debt (including, without limitation, Voluntary Loans or
Subordinated Loans) or (b) the Partnership incurs Losses from
extraordinary events which are not recovered from insurance or
otherwise (collectively "Recourse Obligations") in respect of any
Partnership Fiscal Year, then the calculation and allocation of Profits
and Losses shall be adjusted as follows: first, an amount of
deductions attributable to the Recourse Obligations shall be allocated
to the General Partner; and second, the balance of such deductions
shall be allocated as provided in Section 10.1(a).
(ii) If any Profits arise from the sale or other disposition of any
Partnership asset which shall be treated as ordinary income under the
depreciation recapture provisions of the Code, then the full amount of
such ordinary income shall be allocated among the Partners in the
proportions that the Partnership deductions from the depreciation
giving rise to such recapture were actually allocated. In the event that
subsequently-enacted provisions of the Code result in other recapture
income, no allocation of such recapture income shall be made to any
Partner who has not received the benefit of those items giving rise to
such other recapture income.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or Section 10.3,
the distributions of the cash portion of such purchase price and the
principal amount of such purchase money indebtedness hereunder
shall be allocated among the Partners in the following manner: On
the basis of the sum of the principal amount of the purchase money
indebtedness and cash payments received on the sale (net of amounts
required to pay Partnership obligations and fund reasonable reserves),
there shall be calculated the percentage of the total net proceeds
distributable to each class of Partners based on Section 10.2(b) or
Section 10.3, as applicable, treating cash payments and purchase
money indebtedness principal interchangeably for this purpose, and
the respective classes shall receive such respective percentages of the
net cash purchase price and purchase money principal. Payments on
such purchase money indebtedness retained by the Partnership shall
be distributed in accordance with the respective portions of principal
allocated to the respective classes of Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness
shall be sold, the sale proceeds shall be allocated in the same
proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance with
the applicable provisions of the Allocation Regulations and its basis
computed for federal income tax purposes shall be shared among the
Partners so as to take account of such variation in a manner consistent
with the principles of Section 704(c) of the Code and Section 1.704-
1(b)(2)(iv)(g) of the Allocation Regulations.
(v) The terms "Profits" and "Losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as
determined in accordance with the accounting methods followed by
the Partnership and computed in accordance with Treasury Regulation
Section 1.704-1(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) Nonrecourse Deductions shall be allocated 0.01% to the
General Partner and 99.99% to the Investment Limited Partner.
(vii) Partner Nonrecourse Deductions shall be allocated to and
among the Partners in the manner provided in the Allocation
Regulations.
(viii) Subject to the provisions of Section 10.4(b)(xix), if there is a
net decrease in Partnership Minimum Gain for a Partnership Fiscal
Year, the Partners shall be allocated items of Partnership income and
gain in accordance with the provisions of Section 1.704-(2)(f) of the
Allocation Regulations.
(ix) Subject to the provisions of Section 10.4(b)(xix), if there is a
net decrease in Partner Nonrecourse Debt Minimum Gain for a
Partnership Fiscal Year then any Partner with a Share of such Partner
Nonrecourse Debt Minimum Gain shall be allocated items of
Partnership income and gain in accordance with the provisions of
Section 1.704-2(i)(4) of the Allocation Regulations.
(x) Subject to the provisions of 10.4(b)(vi) through 10.4(b)(ix)
above, in the event that any Limited Partner unexpectedly receives
any adjustments, allocations or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Allocation Regulations, items
of Partnership income and gain shall be specially allocated to each
such Partner in an amount and manner sufficient to eliminate, to the
extent required by the Allocation Regulations, the Adjusted Capital
Account Deficit of such Limited Partner as quickly as possible. This
Section 10.4(b)(x) is intended to constitute a "qualified income offset"
provision within the meaning of the Allocation Regulations and shall
be interpreted consistently therewith.
(xi) Subject to the provisions of Sections 10.4(b)(vi) through
10.4(b)(x) above, in no event shall any Limited Partner be allocated
Losses which would cause it to have an Adjusted Capital Account
Deficit as of the end of any Partnership Fiscal Year. Any Losses
which are not allocated to a Limited Partner by reason of the
application of the provisions of this Section 10.4(b)(xi) shall be
allocated to the General Partner.
(xii) Subject to the provisions of Sections 10.4(b)(vi) through
10.4(b)(xi) above, in the event that any Limited Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Fiscal
Year, items of Partnership income and gain shall be specially
allocated to each such Limited Partner in the amount of such Adjusted
Capital Account Deficit as quickly as possible.
(xiii) Syndication Expenses for any Fiscal Year or other period
shall be specially allocated to the Investment Limited Partner.
(xiv) For purposes of determining the Profits, Losses, Tax Credits
or any other items allocable to any period, Profits, Losses, Tax Credits
and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the General Partner using any
permissible method under Code Section 706 and the Treasury
Regulations thereunder.
(xv) To the extent that interest on loans (or other advances which
are deemed to be loans) made by a General Partner to the Partnership
is determined to be deductible by the Partnership in excess of the
amount of interest actually paid by the Partnership, such additional
interest deduction(s) shall be allocated solely to such General Partner.
(xvi) Notwithstanding anything to the contrary contained herein,
the General Partner (or, if there is more than one General Partner, all
of the General Partners as a group) shall be allocated not less than
0.01% of each material item of Partnership income, gain, loss,
deduction and credit ("Partnership Items") at all times during the
existence of the Partnership, provided, however, that temporary
nonconformance with the provisions of this Section 10.4(b)(xvi) shall
be permitted to the extent permitted by Revenue Procedure 89-12 or
any successor provisions. Subject to the foregoing, in the event that
there is no allocation of a material Partnership Item to the General
Partner(s) hereunder or if the amount of any material Partnership Item
allocable to the General Partner(s) hereunder shall not equal 0.01% of
the aggregate amount allocable to all the Partners without giving
effect to this provision, then the amount of such Partnership Item(s)
otherwise allocable to the Limited Partners hereunder shall be
correspondingly reduced in order to assure the General Partner(s) of
its or their 0.01% share. Any such reduction shall be applied to
reduce the share of all classes of Limited Partners in proportion to
their respective Interests.
(xvii) For purposes of determining each Partner's proportionate
share of the excess Nonrecourse Liabilities of the Partnership pursuant
to Section 1.752-3(a)(3) of the Allocation Regulations, the Investment
Limited Partner shall be deemed to have a 99.99% interest in Profits
and the General Partner shall be deemed to have a 0.01% interest in
Profits.
(xviii) Any recapture of any Tax Credit shall be allocated to and
among the Partners in the same manner in which the Partners share
the expenditures giving rise to such Tax Credit.
(xix) If for any Fiscal Year the application of the minimum gain
chargeback provisions of Section 10.4(b)(viii) or Section 10.4(b)(ix)
of this Agreement would cause distortion in the economic
arrangement among the Partners and it is not expected that the
Partnership will have sufficient other income to correct that distortion,
the General Partner may request a waiver from the Commissioner of
the Service of the application in whole or in part of Section
10.4(b)(viii) or Section 10.4(b)(ix) in accordance with Section 1.704-
2(f)(4) of the Allocation Regulations. Furthermore, if additional
exceptions to the minimum gain chargeback requirements of the
Allocation Regulations have been provided through revenue rulings or
other Service pronouncements, the General Partner is authorized to
cause the Partnership to take advantage of such exceptions if to do so
would be in the best interest of a majority in interest of the Partners.
(xx) In the event that any fee payable to any General Partner or
any Affiliate thereof shall instead be determined to be a non-
deductible, non-capitalizable distribution from the Partnership to a
Partner for federal income tax purposes, then there shall be allocated
to such General Partner an amount of gross income equal to the
amount of such distribution.
(xxi) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of priorities shall
apply:
(1) Capital Accounts shall be deemed to be reduced by Qualified
Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of Cash
Flow under Clause Fourth of Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions of Capital
Proceeds under Clauses Sixth or Seventh of Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4(b)(viii) or Section 10.4(b)(ix).
(5) Capital Accounts shall be increased by any qualified income
offset required under Section 10.4(b)(x).
(6) Capital Accounts shall be increased by allocations of
Operating Profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of
Operating Losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of Losses
under Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of Profits
under Section 10.1(b).
(xxii) To the maximum extent permitted under the Code,
allocations of Profits and Losses shall be modified so that the Partners'
Capital Accounts reflect the amount they would have reflected if
adjustments required by Sections 10.4(b)(x), 10.4(b)(xi) and
10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's distributive
share of Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures and Tax Credits (and items thereof) shall
be determined and allocated in accordance with this Agreement to the
fullest extent permitted by Section 704(b) of the Code and the
Allocation Regulations. In order to preserve and protect the
determinations and allocations provided for in this Agreement, the
General Partner is hereby authorized and directed to allocate Profits,
tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any Fiscal Year
differently than otherwise provided for in this Agreement to the extent
that allocating Profits, tax-exempt income, Losses, non-deductible
non-capitalizable expenditures or credits (or any item thereof) in the
manner provided for herein would cause the determinations and
allocations of each Partner's distributive share of Profits, tax-exempt
income, Losses, non-deductible non-capitalizable expenditures or
credits (or any item thereof) not to be permitted by Section 704(b) of
the Code. Any allocation made pursuant to this Section 10.5 shall be
deemed to be a complete substitute for any allocation otherwise
provided for in this Agreement, and no amendment of this Agreement
or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partner is authorized to act only after
having been advised in writing by the Tax Accountants that, under
Section 704(b) of the Code and/or the Allocation Regulations, (i) the
New Allocation is necessary, and (ii) the New Allocation is the
minimum modification of the allocations otherwise provided for in
this Agreement necessary in order to assure that, either in the then-
current Fiscal Year or in any preceding Fiscal Year, each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (or any
item thereof) is determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of the
Code and the Allocation Regulations.
(c) If the General Partner is required by Section 10.5(a) to make
any New Allocation in a manner less favorable to the Limited Partners
than is otherwise provided for herein, then the General Partner is
authorized and directed, only after having been advised in writing by
the Tax Accountants that such an allocation is permitted by Section
704(b) of the Code and the Allocation Regulations, to allocate Profits,
tax-exempt income, Losses, 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 Partner under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General Partner to the Partnership and the Limited
Partners, and no such allocation shall give rise to any claim or cause
of action by any Limited Partner.
10.6 Recapture Amount
(a) If at any time during the "compliance period" (as defined in
Section 42(i)(1) of the Code), the Apartment Complex ceases to be a
"qualified low income housing project" (as defined in Section 42(g)(1)
of the Code) or any Low-Income Unit in the Apartment Complex
ceases to be a "low income unit" (as defined in Section 42(i)(3) of the
Code), and as a result thereof all or any portion of credits allowed to
the Partnership and its Partners under Section 42 of the Code are
subject to recapture pursuant to Section 42(j) of the Code (such an
occurrence being referred to herein as a "Recapture Event"), the
Investment Limited Partner shall become entitled to additional cash
distributions equal to the "Recapture Amount".
(b) The Recapture Amount is an amount that, after deduction of
all federal income taxes payable by the Investment Limited Partner
(or its partners) as computed under Section 10.6(d) below, is equal the
sum of (i) the "credit recapture amount" allocable to the Investment
Limited Partner as defined in Section 42(j) of the Code plus (ii) the
amount of credits allocable to the Investment Limited Partner which
are disallowed in the year of the Recapture Event and in each
subsequent year.
(c) Any Recapture Amount distributable to the Investment
Limited Partner pursuant to the foregoing provisions shall be
distributed as funds become available for such distributions, but such
distributions shall not be made prior to (i) in the case of the "credit
recapture amount", the year of the Recapture Event and (ii) in the case
of any credits disallowed with respect to any year subsequent to the
Recapture Event, in each such subsequent year.
(d) Determination of the Recapture Amount shall be made on the
assumption that receipt or accrual by each partner of the Investment
Limited Partner of any amounts distributable to such partner under
Subsection (c) above will currently be subject to United States federal
income tax at the highest marginal rate applicable to corporations for
the year(s) in question (and assuming the non-applicability of the
alternative minimum tax).
(e) All computations required under this Section 10.6 shall be
made reasonably by the Investment Limited Partner, and the results of
such computations, together with a statement describing in reasonable
detail the manner in which such computations were made, shall be
delivered to the Managing General Partner in writing. Within fifteen
(15) days following receipt of such computation, the Managing
General Partner may request that the Auditors determine whether such
computations are reasonable and are not erroneous. If the Auditors
determine that such computations are unreasonable or contain errors,
then the Auditors shall determine what they believe to be the
appropriate computations. If the Investment Limited Partner does not
agree with the determination of the Auditors, then another accounting
firm other than the Auditors to be selected jointly by the Investment
Limited Partner and the Managing General Partner or, if they cannot
agree, by the American Arbitration Association, from among the ten
largest national accounting firms, shall make such computations. The
computations of the Investment Limited Partner, the Auditors, or the
other accounting firm so selected, whichever is applicable, shall be
final, binding and conclusive upon the parties. All fees and expenses
payable to an accounting firm other than the Auditors under this
paragraph shall be borne solely by the Managing General Partner. All
fees and expenses payable to the American Arbitration Association
shall be borne equally by the General Partner and the Investment
Limited Partner.
ARTICLE XI
Management Agent
11.1 General
The General Partner shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement.
The Management Agent shall receive a Management Fee of those
amounts payable from time to time by the Partnership to the
Management Agent for management services in accordance with a
management contract approved by any Agency or Lender with the
right to approve the same, or, when any such management contract is
not subject to the approval of any Agency or Lender, in accordance
with a reasonable and competitive fee arrangement; which fee may
equal 7.5% of gross collected revenues provided that (i) there are no
unfunded Operating Deficits, (ii) the Debt Service Coverage Ratio for
such Fiscal Year is 1.15 to 1.00 and (iii) a New Permanent Loan
Commitment has been obtained by the Partnership. The initial
Management Agent shall be Park Management, Inc. From and after
the Admission Date, the Partnership shall not enter into any
Management Agreement or modify in any material respect or extend
on other than substantially similar terms as the immediately preceding
Management Agreement any Management Agreement unless (i) the
General Partner shall have obtained the prior Consent of the Special
Limited Partner to the identity of the Management Agent and the
terms of the Management Agreement or the modification or extension
thereof and (ii) such new Management Agreement or modified or
extended Management Agreement provides that it is terminable by the
Partnership on thirty (30) days' notice by the Partnership in the event
of any change in the identity of the General Partner. The
Management Agent shall maintain insurance in accordance with the
applicable Insurance Requirements set forth in Exhibit C. Copies of
such policies (or binders) shall be provided to the Partnership and the
Investment Limited Partner within thirty (30) days after the effective
date of the Management Agreement and annually thereafter.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however, should the
Investment General Partner or an Affiliate thereof perform property
management services for the Partnership, property management, rent-
up or leasing fees shall be paid to the Investment General Partner or
such Affiliate only for services actually rendered and shall be in an
amount equal to the lesser of (i) fees competitive in price and terms
with those of non-affiliated Persons rendering comparable services in
the locality where the Apartment Complex is located and which could
reasonably be available to the Partnership, or (ii) five percent (5%) of
the gross revenues of the Apartment Complex. No duplicate property
manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a substantial building
code violation which shall not have been cured within six (6) months
after notice from a Governmental Authority or (ii) the Partnership
shall not have achieved a 1.15 to 1.00 Debt Service Coverage Ratio
during any Fiscal Year commencing on January 1, 2000, or (iii) an
Event of Bankruptcy shall occur with respect to the Management
Agent, or (iv) the Management Agent shall commit willful
misconduct or gross negligence in its conduct of its duties and
obligations under the Management Agreement or (v) there is any
change in the Persons acting as General Partners (to which the Special
Limited Partner has not consented), or (vi) the Management Agent is
cited by the Credit Agency or any other Tax Credit monitoring or
compliance agency of the State or any other Governmental Authority
for a violation or alleged violation of any applicable rules, regulations
or requirements, including, without limitation, non-compliance with
the Minimum Set-Aside Test, the Rent Restriction Test or any other
Tax Credit-related provision, then, upon request by the Special
Limited Partner and subject to Agency and Lender approval, if
required, the General Partner shall cause the Partnership to promptly
terminate the Management Agreement with the Management Agent
and appoint a new Management Agent selected by the Special
Limited Partner, which new Management Agent shall not be an
Affiliate of a General Partner. Each General Partner hereby grants to
the Special Limited Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest to take any
action and to execute and deliver any and all documents and
instruments on behalf of such General Partner and the Partnership as
the Special Limited Partner may deem to be necessary or appropriate
in order to effectuate the provisions of this Article XI. Subject to any
Requisite Approvals, the Partnership shall not enter into any future
management arrangement or renew or extend any existing
management arrangement unless such arrangement is terminable
without penalty upon the occurrence of the events described in this
Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Act or by any Governmental Authority and may
maintain such other books and records as the General Partner in its
discretion deems advisable. Each Limited Partner, or its duly
authorized representatives, shall have access to the records of the
Partnership at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records. A
list of the name and addresses of all of the Limited Partners shall be
maintained as part of the books and records of the Partnership and
shall be mailed to any Limited Partner upon request. The Partnership
may require reimbursement for any out of pocket expenses which it
incurs as a result of the exercise by any Limited Partner of its rights
under this Section 12.1, including, without limitation, photocopying
expenses.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General
Partner shall determine. Withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures
as the General Partner may determine. All deposits (including
security deposits and other funds required to be escrowed by any
Lender or Agency) and other funds not needed in the operation of the
business shall be deposited, if required by applicable law and to the
extent permitted by applicable Agency or Lender requirements, in
interest bearing accounts or invested in United States Government
obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partner, all tax returns of the Partnership. Prior to the filing of the
Partnership tax returns, and in no event later than February 1 of each
Fiscal Year, the Auditors shall deliver the tax returns for the prior
Fiscal Year to the Tax Accountants for their review and comment. If
a dispute arises between the Auditors and the Tax Accountants over
the proper preparation of the tax returns and such dispute cannot be
resolved by the Auditors and the Tax Accountants by March 1 of such
Fiscal Year, then the Tax Accountants shall make the final decision
with respect to whether any changes are necessary. The Partnership
shall reimburse the Investment Limited Partner and its Affiliates for
all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports to the
Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations under
Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time periods
set forth therein, at any time thereafter upon written notice from the
Special Limited Partner, the General Partner shall appoint
replacement Auditors. If no such notice from the Special Limited
Partner is delivered, the Consent of the Special Limited Partner must
be received to the appointment of replacement Auditors. If the
General Partner fails to appoint replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to replace the
Auditors, then the Special Limited Partner shall appoint replacement
Auditors of its own choosing, the cost of which shall be borne by the
Partnership as a Partnership expense. All of the Partners hereby grant
to the Special Limited Partner a special power of attorney, irrevocable
to the extent permitted by law, coupled with an interest, to so appoint
replacement Auditors and to anything else which in the judgment of
the Special Limited Partner may be necessary or appropriate to
accomplish the purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost recovery
deductions are permitted, the Partnership shall elect to use, so far as
permitted by the provisions of the Code, accelerated cost recovery
methods. However, the Partnership may change to another method of
cost recovery if such other method is, in the opinion of the Auditors,
more advantageous to the Investment Limited Partner (and the limited
partners and/or holders of beneficial assignee certificates thereof).
(b) Subject to the provisions of Section 12.5, all other elections
required or permitted to be made by the Partnership under the Code
shall be made by the General Partner in such manner as will, in the
opinion of the Auditors, be most advantageous to the Investment
Limited Partner and the limited partners and/or holders of beneficial
assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of the
Investment Limited Partner or a transfer of all or any part of an
interest of a partner and/or a holder of a beneficial assignee certificate
of the Investment Limited Partner, the Partnership shall elect, upon
the request of the Investment Limited Partner, pursuant to Section 754
of the Code, to adjust the basis of the Partnership property. Any
adjustments made pursuant to said Section 754 shall affect only the
successor in interest to the transferring Partner or partner or holder of
a beneficial assignee certificate thereof. Each Partner will furnish the
Partnershi
