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) May 6, 1998
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26200 04-3208648
(Commission File Number) (IRS Employer Identification No.)
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108-4406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
On May 6, 1998, Boston Capital Tax Credit Fund IV L.P., a
Delaware limited partnership, specifically Series 31 thereof
(the "Partnership") entered into various agreements relating to
Level Creek Partners, L.P., a Georgia limited partnership (the
"Operating Partnership"), including the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership
dated as of May 6, 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 two hundred eighteen (218) unit apartment complex
located at 1022 Level Creek Road in Sugar Hill, Georgia, which is
known as Level Creek Apartments (the "Apartment Complex"). The
Apartment Complex consists of fifteen (15) buildings containing
forty (40) 1-bedroom units, one hundred (100) 2-bedroom units and
seventy-eight (78) 3-bedroom units. Construction of the
Apartment Complex is expected to be completed in March 1999 and
100% Occupancy is expected to be achieved in November 1999.
The Operating Partnership is currently receiving combined
construction and permanent financing in the amount of $12,790,000
from the Housing Authority of the City of Sugar Hill, Georgia
("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 are credit-enhanced with respect to the
payment of principal and interest thereon by a letter of credit
in the amount of $12,933,000 ("Letter of Credit") issued by
AMSOUTH Bank of Alabama, and are subject to redemption upon
expiration of the Letter of Credit. The Letter of Credit has an
initial term of five (5) years, expiring on May 1, 2003, and has
an option to renew for five (5) years in the absence of defaults.
The Bonds were issued for a term of thirty (30) years, and bear
interest at a variable rate (the "Base Rate"), initially set at
3.75% per annum at the date of issuance. The General Partner has
purchased an interest-rate cap on the Bonds of 2.5% above the
Base Rate for the initial 5-year term of the Letter of Credit.
It is expected that 60% (130 units) 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
remaining 40% (88 units) of the rental units will be market-rate
rentals.
The general partner of the Operating Partnership is Sugar
Hill Plantation Partners, Inc., a Georgia corporation (the
"General Partner"). The Developer of the Apartment Complex is
Spring Hill Partners, Inc., a Georgia corporation, and Signature
Management Corp. will serve as the Management Agent of the
Apartment Complex. Each of the Developer and the Management
Agent are affiliated with the General Partner, and the affiliated
group has experience developing and managing approximately 812
rental units, of which approximately 697 qualify for Tax Credits.
The Builder of the Apartment Complex is Universal Constructors,
Inc., a contractor whose experience includes a number of multi-
family housing projects located throughout the southeastern
United States.
The Partnership acquired its interest in the Operating
Partnership directly from the Operating Partnership in
consideration of an agreement to make a Capital Contribution of
$2,154,802 to the Operating Partnership in four installments as
follows:
(1) $1,508,362 on the latest to occur of (A) receipt of
executed copies of the Bond documents listed in Exhibit B to
the Operating Partnership Agreement confirming the issuance
of the Bonds and that the Bonds meet the requirements of
Section 42(h)(4)(B) of the Code, (B) Initial Closing, (C)
the Admission Date, (D) receipt of an estoppel letter
reasonably satisfactory to the Special Limited Partner from
the Lender, (E) receipt of a commitment for sale of the
Bonds from Merchant Capital, LLC or (F) execution of an
escrow agreement, satisfactory to the Special Limited
Partner, between the Investment Partnership and the Letter
of Credit Issuer (the "First Installment");
(2) $215,480 on the latest to occur of (A) Substantial
Completion, (B) Cost Certification, (C) State Designation,
(D) receipt of updated insurance certificates and an updated
title insurance policy satisfactory to the Special Limited
Partner, (E) confirmation by Boston Capital that outstanding
Due Diligence Recommendations as set forth in Exhibit A to
the Operating Partnership Agreement attached hereto have
been addressed by the General Partners to the reasonable
satisfaction of Boston Capital, (F) receipt of a payoff
letter from the Contractor stating that all amounts payable
to the Contractor have been paid in full and that the
Operating Partnership is not in violation of the
Construction Contract, (G) receipt of an estoppel
certificate of Lender stating that there are no defaults on
the Loan, (H) satisfaction of all of the conditions to the
payment of the First Installment or (I) receipt of a valid
and recorded Extended Use Commitment and receipt of a
subordination agreement from the Lender (the "Second
Installment");
(3) $215,480 on the latest to occur of (A) the Initial
100% Occupancy Date, (B) Final Closing, (C) Rental
Achievement or (D) satisfaction of all of the conditions to
the payment of the First and Second Installments (the "Third
Installment"); and
(4) $215,480 on the latest to occur of (A) receipt of a
tax return and audited financial statement for the year in
which Rental Achievement occurred or (B) satisfaction of all
of the conditions to payment of the First, Second, and Third
Installments (the "Fourth Installment").
The total Capital Contribution of the Partnership to the
Operating Partnership is based on the Operating Partnership
receiving $2,993,080 of Tax Credits during the 10-year period
commencing in 1999 of which 99.99% ($2,992,781) 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% 70% 70%
Partnership 99.99% 29.99% 30%
Special Limited Partner 0% 0.01% 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.
Boston Capital Communications Limited Partnership
("BCCLP") 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 $15,000. The Asset
Management Fee for each fiscal year will be payable from Cash
Flow in the manner and priority set forth in Section 11.03(A) of
the Operating Partnership Agreement; provided, however, that if
in any fiscal year Cash Flow is insufficient to pay all or any
portion of the Asset Management Fee, the General Partner shall
make a Subordinated Loan to the Operating Partnership in an
amount not to exceed the lesser of $10,000 per annum or that
amount necessary to pay the unpaid portion of such fee. Any
unpaid portion of the Asset Management Fee, to the extent not
paid by the General Partner, shall accrue, without interest, and
shall be payable on a cumulative basis in the first year in which
there is sufficient Cash Flow available, or from the proceeds of
a Capital Transaction to the extent available for distribution.
The Operating Partnership will pay to the General Partner a
fee (the "Partnership Incentive 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 $30,000 per annum. The Partnership Incentive
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 11.03(A) of the Operating Partnership Agreement
to the extent Cash Flow is available therefor for such year;
provided, however, that if in any fiscal year Cash Flow is
insufficient to pay the full amount of the Partnership Incentive
Management Fee, the unpaid portion thereof shall accrue and be
payable on a cumulative basis in the first year in which there is
sufficient Cash Flow or from the proceeds of a Capital
Transaction, in accordance with the priorities set forth in
Sections 11.03A and 11.04A of the Operating Partnership
Agreement.
In consideration of its consultation, advice and other
services in connection with the construction and development of
the Apartment Complex, the Operating Partnership will pay the
Developer a Development Fee in the principal amount of
$1,830,000. It is anticipated that the Development Fee will be
paid, in part, from Capital Contributions as follows: $322,412
during the course of construction from the proceeds of the First
Installment, $215,480 at the time of the Second Installment,
$215,480 at the time of the Third Installment and $215,480 at the
time of the Fourth Installment. The remainder of the Deferred
Development Fee will be payable out of Development Savings, if
available, or from Cash Flow or the proceeds of a Capital
Transaction, in accordance with Sections 11.03A and 11.04A of the
Operating Partnership Agreement.
The Builder of the Apartment Complex will receive total
compensation of $10,012,500, which includes $472,865 of Builder's
profit. The Management Agent of the Apartment Complex will
receive a Management Fee equal to 6% of gross rental receipts.
Item 7. Exhibits.
(c) Exhibits. Page
(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)
* Incorporated by reference to Exhibit (1) to
Registration Statement No. 33-70564 on Form S-11, as
filed with the Securities and Exchange Commission.
(2) (a) Amended and Restated Agreement of Limited Partnership
of Level Creek Partners, L.P.
(2) (b) Certification and Agreement relating to Level Creek
Partners, L.P.
(4) (a)** Agreement of Limited Partnership of the Partnership
** Incorporated by reference to Exhibit (4) to Registration
Statement No. 33-70564 on Form S-11, as filed
with the Securities and Exchange Commission.
(16) None
(17) None
(20) None
(23) None
(24) None
(27) None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.
Dated: December 28, 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
LEVEL CREEK PARTNERS, L.P.
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
As of May 6, 1998
TABLE OF CONTENTS
Page
ARTICLE I - CONTINUATION OF PARTNERSHIP 3
1.01. Continuation 3
1.02. Name 3
1.03. Principal Executive Offices; Agent for Service of
Process 3
1.04. Term 3
1.05. Recording 3
ARTICLE II - DEFINED TERMS 3
ARTICLE III - PURPOSE AND BUSINESS OF THE PARTNERSHIP 20
3.01. Purpose of the Partnership 20
3.02. Authority of the Partnership 20
ARTICLE IV - REPRESENTATIONS, WARRANTIES AND COVENANTS;
DUTIES AND OBLIGATIONS 22
4.01. Representations, Warranties and Covenants Relating to
the Apartment
Complex and the Partnership 22
4.02. Duties and Obligations Relating to the Apartment
Complex and the Partnership 26
ARTICLE V - PARTNERS, PARTNERSHIP INTERESTS AND OBLIGATIONS
OF THE PARTNERSHIP 29
5.01. Partners, Capital Contributions and Partnership
Interests 29
5.02. Return of Capital Contribution 33
5.03. Withholding of Capital Contribution Upon Default
34
5.04. Legal Opinions 34
5.05. Repurchase Obligation 34
ARTICLE VI - CHANGES IN PARTNERS 35
6.01. Withdrawal of a General Partner 35
6.02. Admission of a Successor or Additional General
Partner 36
6.03. Effect of Bankruptcy, Death, Withdrawal, Dissolution or
Incompetence
of a General Partner 37
ARTICLE VII - ASSIGNMENT TO THE PARTNERSHIP 38
7.01. Assignment of Contracts, etc. 38
ARTICLE VIII - RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL
PARTNERS 39
8.01. Management of the Partnership 39
8.02. Limitations Upon the Authority of the General
Partners 41
8.03. Management Purposes 42
8.04. Delegation of Authority 42
8.05. General Partners or Affiliates Dealing with
Partnership 42
8.06. Other Activities 43
8.07. Liability for Acts and Omissions 43
8.08. Partnership Status 44
8.09. Construction of the Apartment Complex, Construction
Cost Overruns,
Operating Deficits 44
8.10. Development Fee 47
8.11. Partnership Incentive Management Fee 48
8.11.1 Asset Management Fee 49
8.12. Withholding of Fee Payments 49
8.13. Removal of a General Partner 50
8.14. Selection of Management Agent 52
8.16. Replacement of the Management Agent 53
8.17. Subordinated Loans to the Partnership 53
8.18. Reserve Fund for Replacements 54
ARTICLE IX - TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS OF
INTERESTS OF LIMITED PARTNERS 55
9.01. Purchase for Investment 55
9.02. Restrictions on Transfer of Limited Partner's
Interests 56
9.03. Admission of Substitute Limited Partners 56
9.04. Rights of Assignee of Partnership Interest 58
ARTICLE X - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 58
10.01. Management of the Partnership 58
10.02. Limitation on Liability of Limited Partners 58
10.03. Other Activities 59
10.04. Ownership by Limited Partner of Corporate General
Partners or Affiliate 59
ARTICLE XI - ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX
CREDITS AND CASH DISTRIBUTION 60
11.01. Allocation of Taxable Income, Tax Losses and Tax
Credits 60
11.02 Allocation of Taxable Income and Tax Losses from
Capital Transactions 60
11.03 Distribution of Cash Flow 61
11.04 Distributions of Distributable Proceeds from Capital
Transactions and
Distributable Proceeds from Refinancings 63
11.05 Allocations Among Partners 64
11.06. Qualified Income Offset 66
11.07. Minimum Gain Allocations 67
11.08 Regulatory Allocations 68
11.09. Partners' Partnership Non-recourse Liabilities
68
11.10 Tax Allocations: Code Section 704(c) 69
11.11. Tax Matters Partner 69
11.12. Capital Accounts 71
11.13. Authority of General Partner to Vary Allocations to
Preserve and Protect Partner's Intent 73
ARTICLE XII - SALE, DISSOLUTION AND LIQUIDATION 75
12.01. Dissolution of the Partnership 75
12.02. Winding Up and Distribution 75
ARTICLE XIII - BOOKS AND RECORDS, ACCOUNTING TAX ELECTIONS, ETC.
77
13.01. Books and Records 77
13.02. Bank Accounts 77
13.03. Accountants 78
13.04. Reports to Partners 78
13.05. Section 754 Elections 83
13.06. Fiscal Year and Accounting Method 83
ARTICLE XIV - AMENDMENTS 83
14.01. Proposal and Adoption of Amendments 83
ARTICLE XV - CONSENTS, VOTING AND MEETINGS 83
15.01. Method of Giving Consent 83
15.02. Submissions to Limited Partners 84
15.03. Meetings; Submission of Matter for Voting 84
ARTICLE XVI - GENERAL PROVISIONS 84
16.01. Burden and Benefit 84
16.02. Applicable Law 84
16.03. Counterparts 84
16.04. Separability of Provisions 84
16.05. Entire Agreement 84
16.06. Liability of the Investment Partnership 85
16.07. Environmental Protection 85
16.08. Notices to the Investment Partnership 86
16.09. Notices to the General Partners 87
16.10. Withdrawal of Initial Limited Partner 87
LEVEL CREEK PARTNERS, L.P.
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
The Limited Partnership Interests evidenced by this Amended
and Restated Agreement of Limited Partnership (the "Agreement")
have not been registered pursuant to applicable state securities
laws ("Blue Sky Laws"). Accordingly, the Limited Partnership
with the Securities and Exchange Commission under the Securities
Act of 1933 (the "Act") or Interests cannot be resold or
transferred by any purchaser thereof without registration of the
same under the Act and the Blue Sky Laws of such state(s) as may
be applicable or in a transaction which is exempt from the
registration requirements of the Act and the Blue Sky Laws or
which is otherwise in compliance therewith. In addition, the
sale or transfer of such Limited Partnership Interests is subject
to certain restrictions set forth in this Agreement, including
without imitation, the restrictions set forth in Article IX
hereof.
These securities have been issued or sold in reliance on
paragraph (13) of Code Section 10-5-9 of the "Georgia Securities
Act of 1973," and may not be sold or transferred except in a
transaction which is exempt under such act or pursuant to an
effective registration under such Act.
This Amended and Restated Agreement of Limited Partnership
is made and entered into as of the 6th day of May, 1998, by and
among the undersigned parties.
RECITALS
A. On January 7, 1997, Michael L. Smith and Scott H.
Smith, as initial general partners (collectively, the "Initial
General Partners") and Scott H. Smith as initial limited partner
(the "Initial Limited Partner"), executed an Agreement of Limited
Partnership of Level Creek Partners, L.P., a Georgia limited
partnership (the "Initial Limited Partnership Agreement") for the
formation of Level Creek Partners, L.P. (the "Partnership")
pursuant to the Georgia [Revised] Uniform Limited Partnership Act
(the "Act");
B. A Certificate of Limited Partnership was subsequently
filed with the Secretary of State for the State of Georgia
effective as of January 17, 1997;
C. On September 24, 1997, the Initial Limited Partnership
Agreement was amended by that certain First Amendment (the "First
Amendment") to provide for the withdrawal of the Initial General
Partners and the admission of Sugar Hill Developers, LLC as the
General Partner;
D. On September 29, 1997 a First Amendment to Certificate
of Limited Partnership was executed and filed with the Secretary
of State of the State of Georgia reflecting the change of General
Partners;
E. On March 2 1998, the Initial Limited Partnership
Agreement was amended by that certain Second Amendment (the
"Second Amendment") to provide for the substitution of Sugar Hill
Plantation Partners, Inc. for Sugar Hill Developers, LLC as the
General Partner (the Initial Limited Partnership Agreement and
the First and Second Amendment are referred to collectively as
the "Initial Agreement," and Sugar Hill Plantation Partners, Inc.
is referred to as the "General Partners");
F. On March 2, 1998, a Second Amendment to Certificate of
Limited Partnership was executed and filed with the Secretary of
State of Georgia reflecting the change of General Partners;
G. The Partnership has been formed to acquire,
rehabilitate, construct, own, maintain and operate the
hereinafter defined Apartment Complex;
H. The parties hereto now desire to enter into this
Amended and Restated Agreement of Limited Partnership to (i)
continue the Partnership; (ii) admit Boston Capital Tax Credit
Fund IV L.P., a Delaware limited partnership, to the Partnership
as a Limited Partner, and BCTC 94, Inc., a Delaware corporation,
to the Partnership as the Special Limited Partner; (iii) withdraw
the Initial Limited Partner from the Partnership; (iv) reassign
Interests in the Partnership; and (v) set forth all of the
provisions governing the Partnership.
NOW, THEREFORE, in consideration of the foregoing, of mutual
promises of the parties hereto and of other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree to continue the
Partnership pursuant to the Act, as set forth in this Amended and
Restated Agreement of Limited Partnership, which reads in its
entirety as follows:
ARTICLE I
CONTINUATION OF PARTNERSHIP TC "ARTICLE I - CONTINUATION OF
PARTNERSHIP"\L1
1.01. Continuation TC "1.01. Continuation"\L2 . The
undersigned hereby continue the Partnership as a limited
partnership under the Act.
1.02. Name TC "1.02. Name"\L2 . The name of the
Partnership is Level Creek Partners, L.P.
1.03. Principal Executive Offices; Agent for Service of
Process TC "1.03. Principal Executive Offices; Agent for
Service of Process"\L2 . The registered office of the
Partnership is 3850 Holcomb Bridge Road, Suite 215, Norcross,
Georgia 30092 and the resident agent for service of process is
Scott H. Smith. The Partnership may change the location of its
principal executive office to such other place or places as may
hereafter be determined by the General Partner. The General
Partner shall promptly notify all other Partners of any change in
the principal executive office. The Partnership may maintain
such other offices at such other place or places as the General
Partner may from time to time deem advisable.
1.04. Term TC "1.04. Term"\L2 . The term of the
Partnership commenced as of January 17, 1997 and shall continue
until December 31, 2046, unless the Partnership is sooner
dissolved in accordance with the provisions of this Agreement.
1.05. Recording TC "1.05. Recording"\L2 . Upon
the execution of this Amended and Restated Agreement of Limited
Partnership by the parties hereto, the General Partner shall take
all necessary action required by law to perfect and maintain the
Partnership as a limited partnership under the laws of the State
and to effectuate the admission of the Investment Partnership and
BCTC 94, Inc. as Limited Partners and the withdrawal of the
Initial Limited Partner hereunder, and shall register the
Partnership under any assumed or fictitious name statute or
similar law in force and effect in the State.
ARTICLE II
DEFINED TERMS TC "ARTICLE II - DEFINED TERMS"\l1
In addition to the abbreviations of the parties set forth in
the preamble to this Agreement, the following defined terms used
in this Agreement shall have the meanings specified below:
"Accountants" means such firm of independent certified
public accountants as may be engaged by the General Partners,
with the Consent of BCTC 94, Inc., to prepare the Partnership
income tax returns and to be responsible for the Partnership's
audit and tax matters reporting obligations under Section 13.04
hereof.
"Act" means the Georgia Revised Uniform Limited Partnership
Act, as amended from time to time during the term of the
Partnership.
"Actual Credit" means as of any point in time, the total
amount of the Tax Credits actually allocated by the Partnership
to the Investment Partnership, representing ninety-nine percent
(99%) of the Tax Credits actually received by the Partnership, as
shown on the applicable tax return of the Partnership.
"Admission Date" means the date upon which the Investment
Partnership is admitted to the Partnership by execution and
delivery of this Agreement by all signatories hereto and the
filing of any such Certificates as may be required by the State
to effectuate the admission of the Investment Partnership.
"Affiliate" means any Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by
or is under common control with a General Partner, or with
another designated Person, as the context may require.
"Affiliated Limited Partnership" means any limited
partnership, other than the Partnership, in which a General
Partner or an Affiliate of a General Partner is a general partner
and the Investment Partnership or an Affiliate of the Investment
Partnership is a limited partner.
"Agency" means the Georgia Department of Community Affairs
in its capacity as the designated agency of the State of Georgia
to allocate Low-Income Housing Tax Credits, acting through any
authorized representative.
"Agreement" means this Amended and Restated Agreement of
Limited Partnership, as amended from time to time.
"Apartment Complex" means the land owned or to be owned by
the Partnership located at 1022 Level Creek Road in the City of
Sugar Hill, Gwinnett County, Georgia and the 218-unit multi-
family rental housing development and other improvements to be
constructed thereon, and to be owned and operated therein by the
Partnership, and to be known as Level Creek Apartments.
"Applicable Percentage" has the meaning given to it in
Section 42(b) of the Code.
"Asset Management Fee" means the fee payable by the
Partnership to Boston Capital, or an Affiliate thereof, pursuant
to Section 8.11.1.
"Bankruptcy" or "Bankrupt" as to any Person means (a) the
entry of an order for relief (or similar court order) against
such Person which authorizes a case brought under Chapter 7, 11
or 13 of Title 11 of the United States Code to proceed; (b) the
commencement of a federal, state or foreign bankruptcy,
insolvency, reorganization, arrangement or liquidation proceeding
by such Person; (c) the commencement of a federal, state or
foreign bankruptcy, insolvency, reorganization, arrangement or
liquidation proceeding against such Person if such proceeding is
not dismissed within sixty (60) days after the commencement
thereof; (d) the entry of a court decree or court order which
remains unstayed and in effect for a period of thirty (30)
consecutive days: (i) adjudging such Person insolvent under any
federal, state or foreign law relating to bankruptcy, insolvency,
reorganization, arrangement, liquidation, receivership or the
like; (ii) approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of, or in
respect of, such Person or his properties under any federal,
state or foreign law relating to insolvency, reorganization,
arrangement, liquidation, receivership or the like; (iii)
appointing a receiver, liquidator, assignee, trustee,
conservator, or sequester (or other similar official) of such
Person, or of all, or of a substantial part, of such Person's
properties; or (iv) ordering the winding up, dissolution or
liquidation of the affairs of such Person; (e) the written
consent by such Person to the institution against it of any
proceeding of the type described in subsection (a), (b), (c) and
(d); (f) the written consent by such Person to the appointment of
a receiver, liquidator, assignee, trustee, conservator or
sequester (or other similar official) of such Person, or of all,
or of a substantial part, of its properties; (g) the making by
such Person of an assignment for the benefit of creditors; (h)
the admission in writing by such Person of its inability to pay
its debts generally as they come due; (i) the taking of any
corporate or other action by such Person in furtherance of any of
the foregoing; or (j) if such Person becomes insolvent by the
making of any act or the making of any transfer, or otherwise, as
"insolvency" is or may be defined pursuant to the Federal
Bankruptcy Code, the Federal Bankruptcy Act, the Uniform
Fraudulent Conveyances Act, any state or federal act or the
ruling of any court.
"BCTC 94, Inc." means BCTC 94, Inc., a Delaware corporation,
which is the Special Limited Partner of the Partnership.
"Bonds" means tax-exempt bonds in the principal amount of
$12,790,000 that meet the conditions set forth in Section
42(h)(4)(B) of the Code to be issued by the Housing Authority,
the proceeds of which will be used to fund the Loan.
"Book Depreciation" has the meaning set forth in Section
11.12C.
"Book Profits and Losses" means the Taxable Income or Tax
Losses of the Partnership, adjusted for purposes of determining
and maintaining the Partners' Capital Accounts as provided in
Section 11.12.
"Boston Capital" means Boston Capital Partners, Inc., a
Massachusetts corporation.
"Capital Account" means the capital account of a Partner as
described in Section 11.12.
"Capital Contribution" with respect to any Partner, means
the total amount of money and the initial Gross Asset Value of
any property (other than money) contributed or agreed to be
contributed, as the context requires, to the Partnership by each
Partner pursuant to the terms of this Agreement. Any reference
to the Capital Contribution of a Partner shall include the
Capital Contribution made by a predecessor holder of the Interest
of such Partner.
"Capital Transaction" means the sale, exchange or
disposition (other than leasing in the ordinary course of
business) of any Partnership property that is not in the ordinary
course of business, or casualty damage to or condemnation of any
Partnership property, or any substantial interest therein or
portion thereof.
"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, but specifically excluding
Debt Service requirements. For purposes of this definition, cash
requirements of the Partnership shall include to the extent not
otherwise covered above, full funding of all Partnership reserves
(excluding deposits to the Cash Flow Reserve), normal repairs,
real estate taxes at fully assessed levels assuming a fully
improved property, and necessary capital improvements.
"Cash Flow" means, with respect to any year or other
applicable period, (a) all Revenues received by the Partnership
during such period, plus (b) any amounts which the General
Partners, acting jointly with BCTC 94, Inc., and subject to the
approval of the Lender, if required, release from the Reserve
Fund for Replacements as being no longer necessary to hold as
part of the Reserve Fund for Replacements and permitted releases
from the Operating Deficit Reserve, less (i) all operating
expenses and obligations of the Partnership paid or payable (on a
thirty-day current basis) during the applicable period, including
without limitation escrow deposits for taxes and insurance,
maintenance and repairs, (ii) all sums due or currently required
to be paid under the terms of the Loan or any other third-party
indebtedness of the Partnership, and (iii) all amounts from
Revenues, if any, added or required to be added to the Reserve
Fund for Replacements during such period. In no event will
deductions in determining Cash Flow pursuant to clauses (i) and
(ii) above include payments made on account of: the Asset
Management Fee, amounts due on any Subordinated Loans, the
Partnership Incentive Management Fee, deposits to the Cash Flow
Reserve and/or the Deferred Development Fee. Cash Flow shall be
determined separately for each fiscal year and shall not be
cumulative.
"Cash Flow Reserve" means a reserve required by the Letter
of Credit Issuer to reserve against Debt Service requirements.
"Certificate" means the Certificate of Limited Partnership
for Level Creek Partners, L.P. filed with the Secretary of State
of Georgia on January 17, 1997 as amended by the First Amendment
to Certificate of Limited Partnership dated September 25, 1997
and filed with the Secretary of State of Georgia on September 29,
1997, and the Second Amendment to Certificate of Limited
Partnership dated March 2, 1998 and filed with the Secretary of
State of Georgia on March 2, 1998 or any certificate of limited
partnership or any other instrument or document which is required
under the law of the State to be signed and/or sworn to by the
Partners of the Partnership and filed in the appropriate public
offices within the State to perfect or maintain the Partnership
as a limited partnership under the laws of the State, to effect
the admission, withdrawal or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited
Partners as limited partners under the laws of the State.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any corresponding provision or provisions
of succeeding law.
"Compliance Period" has the meaning ascribed to such term in
Section 42 of the Code.
"Consent" means the prior written consent or approval of
BCTC 94, Inc. and/or the Investment Partnership and/or any other
Partner, as the context may require, to do the act or thing for
which the consent is solicited.
"Construction Contract" means that certain construction
contract dated March ___, 1998, in the amount of $10,012,500
(including all exhibits and attachments thereto) entered into
between the Partnership and the Contractor pursuant to which the
Apartment Complex is being rehabilitated.
"Contractor" means Universal Constructors, Inc.., in its
capacity as the general construction contractor for the Apartment
Complex.
"Cost Certification" means the date upon which each Limited
Partner shall have received the written certification of the
Accountants, in a form and in substance satisfactory to Boston
Capital, as to the itemized amounts of the rehabilitation and
development costs of the Apartment Complex and the Eligible Basis
and Applicable Percentage (in each case, as defined in Section
42(d) of the Code), pertaining to each building in the Apartment
Complex.
"Counsel" or "Counsel for the Partnership" shall mean the
law firm of Hendrick, Phillips, Schemm & Salzman or such other
attorney or law firm upon which the Investment Partnership and
the General Partners shall agree; provided, however, that if any
section of this Agreement either (i) designates particular
counsel for the purpose described therein, or (ii) provides that
counsel for the purpose described therein shall be chosen by
another method or by another Person, then such designation or
provision shall prevail over this general definition. The
Limited Partners have been, and will continue to be, separately
represented by Hinckley, Allen & Snyder or such other counsel as
they may choose in connection with all Partnership matters.
"Credit Recovery Loan" has the meaning set forth in Section
5.01(d)(iii).
"Credit Shortfall" means the amount by which the Actual
Credit is less than the Projected Credit (or Revised Projected
Credit) for any year or portion thereof.
"Debt Service" means scheduled principal and interest
payments on indebtedness under the Loan determined on an annual
basis for each year of Partnership operations, but excluding (i)
principal and interest due on acceleration of the Loan upon
occurrence of an event of default and (ii) balloon payments of
principal and interest due upon expiration of the term of the
Loan..
"Developer" means Spring Hill Partners, Inc., a Georgia
corporation.
"Deferred Development Fee" means any portion of the
Development Fee not actually paid to and received by the
Developer from the Installments, the payment of which is deferred
and payable only in accordance with Sections 5.01(a), 11.03(A)(c)
and 11.04(A)(b) hereof.
"Development Fee" means the fee payable by the Partnership
to the Developer pursuant to Section 8.10 of this Agreement.
"Development Sources" means the aggregate of: (a) the
proceeds of the Loan; (b) the Capital Contributions of the
General Partner, as set forth in Section 5.01(a) of this
Agreement; (c) the Capital Contributions of the Investment
Partnership as set forth in Section 5.01 of this Agreement, less
the amount of the non-Deferred Development Fee; and (d) any
rental income of the Partnership for the period prior to Final
Closing.
"Distributable Proceeds from Capital Transactions" means
the excess of all cash receipts and other consideration arising
from the sale or other disposition of all or any portion of the
Apartment Complex or any proceeds realized from condemnation,
casualty, or title defect, but excluding proceeds, if any, from
rental interruption insurance or a temporary condemnation in the
nature of a lease, over the sum of the following, to the extent
paid out of such cash receipts or other consideration: (i) the
amount of cash disbursed or to be disbursed in connection with or
as an expense of such sale or other disposition, (ii) the amount
necessary for the payment of all debts and obligations of the
Partnership arising from or otherwise related to such sale or
other disposition or to which the Apartment Complex is subject
and which are otherwise then due (other than debts and
obligations owed to the Partners and their Affiliates, which
shall be satisfied in the order set forth in Section 11.04), and
(iii) any amounts set aside by the General Partner for reserves
which the General Partner deem reasonably necessary for
contingent, unmatured or unforeseen liabilities of the
Partnership.
"Distributable Proceeds from Refinancings" means the excess
of the gross proceeds of any borrowing by the Partnership over
the sum of the following, to the extent paid out of such gross
proceeds: (i) any amounts disbursed to repay then existing loans
of the Partnership and to pay and provide for all debts and
obligations of the Partnership then to be paid or which are
otherwise then due (other than debts and obligations owed to the
Partners and their Affiliates, which shall be satisfied in the
order set forth in Section 11.04), (ii) all reasonable expenses
of such borrowings, including, without limitation, all commitment
fees, brokers' commissions, and attorneys' fees, (iii) all
amounts paid to improve the Apartment Complex or for any other
purpose in order to satisfy conditions to or established in
connection with such borrowings, and (iv) any amounts used to
meet the operating expenses of the Apartment Complex or set aside
by the General Partner for reserves which the General Partner
deem reasonably necessary for contingent, unmatured, or
unforeseen liabilities of the Partnership.
"Eligible Basis" has the meaning given to it in Section
42(d) of the Code.
"Escrow and Disbursement Agreement" means the Agreement
pursuant to which the Trustee has agreed to hold the Investment
Partnership's First Installment in escrow for disbursement during
the construction period pursuant to agreed upon draw procedures.
"Excess Development Costs" means all funds in excess of the
Development Sources which are required to (i) complete
rehabilitation of the Apartment Complex, including paying any
final cost overruns and the cost of any change orders which have
been approved by the Lender and which are not funded from
Development Sources, (ii) achieve Substantial Completion, (iii)
achieve Final Closing and satisfy any escrow deposit requirements
which are conditions to the Final Closing, including without
limitation, any amounts necessary for local taxes, utilities,
insurance premiums and other amounts which are required, (iv) pay
any applicable loan assessment fees, discounts or other costs and
expenses incurred by the Partnership as a result of the
occurrence of the Final Closing, (v) make the required deposit
into the Operating Deficit Reserve, (vi) make the required
deposit into the Reserve Fund for Replacements, and (vii) pay any
Operating Deficits incurred by the Partnership prior to the
occurrence of Rental Achievement. Excess Development Costs shall
not include any amounts paid or to be paid with respect to the
Development Fee.
"Extended Use Commitment" means the agreement between the
Partnership and the Agency, which is intended to meet the
definition of a "long term commitment to low-income housing" as
required by Section 42(h)(6) of the Code and the requirements of
the Agency's Low-Income Housing Tax Credit Program.
"Final Closing" means the occurrence of both of the
following: (i) Substantial Completion, and (ii) commencement of
the principal amortization of the Loan in accordance with the
Letter of Credit Reimbursement Agreement.
"40-60 Set-Aside Test" means the Minimum Set-Aside Test
whereby at least 40% of the units in the Apartment Complex must
be occupied by individuals, with incomes of 60% or less of area
median income, as adjusted for family size.
"General Partner" means Sugar Hill Plantation Partners,
Inc., a Georgia corporation, and any other Person or entity
admitted as a general partner pursuant to this Agreement, and
their respective successors pursuant to this Agreement, including
particularly the provisions of Section 6.03 and 8.13.
"General Partner's Special Capital Contribution" has the
meaning ascribed to such term in Section 5.01 of this Agreement.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
adjusted pursuant to Section 11.12B. 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 Partners and the Partnership.
"Guarantor" means Charles H. Smith and Michael L. Smith.
"Housing Authority" means the Housing Authority of the City
of Sugar Hill, Georgia.
"Initial Closing" means the later to occur of (i) closing of
the construction phase of the Loan and (ii) the Admission Date.
"Initial 100% Occupancy Date" means the first date, after
the completion of construction, upon which 100% of the Low Income
Units in the Apartment Complex have been leased to and are
occupied by, qualified tenants under executed Agency approved
leases, if any such approval is applicable.
"Installment" means an Installment of the Investment
Partnership's Capital Contribution paid or payable to the
Partnership pursuant to Section 5.01.
"Interest" or "Partnership Interest" means the ownership
interest of a Partner in the Partnership at any particular time,
including the right of such Partner to any and all benefits to
which such Partner may be entitled as provided in this Agreement
and in the Act, together with the obligations of such Partner to
comply with all the terms and provisions of this Agreement and of
said Act. Such Interest of each Partner shall, except as
otherwise specifically provided herein, be that percentage of the
aggregate of such benefit or obligation specified by Section 5.01
as such Partner's Percentage Interest.
"Invested Amount" means (i) as to the Investment
Partnership, an amount equal to the paid-in Capital Contribution
of the Investment Partnership divided by .86 and (ii) as to any
other Partner, an amount equal to its paid-in Capital
Contribution.
"Investment Partnership" means Boston Capital Tax Credit
Fund IV L.P., a Delaware limited partnership, which is a Limited
Partner of the Partnership.
"Land" means the 17.579 acre parcel of land located on the
northwest side of Level Creek Road, just north of Spring Hill
Drive, in the City of Sugar Hill, Gwinnett County, Georgia, to be
known as Sugar Hill Plantation, upon which the Apartment Complex
is to be located.
"Lender" means the Housing Authority in its capacity as
maker of the Loan or its successors and assigns in such capacity,
including any substitute Lender permitted pursuant to Section
8.02(b)(v) hereof, each acting through any authorized
representative.
"Letter of Credit" means a direct pay letter of credit in
the amount of $12,931,916.44 to be issued by the Letter of Credit
Issuer in favor of the Trustee as credit enhancement for the
Bonds.
"Letter of Credit Issuer" means AmSouth Bank, the issuer of
the Letter of Credit.
"Limited Partners" means the Investment Partnership and/or
BCTC 94, Inc., or any other Limited Partner in such Person's
capacity as a limited partner of the Partnership.
"Liquidator" means the General Partner or, if there are none
at the time in question, such other Person who may be appointed
in accordance with applicable law and who shall be responsible
for taking all action necessary or appropriate to wind up the
affairs of, and distribute the assets of, the Partnership upon
its dissolution.
"Loan" means the loan in the principal amount of
approximately $12,790,000 made to the Partnership by the Lender,
as evidenced by the Loan Documents, including, without
limitation, a promissory note given by the Partnership to the
Lender, secured by the Trust Indenture and Security Agreement
("Trust Indenture") included within the Loan Documents, and other
related security documents and financing statements.
"Loan Documents" means, collectively, all documents entered
into between the Partnership and the Lender and/or the Letter of
Credit Issuer in connection with the Loan and the issuance of the
Bonds and the Letter of Credit.
"Low-Income Housing Tax Credit" means the low-income housing
tax credit allowed for low-income housing projects pursuant to
Section 42 of the Code.
"Low-Income Unit" shall have the meaning set forth in
Section 42(i)(3) of the Code. There shall be a minimum of 130
Low-Income Units in the Apartment Complex.
"Management Agent" means the management and rental agent for
the Apartment Complex and/or its successors and/or assigns, as
described in Section 8.05 hereof.
"Management Agreement" means the agreement between the
Partnership and the Management Agent providing for the management
of the Apartment Complex.
"Minimum Gain" means the amount determined by computing,
with respect to each non-recourse liability of the Partnership,
the amount of Taxable Income, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction thereof,
and by then aggregating the amounts so computed, in accordance
with Treasury Regulation 1.704-2(d). For purposes of determining
the amount of such Taxable Income with respect to a liability,
the adjusted basis, for federal income tax purposes, of the asset
subject to the liability shall be allocated among all the
liabilities that the asset secures in the manner set forth in
Treasury Regulation 1.704-2(d)(2) (or successor provisions). If
Partnership property subject to one or more non-recourse
liabilities of the Partnership is, under Treasury Regulation
1.704-1(b)(2)(iv)(d),(f), or (r), properly reflected on the books
of the Partnership at a book value that differs from the adjusted
tax basis of such property, then the determination of Minimum
Gain shall be made with reference to such book value.
"Minimum Set-Aside Test" means the set-aside test selected
by the Partnership pursuant to Section 42(g) of the Code with
respect to the percentage of units in its Apartment Complex to be
occupied by tenants with incomes equal to no more than a certain
percentage of area median income. The Partnership has selected
or will select the 40-60 Set-Aside Test as the Minimum Set-Aside
Test.
"Mortgage" means, the mortgage or deed of trust given by the
Partnership to the Letter of Credit Issuer securing the
Partnership's obligations under the Letter of Credit and
Reimbursement Agreement included within the Loan Documents.
"Net Capital Contribution" means an amount equal to a
Partner's paid-in Capital Contribution, less the aggregate amount
of cash distributions, if any, made to such Partner hereunder.
"Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(c) of the Treasury Regulations. The amount of
Nonrecourse Deductions for a Fiscal Year of the Partnership
equals the net increase, if any, in the amount of Minimum Gain
during that Fiscal Year, determined according to the provisions
of Treasury Regulation Section 1.704-2(c).
"Notice" means a writing containing the information required
by this Agreement to be communicated to a Partner and sent by
registered or certified mail, postage prepaid, return receipt
requested, to such Partner at the last known address of such
Partner, the date of registry thereof or the date of the
certification receipt therefor being deemed the date of such
Notice; provided, however, that any written communication
containing such information sent to such Partner actually
received by such Partner shall constitute Notice for all purposes
of this agreement.
"Operating Deficit" means the amount by which (i) the income
of the Partnership from rental payments made by tenants of the
Apartment Complex and all other income of the Partnership,
including unrestricted earnings on reserve or escrow funds (other
than proceeds of any loans to the Partnership and investment
earnings on funds on deposit in the Reserve Fund for
Replacements) for a particular period of time, is exceeded by
(ii) the sum of all the operating expenses, including all Debt
Service payments, operating and maintenance expenses, deposits
into the Reserve Fund for Replacements, any Lender fee payments,
and all other Partnership obligations or expenditures, excluding
payments for construction of the Apartment Complex and fees and
other expenses and obligations of the Partnership to be paid from
the Capital Contributions of the Investment Partnership to the
Partnership pursuant to this Agreement, during the same period of
time, and excluding deposits required to be made to the Cash Flow
Reserve as defined in the Letter of Credit and Reimbursement
Agreement. For the purposes of this definition, all expenses
shall be paid on a thirty (30) day current basis. In no event
will deductions in determining Operating Deficits pursuant to
clause (ii) above include payments made on account of the Asset
Management Fee (unless guaranteed), amounts due on Subordinated
Loans and/or the Deferred Development Fee.
"Operating Deficit Loan" means a loan made pursuant to
Section 8.09(b).
"Operating Deficit Reserve" means the operating deficit
reserve account established pursuant to the provisions of Section
8.18(b) of this Agreement.
"Partner" means any General Partner or any Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning
attributed to "partner loan nonrecourse debt minimum gain" in
Treasury Regulation 1.704-2(i)(3).
"Partner Loan Nonrecourse Deductions" means any deductions
of the Partnership that are attributable to a nonrecourse
liability for which a Partner bears the risk of loss within the
meaning of Treasury Regulation Section 1.704-2(i).
"Partnership" means Level Creek Partners, L.P..
"Partnership Agreement" means this Amended and Restated
Agreement of Limited Partnership, as amended from time to time.
"Partnership Incentive Management Fee" means the fee payable
by the Partnership to the General Partner pursuant to Section
8.11 of this Agreement.
"Percentage Interest" means the percentage Interest of each
Partner as set forth in Section 5.01.
"Person" means any individual, partnership, corporation,
trust or other entity.
"Plans and Specifications" means the plans and
specifications for rehabilitation of the Apartment Complex,
referred to in the Construction Contract and any changes thereto
made in accordance with the terms of this Agreement.
"Project Documents" means and includes the Loan Documents,
the Extended Use Commitment, the Regulatory Agreement, if any,
the Management Agreement and all other instruments delivered to
(or required by) the Lender or the Agency and all other documents
relating to the Apartment Complex and by which the Partnership is
bound, as amended or supplemented from time to time.
"Projected Credit" means Low-Income Housing Tax Credits in
the amount of $175,723 for the year 1999, $299,278 per year for
each of the years 2000 through 2008, and $123,555 for 2009, which
the General Partner has projected to be the total amount of the
Tax Credits which will be allocated to the Investment Partnership
by the Partnership, constituting ninety-nine and 99/100ths
percent (99.99%) of the Tax Credits which are projected to be
available to the Partnership; provided, however, that if the
Actual Credit for 1999 is greater than (or less than) $175,723,
the Projected Credit for the year 2009 shall be reduced
(increased) by an amount equal to the amount by which the Actual
Credit for 1998 exceeds (or is less than) $175,723.
"Regulatory Agreement" means the Land Use Restriction
Agreement, to be entered into between the Partnership and the
Lender setting forth certain terms and conditions under which the
Apartment Complex is to be operated.
"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 cannot exceed 30% of
the qualifying income levels of those units under Section 42.
"Rental Achievement" means the first time, based upon six
consecutive full calendar months of operation after Substantial
Completion, with each month taken individually, that Cash
Available for Debt Service Requirements equals or exceeds 1.15
times Debt Service requirements.
"Reserve Fund for Replacements" means the reserve fund for
replacements with respect to the Apartment Complex as established
pursuant to the provisions of Section 8.18(a) of this Agreement.
"Revenues" means all cash receipts of the Partnership during
any period except for Capital Contributions, proceeds from the
liquidation, sale or refinancing of Partnership property or of a
Capital Transaction, or the proceeds of any loan to the
Partnership.
"Revised Projected Credit" has the meaning set forth in
Section 5.01(d)(i).
"Share of Minimum Gain" means for each Partner, the excess
of (1) the sum of (a) the aggregate Non-Recourse Deductions
allocated to such Partner (and such Partner's predecessors in
interest) up to that time and (b) the aggregate distributions to
such Partner (and such Partner's predecessors in interest) up to
that time of proceeds of a non-recourse liability that are
allocable to an increase in Partnership Minimum Gain over (2) the
sum of (a) such Partner's (and such Partner's predecessors in
interest) aggregate share of the net decrease in Partnership
Minimum Gain up to that time and (b) such Partner's (and such
Partner's predecessors in interest) aggregate share of the
decreases up to that time in Partnership Minimum Gain resulting
from revaluations of Partnership Property subject to one or more
non-recourse liabilities of the Partnership, as more fully set
forth in Treasury Regulation 1.704-2(g).
"State" means the State of Georgia.
"State Designation" means, with respect to the Apartment
Complex, the final allocation by the Agency of Low-Income Housing
Tax Credits, as evidenced by the receipt by the Partnership of
IRS Form 8609 executed by the Agency as to all buildings in the
Apartment Complex.
"Subordinated Loan" means any loan made by any General
Partner to the Partnership pursuant to Section 8.17.
"Substantial Completion" means the date upon which the
Partnership has received (a) both a certificate of substantial
completion from the applicable inspecting architect certifying
that the construction has been completed in accordance with the
Plans and Specifications and (b), if applicable, certificates of
substantial completion or certificates of occupancy from the
applicable governmental jurisdiction(s) or authority(ies) for one
hundred percent (100%) of the apartment units in the Apartment
Complex; provided, however, that Substantial Completion shall not
be deemed to have occurred if on such date any liens or other
encumbrances as to title to the Land and the Apartment Complex
exist, other than those securing the Loan and/or those Consented
to by the Investment Partnership.
"Substitute Limited Partner" means any Person admitted to
the Partnership as a Limited Partner pursuant to Section 9.03.
"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 in
determining and maintaining Capital Accounts pursuant to Section
11.12 of this Agreement at the time they would be taken into
account under the Partnership's method of accounting if they were
deductible expenses.
"Taxable Income" and "Tax Losses" means the Partnership's
taxable income or tax losses, respectively, for each fiscal year
(or part thereof) as determined for federal income tax purposes,
including, where the context requires, all items of income, gain,
loss, deduction and credit which enter into the computation
thereof.
"Tax Credit" means the Low-Income Housing Tax Credit.
"Trustee" means AmSouth Bank, the trustee under the bond
indenture evidencing the Bonds.
ARTICLE III
PURPOSE AND BUSINESS OF THE PARTNERSHIP TC "ARTICLE III -
PURPOSE AND BUSINESS OF THE PARTNERSHIP"\l1
3.01. Purpose of the Partnership TC "3.01. Purpose of the
Partnership"\l2 . The Partnership has been organized to acquire
the Land and to develop, finance, own, construct, maintain,
operate and sell or otherwise dispose of the Apartment Complex,
in order to obtain long-term appreciation, cash income, Tax
Credits and tax losses and to manage the Apartment Complex in a
manner that provides and preserves safe, decent, affordable
housing and needed supportive services.
3.02. Authority of the Partnership TC "3.02. Authority of
the Partnership"\l2 . In order to carry out its purpose, the
Partnership is empowered and authorized to do any and all acts
and things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of its
purpose, and for the protection and benefit of the Partnership,
including but not limited to the following:
(a) acquire ownership of the Land;
(b) construct, operate, maintain, improve, buy, own, sell,
convey, assign, mortgage, rent or lease any real estate and any
personal property necessary to the operation of the Apartment
Complex;
(c) provide housing, subject to the Minimum Set-Aside Test
and the Rent Restriction Test and consistent with the
requirements of the Project Documents so long as any Project
Documents remain(s) in force;
(d) enter into any kind of activity, and perform and carry
out contracts of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the purposes of the
Partnership;
(e) borrow money and issue evidences of indebtedness in
furtherance of the Partnership business and secure any such
indebtedness by mortgage, pledge, or other lien;
(f) maintain and operate the Apartment Complex, including
hiring the Management Agent (which Management Agent may be any of
the Partners or an Affiliate thereof) and entering into any
agreement for the management of the Apartment Complex during its
rent-up and after its rent-up period;
(g) subject to the approval of the Agency and/or the Lender
and/or the Letter of Credit Issuer, if required, and to other
limitations expressly set forth elsewhere in this Agreement,
negotiate for and conclude agreements for the sale, exchange,
lease or other disposition of all or substantially all of the
property of the Partnership, or for the refinancing of any Loan
on the property of the Partnership;
(h) enter into the Loan Documents with the Lender and the
Letter of Credit Issuer and grant the Mortgage, enter into the
Loan and all other documents required by the Lender or the Letter
of Credit Issuer with respect to the Loan, the Regulatory
Agreement, if any, and the Extended Use Commitment with the
Agency, providing for regulations with respect to rents, profits,
dividends and the disposition of the Apartment Complex and the
long-term use of the Apartment Complex for low-income housing;
(i) rent a minimum of 130 dwelling units in the Apartment
Complex from time to time, in accordance with the provisions of
the Code applicable to Low-Income Housing Tax Credits to the
extent applicable with respect to the Low-Income Units and in
accordance with applicable federal, state and local regulations,
collecting the rents therefrom, paying the expenses incurred in
connection with the Apartment Complex, and distributing the net
proceeds to the Partners, subject to any requirements which may
be imposed by the Extended Use Commitment, the Regulatory
Agreement, and the Loan Documents; and
(j) do any and all other acts and things necessary or
proper in furtherance of the Partnership business.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS;
DUTIES AND OBLIGATIONS TC "ARTICLE IV - REPRESENTATIONS,
WARRANTIES AND COVENANTS; DUTIES AND OBLIGATIONS"\l1
4.01. Representations, Warranties and Covenants Relating to
the Apartment Complex and the Partnership TC "4.01.
Representations, Warranties and Covenants Relating to the
Apartment Complex and the Partnership"\l2 . As of the date
hereof, the General Partner hereby represents, warrants and
covenants to the Partnership and to the Partners that:
(a) the construction and development of the Apartment
Complex shall be completed in a timely and workmanlike manner in
accordance with (i) all applicable requirements of the
Construction Contract and the Project Documents, (ii) all
applicable requirements of all appropriate governmental entities,
and (iii) the Plans and Specifications of the Apartment Complex
that have been or shall be hereafter approved by the Lender and
any applicable governmental entities, as such Plans and
Specifications may be changed from time to time with the approval
of the Lender and any applicable governmental entities, if such
approval shall be required;
(b) as of the date hereof, at Initial Closing and at Final
Closing and at the time of commencement of construction, the Land
is and will be properly zoned for the Apartment Complex, all
consents, permissions and licenses required by all applicable
governmental entities have been obtained (excepting however any
certificates of occupancy which must be obtained prior to the
occupancy of the Apartment Complex, which such certificates will
be obtained by the General Partner on behalf of the Partnership),
and the Apartment Complex conformed and conforms to all
applicable federal, state and local land use, zoning,
environmental and other governmental laws and regulations;
(c) all appropriate public utilities, including sanitary
and storm sewers, water, gas and electricity, are currently or
will be available and will be operating properly for all units in
the Apartment Complex at the time of first occupancy of such
units;
(d) as of the date hereof at Initial Closing and at Final
Closing, good and marketable fee simple title to the Apartment
Complex is and will be held by the Partnership, and title
insurance policies of a financially-responsible institution
acceptable to BCTC 94, Inc., in the amount of the replacement
cost of the Apartment Complex, which amount (as to the
Partnership) shall not be less than the aggregate of the Capital
Contributions of the General Partners and the Investment
Partnership plus the principal amount of the Loan, in favor of
the Partnership were or will be issued on or before the Initial
Closing, and shall remain in full force and effect, subject only
to such easements, covenants, restrictions and such other
standard exceptions as are normally included in an owner's
insurance policy and which are acceptable to BCTC 94, Inc. and
shall contain a non-imputation endorsement as to the Investment
Partnership and BCTC 94, Inc. and such other endorsements as
deemed reasonably necessary by BCTC 94, Inc.;
(e) the General Partner is not aware of any default under
any agreement, contract, lease, or other commitment, or of any
claim, demand, litigation, proceedings or governmental
investigation pending or threatened against it, the Apartment
Complex or the Partnership, or related to the business or assets
of the Partnership or of the Apartment Complex, which claim,
demand, litigation, proceeding or governmental investigation
could result in any judgment, order, decree, or settlement which
would materially and adversely affect the business or assets of
the Partnership, the General Partner, or of the Apartment
Complex;
(f) except for the commitment fees paid to the Lender,
neither the General Partners nor any Affiliate of the General
Partner or the Partnership, has entered, or shall enter into any
agreement or contract for the payment of any Loan discounts,
additional interest, yield maintenance or other interest charges
or financing fees, except for the Letter of Credit or any
agreement providing for the guarantee of payment of any such
interest charges or financing fees relating to the Loan;
(g) the execution of this Agreement, the incurrence of the
obligations set forth in this Agreement, and the consummation of
the transactions contemplated by this Agreement do not violate
any provision of law, any order, judgment or decree of any court
binding on the Partnership, the General Partner or any of them or
their Affiliates, any provision of any indenture, agreement, or
other instrument to which the Partnership or they or either of
them is a party or by which the Partnership or the Apartment
Complex is affected, and is not in conflict with, and will not
result in a breach of or constitute a default under any such
indenture, agreement, or other instrument or result in creating
or imposing any lien, charge, or encumbrance of any nature
whatsoever upon the Apartment Complex;
(h) the Construction Contract has been entered into between
the Partnership and the Contractor; no other consideration or fee
shall be paid to the Contractor, in its capacity as the
Contractor, other than the amounts set forth in the Construction
Contract or as evidenced by change orders approved by the Lender
or as otherwise disclosed in writing to and approved by the
Investment Partnership; and all change orders that have been
submitted by the Contractor to date have been paid in full;
(i) as of the date hereof, at Initial Closing, and at the
Final Closing, a builder's risk insurance policy is and will be
in full force and effect, and fire and extended coverage
insurance and earthquake insurance, each for the full replacement
value of the Apartment Complex (excluding the value of the Land,
site utilities, landscaping and foundations) which shall include
flood insurance, if the Apartment Complex is in a flood hazard
area designated by the United States Department of Housing and
Urban Development, worker's compensation insurance in amounts at
least equal to the amounts required by law and the Loan Documents
and public liability insurance in the amount of not less than
$6,000,000 (of which up to $5,000,000 may be provided under an
umbrella policy), all in favor of the Partnership and naming the
Investment Partnership as an additional insured and loss payee,
are in full force and effect and will be maintained in full force
and effect during the term of the Partnership; all such policies
shall be in amounts and with insurers satisfactory to BCTC 94,
Inc., and shall be paid for out of Partnership assets; following
Substantial Completion, the General Partner, on behalf of the
Partnership, will maintain $6,000,000 of liability insurance
covering the Land and the Apartment Complex (prior to Substantial
Completion these coverages may be provided by the Contractor
naming the Partnership and the Investment Partnership as
additional insureds and loss payees, as appropriate, on policies
maintained by the Contractor);
The term "full replacement value" as used herein shall
mean and include the total cost of replacement of the Apartment
Complex at each respective stage of rehabilitation thereof up to
completion;
(j) neither the General Partners nor the Partnership has
incurred any financial responsibility with respect to the
Apartment Complex prior to the date of execution of this
Agreement, other than that disclosed to the Investment
Partnership and except for costs incurred by the Partnership and
reflected in the development budget for the Apartment Complex;
(k) at the time of execution of this Agreement, at the time
of Final Closing, and at Substantial Completion, the Partnership
was, is and will continue to be a valid limited partnership, duly
organized under the laws of the State, had, has and shall
continue to have full power and authority to acquire the Land and
to construct, develop, operate and maintain the Apartment Complex
in accordance with the terms of this Agreement, and has taken and
shall continue to take all action under the laws of the State and
any other applicable jurisdiction that is necessary to protect
the limited liability of the Limited Partners and to enable the
Partnership to engage in its business;
(l) no restrictions on the sale or refinancing of the
Apartment Complex, other than the restrictions set forth in the
Loan Documents, in the Extended Use Commitment, the Regulatory
Agreement, if any, and as set forth in this Agreement, exist as
of the date hereof, and no such restrictions shall, at any time
while the Investment Partnership is a Limited Partner, be placed
upon the sale or refinancing of the Apartment Complex;
(m) the Apartment Complex is being developed in a manner
which satisfies, and shall continue to satisfy, all restrictions,
including tenant income and rent restrictions, applicable to
projects generating Low-Income Housing Tax Credits under Section
42 of the Code;
(n) the Tax Credits projected to be applicable to the
Apartment Complex are the Projected Credits;
(o) it is anticipated that the Partnership is entitled to
receive Tax Credits from the Agency in an annual dollar amount of
not less than $299,308 pursuant to Section 42(h)(4)(B) of the
Code because the Loan is being financed by the proceeds of tax-
exempt bonds, and the Apartment Complex meets the requirements
set forth in Sections 42(m)(1)(D) and 42(m)(2)(D) of the Code;
(p) to the best of its knowledge after due inquiry, at the
time of the execution of this Agreement, the General Partner has
fully complied with all applicable material provisions and
requirements of any and all purchase and/or lease agreements,
loan agreements, Project Documents and other agreements with
respect to the acquisition, development, financing,
rehabilitation and operation of the Apartment Complex; it shall
take, and/or cause the Partnership to take, all actions as shall
be necessary to achieve and maintain continued compliance with
the provisions, and fulfill all applicable requirements, of such
agreements;
(q) the obligations of the General Partner will be
guaranteed by Charles H. Smith and Michael L. Smith; and
(r) Fifty percent (50%) or more of the aggregate basis of
the Apartment Complex and the Land is being financed by the
proceeds of the Loan.
4.02. Duties and Obligations Relating to the Apartment
Complex and the Partnership TC "4.02. Duties and Obligations
Relating to the Apartment Complex and the Partnership"\l2 . The
General Partner shall have the following duties and obligations
with respect to the Apartment Complex and the Partnership:
(a) all requirements shall be met which are necessary to
obtain or achieve (i) compliance with the Minimum Set-Aside Test,
the Rent Restriction Test, and any other requirements necessary
for the Apartment Complex to initially qualify, and to continue
to qualify, for Tax Credits, including all requirements set forth
in the Extended Use Commitment, (ii) issuance of all necessary
certificates of occupancy, including all governmental approvals
required to permit occupancy of all of the apartment units in the
Apartment Complex, (iii) Initial Closing and Final Closing, and
(iv) compliance with all provisions of the Project Documents;
(b) while conducting the business of the Partnership, the
General Partner shall not act in any manner which it knows or
should have known after due inquiry will (i) cause the
termination of the Partnership for federal income tax purposes
without the Consent of the Investment Partnership, or (ii) cause
the Partnership to be treated for federal income tax purposes as
an association taxable as a corporation;
(c) the Apartment Complex shall be managed upon Substantial
Completion so that (i) no less than eighty per cent (80%) of the
gross income from the Apartment Complex in every year is rental
income from dwelling units in the Apartment Complex used to
provide living accommodations not on a transient basis, (ii) the
rental of all Low-Income Units in the Apartment Complex complies
with the tenant income limitations and other restrictions under
the Rent Restriction Test and as set forth in the Extended Use
Commitment, the Regulatory Agreement and all applicable documents
entered into in connection with the Loan, and (iii) 130 of the
dwelling units in the Apartment Complex are occupied or held for
occupancy by individuals with incomes of sixty percent (60%) or
less of area median income as adjusted for family size;
(d) the General Partner shall exercise good faith in all
activities relating to the conduct of the business of the
Partnership, including the development, operation and maintenance
of the Apartment Complex, and shall take no action with respect
to the business and property of the Partnership which is not
reasonably related to the achievement of the purpose of the
Partnership;
(e) all of (i) the fixtures, maintenance supplies, tools,
equipment and the like now and to be owned by the Partnership or
to be appurtenant to, or to be used in the operation of the
Apartment Complex, as well as (ii) the rents, revenues and
profits earned from the operation of the Apartment Complex, will
be free and clear of all security interests and encumbrances
except for the Mortgage, and any additional security agreements
executed in connection therewith (with the exception of
miscellaneous leases of office and laundry equipment entered into
in the ordinary course of business);
(f) the General Partner will execute on behalf of the
Partnership all documents necessary to elect, pursuant to
Sections 732, 743 and 754 of the Code, to adjust the basis of the
Partnership's property upon the request of the Investment
Partnership, if, in the sole opinion of the Investment
Partnership, such election would be advantageous to the
Investment Partnership and any such elections (including
elections made at the direction or with the consent of the
Investment Partnership) shall not reduce the obligations of the
General Partner pursuant to Section 5.01(d);
(g) the General Partner guarantees payment by the
Partnership of any Credit Recovery Loan, the Asset Management
Fee, and Excess Development Costs, as more fully provided herein;
(h) the General Partner shall comply and cause the
Partnership to comply with the provisions of all applicable
governmental and contractual obligations;
(i) the General Partner shall be responsible for the
payment of any fines or penalties imposed by the Agency or the
Lender pursuant to the Project Documents and any documents
executed in connection with obtaining Tax Credits (other than
with respect to payments of principal or interest under the Loan
from and after Final Closing);
(j) the General Partner shall promptly notify the
Investment Partnership of any written or oral notice of (i) any
default or failure of compliance with respect to the Loan, or any
other financial, contractual or governmental obligation of the
Partnership or the General Partner (in the case of the General
Partner, if such default or failure of compliance may have a
material adverse impact on the Partnership or its operations), or
(ii) any Internal Revenue Service proceeding regarding the
Apartment Complex or the Partnership;
(k) the General Partner shall provide the Partnership with
such information and sign such documents as are necessary for the
Partnership to make timely, accurate and complete submissions of
federal and state income tax returns;
(l) within thirty (30) days following the Admission Date,
the General Partner shall submit to Boston Capital evidence of
the Partnership's engagement of Accountants, who have been
approved by BCTC 94, Inc., to be responsible for the
Partnership's audit and tax matter reporting obligations under
Section 13.04 hereof.
(m) the General Partner shall provide to BCTC 94, Inc. for
its approval and Consent prior to execution, a copy of the
Extended Use Commitment to be entered into between the
Partnership and the Agency and shall ensure (i) the Lender
subordinates to same and (ii) that such Extended Use Commitment
is executed and recorded no later than the end of the first
taxable year in which any Tax Credit is claimed by the
Partnership with respect to any building in the Apartment
Complex; and
(n) the General Partner shall establish and maintain all
reserve accounts required by the Lender pursuant to the Loan
Documents.
ARTICLE V
PARTNERS, PARTNERSHIP INTERESTS
AND OBLIGATIONS OF THE PARTNERSHIP TC "ARTICLE V - PARTNERS,
PARTNERSHIP INTERESTS AND OBLIGATIONS OF THE PARTNERSHIP"\l1
5.01. Partners, Capital Contributions and Partnership
Interests TC "5.01. Partners, Capital Contributions and
Partnership Interests"\l2 .
(a) The General Partner, its principal addresses or places
of business, Capital Contributions and Percentage Interests is as
follows:
Sugar Hill Plantation Partners, Inc.$211.00 .01%
3850 Holcomb Bridge Road
Norcross, GA 30092
In the event that the Partnership has not paid all or part
of the Deferred Development Fee when the final payment is due
pursuant to the Development Agreement and Section 8.10 hereof,
the General Partner shall contribute to the partnership an amount
equal to any such remaining principal balance (the "General
Partner's Special Capital Contribution") and the Partnership
shall thereupon make a payment in an equal amount to pay off the
principal balance due under the Development Agreement.
(b)(i) The Investment Partnership, its principal office or
place of business, its Capital Contribution and its Percentage
Interest is as follows:
Boston Capital Tax 99.98%
Credit Fund IV L.P. $2,154,802 (as more
c/o Boston Capital specifically set
Partners, Inc. forth in subparagraph
One Boston Place (c) immediately below)
21st Floor
Boston, MA 02110
(ii) The Special Limited Partner, its principal office
or place of business, its Capital Contribution and its Percentage
Interest is as follows:
BCTC 94, Inc. $ 10.00 0.01%
c/o Boston Capital
Partners, Inc.
One Boston Place,
21st Floor
Boston, MA 02210
(c) Subject to the provisions of this Agreement, including,
without limitation, the provisions of Sections 5.01(d) and 5.03,
the Investment Partnership shall be obligated to make Capital
Contributions to the Partnership in the aggregate amount of
$2,154,802 in four (4) installments (the "Installments"), which
Installments (except for the First Installment)shall be due and
payable in cash by the Investment Partnership within twenty-one
(21) days after the Investment Partnership shall have received
evidence, reasonably satisfactory to it, of the occurrence of
each of the conditions set forth below as to the applicable
Installment, as follows:
(i) $1,508,362 on the latest to occur of (A) receipt of
executed copies of the Bond documents listed in Exhibit B
confirming the issuance of the Bonds and that the Bonds meet the
requirements of Section 42(h)(4)(B) of the Code, (B) Initial
Closing, (C) the Admission Date, (D) receipt of an estoppel
letter reasonably satisfactory to BCTC 94 from the Lender, (E)
receipt of a commitment for sale of the Bonds from Merchant
Capital, LLC or (F) execution of an escrow agreement,
satisfactory to BCTC 94, between the Investment Partnership and
the Letter of Credit Issuer (the "First Installment") (the First
Installment shall be due and payable contemporaneously with the
satisfaction of the conditions set forth in this Section
5.01(c)(i));
(ii) $215,480 on the latest to occur of (A) (A)
Substantial Completion, (B) Cost Certification, (C) State
Designation, (D) receipt of updated insurance certificates and
an updated title insurance policy satisfactory to BCTC 94,
Inc., (E) confirmation by Boston Capital that outstanding Due
Diligence Recommendations as set forth in Exhibit A attached
hereto have been addressed by the General Partners to the
reasonable satisfaction of Boston Capital, (F) receipt of a
payoff letter from the Contractor stating that all amounts
payable to the Contractor have been paid in full and that the
Partnership is not in violation of the Construction Contract,
(G) receipt of an estoppel certificate of Lender stating that
there are no defaults on the Loan, (H) satisfaction of all of
the conditions to the payment of the First Installment or (I)
receipt of a valid and recorded Extended Use Commitment and
receipt of a subordination agreement from the Lender (the
"Second Installment"); and
(iii) $215,480 on the latest to occur of (A) the Initial
100% Occupancy Date, (B) Final Closing, (C) Rental Achievement or
(D) satisfaction of all of the conditions to the payment of the
First and Second Installments (the "Third Installment").
(iv) $215,480 on the latest to occur of (A) receipt of
a tax return and audited financial statement for the year in
which Rental Achievement occurred or (B) satisfaction of all of
the conditions to payment of the First, Second, and Third
Installments (the "Fourth Installment").
As a condition precedent to each payment set forth above other
than the First Installment, the General Partner shall, not less
than twenty (20) days nor more than thirty (30) days prior to the
time such Installment is due, give the Investment Partnership
Notice in the form of a written certification that: (A) all
conditions precedent to such Installment have been satisfied, (B)
the representations, warranties and covenants given by the
General Partner in Section 4.01(a) are valid and accurate, where
still applicable, with respect to the General Partners, the
Partnership and/or the Apartment Complex, as of the date of such
certificate, and (C) to the best of their knowledge, after due
inquiry, no condition exists which would, pursuant to Section
5.03, entitle the Investment Partnership to withhold the payment
of such Installment. Based upon the giving of such Notice, such
Installment shall be made on the due date therefor, or if such
Notice is not timely given, then within twenty-one (21) days
after receipt of such Notice.
The First Installment shall be deposited with the Letter of
Credit Issuer and disbursed at Initial Closing and during the
construction period pursuant to the Escrow and Disbursement
Agreement based upon agreed upon draw procedures.
(d) (i) Upon the occurrence of Cost Certification and State
Designation, if ninety-nine and 99/100ths percent (99.99%) of the
aggregate amount of Tax Credits: (A) for which the Partnership
would be eligible with respect to the Apartment Complex based
upon the Cost Certification, and/or (B) allocated by the Agency
with respect to the Apartment Complex, is less than the aggregate
amount of the Projected Credit over the ten-year credit period
(the "Allocation Differential"), then the Capital Contribution of
the Investment Partnership shall be reduced by the "Adjustment
Amount". The Adjustment Amount shall be equal to the Allocation
Differential multiplied by 83.70%. Any such reduction in Capital
Contribution shall be applied to reduce the Second Installment
and if, and to the extent necessary, the Third and Fourth
Installments. If no further Installments are due to be paid,
then the entire amount of such reduction shall be repaid by the
Partnership to the Investment Partnership promptly after demand
is made therefor. The General Partner is obligated to provide
such funds to the Partnership as shall be necessary to cause the
aforesaid payment to be made by the Partnership to the Investment
Partnership. In the event that there is a reduction in Capital
Contributions equal to the Adjustment Amount, then the amount of
the Projected Credit shall be proportionately reduced to reflect
the Allocation Differential, and thereafter shall be referred to
as the "Revised Projected Credit".
(ii) If at any time the Accountants determine that, for
any fiscal year or portion thereof during the Partnership's
operation, ending on the date five (5) years from and after the
date of Substantial Completion (the "Reduction Period"), the
Actual Credit for such fiscal year or portion thereof is less
than the Projected Credit (or Revised Projected Credit)
applicable to such fiscal year or portion thereof, then the
Capital Contribution of the Investment Partnership shall be
reduced by the Reduction Amount. The "Reduction Amount" shall be
equal to the sum of (A) the Credit Shortfall multiplied by 83.70%
and (B) the amount of any recapture, interest or penalty payable
by the limited partners of the Investment Partnership (assuming
pass through of all such liability in the year incurred and a tax
rate equal to the maximum individual rate applicable in such
year) as a result of the Credit Shortfall for such year. Any
reduction in Capital Contribution shall first be applied to
reduce the Installment next due to be paid by the Investment
Partnership, and any portion of such reduction in excess of such
Installment shall be applied to reduce succeeding Installments.
If no further Installments are due to be paid, then the entire
amount of such reduction shall be repaid by the Partnership to
the Investment Partnership promptly after demand is made
therefor. The General Partner is obligated to provide such funds
to the Partnership as shall be necessary to cause the aforesaid
payment to be made by the Partnership to the Investment
Partnership.
(iii) In the event that, for any reason, at any time
after the Reduction Period, there is a Credit Shortfall with
respect to any fiscal year during the Partnership's operation,
the Investment Partnership shall be treated as having made a
constructive advance to the Partnership with respect to such year
(a "Credit Recovery Loan"), which shall be deemed to have been
made on January 1 of such year, in an amount equal to the sum of
(A) the Credit Shortfall for such year, plus (B) the amount of
any recapture, interest or penalty payable by the limited
partners of the Investment Partnership (assuming pass-through of
all such liability in the year incurred and a tax rate equal to
the maximum individual rate applicable in such year) as a result
of the Credit Shortfall for such year. Credit Recovery Loans
shall be deemed to bear simple (not compounded) interest, from
the respective dates on which such principal advances are deemed
to have been made under this Section 5.01(d) (iii) at 9% per
annum. Credit Recovery Loans shall be repayable by the
Partnership as provided in Sections 11.03(A)(f) and 11.04(A)(b).
(e) Without the Consent of all of the Partners, no
additional Persons may be admitted as additional Limited Partners
and Capital Contributions may be accepted only as and to the
extent expressly provided for in this Article V.
5.02. Return of Capital Contribution TC "5.02. Return of
Capital Contribution"\l2 . Except as provided in this
Agreement, no Partner shall be entitled to demand or receive the
return of his Capital Contribution.
5.03. Withholding of Capital Contribution Upon Default TC
"5.03. Withholding of Capital Contribution Upon Default"\l2 .
In the event that: (a) the General Partner or any successor
General Partner shall not have substantially complied with any
material provisions under this Agreement, after Notice from the
Investment Partnership of such noncompliance and failure to cure
such noncompliance within a period of thirty (30) days from and
after the date of such Notice, or (b) the Partnership is in
default under any of the Project Documents, or (c) foreclosure
proceedings shall have been commenced against the Apartment
Complex, or (d) the Partnership shall not have satisfied the
post-closing conditions described on Exhibit A attached hereto
within the time frames designated therein, then the Investment
Partnership, at its sole election, may cause the withholding of
payment of any Installment otherwise payable to the Partnership.
Notwithstanding the provisions herein, in the event that any
Installment payment becomes due during the cure period stated in
this Section 5.03(a), the Investment Partnership, at its sole
election, may cause the withholding of any payment of any such
Installment otherwise payable to the Partnership until the
termination of such cure period, and then, according to the
provisions herein.
All amounts so withheld by the Investment Partnership under
this Section 5.03 shall be promptly released to the Partnership
only after the General Partners have or the Partnership has cured
the default justifying the withholding, as demonstrated by
evidence reasonably acceptable to the Investment Partnership.
5.04. Legal Opinions TC "5.04. Legal Opinions"\l2 . As
a condition precedent to payment of the First Installment, the
Investment Partnership shall have received the opinion of
Hendrick, Phillips, Schemm & Sulzman, which opinion shall be in
form and substance satisfactory to the Investment Partnership and
shall explicitly state that Hinckley, Allen & Snyder, of Boston,
Massachusetts, counsel to the Limited Partner, may explicitly
rely upon them.
5.05. Repurchase Obligation TC "5.05. Repurchase
Obligation"\l2 .
(a) If (i) Substantial Completion has not occurred and/or
the Apartment Complex is not placed in service by December 31,
2000; (ii) the Partnership has not received State Designation by
December 31, 1999; (iii) Rental Achievement does not occur within
12 months from and after the occurrence of Substantial
Completion; (iv) the Partnership fails to meet the Minimum Set-
Aside Test and the Rent Restriction Test within 12 months of the
date that the Apartment Complex is placed in service; (v) the
Partnership fails to meet either the Minimum Set-Aside Test and
the Rent Restriction Test at anytime during the first 60 months
after initial achievement of the Minimum Set Aside and Rent
Restriction Tests ; (vi) Final Closing has not occurred by June
30, 2000; (vii) an event of default described in Section 5.03(a),
(b) (c) and/or (d) shall exist and shall not have been cured
within 30 days after the occurrence of such default; (viii) the
Bonds are not issued, at the latest, by the end of the year in
which the Project is placed in service and/or BCTC 94, Inc. has
not received the documents set forth in Exhibit B,; or (ix) the
General Partner fails to make Subordinated Loans as required by
this Agreement; then the General Partner shall, within 30 days of
the occurrence thereof, send to the Investment Partnership Notice
of such event and of its obligation to purchase the Interest of
the Investment Partnership hereunder and pay to the Investment
Partnership the Invested Amount in the event the Investment
Partnership in its sole discretion requires such purchase of its
Interest. Thereafter, the General Partner, within 30 days of
their receipt of Notice from the Investment Partnership of such
election, shall acquire the entire Interest of the Investment
Partnership in the Partnership by making payment to the
Investment Partnership, in cash, of an amount equal to the
Invested Amount.
(b) Upon receipt by the Investment Partnership of any such
payment of the Invested Amount, as applicable, the Interest of
the Investment Partnership shall terminate, the Investment
Partnership shall execute, acknowledge and deliver such documents
of assignment as the General Partner shall require and effectuate
termination or transfer of its Interest, and the General Partner
shall indemnify and hold harmless the Investment Partnership from
any losses, damages, and/or liabilities to which the Investment
Partnership (as a result of its participation hereunder) may be
subject, except as and to the extent of any losses, damages
and/or liabilities arising from the Investment Partnership's own
negligence, misconduct or fraud, or breach of this Agreement.
ARTICLE VI
CHANGES IN PARTNERS TC "ARTICLE VI - CHANGES IN PARTNERS"\l1
6.01. Withdrawal of a General Partner TC "6.01.
Withdrawal of a General Partner"\l2 .
(a) A General Partner may withdraw from the Partnership or
sell, transfer or assign his or its Interest as General Partner
only with the prior Consent of BCTC 94, Inc., and of the Lender,
if required, and only after being given written approval by the
necessary parties as provided in Section 6.02, and by the Lender,
if required, of the General Partner(s) to be substituted for him
or it or to receive all or part of his or its Interest as General
Partner.
(b) In the event that a General Partner withdraws from the
Partnership or sells, transfers or assigns his or its entire
Interest pursuant to Section 6.01(a), he or it shall be and shall
remain liable for all obligations and liabilities incurred by him
or it as General Partner, or arising out of any events occurring
before such withdrawal, sale, transfer or assignment shall have
become effective, but shall be free of any obligation or
liability incurred on account of the activities of the
Partnership from and after the time such withdrawal, sale,
transfer or assignment shall have become effective, provided that
if the withdrawal is in breach of this Agreement, the General
Partner shall be liable to the Partnership and/or the Limited
Partners for all damage, loss, cost or expense incurred by the
Partnership or the Limited Partners as a result of such
unauthorized withdrawal.
6.02. Admission of a Successor or Additional General
Partner TC "6.02. Admission of a Successor or Additional
General Partner"\l2 . A Person shall be admitted as a General
Partner of the Partnership only if the following terms and
conditions are satisfied:
(a) the withdrawal of any withdrawing General Partner and
the admission of such Person shall have been Consented to by the
remaining General Partner or its successors and the Investment
Partnership, and Consented to, if required, by the Lender;
(b) the successor or additional Person shall have accepted
and agreed to be bound by (i) all the terms and provisions of
this Agreement, by executing a counterpart hereof, and (ii) all
the terms and provisions of the Loan Documents, including by
executing a counterpart thereof to the extent required by a
Lender, and (iii) all the terms and provisions of such other
documents or instruments as may be required or appropriate in
order to effect the admission of such Person as a General
Partner, and an amendment to this Agreement and/or the
Certificate, as applicable, evidencing the admission of such
Person as a General Partner shall have been filed and all other
actions required by Section 1.05 in connection with such
admission shall have been performed;
(c) if the successor or additional Person is a corporation
or a limited liability company, it shall have provided the
Partnership with evidence satisfactory to counsel for the
Partnership of its authority to become a General Partner, to do
business in the State and to be bound by the terms and provisions
of this Agreement; and
(d) counsel for the Partnership shall have rendered an
opinion that the admission of the successor or additional Person
is in conformity with the Act and that none of the actions taken
in connection with the admission of the successor Person will
cause the termination or dissolution of the Partnership or will
cause it to be classified other than as a partnership for federal
income tax purposes.
6.03. Effect of Bankruptcy, Death, Withdrawal,
Dissolution or Incompetence of a General Partner TC "6.03.
Effect of Bankruptcy, Death, Withdrawal, Dissolution or
Incompetence of a General Partner"\l2 .
(a) In the event of the Bankruptcy of a General Partner or
the withdrawal, death or dissolution of a General Partner or an
adjudication that a General Partner is incompetent (which term
shall include, but not be limited to, insanity) the business of
the Partnership shall be continued by the other General Partner,
if any, (and the other General Partner, by execution of this
Agreement, expressly so agrees to continue the business of the
Partnership); provided, however, that if the withdrawn, Bankrupt,
deceased, dissolved or incompetent General Partner is then the
sole General Partner, unless the Limited Partners within ninety
(90) days after receiving Notice of such Bankruptcy, withdrawal,
death, dissolution or adjudication of incompetence elect to
designate a successor General Partner and continue the
Partnership upon the admission of such successor General Partner
to the Partnership, the Partnership shall be terminated.
(b) Upon the Bankruptcy, death, dissolution or adjudication
of incompetence of a General Partner, such General Partner shall
immediately cease to be a General Partner and his or its Interest
shall without further action be converted to a Limited Partner
Interest; provided, however, that if such Bankrupt, dissolved,
incompetent or deceased General Partner is the sole remaining
General Partner, such General Partner shall cease to be a General
Partner only upon the expiration of ninety (90) days after Notice
to the Investment Partnership of the Bankruptcy, death,
dissolution or declaration of incompetence of such General
Partner; and provided further that if such Bankrupt, dissolved,
incompetent or deceased General Partner is the sole remaining
General Partner, the converted Partnership Interest of such
replaced General Partner shall be ratably reduced to the extent
deemed reasonable by the Limited Partners as a result of good
faith negotiations with such substitute General Partner in order
to give such substitute General Partner an appropriate economic
interest in the Partnership.
Except as set forth above, such conversion of a General
Partner Interest to a Limited Partner Interest shall not affect
any rights, obligations or liabilities (including without
limitation, any of the General Partner's obligations under
Section 8.09 herein) of the Bankrupt, deceased, dissolved or
incompetent General Partner existing prior to the Bankruptcy,
death, dissolution or incompetence of such person as a General
Partner (whether or not such rights, obligations or liabilities
were known or had matured).
(c) If, at the time of the withdrawal, Bankruptcy, death,
dissolution or adjudication of incompetence of a General Partner,
the Bankrupt, deceased, dissolved or incompetent General Partner
was not the sole General Partner of the Partnership, the
remaining General Partner or General Partners shall promptly (i)
give Notice to the Limited Partners of such Bankruptcy, death,
dissolution or adjudication of incompetence, and (ii) make such
amendments to this Agreement and execute and file such amendments
or documents or other instruments as are necessary to reflect the
conversion of the Interest of the Bankrupt, deceased, dissolved
or incompetent General Partner and his having ceased to be a
General Partner. The remaining General Partner or General
Partners are hereby granted an irrevocable power of attorney to
execute any or all documents on behalf of the Partners and the
Partnership and to file such documents as may be required to
effectuate the provisions of this Section 6.03.
ARTICLE VII
ASSIGNMENT TO THE PARTNERSHIP TC "ARTICLE VII - ASSIGNMENT TO
THE PARTNERSHIP"\l1
7.01. Assignment of Contracts, etc. TC "7.01. Assignment
of Contracts, etc."\l2 The General Partners hereby transfer
and assign to the Partnership all of their, right, title and
interest in and to the Apartment Complex, including the
following:
(i) any and all contracts, agreements, options, or
commitments, relating to the acquisition of the Land;
(ii) all contracts with architects, developers, engineers,
contractors, supervising architects, and all other professionals
and service providers with respect to the construction or
development of the Apartment Complex;
(iii) all plans, appraisals, reports, specifications and
working drawings, heretofore prepared or obtained in connection
with the Apartment Complex and all governmental approvals
obtained, including planning, zoning and building permits;
(iv) any and all commitments with respect to the Loan; and
(v) any other work product related to the Apartment Complex.
ARTICLE VIII
RIGHTS, OBLIGATIONS AND POWERS
OF THE GENERAL PARTNERS TC "ARTICLE VIII - RIGHTS, OBLIGATIONS
AND POWERS OF THE GENERAL PARTNERS"\l1
8.01. Management of the Partnership TC "8.01. Management
of the Partnership"\l2 .
(a) Except as otherwise set forth in this Agreement, the
General Partner, within the authority granted to it under this
Agreement, shall have full, complete and exclusive discretion to
manage and control the business of the Partnership for the
purposes stated in Article III, shall make all decisions
affecting the business of the Partnership and shall manage and
control the affairs of the Partnership to the best of its ability
and use its best efforts to carry out the purpose of the
Partnership. In so doing, the General Partner shall take all
actions necessary or appropriate to protect the interests of the
Limited Partner and of the Partnership. The General Partner
shall devote such of its time as is necessary to the affairs of
the Partnership. .
(b) Except as otherwise set forth in this Agreement and
subject to the applicable Lender rules and regulations and the
provisions of the Project Documents, the General Partner (acting
for and on behalf of the Partnership), in extension and not in
limitation of the rights and powers given by law or by the other
provisions of this Agreement, shall, in its sole discretion, have
the full and entire right, power and authority in the management
of the Partnership business to do any and all acts and things
necessary, proper, convenient or advisable to effectuate the
purpose of the Partnership. In furtherance and not in limitation
of the foregoing provisions, the General Partner is specifically
authorized and empowered to execute and deliver, on behalf of the
Partnership, the Project Documents and to execute any and all
other instruments and documents, and amendments thereto, as shall
be required in connection with the Loan including, but not
limited to, executing any mortgage, note, contract, building loan
agreement, bank resolution and signature card, release,
discharge, or any other document or instrument in any way related
thereto or necessary or appropriate in connection therewith;
provided, however, that copies of all applications for advances
of Loan proceeds, including, without limitation, any requests for
disbursements from escrows or reserves, shall be provided to the
Investment Partnership for the Investment Partnership's Consent
contemporaneously with the request to the Letter of Credit
Issuer for the disbursement of any funds pursuant thereto.
(c) Subject to the terms of this Partnership Agreement, the
General Partner shall be responsible for the management and
administration of the Partnership business and shall have all
rights and authority generally conferred by law or necessary,
advisable or consistent with accomplishing the purpose of the
Partnership. Subject to the consent of the Special Limited
Partner, the General Partner shall have the power to assign
duties and may delegate any of its powers, rights and obligations
hereunder and may appoint, employ, contract or otherwise deal
with any person for the transaction of business of the
Partnership, which person may, but only under the supervision of
the General Partner, perform any acts or services for the
Partnership as the General Partner may approve.
(d) Notwithstanding anything to the contrary contained
herein, the Limited Partners reserve the right, at their option
to conduct an audit on twenty five (25%) percent of the initial
leases or occupancy agreements executed in connection with the
Apartment Complex in order to ensure compliance with the
applicable Rent Restriction Test, Minimum Set Aside Test, or any
other applicable tenant restriction test ("Occupancy Agreement
Audit"). The Limited Partners shall select at their option, any
combination of occupancy agreements which shall comprise the
Occupancy Agreement Audit (the "Selected Occupancy Agreements").
The Occupancy Agreement Audit shall consist of a review of the
complete tenant files in connection with the Selected Occupancy
Agreements, including but not limited to any tenant financial
information. Further, the Occupancy Agreement Audit shall be
conducted with the cooperation of, and at the sole cost and
expense of the General Partner if the Occupancy Agreement Audit
reveals a material noncompliance. A material noncompliance shall
be deemed to exist if at least five (5) occupancy agreements
reveal noncompliance or violations of any applicable tenant
restriction test. If the Occupancy Agreement Audit does not
reveal a material noncompliance, the Limited Partners shall bear
the cost of such audit.
8.02. Limitations Upon the Authority of the General
Partner TC "8.02. Limitations Upon the Authority of the General
Partners"\l2 .
(a) The General Partner shall not have any authority to:
(i) perform any act in violation of any applicable law
or regulation thereunder;
(ii) perform any act in violation of the provisions of
the Extended Use Commitment, the Loan Documents, or any other
Project Documents;
(iii) do any act required to be approved or
ratified in writing by all Limited Partners under the Act unless
the right to do so is expressly otherwise given in this
Agreement;
(iv) rent apartments in the Apartment Complex such that
the Apartment Complex would not meet the requirements of the Rent
Restriction Test or Minimum Set-Aside Test or to rent any of the
Low-Income Units to any individuals whose income exceeds 60% of
area median income, as adjusted for family size or any of the
units to individuals in violation of the Regulatory Agreement; or
(v) borrow from the Partnership or commingle
Partnership funds with funds of any other Person.
(b) The General Partner shall not, without the Consent of
BCTC 94, Inc. have any authority to:
(i) sell or otherwise dispose of, at any time, all or
substantially all of the assets of the Partnership;
(ii) borrow in excess of $25,000 in the aggregate at
any one time outstanding on the general credit of the
Partnership, except borrowings constituting Subordinated Loans or
Credit Recovery Loans, or financing leases for miscellaneous
office and laundry equipment entered into in the ordinary course
of business;
(iii) following Substantial Completion, construct
any new or replacement capital improvements on the Apartment
Complex which substantially alter the Apartment Complex or its
use or which are at a cost in excess of $50,000 in a single
Partnership fiscal year, except (a) replacements and remodeling
in the ordinary course of business or under emergency conditions
or (b) construction paid for from insurance proceeds;
(iv) acquire any real property in addition to the
Apartment Complex; or
(v) refinance the Loan.
8.03. Management Purposes TC "8.03. Management
Purposes"\l2 . In conducting the business of the Partnership,
the General Partners shall be bound by the Partnership's
purpose(s) set forth in Article III.
8.04. Delegation of Authority TC "8.04. Delegation of
Authority"\l2 . Subject to Section 8.05 hereof, the General
Partner may employ, contract, or otherwise deal with any Person
in connection with the performance of its management
responsibilities hereunder, provided such Person acts only under
the supervision of the General Partners.
8.05. General Partners or Affiliates Dealing with
Partnership TC "8.05. General Partners or Affiliates Dealing
with Partnership"\l2 .
(a) The General Partner or any Affiliate may act as
Management Agent on such terms and conditions permitted by
applicable regulations of the Lender and the Agency, and may
receive compensation at the highest rates approved and permitted
by any Lender or the Agency at any time; provided that
notwithstanding the foregoing, the Management Agent may not
receive compensation in excess of 6% of gross rental receipts
received from tenants of the Apartment Complex without the prior
approval of the Special Limited Partner.
(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 (A) 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, (B) the goods or services
to be furnished shall be reasonable for and necessary to the
Partnership, (C) 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, (D) 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
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 Section 13.04.
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
8.05(b).
8.06. Other Activities TC "8.06. Other Activities"\l2 .
The General Partner and any Affiliates thereof may engage in or
possess interests in other business ventures of every kind and
description for their own account, including, without limitation,
serving as general partner of other partnerships which own,
either directly or through interests in other partnerships,
government-assisted housing projects similar to the Apartment
Complex. Neither the Partnership nor any of the Partners shall
have any rights by virtue of this Agreement in or to such other
business ventures or to the income or profits derived therefrom.
8.07. Liability for Acts and Omissions TC "8.07.
Liability for Acts and Omissions"\l2 . No General Partner
shall be liable, responsible or accountable in damages or
otherwise to any of the Partners for any act or omission
performed or omitted by him or it, or any of them, in good faith
on behalf of the Partnership and in a manner reasonably believed
by him or it or any of them to be within the scope of the
authority granted to him or it or any of them by this Agreement
and in the best interest of the Partnership, except for
negligence, willful misconduct, fraud or any material breach of
his or its or their fiduciary duty as General Partner with
respect to such acts or omissions. Any loss or damage incurred
by any General Partner by reason of any act or omission performed
or omitted by him or it or any of them in good faith on behalf of
the Partnership and in a manner reasonably believed by him or it
or any of them to be within the scope of the authority granted to
him or it by this Agreement and in the best interests of the
Partnership (but not, in any event, any loss or damage incurred
by any General Partner by reason of negligence, willful
misconduct, fraud or any material breach of his or its or their
fiduciary duty as General Partner with respect to such acts or
omissions, or liabilities of the Partners chargeable to the
General Partner) shall be paid from Partnership assets to the
extent available, but the Limited Partners shall not have any
personal liability to the General Partners under any
circumstances on account of any such loss or damage incurred by
the General Partners or on account of the payment thereof.
8.08. Partnership Status TC "8.08. Partnership Status"\l2
. The Partners intend that the Partnership will be classified
as a partnership for federal income tax purposes. The General
Partner will undertake any and all actions necessary under the
Code and the regulations promulgated thereunder, including any
future amendments to such regulations, to ensure that the
Partnership will be classified as a partnership for federal
income tax purposes. The General Partner will file or cause to
be filed any elections that may be required (but only if
required) under the Code and the regulations promulgated
thereunder, including any future amendments to such regulations,
in order to ensure that the Partnership will be classified as a
partnership for federal income tax purposes. The General Partner
will not change its classification status or election without the
consent of the Special Limited Partner.
8.09. Construction of the Apartment Complex, Construction
Cost Overruns, Operating Deficits TC "8.09. Construction of the
Apartment Complex, Construction Cost Overruns, Operating
Deficits"\l2 .
(a) (i) The Partnership has entered or will enter into the
Construction Contract. The General Partners shall be responsible
for:
(A) achieving completion of construction of the
Apartment Complex on a timely basis in accordance with the Plans
and Specifications, this Agreement and the Project Documents;
(B) meeting all requirements for obtaining all
necessary permanent, unconditional certificates of occupancy for
all the apartment units in the Apartment Complex;
(C) fulfilling all actions required of the Partnership
to assure that the Apartment Complex satisfies the Minimum Set-
Aside Test and the Rent Restriction Test; and
(D) causing the making of the Loan by the Lender and
the achievement of Initial and Final Closing.
(ii) The General Partner hereby is obligated to pay all
Excess Development Costs; the Partnership shall have no
obligation to pay any Excess Development Costs.
(iii) In the event that the General Partner shall fail
to pay any such Excess Development Costs as required in this
Section 8.09(a), an amount not in excess of the next installment
of the Development Fee due to the Developer shall be applied by
the Partnership as an offset against such obligations of the
General Partner.
Any such direction and application of funds otherwise
payable to the Developer as aforesaid shall be deemed to have
been paid by the Partnership to the Developer and then applied to
reduce the amount of the Excess Development Costs, and the
Partnership's obligation to make installment payments to the
Developer pursuant to Section 8.10(a), as well as the Investment
Partnership's obligation to make future Installments, shall be
deemed satisfied to the extent of the funds applied to reduce the
General Partners' obligation to fund Excess Development Costs,
and the obligations of the General Partners pursuant to Sections
8.09(a) (i) or 8.09(a) (ii) shall be deemed satisfied to the
extent of the funds applied.
(b) In the event that, at any time (subject to the
hereinafter set forth limitations), an Operating Deficit shall
exist, the General Partner shall provide such funds to the
Partnership as shall be necessary to pay such Operating
Deficit(s) in the form of a loan to the Partnership (the
"Operating Deficit Loan(s)"). An Operating Deficit Loan shall be
a Subordinated Loan payable in accordance with the provisions of
Section 8.17; provided, however that Operating Deficit Loans
shall bear no interest.
From and after the occurrence of the later of (i) Rental
Achievement and (ii) the extension of the Letter of Credit for an
additional five-year term, the obligation of the General Partner
to make Operating Deficit Loans shall be limited to an aggregate
of $1,000,000. The General Partner's obligation to make
Operating Deficit Loans shall terminate upon the later of (i) the
expiration of 60 months from Rental Achievement and (ii) the
extension of the Letter of Credit for an additional five-year
term.
In the event that the General Partner shall fail to make any
such Operating Deficit Loan as aforesaid, an amount not in excess
of the required Operating Deficit Loan shall be applied by the
Partnership against the Development Fee due to the Developer as
an offset against the obligations of the General Partner pursuant
to this Section 8.09(b). Any such direction and application of
funds otherwise payable to the Developer as aforesaid shall be
deemed to have been paid by the Partnership to the Developer and
then applied to reduce the amount of the Operating Deficit Loan,
and the Partnership's obligation to make installment payments to
the Developer pursuant to Section 8.10(a), as well as the
Investment Partnership's obligation to make future Installments,
shall be deemed satisfied to the extent of the funds applied to
reduce the General Partners' obligation to make such Operating
Deficit Loan, and the obligations of the General Partners
pursuant to Sections 8.09(a) (i) or 8.09(a) (ii) shall be deemed
satisfied to the extent of the funds applied.
8.10. Development Fee TC "8.10. Development Fee"\l2 .
The Partnership has entered into a Development Agreement of even
date herewith with the Developer for its services in connection
with the development and construction of the Apartment Complex.
In consideration for such services, a Development Fee in the
total amount of $1,830,000 shall be payable by the Partnership to
the Developer, solely from the Capital Contributions by the
Investment Partnership except as provided in Sections 5.01(a),
11.03A(c) and 11.04(A)(b)(1).
The Development Fee shall be due and payable as follows:
(a) $322,412 from the proceeds of the First Installment,
which shall be disbursed subject to the approval of the Letter of
Credit Issuer and to the provisions of the Escrow and
Disbursement Agreement, and up to $300,000 of which shall be
disbursed in amounts equal to $30,000 per month throughout the
course of construction;
(b) $215,480 upon receipt by the Partnership of the Second
Installment;
(c) $215,480 upon receipt by the Partnership of the Third
Installment;
(d) $215,480 upon receipt by the Partnership of the Fourth
Installment;
(e) the remainder of the Deferred Development Fee shall be
payable only in accordance with Sections 11.03A(c) and 11.04A(b)
or, if not sooner paid, on December 31, 2009;
Notwithstanding the foregoing, if as of Rental Achievement
the Development Sources have exceeded the total development costs
as described in clauses (i) through (vii) of the definition of
Excess Development Costs plus all amounts previously paid on the
Development Fee through the Fourth Installment (the "Development
Savings"), then the Partnership shall pay the Developer an amount
equal to the Development Savings as a payment on the Development
Fee otherwise payable under Sections 11.03A(c) and 11.04A(b).
The payment of any Development Savings toward the Development Fee
shall be payable within thirty (30) days following the Investment
Partnership's receipt of a certificate from the General Partner
and the Developer calculating the Development Savings together
with such supporting documentation as the Investment Partnership
may reasonably require.
8.11. Partnership Incentive Management Fee TC "8.11.
Partnership Incentive Management Fee"\l2 . The Partnership has
entered into a Partnership Management Services Agreement with the
General Partner of even date herewith for its services in
managing the business of the Partnership for the period from the
date hereof throughout the term of the Partnership, commencing in
2000. Such agreement includes provisions to the effect that in
return for its services in administering and directing the
business of the Partnership, maintaining appropriate books and
records relating to all financial affairs of the Partnership, and
reporting periodically to the Partners, the Lender and the Agency
with respect to the financial and administrative affairs of the
Partnership and the Apartment Complex, the Partnership shall pay
to the General Partner, from the Cash Flow and/or from Proceeds
of Capital Transactions of the Partnership available for
distribution and in accordance with Section 11.03A(e) and
11.04(A)(b) an annual Partnership Incentive Management Fee.
Such fee shall be payable in accordance with the provisions
of any applicable regulations of the Lender or the Agency and of
the Project Documents and shall be in an amount equal to $30,000
per year, commencing in 2000 and payable from Cash Flow. Such
fee shall be cumulative from year to year until Cash Flow or
Proceeds of Capital Transaction are sufficient to make all or a
portion of accrued payments due in accordance with the priorities
set forth in Sections 11.03A and 11.04A.
8.11.1 Asset Management Fee TC "8.11.1 Asset Management
Fee"\l2 . The Partnership shall pay to Boston Capital, or an
Affiliate thereof, an annual Asset Management Fee in the amount
of $15,000 per annum, commencing in 2000, for its services in
assisting with the preparation of the reports required pursuant
to Section 13.04 and shall be payable from Cash Flow; provided,
however, that if in any fiscal year, Cash Flow is insufficient to
pay all or any portion of the Asset Management Fee, the General
Partner shall make a Subordinated Loan to the Partnership in an
amount not to exceed the lesser of $10,000 per annum or that
amount necessary to pay the unpaid portion of such fee. Any
unpaid portion of said Asset Management Fee, to the extent not
paid by the General Partners, shall accrue, without interest, and
shall be payable on a cumulative basis in the first year in which
there is sufficient Cash Flow available for the payment of such
fee, or, in the first year in which proceeds of a Capital
Transaction are available
8.12. Withholding of Fee Payments TC "8.12. Withholding
of Fee Payments"\l2 . In the event that: (a) the General Partner
or any successor General Partner shall not have substantially
complied with any material provisions under this Agreement, after
Notice from the Investment Partnership of such noncompliance and
failure to cure such noncompliance within a period of thirty (30)
days from and after the date of such Notice, or (b) the
Partnership is in default under any of the Project Documents, or
(c) foreclosure proceedings shall have been commenced against the
Apartment Complex, or (d) the Partnership shall not have
satisfied the post-closing conditions described on Exhibit A
attached hereto within the time frames designated therein, then
(i) then the Investment Partnership, at its sole election, may
cause the withholding of payment of any installment of fees
payable pursuant to Sections 8.10 and 8.11, and (ii) the General
Partner shall be liable for the Partnership's payment of any and
all installments of the Development Fee payable pursuant to
Section 8.10, to the extent that the Investment Partnership has
withheld any Installment(s) pursuant to Section 5.03 as a result
of the above-described default.
All amounts so withheld by the Partnership under this
Section 8.12 shall be promptly released only after the General
Partner have cured the default justifying the withholding, as
demonstrated by evidence reasonably acceptable to the Investment
Partnership.
8.13. Removal of a General Partner TC "8.13. Removal of a
General Partner"\l2 .
(a) BCTC 94, Inc., acting on behalf of the Investment
Partnership, so long as the Investment Partnership is a Partner,
shall have the right to remove any or all General Partner (i) for
any intentional misconduct or gross negligence in the discharge
of its duties and obligations as a General Partner (provided that
such misconduct or failure results in, or is likely to result in,
a material detriment to or an impairment of the Apartment Complex
or assets of the Partnership), or (ii) upon the occurrence of any
of the following:
(A) such General Partner shall have violated any of
the material provisions of the Extended Use Commitment, the Loan
Documents, or any provisions of any other Project Document or
other document required in connection with the Loan, or any
provisions of the Agency regulations applicable to the Apartment
Complex;
(B) such General Partner shall have violated any
material provision of this Agreement or any provision of
applicable law, which violations shall include, without
limitation (i) withdrawal of a General Partner without the
Consent of the Investment Partnership pursuant to the Section
6.01(a) or (ii) the failure of a General Partner to make
Subordinated Loans required under this Agreement;
(C) such General Partner shall have caused the Loan go
into default; or
(D) such General Partner shall have conducted its own
affairs or the affairs of the Partnership in such manner as
would: (1) cause the termination of the Partnership for federal
income tax purposes; or (2) cause the Partnership to be treated
for federal income tax purposes as an association, taxable as a
corporation.
(b) BCTC 94, Inc. shall give Notice to all Partners of its
determination that any such General Partner shall be removed.
The General Partner shall have thirty (30) days after receipt of
such Notice to cure any default or other reason for such removal,
in which event it shall remain as General Partner. If, at the
end of such cure period such General Partner has not cured any
default or other reason for such removal, (i) without any further
action by any Partner, BCTC 94, Inc. or its designee shall
automatically become a General Partner and acquire in
consideration of a cash payment of $5 such portion of the
Interest of the removed General Partner as counsel to the
Investment Partnership shall determine is the minimum appropriate
interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the Act,
(ii) the remaining portion of the economic Interest of the
removed General Partner shall automatically be converted to an
equal economic Interest as an Additional Limited Partner, (iii)
the economic Interest of BCTC 94, Inc. as the Special Limited
Partner shall continue unaffected by the new status of BCTC 94,
Inc. or its designee as a General Partner, and (iv) the new
General Partner shall automatically be irrevocably delegated all
of the powers and duties of the General Partner hereunder.
(c) BCTC 94, Inc. or any successor General Partner proposed
by the Special Limited Partner shall have the option, exercisable
in its sole discretion, to acquire the Additional Limited Partner
Interest, or any portion thereof, of any removed General Partner
upon payment of the agreed or then present fair market value of
such Interest or portion thereof. Any dispute as to the value of
the Interest or portion thereof to be acquired pursuant to the
immediately preceding sentence shall be submitted to a committee
composed of three qualified real estate appraisers, one chosen by
the removed General Partner, one chosen by the successor General
Partner, and the third chosen by the two so chosen. The
proceedings of such committee shall conform to the rules of the
American Arbitration Association, as far as appropriate, and its
decision shall be final and binding. The expense of arbitration
shall be born equally by the removed General Partner and the
Partnership. The method of payment will be deemed presumptively
fair where it provides for a promissory note bearing simple
interest at eight percent (8%) per annum coming due in no less
than five (5) years with equal installments each year.
(d) Upon removal, no General Partner or any Affiliate
thereof shall be entitled to receive any fee, compensation or
other remuneration from the Partnership, other than the above-
described payment for the Interest, or portion thereof, of the
Removed General Partner. 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 BCTC 94, Inc. shall have been obtained to such
particular arrangement. The Partnership may offset against any
payments to a General Partner removed under this Section 8.13 any
damages suffered by the Partnership as a result of any breach of
the obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a general partner for
any obligations of the Partnership incurred after the effective
date of its removal, but shall be and remain liable for all
obligations and liabilities incurred by it as General Partner
before such removal became effective, including, but not limited
to, its obligations set forth in Section 8.09 hereof.
(e) Each General Partner hereby grants to each of the
Investment Partnership and BCTC 94, Inc. an irrevocable power of
attorney, coupled with an interest, to execute any and all
documents on behalf of the Partners and the Partnership as shall
be legally necessary and sufficient to effect all of the
foregoing provisions of this Section 8.13. The election by BCTC
94, Inc. to remove such General Partner under this Section shall
not limit or restrict the availability and use of any other
remedy which BCTC 94, Inc. or any other Partner might have with
respect to the General Partner in connection with its
undertakings and responsibilities under this Agreement.
8.14. Selection of Management Agent TC "8.14. Selection
of Management Agent"\l2 . The Partnership, with the approval of
the Lender and the Agency, if required, shall engage such person,
firm or company as the General Partners may select, and as BCTC
94, Inc. may approve, which approval shall not be unreasonably
withheld (hereinafter referred to as "Management Agent") to
manage the operation of the Apartment Complex during the rent-up
period and following Substantial Completion for a period of one
year, and thereafter such management contract may be extended on
an annual basis unless terminated for cause. The Management
Agent shall be paid a management fee subject to Section 8.05(a)
and to the approval of the Lender and the Agency, if required.
The contract between the Partnership and the Management Agent and
the management plan for the Apartment Complex shall be in a form
acceptable to the Lender and the Agency, if required. Signature
Management Corp. hereby is approved by the parties hereto as the
initial Management Agent.
8.15 Removal of the Management Agent. The General Partner
(i) may, upon receiving any required approval of the Lender and
the Agency, dismiss the management Agent as the entity
responsible for managing the Apartment Complex under the terms of
the contract between the Partnership and the Management Agent,
and (ii) at the request of BCTC 94, Inc., subject to any notice
requirements set forth in the Management Agreement, shall remove
the Management Agent in the event that (A) BCTC 94, Inc., in its
reasonable discretion, determines that the Management Agent does
not possess the necessary experience to properly manage the
Apartment Complex or (B) the Management Agent is declared
Bankrupt, is dissolved, or makes an assignment for the benefit of
its creditors, or for any intentional misconduct by the
Management Agent or gross negligence in the discharge of its
duties and obligations as Management Agent, including, without
limitation, for any action or failure to take any action which:
(1) violates in any material respect any provision of
the Management Agreement entered into with the Partnership and
approved by the Lender, and/or any provision of the Extended Use
Commitment, the Regulatory Agreement and/or the Loan Documents
applicable to the Apartment Complex, or the Lender approved
management plan for the Apartment Complex, or
(2) violates in any material respect any provision of
this Agreement or provision of applicable law.
8.16. Replacement of the Management Agent TC "8.16.
Replacement of the Management Agent"\l2 . Upon the removal of
the Management Agent as the entity responsible for the management
of the Apartment Complex, a substitute Management Agent, which
may be an Affiliate of any of the General Partners, shall be
named by the General Partner, by their joint agreement, subject
to the approval of the Lender, if required, and the Consent of
BCTC 94, Inc.
8.17. Subordinated Loans to the Partnership TC "8.17.
Subordinated Loans to the Partnership"\l2 . In the event that
additional funds are required by the Partnership for any purpose
relating to the business of the Partnership or for any of its
obligations, expenses, costs or expenditures, the Partnership may
borrow such funds as are needed from any Partners or other Person
or organization, including the General Partner, for such period
of time and on such terms as the General Partner, BCTC 94, Inc.
and the Lender, if so required, may agree and at the rate of
interest then prevailing for comparable loans (except for
Operating Deficit Loans made pursuant to Section 8.09(b), which
shall bear interest only as provided in Section 8.09(b));
provided however, that no such additional loans shall be secured
by any mortgage or other encumbrance on the property of the
Partnership without the Consent of BCTC 94, Inc. and the
approval of the Lender, if required. Loans made under this
Section shall be repaid as set forth in Section 11.01 of this
Agreement, but any amount of any such loan that is outstanding at
the time of the occurrence of any of the events described in
Sections 11.04 or 12.01 shall be repaid as provided in Section
11.04A(c)(5). The General Partners are obligated to make
Subordinated Loans in accordance with Section 8.09 and Section
8.11.1.
8.18. Reserve Fund for Replacements TC "8.18. Reserve
Fund for Replacements"\l2 .
(a) Reserve Fund for Replacements. The Partnership
shall establish a Reserve Fund for Replacements with respect to
the Apartment Complex, as required by the Letter of Credit Issuer
and BCTC 94, Inc. The Partnership shall make deposits into the
Reserve Fund at the rate of $3,633 per month commencing on the
first day of the month following the Debt Service Coverage Date
(as defined in the Letter of Credit and Reimbursement Agreement);
such deposits may be suspended only as approved by the Letter of
Credit Issuer and/or BCTC 94, Inc. Funds in the Reserve Fund for
Replacements are intended to be employed for the replacement as
needed of fixtures, equipment, structural elements and other
components of the Apartment Complex of a capital nature. All
interest earnings on funds on deposit in the Reserve Fund for
Replacements shall be retained therein for the aforesaid
purposes. The Reserve Fund for Replacement shall be maintained
in an account established with the Letter of Credit Issuer and
shall remain under the joint control of the General Partner and
BCTC 94, Inc. Withdrawals from the Reserve Fund for Replacements
shall be made only with the Consent, or upon the direction, of
the Letter of Credit Issuer, the General Partners and BCTC 94,
Inc.
(b) Operating Deficit Reserve. The Partnership shall
establish an Operating Deficit Reserve Escrow Account (the
"Operating Deficit Reserve") as a separate, interest bearing
account with and shall deposit therein funds in the amount of
$348,500. Funds in the Operating Deficit Reserve are intended to
be employed solely for the payment of Operating Deficits
(including, without limitation, debt service, taxes and
insurance), unless otherwise released from escrow by the Lender
and/or Letter of Credit Issuer with the Consent of BCTC 94, Inc.,
provided that until Rental Achievement the Operating Deficit
Reserve must always maintain a minimum balance of $200,000, which
may not be depleted by draws on the Operating Deficit Reserve
during the period prior to Rental Achievement. All interest
earnings on funds on deposit in the Operating Deficit Reserve
shall be retained therein for the aforesaid purposes.
Withdrawals from the Operating Deficit Reserve shall be made only
with the Consent, or upon the direction, of the Lender and BCTC
94, Inc.. The Operating Deficit Reserve shall be maintained
until the later of (i) five years after the occurrence of Rental
Achievement, or (ii) the achievement of twelve consecutive months
at a minimum monthly occupancy rate of 93% plus twelve
consecutive months of operations during each of which Cash
Available for Debt Service Requirements equals or exceeds 1.15
times Debt Service or (iii) the extension of the Letter of Credit
for an additional five-year term.
The Operating Deficit Reserve shall also be subject to the
requirements of the Letter of Credit Issuer and shall function
initially as the Lease Up Reserve required by the Letter of
Credit Issuer. Upon Rental Achievement, the Operating Deficit
Reserve shall be paid into the account maintained by the Letter
of Credit Issuer as the Letter of Credit/Debt Service Account,
into which annual payments set forth in Section 11.03 A(b) shall
also be paid. Withdrawals from the Operating Deficit Reserve
shall always be subject to the consent of both the Lender and
BCTC 94, Inc.
ARTICLE IX
TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS
OF INTERESTS OF LIMITED PARTNERS TC "ARTICLE IX - TRANSFERS OF,
AND RESTRICTIONS ON TRANSFERS OF INTERESTS OF LIMITED
PARTNERS"\l1
9.01. Purchase for Investment TC "9.01. Purchase for
Investment"\l2 .
(a) The Investment Partnership hereby represents and
warrants to the General Partners and to the Partnership that the
acquisition of its Interest is made as principal for its account
for investment purposes only and not with a view to the resale or
distribution of such Interest, except insofar as the Securities
Act of 1933 and any applicable securities law of any state or
other jurisdiction permit such acquisitions to be made for the
account of others or with a view to the resale or distribution of
such Interest without requiring that such Interest, or the
acquisition, resale or distribution thereof, be registered under
the Securities Act of 1933 or any applicable securities law of
any state or other jurisdiction.
(b) The Investment Partnership agrees that it will not
sell, assign or otherwise transfer its Interest or any fraction
thereof to any Person who does not, by agreeing to be bound by
this Agreement, similarly represent and warrant and similarly
agree not to sell, assign or transfer such Interest or fraction
thereof to any Person who does not similarly represent and
warrant and agree.
(c) The Investment Partnership is an "accredited
investor" as defined in Rule 501 promulgated by the United States
Securities and Exchange Commission.
9.02. Restrictions on Transfer of Limited Partner's
Interests TC "9.02. Restrictions on Transfer of Limited
Partner's Interests"\l2 .
(a) Under no circumstances will any offer, sale,
transfer, assignment, hypothecation or pledge of any Limited
Partner Interest, other than (i) an assignment to an Affiliate
(a "Permitted Assignee") or (ii) a pledge or collateral
assignment (a "Financing Pledge") to a lender financing the
acquisition of the Limited Partner Interest (a "Financing
Pledgee"), be permitted unless the General Partners, in their
sole discretion, shall have Consented.
(b) The Limited Partner whose interest is being
transferred shall pay such reasonable expenses as may be incurred
by the Partnership in connection with such transfer.
9.03. Admission of Substitute Limited Partners TC "9.03.
Admission of Substitute Limited Partners"\l2 .
(a) Except as permitted under Section 9.03(b), and
subject to the other provisions of this Article IX, an assignee
of the Interest of a Limited Partner (which shall be understood
to include any purchaser, transferee, donee, or other recipient
of any disposition of such Interest) shall be admitted as a
Substitute Limited Partner of the Partnership only upon the
satisfactory completion of the following:
(i) Consent of the General Partner which shall not
unreasonably be withheld, and the consent of the Lender, if
required, shall have been given, which Consent of the General
Partner may be evidenced by the execution by the General Partner
of an amended Agreement and/or Certificate evidencing the
admission of such Person as a Limited Partner pursuant to the
requirements to the Act;
(ii) the assignee shall have accepted and agreed to be
bound by the terms and provisions of this Agreement by executing
a counterpart of this Agreement or an appropriate amendment
hereto, or such other document as reflects the assignee's
agreement to be bound by the provisions hereof and such other
documents or instruments as may be required by law in order to
effect the admission of such Person as a Limited Partner;
(iii) an amended Agreement and/or Certificate
evidencing the admission of such Person as a Limited Partner
shall have been filed for recording pursuant to the requirements
of the Act to the extent required in order to effectuate the
admission of such Person as a Limited Partner;
(iv) if the assignee is a corporation and if the
General Partner so requires, the assignee shall have provided the
General Partners with evidence satisfactory to counsel for the
Partnership of its authority to become a Limited Partner under
the terms and provisions of this Agreement; and
(v) the assignee or the assignor shall have reimbursed
the Partnership for all reasonable expenses, including all
reasonable legal fees and recording charges, incurred by the
Partnership in connection with such assignment.
(b) A Permitted Assignee and, upon foreclosure of a
Financing Pledge, a Financing Pledgee, shall be automatically
admitted to the Partnership as a Substitute Limited Partner upon
compliance only with Section 9.03(a) (ii), (iii), (iv) and (v).
(c) For the purpose of allocation of Taxable Income, Tax
Losses, Tax Credits, and for the purpose of distributing cash of
the Partnership, a Substitute Limited Partner shall be treated as
having become, and as appearing in, the records of the
Partnership as a Partner upon its signing of an amendment to this
Agreement, agreeing to be bound hereby.
(d) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the
documentation required by this Section and making all official
filings and publications. The Partnership shall take all such
action, including the filing of any amended Agreement and/or
Certificate evidencing the admission of any Person as a Limited
Partner, and the making of any other official filings and
publications, as promptly as practicable after the satisfaction
by the assignee of the Interest of a Limited Partner of the
conditions contained in this Article IX to the admission of such
Person as a Limited Partner of the Partnership.
9.04. Rights of Assignee of Partnership Interest TC "9.04.
Rights of Assignee of Partnership Interest"\l2 .
(a) Except as provided in this Article and as required by
operation of law, the Partnership shall not be obligated for any
purpose whatsoever to recognize the assignment by any Limited
Partner of his (its) Interest until the Partnership has received
actual Notice thereof.
(b) Any Person who is the assignee of all or any portion of
a Limited Partner's Interest, but does not become a Substitute
Limited Partner and desires to make a further assignment of such
Interest, shall be subject to all the provisions of this Article
IX to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of his its Interest.
ARTICLE X
RIGHTS AND OBLIGATIONS
OF LIMITED PARTNERS TC "ARTICLE X - RIGHTS AND OBLIGATIONS OF
LIMITED PARTNERS"\l1
10.01. Management of the Partnership TC "10.01. Management
of the Partnership"\l2 . No Limited Partner shall take part in
the management or control of the business of the Partnership nor
transact any business in the name of the Partnership. Except as
otherwise expressly provided in this Agreement, no Limited Partner
shall have the power or authority to bind the Partnership or to
sign any agreement or document in the name of the Partnership. No
Limited Partner shall have any power or authority with respect to
the Partnership except insofar as the consent of any Limited
Partner shall be expressly required and except as otherwise
expressly provided in this Agreement.
10.02. Limitation on Liability of Limited Partners TC
"10.02. Limitation on Liability of Limited Partners"\l2 . The
liability of each Limited Partner shall be limited to its Capital
Contribution as and when payable under the provisions of this
Agreement. No Limited Partner shall have any other liability to
contribute money to, or in respect of the liabilities or
obligations of, the Partnership, nor shall any Limited Partner be
personally liable for any obligations of the Partnership. No
Limited Partner shall be obligated to make loans to the
Partnership.
10.03. Other Activities TC "10.03. Other Activities"\l2
. Any Limited Partner may engage in or possess interests in
other business ventures of every kind and description for its own
account, including without limitation, serving as general or
limited partner of other partnerships which own, either directly
or through interests in other partnerships, government-assisted
housing projects similar to the Apartment Complex. Neither the
Partnership nor any of the Partners shall have any right by
virtue of this Agreement in or to such other business ventures to
the income or profits derived therefrom.
10.04. Ownership by Limited Partner of Corporate General
Partners or Affiliate TC "10.04. Ownership by Limited Partner
of Corporate General Partners or Affiliate"\l2 . No Limited
Partner shall, at any time, either directly or indirectly, own
any stock or other interest in any corporate General Partner if
such ownership by itself or in conjunction with other stock or
other interests owned by other Limited Partners would, in the
opinion of Hinckley, Allen & Snyder or other tax counsel to the
Investment Partnership, jeopardize the classification of the
Partnership as a partnership for federal income tax purposes. In
the event of any violation of the provisions of this Section by
any one or more Limited Partners, such Limited Partner or Limited
Partners shall either dispose of their Interests in the
Partnership (subject to and in compliance with the provisions of
Article IX) or of their stock or other interest in the corporate
General Partner or Affiliates to the extent necessary so that, in
the opinion of counsel for the Partnership, the classification of
the Partnership as a partnership for federal income tax purposes
is no longer in jeopardy. The obligation of any such disposition
required of more than one Limited Partner shall be shared among
them on an equitable basis. Notwithstanding the foregoing,
neither the General Partners nor any Limited Partner shall be
liable in damages to the Partnership or to any Partner by reason
of any violation of this Section, except for damages arising (a)
out of any material misrepresentation by any Limited Partner
relating to the ownership of stock or other interest in a
corporate General Partner or any affiliate by him or by any
member of his family (within the meaning of the attribution rules
set forth in Section 318 of the Code), or (b) out of any failure
by any Limited Partner to dispose of his Interest in the
Partnership or of his stock or other interest in a corporate
General Partner or Affiliate within a reasonable time after
Notice to such Limited Partner by the Partnership of the
obligations to make such disposition.
ARTICLE XI
ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX CREDITS
AND CASH DISTRIBUTIONS
TC "ARTICLE XI - ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX
CREDITS AND CASH DISTRIBUTION"\l1
11.01. Allocation of Taxable Income, Tax Losses and Tax
Credits TC "Section 11.01. Allocation of Taxable Income, Tax
Losses and Tax Credits"\l2 .
A. General. Subject to the special allocations set forth
in this Article XI, Taxable Income, Tax Credits and Tax Losses
for each fiscal year of the Partnership (or part thereof) other
than those to be allocated pursuant to Section 11.01B or Section
11.02 hereof, shall be allocated 99.99% to the Investment
Partnership and .01% to the General Partner.
B. Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other period shall be specially allocated 99.99%
to the Investment Partnership and .01% to the General Partners.
C. Partner Loan Nonrecourse Deductions. Any Partner Loan
Nonrecourse Deductions for any Fiscal Year or other period shall
be specially allocated to the Partner who bears the economic risk
of loss with respect to the loan to which such Partner Loan
Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i).
11.02 TC "Section 11.02"\l2 . Allocation of Taxable
Income and Tax Losses from Capital Transactions. Subject to the
special allocations set forth in this Article XI, Taxable Income
and Tax Losses from Capital Transactions shall be allocated to
the Partners as follows:
(i) Taxable Income from Capital Transactions shall be
allocated:
(a) first, to the Partners with negative Capital
Accounts pro rata in such amounts as will result in the
elimination of the negative Capital Accounts of such Partners;
provided, however, that if Taxable Income to be allocated
pursuant to this Section 11.02(i)(a) is insufficient to eliminate
all negative Capital Accounts, such Taxable Income will be
allocated to Partners with negative Capital Accounts in the
proportion that each such Partner's negative Capital Account
bears to the total of all such Negative Capital Accounts;
(b) second, in the amount and to the extent necessary
to increase the Partners' respective Capital Accounts to equal
the amounts distributable under Sections , 11.04 A(d) and 11.04 A
(e);
(c) then, the balance, if any, of such Taxable Income
shall be allocated 70% to the General Partner and 30% to the
Investment Partnership.
(ii) Tax Losses from Capital Transactions shall be
allocated:
(a) first, to the extent of the respective positive
balances in the Partners' Capital Accounts; and
(b) any balance, 99.99% to the Limited Partner and
.01% to the General Partner.
(iii) Notwithstanding the foregoing provisions, if
Taxable Income to be allocated includes income treated as
ordinary income for federal income tax purposes because such
Taxable Income is attributable to the recapture of depreciation
under Section 1245 or 1250 of the Code, such Taxable Income, to
the extent treated as ordinary income, shall be allocated to and
reported by the Partners in proportion to their accumulated
depreciation allocations. The Partnership shall keep records of
such allocations of depreciation to the Partners. In determining
the accumulated depreciation allocations of the Partners,
depreciation deductions for each taxable year shall be deemed
allocated to the Partners in the same proportion as the Taxable
Income or Tax Losses in that particular taxable year were
allocated to the Partners.
11.03 Distribution of Cash Flow TC "11.03 Distribution of
Cash Flow"\l2 .
A. Subject to Lender approval, if required, Cash Flow
shall be determined for each fiscal year and shall be applied or
distributed at such time or times as the General Partners deem
appropriate, but in no event less than once in each fiscal year,
in the following order of priority:
(a) First, to payment of the Asset Management Fee
currently due, together with any accrued but unpaid Asset
Management Fees;
(b) Second, for each of the first five years of
operation from and after Rental Achievement, to payment of
$130,000 annually to the Cash Flow Reserve Account.
(c) Third, to payment to the Developer of the Deferred
Development Fee;
(d) Fourth, to repayment of any amounts due with
respect to any Subordinated Loans (including, without limitation,
Operating Deficit Loans made under Section 8.09(b)),
(e) Fifth, to payment of the Partnership Incentive
Management Fee currently due, together with any accrued but
unpaid Partnership Incentive Management Fee;
(g) Sixth, to repayment of the Investment Partnership
of any Reduction Amount pursuant to Section 5.01(d)(ii) or Credit
Recovery Loan pursuant to Section 5.01(d)(iii); and
(h) Any balance, 70% to the General Partner and 30% to
the Investment Partnership.
11.04 Distributions of Distributable Proceeds from Capital
Transactions and Distributable Proceeds from Refinancings TC
"Section 11.04 Distributions of Distributable Proceeds from
Capital Transactions and Distributable Proceeds from
Refinancings"\l2 .
A. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings (other than liquidating
distributions pursuant to Section 12.02) shall be distributed in
the following order of priority:
(a) First, to the payment of any debts and liabilities
(including unpaid fees but excluding any debts, liabilities
and/or fees owed to any Partners) and to the establishment of any
required reserves;
(b) Third, to the payment of any debts and liabilities
(including unpaid fees) owed to the Partners or any Affiliates by
the Partnership for Partnership obligations, including the
repayment of any Credit Recovery Loans made pursuant to Section
5.01(d)(iii) and the funding of reserves, if any, under Section
8.18; provided, however, that the foregoing debts and liabilities
owed to Partners and their Affiliates shall be paid or repaid, as
applicable, in the following order of priority if and to the
extent applicable:
(1) The Deferred Development Fee, if any;
(2) The Asset Management Fees currently due, if any,
together with any accrued and unpaid Asset Management Fees;
(3) The repayment of the Investment Partnership of any
Reduction Amount pursuant to Section 5.01(d)(ii) together with
any accrued or unpaid interest or Credit Recovery Loan pursuant
to Section 5.01(d)(iii) together with any accrued or unpaid
interest;
(4) The Partnership Incentive Management Fee currently due,
if any, together with any accrued and unpaid Partnership
Incentive Management Fee;
(5) Subordinated Loans to the General Partner; and
(6) Any other such debts and liabilities; provided,
however, that all such other debts and liabilities owed to the
Investment Partnership shall be paid prior to any such debts and
liabilities owed to the General Partner;
(d) then to the Investment Partnership in an amount
equal to its Net Capital Contribution;
(e) then to the General Partner in an amount equal to
its Net Capital Contribution;
(f) then to each Partner in an amount equal to the
positive balance in such Partner's Capital Account following
adjustments made pursuant to this Section 11.04A; and
(g) the balance, if any, 70% to the General Partners
and 30% to the Investment Partnership.
B. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings shall be distributed
within 90 days after the end of the fiscal quarter in which such
Capital Transaction or Refinancing occurs. Distributions of
Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings to the Partners shall be
made only after Capital Accounts have been adjusted to reflect
all previous allocations of Taxable Income and Tax losses to the
Partners, for distributions of Cash Flow, and for any other
distributions of Distributable Proceeds form Capital Transactions
or Distributable Proceeds from Refinancings.
C. Amounts remaining in the Operating Deficit Reserve at
the time of any of the foregoing distributions shall be utilized
by the Partnership to reduce any amounts which remain outstanding
under the Development Agreement, and if no such amounts remain
outstanding, then such amounts shall be distributed to the
General Partner as an incentive fee.
11.05 Allocations Among Partners TC "Section 11.05
Allocations Among Partners"\l2 .
A. For purposes of determining the Taxable Income (or Tax
Losses) or any other items allocable to any period, Taxable
Income (or Tax Losses) and any such other items shall be
determined on a daily, monthly, or other basis, as determined by
the General Partners using any permissible method under Code
Section 706 and the Treasury Regulations thereunder.
B. Taxable Income, Tax Losses, and Tax Credits for all
purposes of this Agreement shall be determined in accordance with
the accrual accounting method. Except as otherwise provided in
this Agreement, all items of Partnership income, gain, loss,
deduction, and any other allocations, including allocation of
Book Profits and Losses, shall be divided among the Partners in
the same proportions as they share Taxable Income, Tax Credits,
and Taxable Losses, as the case may be, for such fiscal year.
C. In any year in which a Partner sells, assigns or
transfers all or any portion of an Interest to any Person who
during such year is admitted as a substitute Partner, the share
of all Taxable Income, Tax Losses, and Tax Credits, allocated to
and of all Cash Flow and all cash proceeds distributable under
Section 11.04 distributed to, all Partners which is attributable
to the Interest sold, assigned or transferred shall be divided
between the assignor and the assignee using any one of the
following methods as determined by agreement between the assignor
and assignee: (i) ratably on the basis of the number of days in
such year before, and the number of days on and after, the
execution by the assignee of this Agreement, or (ii) by dividing
the Partnership fiscal year into two segments, the first segment
being the time period in such year before the execution by the
assignee of this Agreement and the second segment being the time
period in such year beginning on the date of execution of this
Agreement, and allocating Taxable Income, Tax Losses, Tax
Credits, Cash Flow, and all cash proceeds distributable in each
such segment among the persons who were Partners during that
segment, or (iii) using such other method as provided by the Code
or regulations thereunder.
D. In the event that there is a determination that there
is any original issue discount or imputed interest attributable
to the Capital Contribution of any Partner, or any loan between a
Partner and the Partnership, any income or deduction of the
Partnership attributable to such imputed interest or original
issue discount on such Capital Contribution or loan (whether
stated or unstated) shall be allocated solely to such Partner.
E. In the event that the deduction of all or a portion of
any fee paid or incurred by the Partnership to a Partner or an
Affiliate of a Partner is disallowed for federal income tax
purposes by the Internal Revenue Service with respect to a
taxable year of the Partnership, the Partnership shall then
allocate to such Partner an amount of gross income of the
Partnership for such year equal to the amount of such fee as to
which the deduction is disallowed.
F. If any Partner's Interest in the Partnership is reduced
but not eliminated because of the admission of new Partners or
otherwise, or if any Partner is treated as receiving any items of
property described in Section 751(a) of the Code, the Partner's
Interest in such items of Section 751(a) property that was
property of the Partnership while such Person was a Partner shall
not be reduced, but shall be retained by the Partner so long as
the Partner has an Interest in the Partnership and so long as the
Partnership has an Interest in such property.
G. The Partners are aware of the income tax consequences
of the allocations made by this Article XI and hereby agree to be
bound by the provisions of this Article XI in reporting their
shares of Partnership income and loss for income tax purposes.
11.06. Qualified Income Offset TC "Section 11.06.
Qualified Income Offset"\l2 .
(i) Notwithstanding any other provision of this
Article XI, in the event any Partner unexpectedly receives (a) an
adjustment to the Capital Account balance of such Partner as
described in Section 1.704-1(b)(2)(ii)(d)(4) of the Treasury
Regulations, (b) an allocation to such Partner of loss or
deduction of the type described in Section 1.704-
1(b)(2)(ii)(d)(5) of the Treasury Regulations, or (c) a
distribution to such Partner in excess of any offsetting increase
in the Partner's Capital Account balance during or prior to the
year of distribution, items of Partnership Taxable Income and of
income that constitute a credit to such Partner's Capital Account
shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Treasury Regulations under Code Section 704(b), the Qualified
Income Offset Amount (defined in Section 11.06(ii)) created by
such adjustments, allocations, or distributions as quickly as
possible, provided that an allocation pursuant to this Section
11.06(i) shall be made only if and to the extent that such
Partner would have a Qualified Income Offset Amount after all
other allocations provided for in this Article have been
tentatively made as if this Section 11.06(i) were not in this
Agreement.
(ii) Notwithstanding anything to the contrary
contained in this Agreement, in no event shall Tax Losses of the
Partnership be allocated to a Partner if such allocation would
result in such Partner having a "Qualified Income Offset Amount"
(as defined below). As used herein, the term "Qualified Income
Offset Amount" for a Partner means 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 an amount equal to (a) the
Partner's Share of Minimum Gain immediately prior to the
allocation or distribution and (b) the sum of such Partner's
allocable share of any recourse indebtedness of the Partnership
as determined under Section 752 of the Code and any unconditional
obligation of such Partner to contribute additional amounts to
the capital of the Partnership in the future (to the extent not
previously taken into account in determining such Partner's share
of recourse liabilities of the Partnership) and (ii) debit to
such Capital Account the allocations or distributions described
in Section 11.06(i) that, as of the end of the taxable year, are
reasonably expected to be made to such Partner. All Tax Losses
in excess of the limitation set forth in this Section 11.06(ii)
shall be allocated to the General Partners.
11.07. Minimum Gain Allocations TC "Section 11.07. Minimum
Gain Allocations"\l2 .
A. Notwithstanding any other provisions of this Article
XI, if in any year there is a net decrease in the amount of the
Partnership's Minimum Gain, each Partner will be allocated items
of Taxable Income and gain for such year equal to that Partner's
share of the net decrease in Minimum Gain, within the meaning of
Treasury Regulation 1.704-2(g)(2), and subject to the exceptions
set forth in Treasury Regulation 1.704-2(f).
Allocations of Taxable Income and gain (hereinafter referred
to as a "Minimum Gain Chargeback") required pursuant to this
Section 11.07 shall consist first of gains recognized from the
disposition of items of Partnership property subject to one or
more nonrecourse liabilities of the Partnership to the extent of
the decrease in Minimum Gain attributable to the disposition of
such items of property (or if such gains exceed the amount of the
Minimum Gain Chargeback required for such taxable year, the
Minimum Gain Chargeback shall consist of a proportionate share of
each such gain), and the remainder of such Minimum Gain
Chargeback shall consist of a pro-rata portion of the other items
of Taxable Income and gain of the Partnership for that year. If
the amount of the Minimum Gain Chargeback requirement exceeds the
Partnership's Taxable Income and gains for the taxable year, the
excess shall carry over to subsequent years.
B. If in any year there is a net decrease (within the
meaning of Treasury Regulations Section 1.704-2(i)(3) in Partner
Nonrecourse Debt Minimum Gain, any Partner with a share of that
Member Nonrecourse Debt Minimum Gain (determined under Treasury
Regulation 1.704-2(i)(5)) as of the beginning of the year shall
be allocated items of profits and gains for that year (and if
necessary, subsequent years) equal to that Partner's share of the
net decrease in Member Nonrecourse Debt Minimum Gain in
accordance with Treasury Regulation Section 1.704-2(i)(4).
Section 11.08 Regulatory Allocations TC "Section 11.08
Regulatory Allocations"\l2 . The allocations set forth in
Sections 11.01B, 11.01C, 11.06 and 11.07 (the "Regulatory
Allocations") are intended to comply with certain requirements of
Treasury Regulation Section 1.704-1(b). It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with
special allocations of other items of Taxable Income, Tax Losses
and items of income, gain, loss, or deduction pursuant to this
Section 11.08. Therefore, notwithstanding any other provision of
this Article (other than the Regulatory Allocations), the General
Partners shall make such offsetting special allocations of
Taxable Income, Tax Losses, and items of income, gain, loss, or
deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Capital Account
balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations
were not part of the Agreement and all items were allocated
pursuant to Sections 11.01A and 11.02. In exercising its
discretion under this Section 11.08, the General Partners shall
take into account future Regulatory Allocations under Section
11.07 that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 11.01B and
11.01C.
Section 11.09. Partners' Partnership Non-recourse
Liabilities TC "Section 11.09. Partners' Partnership Non-
recourse Liabilities"\l2 . For purposes of Code Section 752,
each Partner's share of Partnership non-recourse liabilities
shall be determined in accordance with Treasury Regulation 1.752-
3(a) or successor regulation. In this connection, for purposes
of determining each Partner's proportionate share of the excess
non-recourse liabilities of the Partnership pursuant to Treasury
Regulation 1.752-3(a), the Investment Partnership shall have a
99.99% interest in Partnership Taxable Income or profits and the
General Partners shall have a .01% interest in Partnership
Taxable Income or profits.
Section 11.10 Tax Allocations: Code Section 704(c) TC
"Section 11.10 Tax Allocations: Code Section 704(c)"\l2 . In
accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall be
allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial Gross
Asset Value (computed in accordance with Section 11.12 hereof).
In the event the Gross Asset Value of any Partnership prop-
erties is adjusted pursuant to Section 11.12 hereof, subsequent
allocations of income, gain, loss, and deduction with respect to
such asset shall take into account any variation between the
adjusted basis of such asset for federal income tax purposes and
its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such
allocations shall be made by the General Partners with the
Consent of the Limited Partner, in any manner that reasonably
reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section are solely for purposes of
federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Partner's Capital
Account or share of Book Profits and Losses, other items, or
distributions pursuant to any provision of this Agreement.
11.11. Tax Matters Partner TC "11.11. Tax Matters
Partner"\l2 .
A. Sugar Hill Plantation Partners, Inc. is hereby
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 regulations pursuant
to Section 6231 of the Code. Each Partner, by its 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 is hereby authorized, but not
required:
(a) to enter into any settlement with the Internal
Revenue Service or the Secretary 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 regulations thereunder) files a statement with the Secretary
providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on behalf of such
Partner;
(b) in the event that a notice of a 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;
(c) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(d) to file a request for an administrative adjustment
with the Internal Revenue Service at any time and, if any part of
such request is not allowed by the Internal Revenue Service, to
file a petition for judicial review with respect to such request;
(e) to enter into an agreement with the Internal
Revenue 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 affected by such item; and
(f) 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 (including any reimbursement of the Tax Matters
Partner for expenses that it may incur under the following
sentence) shall be made before any distributions are made or any
discretionary reserves are set aside by the General Partners. In
the event that funds are not available from the Partnership for
such expenses, the General Partners shall have the obligation to
provide funds for such purpose. 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
Partners and indemnification set forth in Section 8.07 of this
Agreement shall be fully applicable to the Tax Matters Partner in
its capacity as such.
11.12. Capital Accounts TC "11.12. Capital Accounts"\l2
.
A. A Capital Account shall be maintained on the books of
the Partnership for each Partner, which shall be (i) credited
with its Capital Contributions 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)
credited with its distributive share of Taxable Income and any
income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Taxable Income;
(iii) charged with its distributive share of Tax Losses and any
nondeductible expenditures of the Partnership (including
Syndication Expenses) described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account under this Section 11.12; and (iv)
charged with any distributions to it and with 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 case of property other than cash contributed to the
Partnership or distributed to a Partner, each Partner's Capital
Account will be credited with the Gross Asset Value of property
contributed to the Partnership (net of liabilities assumed by the
Partnership and liabilities to which such contributed property is
subject) and shall be debited with the cash and the Gross Asset
Value of property distributed to it (net of liabilities assumed
by such Partner and liabilities to which such distributed
property is subject). In the event the Gross Asset Values of
Partnership assets are adjusted pursuant to Section 11.12B
hereof, 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.
Upon the sale, exchange or other transfer of an Interest, or
the assignment of such Interest to a new Partner, the Capital
Account of the transferor Partner shall carry over to the
transferee Partner.
B. For purposes of determining and maintaining the
Partners' Capital Accounts, the Gross Asset Value of Partnership
assets shall be adjusted 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 Partners, 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) upon liquidation
of the Partnership, or upon the distribution by the Partnership
to a Partner of more than a de minimis amount of money or other
Partnership property to a retiring or continuing Partner as
consideration for an Interest in the Partnership; or (c) under
generally accepted industry accounting practices, provided
substantially all of the Partnership's property (excluding money)
consists of stock, securities, commodities, options, warrants,
futures, or similar instruments that are readily tradeable on an
established securities market; and
(iii) If the Gross Asset Value of an asset has been
determined or adjusted pursuant to subsection (i) or (ii) of this
Section 11.12B, such Gross Asset Value shall thereafter be
adjusted by the Book Depreciation taken into account with respect
to such asset for purposes of computing Book Profits and Losses,
as set forth in Section 11.12B.
C. For purposes of determining and maintaining the
Partners' Capital Accounts and the computation of Book Profits
and Losses only, the following adjustments shall be made to the
calculation of Taxable Income and Tax Losses reflected in the
Partners' Capital Accounts:
(i) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(ii) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing
such Taxable Income or Tax Losses, there shall be taken into
account Book Depreciation for such fiscal year or other period,
computed as hereinafter set forth;
(iii) For this purpose, "Book Depreciation" means,
for each fiscal year or other period, an amount equal to the
depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning
of such year or other period, Book Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or
other cost recovery deductions for such year or other period
bears to such beginning adjusted tax basis; and
(iv) Allocations of Book Profits and Losses among the
Partners shall be made in accordance with the provisions of this
Article XI respecting allocations of Taxable Income and Tax
Losses among the Partners.
11.13. Authority of General Partner to Vary Allocations to
Preserve and Protect Partner's Intent TC "11.13. Authority of
General Partner to Vary Allocations to Preserve and Protect
Partner's Intent"\l2 .
(a) It is the intent of the Partners that each
Partner's distributive share of income, gain, loss, deduction, or
credit (or item thereof) shall be determined and allocated in
accordance with this Article XI to the fullest extent permitted
by Section 704(b) of the Code. In order to preserve and protect
the determinations and allocations provided for in this Article
XI, the General Partner hereby are authorized and directed to
allocate income, gain, loss, deduction, or credit (or item
thereof) arising in any year differently than otherwise provided
for in this Article XI to the extent that allocating income,
gain, loss, deduction or credit (or item thereof) in the manner
provided for in Article XI would cause the determinations and
allocations of each Partner's distributive share of income, gain,
loss, deduction, or credit (or item thereof) not to be permitted
by Section 704 (b) of the Code and Treasury Regulations
promulgated thereunder. Any allocation made pursuant to this
Section 11.13 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Article XI and no
amendment of this Agreement or approval of any Partner shall be
required.
(b) In making any allocation (the "new allocation")
under Section 11.13(a), the General Partner is authorized to act
only after having been advised by the Accountants that, under
Section 704(b) of the Code and the Treasury Regulations
thereunder, (i) the new allocation is necessary, and (ii) the new
allocation is the minimum modification of the allocations
otherwise provided for in this Article XI necessary in order to
assure that, either in the then current year or in any preceding
year, each Partner's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and
allocated in accordance with this Article XI to the fullest
extent permitted by Section 704(b) of the Code and the Treasury
Regulations thereunder.
(c) If the General Partner is required by Section
11.13(a) to make any new allocation in a manner less favorable to
any Partner than is otherwise provided for in this Article XI,
then the General Partner is authorized and directed, only after
having been advised by the Accountants that it is permitted by
Section 704(b) of the Code, to allocate income, gain, loss,
deduction, or credit (or item thereof) arising in later years in
such manner so as to bring the allocations of income, gain, loss,
deduction, or credit (or item thereof) to such Partner as nearly
as possible to the allocations thereof otherwise contemplated by
this Article XI.
(d) New allocations made by the General Partner under
Section 11.13(a) and Section 11.13(c) in reliance upon the advice
of the 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.
ARTICLE XII
SALE, DISSOLUTION AND LIQUIDATION TC "ARTICLE
XII - SALE, DISSOLUTION AND LIQUIDATION"\l1
12.01. Dissolution of the Partnership TC "12.01.
Dissolution of the Partnership"\l2 . The Partnership shall be
dissolved upon the earlier of the expiration of the term of the
Partnership, or upon:
(a) subject to Section 6.03, the withdrawal, Bankruptcy,
death, dissolution or adjudication of incompetency of a General
Partner who is at that time the sole General Partner;
(b) the sale or other disposition of all or substantially
all of the assets of the Partnership;
(c) the election by the General Partner, with the Consent
of BCTC 94, Inc.;
(d) the election of BCTC 94, Inc., without the Consent of
the General Partners; or
(e) any other event causing the dissolution of the
Partnership under the laws of the State.
12.02. Winding Up and Distribution TC "12.02. Winding Up
and Distribution"\l2 .
(a) In the event of dissolution and termination of the
Partnership, a full accounting of the assets and liabilities
shall be taken, and the assets shall be distributed in accordance
with this Section 12.02 as follows, after taking into account all
other allocations and distributions under this Agreement for the
Fiscal Year, including, without limitation, the allocations under
Article XI hereof:
(A) To the payment of all debts and liabilities of the
Partnership then due (including fees and loans payable to
Partners);
(B) To the setting up of any reserves that the
Liquidator may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership; and
(C) To the Partners, in an amount equal to the
positive balances in their Capital Accounts.
If a General Partner has a negative Capital Account balance
following the liquidation of the Partnership or of a General
Partner's Interest in the Partnership within the meaning of
Treasury Regulation Section 1.704-1(b)(ii)(g), excluding from
such General Partner's negative Capital Account balance, (a) such
General Partner's Share of Minimum Gain, and (b) any other amount
that such General Partner is deemed to be obligated to restore to
the Partnership under Treasury Regulation Section
1.704-1(b)(2)(ii)(c) or otherwise under the Treasury Regulations
promulgated under Code Section 704(b), and after taking into
account all Capital Account adjustments (including adjustments
arising from the liquidation) for the Partnership taxable year
during which such liquidation occurs, other than those made
pursuant to this Section, such General Partner shall be
unconditionally obligated to restore the amount of such negative
Capital Account balance to the Partnership by the end of such
taxable year (or, if later, within 90 days after the date of
liquidation). Amounts contributed to the Partnership in respect
of the General Partner's obligation to restore negative Capital
Account balances shall be paid to creditors of the Partnership or
distributed to the other Partners in accordance with their
positive Capital Account balances, if any, as of the date of
liquidation.
(b) The Liquidator shall file all certificates and
notices of the dissolution of the Partnership required by law.
The Liquidator shall proceed without any unnecessary delay to
sell and otherwise liquidate the Partnership's property and
assets; provided, however, that if the Liquidator shall determine
that an immediate sale of part or all of the Partnership property
would cause undue loss to the Partners, then in order to avoid
such loss, the Liquidator may, except to the extent provided by
the Act, defer the liquidation as may be necessary to satisfy the
debts and liabilities of the Partnership to Persons other than
the Partners. Upon the complete liquidation and distribution of
the Partnership assets, the Partners shall cease to be Partners
of the Partnership, and the Liquidator shall execute, acknowledge
and cause to be filed all certificates and notices required by
the law to terminate the Partnership.
(c) Upon the dissolution of the Partnership pursuant
to Section 12.01, the Accountants shall promptly prepare, and the
Liquidator shall furnish to each Partner, a statement setting
forth the assets and liabilities of the Partnership upon its
dissolution. Promptly following the complete liquidation and
distribution of the Partnership property and assets, the
Accountants shall prepare, and the Liquidator shall furnish to
each Partner, a statement showing the manner in which the
Partnership assets were liquidated and distributed.
ARTICLE XIII
BOOKS AND RECORDS, ACCOUNTING
TAX ELECTIONS, ETC. TC "ARTICLE XIII -
BOOKS AND RECORDS, ACCOUNTING TAX ELECTIONS, ETC."\l1
13.01. Books and Records TC "13.01. Books and Records"\l2
. The books and records of the Partnership shall be maintained
on an accrual basis in accordance with sound federal income tax
accounting principles. These and all other records of the
Partnership, including information relating to the status of the
Apartment Complex, information with respect to the sale by the
General Partner or any Affiliate of goods or services to the
Partnership, and any information required to be maintained by the
Act or any governmental agencies having jurisdiction, shall be
kept at the principal office of the Partnership and shall be
available for examination there by any Partner, or his duly
authorized representative, at any and all reasonable times. Any
Partner, or his duly authorized representative, upon paying the
costs of collection, duplication and mailing, shall be entitled
to a copy of the list of names and addresses of the Limited
Partners and of any of the books and records of the Partnership.
The General Partner shall maintain and store all original tenant
files in fire-proof file cabinets in a secure location.
Microfiche or other similar storage technologies may also be used
provided that the General Partner obtains the Consent of the
Investment Partnership with respect to such alternate storage
technology.
13.02. Bank Accounts TC "13.02. Bank Accounts"\l2 . All
funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking
institutions as the General Partner shall determine, and
withdrawals shall be made only in the regular course of
Partnership business on such signature or signatures as the
General Partner may, from time to time, determine. No funds of
the Partnership shall be deposited in any financial institution
in which any Partner is an officer, director or holder of any
proprietary interest.
13.03. Accountants TC "13.03. Accountants"\l2 . The
Accountants shall annually prepare for execution by the General
Partner all tax returns of the Partnership, shall annually audit
the books of the Partnership, and shall certify, in accordance
with generally accepted accounting principles, a balance sheet, a
profit and loss statement, and a cash flow statement. With
respect to each fiscal year during the Partnership's operations,
at such time as the Accountants shall have prepared the proposed
tax return for such year, the Accountants shall provide copies of
such proposed tax return to the Investment Partnership and to its
accountants, Reznick, Fedder & Silverman, of Bethesda, Maryland,
for their review and comment. Any comments and/or changes in
such proposed tax return reasonably recommended by the Investment
Partnership's accountants shall be taken into account and made by
the Accountants prior to the completion of such tax return for
execution by the General Partner. The Partnership shall
reimburse Boston Capital Communications Limited Partnership, an
affiliate of the Investment Partnership, for its expenses
incurred in causing the Partnership's proposed tax return to be
reviewed by the Investment Partnership's accountants, if and to
the extent that such review results in material modifications to
such proposed tax return. A full detailed statement shall be
furnished to all Partners, showing such assets, properties, and
net worth and the profits and losses of the Partnership for the
preceding fiscal year. All Partners shall have the right and
power to examine and copy, at any and all reasonable times, the
books, records and accounts of the Partnership.
13.04. Reports to Partners TC "13.04. Reports to
Partners"\l2 .
(a) Within thirty (30) days of the date of Substantial
Completion, the General Partner shall cause to be prepared and
distributed to the Investment Partnership, a Credit Basis
Worksheet for each building, and in the form specified by Boston
Capital.
(b) By December 1 of each year, the General Partner
shall caused to be prepared and distributed to the Investment
Partnership the projected annual operating budget for the
Apartment Complex for the next year.
(c) The General Partner shall cause to be prepared and
distributed to all persons who were Partners at any time during a
fiscal year of the Partnership:
(i) By March 1 of the year after the end of each
fiscal year of the Partnership, (A) an audited financial
statement which includes a balance sheet as of the end of such
fiscal year and statements of income, Partners' equity, and
changes in financial position and a Cash Flow statement, for the
year then ended, all of which, except the Cash Flow statement,
shall be prepared in accordance with generally accepted
accounting principles and accompanied by an auditor's report
containing an opinion of the Accountants, and (B) a report of the
activities of the Partnership during the period covered by the
report. Such report shall set forth distributions to Limited
Partners for the period covered thereby and shall separately
identify distributions from: (1) Cash Flow from operations during
the period, (2) Cash Flow from operations during a prior period
which had been held as reserves, (3) proceeds from disposition of
the Apartment Complex or any other investments of the
Partnership, (4) lease payments on net leases with builders and
sellers, and (5) reserves. With respect to any distribution to
the Investment Partnership, the report called for shall
separately identify distributions from (A) Cash Flow from
operations during the period, (B) Cash Flow from operations
during a prior period which had been held as reserves, (C)
proceeds from disposition of property and investments, (D) lease
payments on net leases with builders and sellers, (E) reserves
from the gross proceeds of the offering originally obtained from
the Investment Partnership, (F) borrowed monies, (G) loans or
contributions from the Investment Partnership, and (H)
transactions outside of the ordinary course of business with a
description thereof. If the Completion Date had not yet occurred
as of December 31 in the year which is the subject of the report,
then this Section 13.04(a)(i) shall require only the balance
sheet for the year then ended.
(ii) By February 1 of the year after the end of each
fiscal year of the Partnership, all information necessary for the
preparation of the Limited Partners' federal income tax returns,
together with a draft of the Partnership's federal income tax
return for such fiscal year.
(iii) Within thirty (30) days after the end of each
calendar quarter of a fiscal year of the Partnership, a report
containing:
(A) A balance sheet, which may be unaudited; and
(B) a statement of income for the quarter then
ended, which may be unaudited; and
(C) A Low Income Housing Credit Monitoring form,
Rent Rolls, Statement of Income and Expenses, Operating Statement
and Occupancy Rental Report, all in the form specified by Boston
Capital; and
(D) A certification that the Apartment Complex
and its tenants are in compliance with all applicable federal and
state laws and regulation; and
(E) other pertinent information regarding the
Partnership and its activities during the quarter covered by the
report.
(d) Within ninety (90) days after the end of each fiscal
year of the Partnership the General Partner shall provide to the
Investment Partnership:
(i) A certification by the General Partner that (A)
all Loans payments and taxes and insurance payments with respect
to the Apartment Complex are current as of the date of the year-
end report, (B) to the best of the General Partner's knowledge
and belief there is no default under the Project Documents or
this Agreement, or if there is any default, a description
thereof, and (C) to the best of the General Partner's knowledge
and belief there is no building, health or fire code violation or
similar violation of a governmental law, ordinance or regulation
against the Apartment Complex or, if there is any violation, a
description thereof;
(ii) the information specified in Section 13.04(b);
(iii) to the extent not previously disclosed in a
report required hereunder a descriptive statement of all
transactions during the fiscal year between the Partnership and
the General Partner and/or any Affiliates, including the nature
of the transaction and the payments involved (including accrued
cash or other payments);
(iv) a Cash Flow statement; and
(v) if required, a copy of the annual report to be
filed with the United States Treasury concerning the status of
the Apartment Complex as low income housing and, if required, a
certificate to the Agency concerning the same.
(e) Upon the written request of the Investment Partnership
for further information with respect to any matter covered in
items (a) or (b) above, the General Partner shall utilize its
best efforts to furnish such information within thirty (30) days
of receipt of such request.
(f) Prior to November 1 of each year commencing in 1999,
the General Partner, on behalf of and at the expense of the
Partnership, shall send to the Investment Partnership an estimate
of the Investment Partnership's share of the Tax Credits,
identified by building, and of Taxable Income and Tax Losses of
the Partnership for federal income tax purposes for the current
fiscal year, all in the form specified by Boston Capital. Such
estimate shall be prepared by the General Partner and the
Accountants.
(g) Within fifteen (15) days after the end of any calendar
month during which
(i) there is a material default by the Partnership
under the Project Documents or in payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially different
from those for which such reserve was established,
(iii) the General Partner has received any notice
of a material fact which may substantially affect further
distributions, or
(iv) any Partner has pledged or collateralized his
Interest in the Partnership, the General Partner shall send the
Investment Partnership a detailed report of such event.
(h) On or before the Admission Date, the General Partner,
on behalf of the Partnership, shall send to the Investment
Partnership a copy of all requests for disbursements or other
extensions of credit under the Loans which have been submitted to
the Lender prior to the Admission Date. After the Admission
Date, the General Partner, on behalf of the Partnership, shall
send to the Investment Partnership, on or before the tenth day of
each month, a copy of (i) all reports required by the Agency,
filed the previous month and covering the status of project
operations and (ii) each request for a disbursement or other
extensions of credit under the Loans submitted to the Lender
during the previous month. In addition, within thirty (30) days
after the occurrence of Substantial Completion, the General
Partner, on behalf of the Partnership, shall prepare and send to
the Investment Partnership a Credit Basis Worksheet for each
building within the Apartment Complex, in the format provided by
Boston Capital. The General Partner shall provide to the
Investment Partnership such other reports from time to time as
may be reasonably required by the Investment Partnership with the
reasonable consent of the General Partner or by federal or state
agencies having jurisdiction.
(i) (i) In the event that the reports or information
provided for in Sections 13.04 (b)(i) and/or 13.04(b)(ii) above
are, at any time, not provided within the time period(s)
specified in such Sections commencing on the 5th business day
following the General Partner's receipt of Notice from the
Investment Partnership that it intends to assess liquidated
damages the General Partner shall be obligated to pay to the
Investment Partnership the sum of $500 per day, as liquidated
damages, for each day from the date upon which such reports or
information is(are) due pursuant to the provisions of the
aforesaid Sections until the date upon which such reports or
information is (are) provided.
(ii) In the event that the reporting requirements set
forth in any of the above provisions of this Section 13.04 are
not met, the Investment Partnership, in its reasonable
discretion, may direct the General Partner to dismiss the
Accountants, and to designate successor Accountants, subject to
the approval of the Investment Partnership; provided, however,
that if the General Partner and the Investment Partnership cannot
agree on the designation of successor Accountants, the successor
Accountants shall be designated by the Investment Partnership in
its sole discretion. These costs shall not exceed the average of
three bids from qualified Accountants obtained by the General
Partner. The Special Limited Partner may change the reporting
requirements at any time if required to do so by the Investment
Partnership's limited partners to make changes reasonably
required to be consistent with industry standards and to make
changes reasonably required by the Special Limited Partner to
permit it to adequately monitor its investment. The Investment
Partnership shall give the General Partner at least sixty (60 )
days' Notice of any material change in the reporting requirements
set forth herein.
13.05. Section 754 Elections TC "13.05. Section 754
Elections"\l2 . In the event of a transfer of all or any part
of the Interest of a General Partner or of a Limited Partner, the
Partnership may elect, pursuant to Sections 743 and 754 of the
Code (or any corresponding provision of succeeding law), to
adjust the basis of the Partnership property if, in the opinion
of the Special Limited Partner, based upon the advice of the
Accountants, such election would be most advantageous to the
Investment Partnership. Each Partner agrees to furnish the
Partnership with all information necessary to give effect to such
election.
13.06. Fiscal Year and Accounting Method TC "13.06.
Fiscal Year and Accounting Method"\l2 . The fiscal year of the
Partnership shall be the calendar year. All Partnership accounts
shall be determined on the accrual basis.
ARTICLE XIV
AMENDMENTS TC "ARTICLE XIV -
AMENDMENTS"\l1
14.01. Proposal and Adoption of Amendments TC "14.01.
Proposal and Adoption of Amendments"\l2 . This Agreement may be
amended, after giving 20 days' Notice to the Partners hereunder
(a) by the General Partner with the Consent of the Investment
Partnership, which Consent (except in the case of any proposed
amendment which the Investment Partnership reasonably determines
to be adverse to its interests as a Partner) shall not be
unreasonably withheld or (b) by the Investment Partnership with
the Consent of the General Partner which Consent (except in the
case of any proposed amendment which the General Partner
reasonably determines to be adverse to its interest as Partner)
shall not be unreasonably withheld or delayed. In determining
whether or not to give its Consent to an amendment prepared by
the Investment Partnership, the General Partner agrees to take
into account the investment objectives of the Investment
Partnership.
ARTICLE XV
CONSENTS, VOTING AND MEETINGS TC "ARTICLE XV - CONSENTS, VOTING
AND MEETINGS"\l1
15.01. Method of Giving Consent TC "15.01. Method of
Giving Consent"\l2 . Any Consent required by this Agreement may
be given by a written Consent given by the consenting Partner and
received by the General Partner at or prior to the doing of the
act or thing for which the Consent is solicited.
15.02. Submissions to Limited Partners TC "15.02.
Submissions to Limited Partners"\l2 . The General Partner shall
give the Limited Partners Notice of any proposal or other matter
required by any provision of this Agreement or by law to be
submitted for consideration and approval of the Limited Partners.
Such Notice shall include any information required by the
relevant provision or by law.
15.03. Meetings; Submission of Matter for Voting TC
"15.03. Meetings; Submission of Matter for Voting"\l2 .
Subject to the provisions of Section 10.01, a majority in
Interest of the Limited Partners shall have the authority to
convene meetings of the Partnership and to submit matters to a
vote of the Partners.
ARTICLE XVI
GENERAL PROVISIONS TC "ARTICLE XVI -
GENERAL PROVISIONS"\l1
16.01. Burden and Benefit TC "16.01. Burden and
Benefit"\l2 . The covenants and agreements contained herein
shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the
respective parties hereto.
16.02. Applicable Law TC "16.02. Applicable Law"\l2 .
This Agreement shall be construed and enforced in accordance with
the laws of the State.
16.03. Counterparts TC "16.03. Counterparts"\l2 . This
Agreement may be executed in several counterparts, each of which
shall be deemed to be an original copy and all of which together
shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties shall not have signed the
same counterpart.
16.04. Separability of Provisions TC "16.04. Separability
of Provisions"\l2 . Each provision of this Agreement shall be
considered separable and if for any reason any provision which is
not essential to the effectuation of the basic purposes of this
Agreement is determined to be invalid and contrary to any
existing or future law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement which
are valid.
16.05. Entire Agreement TC "16.05. Entire Agreement"\l2
. This Agreement and the ancillary agreements executed in
connection herewith set forth all (and is intended by all parties
to be an integration of all) of the representations, promises,
agreements and understandings among the parties hereto with
respect to the Partnership, the Partnership business and the
property of the Partnership, and there are no representations,
promises, agreements or understandings, oral or written, express
or implied, among them other than as set forth or incorporated
herein.
16.06. Liability of the Investment Partnership TC "16.06.
Liability of the Investment Partnership"\l2 . Notwithstanding
anything to the contrary contained herein, neither the Investment
Partnership nor any of its partners, general or limited, shall
have any personal liability to any of the parties to this
Agreement with regard to the representations and covenants
extended, or the obligations undertaken, by the Investment
Partnership under this Agreement. In the event that the
Investment Partnership shall be in default under any of the terms
of this Agreement, the sole recourse of any party hereto for any
indebtedness due hereunder, or for any damages resulting from any
such default by the Investment Partnership, shall be against the
capital contributions of the investor limited partners of the
Investment Partnership allocated to, and remaining for investment
in, the Partnership; provided however, that under no
circumstances shall the liability of the Investment Partnership
for any such default be in excess of the aggregate of: (a) the
amount of Capital Contribution payable by the Investment
Partnership to the Partnership, under the terms of this
Agreement, at the time of such default, and (b) an amount equal
to reasonable attorneys' fees reasonably and necessarily incurred
by the General Partner in obtaining payment of any Installment(s)
not made by the Investment Partnership when due and payable
pursuant to the provisions of this Agreement.
16.07. Environmental Protection TC "16.07. Environmental
Protection"\l2 .
(a) The General Partner represents and warrants that
(i) it has no actual knowledge of any deposit, storage, disposal,
burial, discharge, spillage, uncontrolled loss, seepage or
filtration of any Hazardous Substances at, upon, under or within
the Land or any contiguous real estate, and (ii) it has not
caused or permitted to occur, and shall not permit to exist, any
condition on the Land which may cause a discharge of any
Hazardous Substances at, upon, under or within the Land or on any
contiguous real estate.
(b) The General Partner further represents and
warrants that neither it nor any of its Affiliates (i) has been,
or will be involved in operations at or, near the Land, which
operations could lead to (A) the imposition of liability under
the Hazardous Waste Laws on the Partnership or on any other
subsequent or former owner of the Land or (B) the creation of a
lien on the Land under the Hazardous Waste Laws or under any
similar laws or regulations; and (ii) has permitted, or will
permit, any tenant or occupant of the Apartment Complex to engage
in any activity that could impose liability under the Hazardous
Waste Laws on such tenant or occupant, on the Land or on any
other owner of the Apartment Complex.
(c) The General Partner shall comply strictly and in
all respects with the requirements of the Hazardous Waste Laws
and related regulations and with all similar laws and
regulations.
(d) The General Partner, shall at all times indemnify
and hold harmless the Investment Partnership against and from any
and all claims, suits, actions, debts, damages, costs, charges,
losses, obligations, judgments, and expenses, of any nature
whatsoever, suffered or incurred by the Investment Partnership,
under or on account of the Hazardous Waste Laws or any similar
laws or regulations, including the assertion of any lien
thereunder, except for claims, suits, actions, debts, damages,
costs, charges, losses, obligations, judgments, or expenses
arising from the Investment Partnership's own negligence,
misconduct or fraud.
(e) For purposes of this Section 16.07, "Hazardous
Substances" means oil, petroleum or chemical liquids or solids,
liquid or gaseous products or any hazardous wastes or hazardous
substances, as those terms are used in the Hazardous Waste Laws;
and "Hazardous Waste Laws" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, and any other
federal, state or local law governing Hazardous Substances, as
such laws may be amended from time to time.
16.08. Notices to the Investment Partnership TC "16.08.
Notices to the Investment Partnership"\l2 . Any Notice required
by the provisions of this Agreement to be given to the Investment
Partnership shall be addressed as follows:
Boston Capital Tax Credit Fund IV, L.P.
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108-4406
ATTN: Steven Spall, Acquisitions
And a copy to:
Hinckley, Allen & Snyder
28 State Street
Boston, MA 02109
ATTN: Kristin A. DeKuiper, Esq.
16.09. Notices to the General Partner TC "16.09. Notices
to the General Partners"\l2 . Any Notice required by the
provisions of this Agreement to be given to the General Partners
shall be addressed as follows:
Sugar Hill Plantation Partners, Inc.
3850 Holcomb Bridge Road
Suite 215
Norcross, Georgia 30092
ATTN: Michael L. Smith
And a copy to:
Hendrick, Phillips, Schemm & Salzman
1800 Peachtree Center Tower
230 Peachtree Street, NW
Atlanta, Georgia 30303
ATTN: Neil Schemm, Esq.
16.10. Withdrawal of Initial Limited Partner TC "16.10.
Withdrawal of Initial Limited Partner"\l2 . Scott H. Smith
hereby withdraw as the Initial Limited Partner of the
Partnership.
IN WITNESS WHEREOF, the parties have affixed their
signatures to this Amended and Restated Agreement of Limited
Partnership of Level Creek Partners, L.P. as of the date first
written above.
[SIGNATURES BEGIN ON NEXT PAGE
GENERAL PARTNER:
Sugar Hill Plantation
Partners, Inc.
________________________ By: /s/ Michael L. Smith
Witness Michael L. Smith, President
LIMITED PARTNER:
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/ Bonnie Kate Fox
Witness Bonnie Kate Fox, as
Attorney-in-Fact of
John P. Manning, Partner
SPECIAL LIMITED PARTNER:
BCTC 94, Inc.
____________________________ By: /s/ Bonnie Kate Fox
Witness Bonnie Kate Fox, Attorney-
in-Fact for John P. Manning,
President
WITHDRAWING INITIAL LIMITED
PARTNER:
Witness
/s/Scott H. Smith
Scott H. Smith
Consent and Agreement
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Sections 8.14, 8.15 and
8.16 of the foregoing Amended and Restated Agreement of Limited
Partnership notwithstanding any provision of the Management
Agreement to the contrary.
SIGNATURE MANAGEMENT CORP.
_________________________ By:_____________________________
Witness Name:________________________
Title:____________________
EXHIBIT A
Due Diligence Recommendations
N/A
EXHIBIT B
List of Bond Documents
1. Certificate from the Mayor of the City of Sugar Hill
approving the issuance of the bonds.
2. Notice of Allocation from Georgia Department of
Community Affairs regarding bond volume cap.
3. Letter from Housing Authority of the City of Sugar
Hill, Georgia regarding determinations made pursuant to
the Internal Revenue Code with respect to the issuance
of the bonds (See Exhibit B-2).
4. Letter dated November 19, 1997 from Georgia Department
of Community Affairs determinations made pursuant to
Section 42(m)(1)(D) of the Internal Revenue Code (see
Exhibit B-1) re: Qualified Allocation Plan.
5. Reliance letter from bond counsel authorizing Hinckley,
Allen & Snyder to rely on the opinion of bond counsel
in connection with the issuance of the bonds.
EXHIBIT B-1
[Letter dated November 19, 1997 from Georgia Department of
Community Affairs re: QAP]
EXHIBIT B-2
[Letterhead of Issuer of Bonds]
March ___, 1998
Boston Capital Tax Credit Fund IV L.P.
One Boston Place
Boston, MA 02108-4406
Hinckley, Allen & Snyder
28 State Street
Boston, MA 02109
RE: Sugar Hill Plantation, Sugar Hill, Georgia
Dear Sir/Madam:
In connection with our issuance of tax exempt bonds (the
"Bonds"), the proceeds of which will be loaned (the "Loan") to
Level Creek Partners, L.P., a Georgia limited partnership (the
"Partnership") for the acquisition and construction of the Sugar
Hill Plantation project (the "Project"), located in Sugar Hill,
Georgia, to be occupied by low and moderate income tenants who
are expected to be eligible for Low Income Housing Tax Credits
(the "Tax Credits") under Section 42 of the Internal Revenue Code
of 1986 (the "Code"), we have made the following determinations:
1. Pursuant to Section 42(m)(2)(D) of the Code, we have
determined that, provided all representations by or on behalf of
the Partnership made to us and to the Georgia Department of
Community Affairs in connection with the Project are true and
correct, to the extent required by the Code and as of the date
hereof, that the amount of Tax Credits to be allocated to the
Project does not exceed the amount necessary for the financial
feasibility of the Project and its viability as a qualified low-
income housing project throughout the credit period. In making
this determination, we have considered those factors set forth in
Section 42(m)(2)(B) of the Code.
2. In addition, we confirm that (i) interest on the Bonds is
exempt under Section 103 of the Code, (ii) the Bonds have been
issued under, and meet the requirements of, the volume cap of
Section 146 of the Code and (iii) the principal payments on the
Loan will be applied within a reasonable time to pay or redeem
the Bonds.
Sincerely,
BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
_______________________________________
CERTIFICATION AND AGREEMENT
for
LEVEL CREEK PARTNERS, L.P.
This CERTIFICATION AND AGREEMENT is made as of May 6, 1998
by Level Creek Partners, L.P., a Georgia limited partnership (the
"Operating Partnership"); and Sugar Hill Plantation Partners,
Inc., a Georgia corporation, as General Partner of the Operating
Partnership; for the benefit of Boston Capital Tax Credit Fund
IV, L.P., a Delaware limited partnership (the "Investment
Partnership"); BCTC 94, Inc., a Delaware corporation, (the
"Special Limited Partner"); Hinckley, Allen & Snyder; Hendrick,
Phillips, Schemm & Salzman, and certain other persons or entities
described herein. The Investment Partnership and the Special
Limited Partner shall hereinafter be referred to collectively as
the "Limited Partners". The General Partners, if more than one,
shall hereinafter be referred to collectively, jointly and
severally, as the General Partner.
WHEREAS, the Operating Partnership proposes to admit the
Limited Partners as the limited partners thereof pursuant to the
Amended and Restated Agreement of Limited Partnership of the
Operating Partnership dated as of May 6, 1998 (the "Operating
Partnership Agreement"), in accordance with which the Special
Limited Partner will make a capital contribution of $10 to the
Operating Partnership and the Investment Partnership will make
certain capital contributions to the Operating Partnership;
WHEREAS, simultaneous with the admission of the Limited
Partners to the Operating Partnership, Scott H. Smith shall
withdraw from the Operating Partnership as its initial limited
partner;
WHEREAS, the Limited Partners have relied upon certain
information and representations described herein in evaluating
the merits of investment by the Limited Partners in the Operating
Partnership;
WHEREAS, Hinckley, Allen & Snyder, as counsel for the
Limited Partners, will rely upon such information and representa-
tions in connection with its delivery of certain opinions with
respect to this transaction; and
WHEREAS, Hendrick, Phillips, Schemm & Salzman, as counsel
for the Operating Partnership and the General Partner, will rely
upon such information and representations in connection with its
delivery of certain opinions with respect to this transaction.
NOW, THEREFORE, to induce the Limited Partners to enter into
the Operating Partnership Agreement and become the limited part-
ners of the Operating Partnership, and for $1.00 and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Operating Partnership and the General
Partner hereby agree as follows for the benefit of the Limited
Partners, Hinckley, Allen & Snyder, Hendrick, Phillips, Schemm &
Salzman and certain other persons hereinafter described. Terms
defined in the Operating Partnership Agreement but not otherwise
defined herein shall have the meanings given them in the
Operating Partnership Agreement.
1. Representations, Warranties and Covenants of the Operating
Partnership, and the General Partner
The Operating Partnership and the General Partner jointly
and severally represent, warrant and certify to the Limited
Partners, Hinckley, Allen & Snyder and Hendrick, Phillips, Schemm
& Salzman, that, with respect to the Operating Partnership, as of
the date hereof:
1.01 The Operating Partnership is duly organized and in
good standing as a limited partnership pursuant to the laws of
the state of its formation with full power and authority to own
the 218-unit rental housing project located in Sugar Hill,
Georgia known as Level Creek Apartments (the "Apartment Complex")
and conduct its business; each of the Operating Partnership and
General Partner have the power and authority to enter into and
perform this Certification and Agreement; the execution and
delivery of this Certification and Agreement by the Operating
Partnership and the General Partner have been duly and validly
authorized by all necessary action; the execution and delivery of
this Certification and Agreement, the fulfillment of its terms
and consummation of the transactions contemplated hereunder do
not and will not conflict with or result in a violation, breach
or termination of or constitute a default under (or would not
result in such a conflict, violation, breach, termination or
default with the giving of notice or passage of time or both) any
other agreement, indenture or instrument by which the Operating
Partnership or the General Partner is bound or any law,
regulation, judgment, decree or order applicable to the Operating
Partnership, or the General Partner or any of their respective
properties; and this Certification and Agreement constitutes the
valid and binding agreement of the Operating Partnership and the
General Partner enforceable against each of them in accordance
with its terms.
1.02 All factual information, including without
limitation the information set forth in Exhibit A hereto,
provided to the Limited Partners or their affiliates either in
writing or orally, did not, at the time given, and does not, on
the date hereof, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they are made. The General
Partner has also delivered to the Limited Partners or their
affiliates all documents and other information which has been
requested by such parties. Since the date of the financial
statements for the General Partner previously delivered, there
has been no material adverse change in the financial position of
the General Partner. The estimates of occupancy rates, rental
rates, operating expenses and tax credits set forth on Exhibit A
are reasonable in light of the knowledge and experience of the
General Partner.
1.03 As of the date hereof, each of the representations
contained in Exhibit B attached hereto is true, accurate and
complete as to the Operating Partnership, and the General Partner
and as to any of their affiliates, any of their predecessors and
their affiliates' predecessors, any of their directors, officers,
general partners and/or beneficial owners of ten percent (10%) or
more of any class of their equity securities (beneficial
ownership meaning the power to vote or direct the vote and/or the
power to dispose or direct the disposition of such securities),
as the case may be, and any promoters presently connected with
them in any capacity.
1.04 Each of the representations and warranties con-
tained in the Operating Partnership Agreement is true and correct
as of the date hereof.
1.05 Each of the covenants and agreements of the
Operating Partnership and the General Partner contained in the
Operating Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required
on or prior to the date hereof.
1.06 All conditions to admission of the Limited Partners as
limited partners of the Operating Partnership contained
in the Operating Partnership Agreement have been satisfied.
1.07 No default by the Operating Partnership or the
General Partner has occurred and is continuing under the
Operating Partnership Agreement or any of the Project Documents
(as such term is defined in the Operating Partnership Agreement).
1.08 The General Partner agrees to take all actions
necessary to claim the Projected Credit, including, without
limitation, the filing of Form 8609 with the Internal Revenue
Service in a timely manner.
1.09 No person or entity other than the Operating
Partnership holds any legal or equity interest in the Apartment
Complex, except for the Lender's security interest as set forth
in the Loan Documents.
1.10 The Operating Partnership has the sole responsibility
to pay all maintenance and operating costs, including all
taxes levied and all insurance costs, attributable to the
Apartment Complex.
1.11 The Operating Partnership, except to the extent it
is protected by insurance and excluding any risk borne by
lenders, bears the sole risk of loss if the Apartment Complex is
destroyed or condemned or there is a diminution in the value of
the Apartment Complex.
1.12 No person or entity except the Operating Partnership
has the right to any proceeds, after payment of all
indebtedness, from the sale, refinancing, or leasing of the
Apartment Complex, other than the Management Agent's management
fee, which is based on a percentage of rental income, under the
Management Agreement.
1.13 The General Partner is not related in any manner
to either of the Limited Partners, nor is the General Partner
acting as an agent of the Limited Partners.
1.14 To the best of the undersigned's knowledge after
due inquiry the Apartment Complex does not contain in a level
above that deemed safe by all applicable governmental agencies,
any substance known to be hazardous, such as hazardous waste,
lead-based paint, asbestos, methane gas, urea formaldehyde
insulation, oil, toxic substances, underground storage tanks,
polychlorinated biphenals (PCBs), and radon; the Apartment
Complex is not affected by the presence of oil, toxic substances,
or other pollutants that could be a detriment to the Apartment
Complex nor is the Operating Partnership in violation of any
local, state, or federal law or regulation; and no violation of
the Clean Air Act, Clean Water Act, Resource Conservation and
Recovery Act, Toxic Substance Control Act, Safe Drinking Water
Control Act, Comprehensive Environmental Resource Compensation
and Liability Act, or Occupational Safety and Health Act has
occurred or is continuing. Neither the Operating Partnership nor
the General Partner has received any notice from any source
whatsoever of the existence of any such hazardous condition
relating to the Apartment Complex or of any violation of any
local, state or federal law or regulation with respect to the
Apartment Complex.
1.15 Based on that certain real estate appraisal
prepared for the Partnership by CB Commercial Real Estate Group,
Inc. Appraisal Services dated October 29, 1997 and the
undersigned's knowledge of property values in the area where the
Apartment Complex is located, and based upon the level of
permanent debt financing for the Apartment Complex, there is a
reasonable expectation that the fair market value of the
Apartment Complex, taking into account value attributable to the
Low Income Housing Tax Credits and/or below market financing, as
well as the use restrictions imposed on the Apartment Complex,
will be greater than the total amount of the Operating
Partnership's liabilities at the date of closing.
1.16 None of the partners of the Operating Partnership
or of the General Partner is a tax-exempt entity.
117. The General Partner is a Georgia corporation, the
sole shareholders of which are Michael L. Smith, Charles H. Smith
and Ralph W. Donald. The General Partner has only one class of
capital stock of which 100,000 shares are authorized and 1,000
shares are issued and outstanding. The shareholders' ownership
interests in the General Partner are as follows:
Shareholder Shares of Stock Percent of Issued and
Outstanding Stock
Michael L. Smith 395 39.5%
Charles H. Smith 395 39.5%
Ralph W. Donald 210 21.0%
1.18 No person or entity who has economic risk of loss
with respect to the Loan, including, without limitation the
guarantors under that certain Letter of Credit and Reimbursement
Agreement by and among the Operating Partnership, the Letter of
Credit Issuer, and the Lender, owns or will at any time in the
future own, individually or in the aggregate, more than 79% of
the aggregate issued and outstanding stock of the General
Partner.
1.19 If any shareholder or other affiliate of the
General Partner is a tax-exempt entity and the General Partner is
a "controlled entity" in relation to such tax-exempt entity, a
timely election will be made under Code Section 168(h)(6)(F) so
that no portion of the Apartment Complex will be treated as "tax
exempt use property" as defined in Code Section 168(h).
1.20 All representations made by the General Partner in
the Operating Partnership Agreement are incorporated herein by
reference and are confirmed.
1.21 It is reasonable to expect that the Operating
Partnership will be able to repay, as and when due, the principal
and interest on the projected loans to the Operating Partnership
based on the projected value of the Operating Partnership's
property and building(s) and the projection of rental income and
expense from operations set forth in Exhibit A, assuming a rate
of inflation of operating income and expense during the term of
the Loans that is reasonable for the area in which the Apartment
Complex is located.
1.22 An Extended Use Commitment (as defined in the
Operating Partnership Agreement) within the meaning of Code
Section 42(h)(6) will be in effect and recorded in the appropriate
land evidence records with respect to the building(s) in the
Apartment Complex not later than the end of the first taxable
year in which any Tax Credit is taken with respect to any
building. If not in effect as of the date hereof, the General
Partner agrees (i) to deliver a valid and binding Extended Use
Agreement and evidence that it has been recorded no later than
the end of the first taxable year in which any Tax Credit is
taken with regard to any building and (ii) to ensure that all
Partnership lenders subordinate their mortgage liens on the
Apartment Complex to the Extended Use Agreement at or prior to
the time it is recorded.
1.23 The amounts payable in development and property
management fees to the General Partner, initial Management Agent
and the Developer are fair in light of the value and magnitude of
the services rendered in consideration for such fees, and the
services performed in consideration for the development fees
relate solely to the acquisition, construction or renovation of
the Apartment Complex.
1.24 To the best of the General Partner's knowledge,
the Low-Income Housing Tax Credits allocated to the Apartment
Complex will not exceed the amount the Agency determines is
necessary for the financial feasibility of the Apartment Complex
and its viability as a qualified low-income housing project
throughout the credit period.
1.25 To the best of the General Partner's knowledge,
the proposed operations of the Apartment Complex and the
Partnership satisfy the requirements of the State's Qualified
Allocation Plan, including any specific targeting, set-asides or
other factors upon which the Georgia Department of Community
Affairs based its determination that the proposed operations of
the Apartment Complex and the Partnership satisfy the Qualified
Allocation Plan.
1.26 The Operating Partnership has not elected pursuant
to Code Section 42 to lock in the applicable Tax Credit rate
prior to placement in service of each building.
1.27 Each of the representations and disclosures made
by the Operating Partnership to the Georgia Department of
Community Affairs (the "Agency") in the Low Income Housing Tax
Credit Allocation Application (the "Credit Application") upon
which the letter from the Georgia Department of Community Affairs
dated November 19, 1997 determining that the project meets the
requirements of Georgia's 1997 Qualified Allocation Plan (the
"Credit Reservation Agreement") was based, is true and correct in
all material respects as of the date hereof.
1.28 Each of the covenants, agreements, and conditions
contained in the Credit Application and Credit Reservation
Agreement entered into by and between the Agency and the
Operating Partnership, has been duly performed or satisfied by
the Operating Partnership or the General Partner, as applicable,
to the extent that performance of any such covenant or agreement
or satisfaction of any conditions is required on or prior to the
date hereof, and the General Partner has no reason to believe
that the covenants, agreements, and conditions required to be
performed or satisfied after the date hereof will not be
performed or satisfied in a timely manner.
1.29 The General Partner has not received from the
Agency any notice of default or of withdrawal or cancellation of
the Tax Credit [Reservation] the Operating Partnership as
described in the [Credit Reservation Agreement].
1.30 The General Partner and any entity that is related
to the General Partner or to the Operating Partnership and that
receives a fee from the Operating Partnership, directly or
indirectly, is on the cash method of accounting for tax purposes.
If any fee received by the General Partner is treated as a
guaranteed payment under Section 707(c) of the Code, the General
Partner will recognize such fee as income at the time such fee is
accrued by the Operating Partnership.
1.31 The General Partner will be actively involved in
the management and operation of the Operating Partnership, will
devote substantial and continuing attention to the activities of
the Operating Partnership, and will provide substantial services
to the Operating Partnership.
1.32 The development and leasing activity in which the
Operating Partnership will engage will not contain personal or
recreational benefit for the partners of the Operating
Partnership.
1.33 The Operating Partnership will keep active records
and carry out the proposed activity in a manner consistent with
profitable businesses in the same activity.
1.34 The Operating Partnership will have an objective
to carry on businesses for profit and divide the gains therefrom.
1.35 The Operating Partnership may earn a profit,
including profit from appreciation in the value of the Apartment
Complex.
1.36 The Loan and all other debt financing of the
Apartment Complex require the noncontingent repayment of
principal on or before a fixed maturity date, and will be
considered and treated as a loan by the Lender.
1.37 None of the Operating Partnership's Lenders is a
party from whom the Operating Partnership acquired any portion of
the Apartment Complex, and none of the financing was issued in
exchange for any portion of the Apartment Complex. None of the
Operating Partnership's Lenders will receive a fee with respect
to the Operating Partnership's investment in the Apartment
Complex, except for fees payable to the Lender and Letter of
Credit Issuer under the Loan Documents.
1.38 Following is a description of any and all existing
or proposed financing of the Apartment Complex that involves any
direct or indirect grant or federal subsidy (including, without
limitation, federal grants, below-market interest rate loans, and
tax-exempt bonds):
The $12,790,000 Loan is funded with the proceeds of tax-
exempt bonds.
1.39 The Project will not receive moderate rehabilitation
assistance under Section 8(e)(2) of the United States
Housing Act of 1937 (unless pursuant to the Stewart B. McKinney
Homeless Assistance Act of 1988).
1.40 All Units in the Apartment Complex are to be of
comparable quality for similarly sized units and all Apartment
Complex amenities are to be made available to all tenants on a
comparable basis without separate fees except for one unit in
which the on-site manager shall reside.
1.41 There will be no direct or indirect personal
liability of the Operating Partnership or of any of the Partners
for the repayment of the principal of and payment of interest on
the Loan, and the sole recourse of the Lender under the Loan,
with respect to the principal thereof and interest thereon, will
be to the property securing the indebtedness.
1.42 If necessary to insure that 100% of the Projected
Credit is available to the Project, the Partnership will elect to
defer the commencement of the tax credit period in accordance
with Section 42(f)(1)(b).
1.43 At least 50% of the aggregate basis of the Land
and buildings comprising the Apartment Complex will be financed
by the Loan.
1.44 The Loan will be funded by tax exempt bonds, the
interest on which is exempt from tax under Code Section103; such
bonds are subject to the volume cap imposed by Code Section 146;
and principal payments on the Loan are to be applied within a
reasonable period to redeem such bonds.
2. Indemnification
2.01 The General Partner (for purposes of this Section
2.01, jointly and severally, the "Indemnifying Parties" or,
individually, an "Indemnifying Party") agrees to indemnify and
hold harmless the Limited Partners (for purposes of this Section
2.01, the "Indemnified Parties" or, individually, an "Indemnified
Party") and each officer, director, employee and person, if any,
who controls any Indemnified Party against any losses, claims,
damages or liabilities (collectively, "Liabilities"), joint or
several, to which any Indemnified Party or such officer,
director, employee or controlling person may become subject,
insofar as such Liabilities or actions in respect thereof arise
out of or are based upon (i) a breach by such Indemnifying Party
of any of its representations, warranties or covenants to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons under this Certification and
Agreement or (ii) liability in connection with the Land and/or
the Apartment Complex, as each term is defined in the Operating
Partnership Agreement, under any statute, regulation, ordinance,
or other provision of federal, state, or local law pertaining to
the protection of the environment, or otherwise pertaining to
public health or employee health and safety, including, without
limitation, protection from hazardous waste, lead-based paint,
methane gas, urea formaldehyde insulation, oil, toxic substance,
underground storage tanks, polychlorinated biphenals (PCBs), and
radon; and to reimburse each such Indemnified Party and each such
officer, director, employee or controlling person for any legal
or other expenses reasonably incurred by it or them in connection
with defending against any such Liability or action; provided,
however, that the Indemnifying Party shall not be required to
indemnify any Indemnified Party or any such officer, director,
employee or controlling person for any payment made to any
claimant in settlement of any Liability or action unless such
payment is approved by the Indemnifying Party or by a court
having jurisdiction of the controversy. This indemnity agreement
shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the
termination of any agreement which refers to this indemnity and
shall be in addition to any liability which the Indemnifying
Party may otherwise have.
2.02 No Indemnifying Party shall be liable under the
indemnity agreements contained in Section 2.01 unless the Indem-
nified Party shall have notified the Indemnifying Party in
writing within forty-five (45) business days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Indemnified Party or any
such of its officers, directors, employees or controlling
persons, but failure to notify an Indemnifying Party of any such
claim shall not relieve it from any liability which it may have
to the Indemnified Party or any such of its officers, directors,
employees or controlling persons against whom action is brought
otherwise than on account of its indemnity agreement contained in
Section 2.01. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so
elects, in accordance with arrangements satisfactory to any
other Indemnifying Party or parties similarly notified, to
assume the defense thereof, with counsel who shall be reasonably
satisfactory to such Indemnified Party or any such of its officers,
directors, employees or controlling persons and any other
Indemnified Parties who are defendants in such action; and after
notice from the Indemnifying Party to such Indemnified Party or any
such of its officers, directors, employees or controlling persons
of its election so to assume the defense thereof and the retaining
of such counsel by the Indemnifying Party, the Indemnifying Party
shall not be liable to such Indemnified Party or any such of its
officers, directors, employees or controlling persons for any
legal or other expenses subsequently incurred by such Indemnified
Party or any such of its officers, directors, employees or controlling
persons in connection with the defense thereof.
3. Miscellaneous
3.01 This Certification and Agreement is made solely
for the benefit of the Limited Partners, Hinckley, Allen &
Snyder, and Hendrick, Phillips, Schemm & Salzman, (and, to the
extent provided in Section 2, the officers, directors, partners,
employees and controlling persons referred to therein), and their
respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement.
3.02 This Certification and Agreement may be executed
in several counterparts, each of which shall be deemed to be an
original, all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
OPERATING PARTNERSHIP
Level Creek Partners, L.P.
By Sugar Hill Plantation
Partners, Inc., Its General
Partner
By:______________________
Its duly authorized
Sugar Hill Plantation
Partners, Inc.
By:_______________________
Its duly authorized
Exhibit A
Level Creek Partners, L.P. Fact Sheet
Project Development Costs & Sources
Sources of Funds:
A. Bond Proceeds 12,790,000
B. G.P. Capital Contributions 211
C. I.P. Capital Contributions 2,154,802
D. Deferred Development Fee 861,148
Note 15,806,161
Total Sources
Application of Funds:
Acquisition Costs:
Land 1,112,726
Building 1,112,726
Construction Costs:
Building Costs 6,566,954
Furnishings & Equipment 675,879
Site Work 1,651,014
General Conditions/Overhead 1,036,322
Profit 82,331
Performance Bond 10,012,500
Subtotal General 400,000
Contractor 238,372
Construction Contingency 84,136
Tap Fees & Bldg. Permits
Direct Construction Costs By 10,735,008
Partnership
Legal/Organizational:
Legal - Bond Issuance 151,548
Legal - Real Estate 10,000
Legal - Corporate 39,500
Title & Recording 20,000
Audit Tax 25,000
246,048
Construction Financing:
LOC Origination Fee 226,309
LOC Annual Fees During 355,628
Construction 767,400
Bond Interest During (300,000)
Construction
Less Interest Income on 1,049,337
Investments
Soft Costs:
Architectural & Engineering 142,500
Construction Period Taxes & 18,500
Insurance 28,000
3rd Party Fees For Professional 181,675
Services 83,867
Issuance Costs
Tax Credit Fees 454,542
Interim Operating Costs:
Advertising 30,000
Lease Up Reserve 348,500
378,500
Development Fees:
Overhead 300,000
Developer Fee 1,530,000
1,830,000
Total Application Of Funds 15,806,161
2. Construction and Permanent Financing:
A. Lender: The Housing Authority of the City of Sugar
Hill, Georgia
B. Mortgage Amount: $12,790,000
C. Note Date: May 7, 1998
D. Interest Rate: ____________
E. Term: May 15, 2003
3. Junior Financing: N/A
4. Eligible Basis: $13,412,974
5. Qualified Basis: $ 7,998,156
6. GP Capital Contribution: $ 211
7. Type of Credit: Tax Exempt Bond Financed
New Construction - May Rate is 3.58% (not locked)
8. Rent-up Schedule: 100% by November, 1999
9. Projected Credit to the Investment Partnership (99.99%):
$2,992,781
A. $175,723 for year 1
B. $299,278 for years 2 through 10
C. $123,555 for year 11
10. Total Projected Credit to the Operating Partnership (100%):
$2,993,080
A. $175,740 for year 1
B. $299,308 for years 2 through 10
C. $123,568 for year 11
11. Tax Credit Approval:
A. Application:
1. Date: 10-14-97
2. Credit Amount Requested: $To Be Determined
($292,817)
B. Credit Reservation:
1. Date: 11-19-97
2. Credit Amount Reserved: $To Be Determined
C. Carryover Allocation: N/A
1. Date: ____________
2. Credit Amount Allocated: $__________
D. Credit Rate Lock-in Agreement
1. Date: N/A
2. Rate locked-in: N/A
E. Form 8609
1. Date: At placement in service N/A
2. Credit Amount Allocated: N/A
12. Apartment Complex:
A. Name: Level Creek Apartments
B. Address: 1022 Level Creek Road, Sugar Hill, Georgia
C. County: Gwinnett
D. Type of Project: Low Income Housing
13. 1998 Area Median Income: $54,700
14. Type of Units:
Square Basic* Utility*
Number Type Unit Feet Rent Allowance
20 1 bedroom 801 536 61
20 1 bedroom 801 650 _____
60 2 bedroom 1,002 637 80
40 2 bedroom 1,002 730 _____
50 3 bedroom 1,200 729 99
28 3 bedroom 1,200 875 _____
*Note: Rents and Utility Allowances Based on 1997 Limits
15. Difference between rents allowed
by FmHA and rents allowed under
the Rent Restriction Test, if applicable: N/A
16. Rental Assistance: N/A
17. (Projected) Annual Operating Expenses: $614,659 (year 2)
18. Replacement Reserve Account
A. Annual: $ 43,600 ($3,633/month)
19. Operating Reserve Account: $348,500
20. Amount of Annual Asset Management Fee
to Boston Capital Communications
Limited Partnership: $ 15,000
21. Amount of Annual Incentive Partnership
Management Fee: $ 30,000
22. Amount of Total Depreciable
Basis Allocated to Personal
Property: $675,879
23. Completion Date: March, 1999
24. Total Capital Contribution of
Investment Partnership: $2,154,802
25. Schedule of Capital Contributions:
A. $1,508,362 (70%) upon the latest to occur of:
(i) Tax Credit Set Aside (Receipt of Documents Confirming
Issuance of Section 42 Qualifying Bonds),
(ii) Initial Closing,
(iii)Receipt of Estoppel Letter,
(iv) Admission Date,
(v) Execution of Escrow Agreement Between ILP and Letter
of Credit Issuer, or
(vi) Receipt of Commitment for Sale of Bonds from
Underwriter
B. $215,480 (10%) upon the latest to occur of:
(i) Substantial Completion
(ii) Cost Certification,
(iii) State Designation
(iv) Title and Insurance Updates
(v) Contractor's Payoff Letter
(vi) Lender Estoppel Certificate
(vii) Recording of Extended Use, or
(viii)Satisfaction of Outstanding Due Diligence; or
(ix) Satisfaction of Condition of First Installment
C. $215,480 (10%) upon the latest to occur of:
(i) Initial 100% Occupancy Date,
(ii) Final Closing,
(iii) Rental Achievement, or
(iv) Satisfaction of conditions of First and Second
Installments
D. $215,480 (10%) upon the later of :
(i) Receipt of Federal Tax Return, or
(ii) Satisfaction of conditions of First, Second and
Third Installments
26. Fees, Special Distributions and Other Items to be paid from
Capital Contributions
A. Development
Fee: $1,830,000 (*of which $861,148 is estimated to be deferred)
B. Special Return of GP Capital, if applicable N/A
27. Consulting Fee to Boston Capital N/A
Partners, Inc., if applicable
28. Operating General Partner: SUGAR HILL PLANTATION PARTNERS,
INC.
Attn: Michael L. Smith
Address: 3850 Holcomb Bridge Road
Address: Suite 215
Atlanta, Georgia 30092-5219
Telephone Number: 770-368-1519
29. Managing General Partner: N/A
Attn:
Address:
Telephone Number:
30. Developer: SPRING HILL PARTNERS,INC.
Attn: Michael L. Smith
Address: 3850 Holcomb Bridge Road
Suite 215
Atlanta, Georgia 30092-5219
Telephone Number: 770-368-1519
31. Ownership Interests
Normal Capital Cash
Operations Transactions Flow
Operating General Partner .01% 70% 70%
Investment Partnership 99.99% 30% 30%
Special Limited Partner 0% 0% 0%
32. Management Agent: SIGNATURE MANAGEMENT CORP.
Attn: Michael B. Smith
Address:3850 Holcomb Bridge Road
Suite 215
Atlanta, Georgia 30092-5219
Telephone Number: 770-368-1519
Amount of Fee: 6% of
gross rental receipts
33. Builder: Universal Constructors, Inc.
Attn:
Address: P.O. Box 28
McMinnville, TN 37100
Telephone Number: 931-668-2876
Amount of Compensation: $10,012,500.00
Builder's Profit: $472,865.00
34. Subcontractor: (N/A)
Attn:
Address:
Telephone Number:
35. Architect: Lamas Architects, Inc.
Attn:
Address: 3131 Piedmont Road, Suite 206
Atlanta, GA 30305
Telephone Number: 404-869-1411
Amount of Fee: $80,000.00
36. Auditor: Habif, Arogeti & Wynne
Attn: Edward D. Deck, C.P.A.
Address: 1073 W. Peachtree Street
Atlanta, GA 30309
Telephone Number: 404-898-8245
37. Tax Return Preparer: Habif, Arogeti & Wynne
Attn: Edward D. Deck, C.P.A.
Address: 1073 W. Peachtree Street
Atlanta, GA 30309
Telephone Number: 404-898-8245
38. Federal Taxpayer ID Number: 58-2296636
39. State Housing Credit Agency: Georgia Department of
Community Affairs
40. State Housing Agency LIHTC Number: Application No. 97-518
41. Operating Deficit Guaranty
The General Partner shall be obligated to make Subordinated Loans
to the Partnership to cover debt service, operating expenses and
the Replacement Reserve Fund to the extent these exceed
availableoperating income for a period of (i) 60 months from
Rental Achievement or (ii) until the extension of the Letter of
Credit for an additional five years, whichever is later. From
and after the later of (i) Rental Achievement and (ii) Extension
of the Letter of Credit for an additional five years, the GP's
Operating Deficit guaranty is limited to $1,000,000.
42. Guaranty of Development Cost Overruns/ The Guarantors are
Excess Development Costs responsible for Development Cost
Overruns/Excess Development Cost pursuant to the Guaranty.
43. Guarantor: Charles H. Smith
Michael L. Smith
44. Post-Closing Follow-Up Required:
cc: Boston Capital Communications Limited Partnership Accounting
Department
Exhibit B
Certificate of Operating Partnership and
Operating General Partner Re: Lack of
Disqualifications
The Operating Partnership and its Operating General Partner
(as identified on the Certification and Agreement to which this
Certificate is attached as Exhibit B) hereby represent to you that
none of (i) the Operating Partnership, (ii) any predecessor of the
Operating Partnership, (iii) any of the Operating Partnership's
affiliates ("affiliate" meaning a person that controls or is
controlled by, or is under common control with, the Operating
Partnership), (iv) any sponsor (meaning any person who (1) is
directly or indirectly instrumental in organizing the Operating
Partnership or (2) will directly or indirectly manage or
participate in the management of the Operating Partnership or (3)
will regularly perform, or select the person or entity who will
regularly perform, the primary activities of the Operating
Partnership), (v) any officer, director, principal or general
partner of the Operating Partnership or of any sponsor, (vi) the
officer, director, principal, promoter or general partner of
Operating General Partner, (vii) any beneficial owner of ten
percent (10%) or more of any class of the equity securities of the
Operating Partnership or of any sponsor (beneficial ownership
meaning the power to vote or direct the vote and/or the power to
dispose or direct the disposition of such securities), (viii) any
promoter of the Operating Partnership (meaning any person who,
acting alone or in conjunction with one or more other persons,
directly or indirectly has taken, is taking or will take the
initiative in founding and organizing the business of the Operating
Partnership or any person who, in connection with the founding and
organizing of the business or enterprise of the Operating
Partnership, directly or indirectly receives in consideration of
services or property, or both services and property, ten percent
(10%) or more of any class of securities of the Operating
Partnership or ten percent (10%) or more of the proceeds from the
sale of any class of such securities; provided, however, a person
who receives such securities or proceeds either solely as
underwriting commissions or solely in consideration of property
shall not be deemed a promoter if such person does not otherwise
take part in founding and organizing the enterprise) presently
connected with the Operating Partnership in any capacity:
(1) Has filed a registration statement which is the
subject of any pending proceeding or examination under the secur-
ities laws of any jurisdiction, or which is the subject of a any
refusal order or stop order thereunder entered within five (5)
years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere to
a misdemeanor or felony or, within the last ten (10) years, been
held liable in a civil action by final judgment of a court based
upon conduct showing moral turpitude in connection with the offer,
purchase or sale of any security, franchise or commodity (which
term, for the purposes of this Certificate shall hereinafter
include commodity futures contracts) or any other aspect of the
securities or commodities business, or involving racketeering, the
making of a false filing or a violation of Sections 1341, 1342 or
1343 of Title 18 of the United States Code or arising out of the
conduct of the business of an issuer, underwriter, broker, dealer,
municipal securities dealer, or investment adviser, or involving
theft, conversion, misappropriation, fraud, breach of fiduciary
duty, deceit or intentional wrongdoing including, but not limited
to, forgery, embezzlement, obtaining money under false pretenses,
larceny fraudulent conversion or misappropriation of property or
conspiracy to defraud, or which is a crime involving moral
turpitude, or within the last five (5) years of a misdemeanor or
felony which is a criminal violation of statutes designed to
protect consumers against unlawful practices involving insurance,
securities, commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order, judgment
or decree entered within five (5) years prior to the date hereof
entered or issued by or procured from a state securities commission
or administrator, the Securities and Exchange Commission ("SEC"),
the Commodities Futures Trading Commission or the U.S. Postal
Service, or to (b) any administrative order or judgment, arising
out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
involving deceit, theft, fraud or fraudulent conduct, or breach of
fiduciary duty, or which is based upon a state banking, insurance,
real estate or securities law or (c) has been the subject of any
administrative order, judgment or decree in any state in which
fraud, deceit, or intentional wrongdoing, including, but not
limited to, making untrue statements of material fact or omitting
to state material facts, was found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of any
security or offering, or to any order, judgment or decree in which
registration violations were found or which prohibits, denies or
revokes the use of any exemption from registration in connection
with the offer, purchase or sale of securities, or to an SEC
censure or other order based on a finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction entered
within five (5) years prior to the date hereof, temporarily,
preliminarily or permanently restraining or enjoining such persons
from engaging in or continuing any conduct or practice in
connection with any aspect of the securities or commodities
business or involving the making of any false filing or arising out
of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, or investment adviser, or which
restrains or en joins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five (5)
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to conduct
alleged to have violated Section 3005 of Title 39 of the United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an exchange
registered as a national securities exchange, an association
registered as a national securities association, or any self-
regulatory organization registered pursuant to the Securities
Exchange Act of 1934, or a Canadian securities exchange, or
association or self-regulatory organization operating under the
authority of the Commodity Futures Trading Commission, or is
subject to any currently effective order or order entered within
the past five years of the SEC, the Commodity Futures Trading
Commission or any state securities administrator denying regis-
tration to, or revoking or suspending the registration of, such
person as a broker-dealer, agent, futures commission merchant,
commodity pool operator, commodity trading adviser or investment
adviser or associated person of any of the foregoing, or prohib-
iting the transaction of business as a broker-dealer or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding before the
SEC or any state securities commission or any regulatory authority
willfully made or caused to be made any statement which was at the
time and in the light of the circumstances under which it was made
false or misleading with respect to any material fact, or has
willfully omitted to state in any such application, report or
proceeding any material fact which is required to be stated therein
or necessary in order to make the statements made, in the light of
the circumstances under which they are made, not misleading, or has
willfully failed to make any required amendment to or supplement to
such an application, report or statement in a timely manner;
(8) Has willfully violated any provision of the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Trust Indenture Act of 1939, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, the Commodity Exchange Act of
1974 or the securities laws of any state, or any predecessor law,
or of any rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any of the
statutes or rules or regulations referred to in subsection (8)
hereof;
(10) Has failed reasonably to supervise his agents, if he
is a broker-dealer, or his employees, if he is an investment
adviser, but no person shall be deemed to have failed in such
supervision if there have been established procedures, and a system
for applying such procedures, which would reasonably be expected to
prevent and detect, insofar as practicable, any violation of
statutes, rules or orders described in subsection (8) and if such
person has reasonably discharged the duties and obligations
incumbent upon him by reason of such procedures and system without
reasonable cause to believe that such procedures and system were
not being complied with;
(11) Is subject to a currently effective state admini-
strative order or judgment procured by a state securities admini-
strator within five (5) years prior to the date hereof or is
subject to a currently effective United States Postal Service fraud
order or has engaged in dishonest or unethical practices in the
securities business or has taken unfair advantage of a customer or
is the subject of sanctions imposed by any state or federal
securities agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his
liabilities exceed his assets or in the sense that he cannot meet
his obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his customers,
or has not sufficient financial responsibility to carry out the
obligations incident to his operations or has been adjudged a
bankrupt or made a general assignment for the benefit of creditors;
or
(13) Is selling or has sold, or is offering or has
offered for sale, in any state securities through any unregistered
agent required to be registered under the securities laws of any
state or for any broker-dealer or issuer with knowledge that such
broker-dealer or issuer had not or has not complied with the
securities laws of the applicable state.
If the Operating Partnership is subject to the requirements of
Section 12, 14 or 15(d) of the Securities Exchange Act of 1934,
then the Operating Partnership has filed all reports required by
those Sections to be filed during the twelve (12) calendar months
preceding the date hereof (or for such shorter period that the
Operating Partnership was required to file such reports).
