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) October 1, 1998
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26200 04-3208648
(Commission 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
As of October 1, 1998 Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, specifically Series 33 thereof (the "Partnership")
entered into various agreements relating to Southaven Partners I, L.P.,
a Mississippi limited partnership (the "Operating Partnership"), including
the First Amended and Restated Agreement of Limited Partnership of the
Operating Partnership dated as of October 1, 1998 (the "Operating
Partnership Agreement"), pursuant to which the Partnership acquired a
limited partner interest in the Operating Partnership. Capitalized terms
used and not otherwise defined herein have their meanings set forth in the
Operating Partnership Agreement, a copy of which is attached hereto as
Exhibit (2)(a).
The Operating Partnership owns and is in the process of constructing a two
hundred eight (208) unit apartment complex located on Airways Road in
Southaven, Mississippi, which is known as Bradford Park Apartments
(the "Apartment Complex"). The Apartment Complex consists of twenty-six
(26) buildings containing thirty-two (32) 1-bedroom units, one hundred twelve
(112) 2-bedroom units and sixty-four (64) 3-bedroom units. Amenities include
a community building/clubhouse, swimming pool and playground. Construction of
the Apartment Complex is expected to be completed in July 2000 and 100%
Occupancy is expected to be achieved in December 2000.
The Operating Partnership is currently receiving combined construction and
permanent financing in the amount of $9,765,000 from the Mississippi Regional
Housing Authority No. II ("Issuer") in the form of a loan (the "Bond Loan")
of the proceeds of tax-exempt variable rate bonds ("Bonds") issued by the
Issuer. The Bonds were issued for a 20-year term, bear interest at a variable
rate initially set at 4.35% per annum at the date of issuance, and are
subject to an interest rate cap at 5.5% purchased by the General Partner for
a five-year period. The Bonds are credit-enhanced with respect to the
payment of principal and interest thereon by a letter of credit in the amount
of $10,000,000 (the "Letter of Credit") furnished by AmSouth Bank, N.A., and
are subject to redemption upon the expiration of the Letter of Credit.
The Letter of Credit has an initial term of five years, expiring on
September 1, 2003.
It is expected that 100% of the rental apartment units in the Apartment
Complex will qualify for the low-income housing tax credit
(the "Tax Credits") under Section 42 of the Internal Revenue Code of 1986, as
amended (the "Code").
The general partner of the Operating Partnership is Bradford Park, LLC, a
Mississippi limited liability company (the "General Partner").
J.H. Thames, Jr. is the controlling Member and Manager of the General Partner.
Mr. Thames is also a principal of Unicorp, Inc. which is the Builder of the
Apartment Complex, and of Park Management, Inc., which is the Management Agent
of the Apartment Complex. Bradford Park, LLC will also serve as the
Developer of the Apartment Complex. The Thames organization has extensive
development, construction and project management experience, covering
approximately 58 properties totaling more than 2,631 units, of which 1,606 are
units qualified for Tax Credits. The Thames organization currently has
approximately 15 multi-family housing complexes, containing approximately 1,927
units, under development.
The Partnership acquired its interest in the Operating Partnership directly
from the Operating Partnership in consideration of an agreement to make a
Capital Contribution of $3,165,041 to the Operating Partnership in four
installments as follows:
(1) $1,899,024 (the "First Installment") on the latest to occur of
(A) the Admission Date, (B) the Bond Loan Full Funding Date and (C) Tax
Credit Set-Aside;
(2) $633,009 (the "Second Installment") on the 50% Completion Date;
(3) $316,504 (the "Third Installment") on the latest to occur of (A)
the Completion Date, (B) Cost Certification, (C) receipt by the Special
Limited Partner of an updated Title Policy in form and substance
satisfactory to the Special Limited Partner, which policy in no event
shall contain a survey exception, (D) receipt by the Special Limited
Partner of current liability insurance certificates conforming to the
requirements of the Partnership Agreement, (E) receipt by the Special
Limited Partner of an Estoppel Letter from each Lender of (F) receipt by
the Special Limited Partner of the Contractor Pay-Off Letter; and
(4) $316,504 (the "Fourth Installment") on the latest to occur of
(A) the Initial 100% Occupancy Date, (ii) the closing and funding of the
New Permanent Loan, if applicable, or (iii) Rental Achievement.
The First Installment has been paid in by the Partnership. The total Capital
Contribution of the Partnership to the Operating Partnership is based on
the Operating Partnership receiving $4,277,510 of Tax Credits during the
10-year period commencing in 1999 of which 99.99% ($4,277,082) will be
allocated to the Partnership as the Investment Limited Partner of the
Operating Partnership.
The Partnership believes that the Apartment Complex is adequately insured.
Ownership interests in the Operating Partnership are as follows, subject in
each case to certain priority allocations and distributions as set forth in
the Operating Partnership Agreement:
Normal Capital Cash
Operations Transactions Flow
General Partner .01% 80% 90%
Partnership 99.99% 19.999% 10%
Special Limited
Partner 0% .001% 0%
The Special Limited Partner of the Operating Partnership is BCTC
94, Inc., an affiliate of the Partnership.
The Partnership used the funds obtained from the payments of
the holders of its beneficial assignee certificates to make the
acquisition of its interest in the Operating Partnership.
The Special Limited Partner, or an Affiliate thereof, will
receive an Asset Management Fee commencing in 2000 from the
Operating Partnership for services in connection with the
Operating Partnership's accounting matters and the preparation of
tax returns and reports to the Partnership in the annual amount
of $5,000. The Asset Management Fee for each Fiscal Year will be
payable from Cash Flow in the manner and priority set forth in
Section 10.2(a) of the Operating Partnership Agreement; provided,
however, that if in any Fiscal Year Cash Flow is insufficient to
pay the full amount of the Asset Management Fee and the shortfall
is not paid from funds advanced to the Operating Partnership by
the General Partner as a Subordinated Loan pursuant to the
Operating Partnership Agreement, the unpaid portion thereof shall
accrue and be payable on a cumulative basis in the first Fiscal
Year in which there is sufficient Cash Flow or Capital Proceeds
as provided in Article X of the Operating Partnership Agreement.
The Operating Partnership shall pay to the General Partner a
fee (the "Partnership Management Fee") commencing in 2000 for
services in connection with the administration of the day-to-day
business of the Operating Partnership in an annual amount equal
to $27,000. The Partnership Management Fee for each Fiscal Year
of the Operating Partnership shall be payable from Cash Flow in
the manner and priority set forth in Section 10.2(a) of the
Operating Partnership Agreement; provided, however, that if in
any Fiscal Year Cash Flow is insufficient to pay the full amount
of the Partnership Management Fee, the unpaid portion thereof
shall accrue and be payable on a cumulative basis in the first
Fiscal Year in which there is sufficient Cash Flow or Capital
Proceeds as provided in Article X of the Operating Partnership
Agreement.
In consideration of its consultation, advice and other
services in connection with the construction and development of
the Apartment Complex and as consideration for the assignment
described in Section 6.14 of the Operating Partnership Agreement,
the Operating Partnership will pay the Developer a Development
Fee in the principal amount of $1,154,833. The Development Fee
shall be initially paid out of certain specified proceeds
available from mortgage loans, net rental income prior to the
Completion Date, Capital Contributions and casualty insurance
proceeds; any unpaid amount of such Development Fee shall be paid
out of Cash Flow as set forth in Section 10.2(a) of the Operating
Partnership Agreement.
The Builder of the Apartment Complex will receive a total
compensation of $9,711,165, which includes Builder's fee of
$544,732. The Management Agent of the Apartment Complex will
receive a Management Fee equal to 5% of collected rents.
Item 7. Exhibits.
(c) Exhibits. Page
(1) (a)<F1> Form of Dealer-Manager Agreement between Boston Capital
Services, Inc. and the Registrant (including, as an exhibit
thereto, the form of Soliciting Dealer Agreement)
(2) (a) First Amended and Restated Agreement of Limited
Partnership of Southaven Partners I, L.P.
(2) (b) General Partner's Payment Certificate (First Installment)
relating to Southaven Partners I, L.P.
(4) (a)<F2> Agreement of Limited Partnership of the Partnership
(16)
None
(17)
None
(20)
None
(23)
None
(24)
None
(27)
None
_________________
<F1> Incorporated by reference to Exhibit (1) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities Exchange Commission.
<F2> Incorporated by reference to Exhibit (4) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Dated: July 23, 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
SOUTHAVEN PARTNERS I, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of October 1, 1998
TABLE OF CONTENTS
Preliminary Statement 1
ARTICLE I 1
Defined Terms 1
ARTICLE II 22
Name and Business 22
2.1 Name; Continuation 22
2.2 Office and Resident Agent 23
2.3 Purpose 23
2.4 Term and Dissolution 23
ARTICLE III 28
Mortgage, Refinancing and Disposition of Property 24
3.1 Personal Liability 24
3.2 Refinancing 24
3.3 Sale of Assets 25
3.4 Real Estate Commissions 25
ARTICLE IV 25
Partners; Capital 25
4.1 Capital and Capital Accounts 25
4.2 General Partner 26
4.3 Investment Limited Partner, Special Limited Partner and Original
Limited Partner 26
4.4 Liability of the Limited Partners 27
4.5 Special Rights of the Special Limited Partner 27
4.6 Meetings 29
ARTICLE V 30
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner 30
5.1 Payments 30
5.2 Return of Capital Contributions 33
ARTICLE VI 36
Rights, Powers and Duties of General Partner 36
6.1 Authorized Acts 36
6.2 Restrictions on Authority 37
6.3 Personal Services; Other Business Ventures 40
6.4 Business Management and Control 40
6.5 Duties and Obligations 41
6.6 Representations and Warranties 44
6.7 Liability on Mortgages 47
6.8 Indemnification of the General Partner 48
6.9 Indemnification of the Partnership and the Limited Partners 49
6.10 Operating Deficits 49
6.11 Obligation to Complete the Construction of the Apartment Complex 50
6.12 Certain Payments to the General Partner and Others 50
6.13 Delegation of General Partner Authority 51
6.14 Assignment to Partnerhsip 52
6.15 Contracts with Affiliates 52
6.16 Tax Matters Partner 52
ARTICLE VII 54
Withdrawal of a General Partner; New General Partners 54
7.1 Voluntary Withdrawal 54
7.2 Reconstitution 54
7.3 Successor General Partner 54
7.4 Interest of Predecessor General Partner 55
7.5 Amendment of Certificate; Approval of Certain Events 56
7.6 Valuation and Sale of Interest of Former General Partner 56
7.7 Designation of New General Partners 57
ARTICLE VIII 57
Transferability of Limited Partner Interests 57
8.1 Assignments 58
8.2 Substituted Limited Partner 58
8.3 Restrictions 59
ARTICLE IX 59
Borrowings 59
ARTICLE X 60
Profits, Losses, Tax Credits, Distributions and Capital Accounts 60
10.1 Profits, Losses and Tax Credits 60
10.2 Cash Distributions Prior to Dissolution 61
10.3 Distributions Upon Dissolution 62
10.4 Special Provisions 63
10.5 Authority of the General Partner to Vary Allocations to
Preserve and Protect the Partners' Inten 67
10.6 Recapture Amount 68
ARTICLE XI 69
Management Agent 69
11.1 General 69
11.2 Fees 70
11.3 Removal and Replacement 70
11.4 Lack of Management Agent 71
ARTICLE XII 71
Books and Records, Accounting, Tax Elections, Etc. 71
12.1 Books and Records 71
12.2 Bank Accounts 71
12.3 Auditors 72
12.4 Cost Recovery and Elections 72
12.5 Special Basis Adjustments 73
12.6 Fiscal Year 73
12.7 Information to Partners 73
12.8 Expenses of the Partnership 76
ARTICLE XIII 77
General Provisions 77
13.1 Restrictions by Reason of Section 708 of the Code 77
13.2 Amendments to Certificates 77
13.3 Notices 78
13.4 Word Meanings 78
13.5 Binding Effect 79
13.6 Applicable Law 79
13.7 Counterparts 79
13.8 Financing Regulations 79
13.9 Separability of Provisions 80
13.10 Paragraph Titles 80
13.11 Amendment Procedure 80
13.12 Time of Admission 80
Exhibit A Legal Description
Exhibit B Projected Rents
Exhibit C Insurance Requirements
SOUTHAVEN PARTNERS I, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Southaven Partners I, L.P. (the "Partnership") was formed as a
Mississippi limited partnership pursuant to a Limited Partnership
Agreement dated June 1, 1998, as amended (the "Original
Agreement") by and between BRADFORD PARK, LLC, a Mississippi
limited liability company ("BPLLC"), as general partner (the
"General Partner") and SUZAN B. THAMES as the limited partner
(the "Original Limited Partner"), and a Certificate of
Mississippi Limited Partnership (the "Certificate") filed in the
Filing Office on June 1, 1998.
The parties desire to amend and restate the Original Agreement to
(i) provide for the withdrawal from the Partnership of the
Original Limited Partner, (ii) provide for the admission of
BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited
partnership ("BCTCF"), as the Investment Limited Partner, (iii)
provide for the admission of BCTC 94, INC., a Delaware
corporation as the Special Limited Partner, and (iv) more fully
set forth the rights and obligations of the Partners.
In consideration of the mutual agreements set forth herein, it is
agreed and certified, and the Original Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the meanings
specified below:
"Act" means the Revised Uniform Limited Partnership Act as in
effect in the State.
"Actual Credit" means, with respect to a particular Fiscal Year,
the total amount of Tax Credit properly allocable by the
Partnership to the Investment Limited Partner for such Fiscal
Year. The Actual Credit shall be retroactively revised if the
amount of Tax Credit properly allocable to the Investment Limited
Partner is revised as the result of an audit or is recaptured.
"Additional Limited Partner" means any holder of an Interest
designated as an Additional Limited Partner pursuant to the
provisions of Section 4.5(b) or Section 7.4.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provisions of
this Agreement or is deemed to be obligated to restore pursuant
to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(i) and 1.704-2(i)(5), respectively; and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-
1(b)(2)(ii)(d)(6) of the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-
1(b)(2)(ii)(d) of the Treasury Regulations and shall be
interpreted consistently therewith.
"Admission Date" means the first date on which all parties hereto
shall have executed this Agreement.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses and
fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" means as to a specified Person, (i) such Person; (ii)
each member of the Immediate Family of such Person; (iii) each
legal representative, successor or assignee of any Person
referred to in the preceding clauses (i) or (ii); (iv) each
trustee of a trust for the benefit of any Person referred to in
the preceding clauses (i) or (ii); or (v) any other Person (a)
who directly or indirectly controls, is controlled by, or is
under common control with such Person, (b) who is an officer of,
director of, partner in or trustee of, or serves in a similar
capacity with respect to, such Person or of which such Person is
an officer, director, partner or trustee, or with respect to
which such Person serves in a similar capacity, (c) who, directly
or indirectly, is the beneficial owner of ten percent (10%) or
more of any class of equity securities of such Person or of which
such Person is directly or indirectly the owner of ten percent
(10%) or more of any class of equity securities, (d) who is an
officer, director, general partner, trustee or holder of ten
percent (10%) or more of the voting securities or beneficial
interests of any Person referred to in the foregoing clauses (v)
(b) or (v) (c), or (e) who, whatever such Person's title,
performs functions for such Person or any Affiliate of such
Person similar to a Chairman or member of the Board of Directors,
or executive officer such as the President, Executive Vice
President or Senior Vice President, Corporate Secretary, or
Treasurer, or any Person holding a five percent (5%) or more
equity interest in such Person, or any Person having the power to
direct or cause the direction of such Person whether through the
ownership of voting securities, by contract or otherwise. An
Affiliate of any Investment Limited Partner or of any Investment
General Partner does not include a Person who is a partner in a
Partnership or joint venture with any Investment Limited Partner
or any other Affiliate of any Investment Limited Partner if such
Person is not otherwise an Affiliate of any Investment Limited
Partner or any Investment General Partner. For purposes of this
definition, the term Affiliate shall not be deemed to include any
law firm (or member or associate thereof) providing legal
services to any Investment Limited Partner, any Investment
General Partner, the General Partner or any Affiliate of any of
them.
"AFR" means the "applicable federal rate" as defined and
determined in the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency, Issuer or any other
Governmental Authority with jurisdiction over the Apartment
Complex, or the business and operations of the Partnership.
"Agreement" means this First Amended and Restated Agreement of
Limited Partnership, including Schedule A, as amended from time
to time.
"Allocation Regulations" means the Treasury Regulations issued
under Sections 704(b) and 752 of the Code, as the same may be
modified or amended from time to time. In the event that the
Allocation Regulations are revised or amended subsequent to the
date of this Agreement, references herein to sections or
paragraphs of the Allocation Regulations shall be deemed to be
references to the applicable sections or paragraphs of the
Allocation Regulations as then in effect
"AmSouth" means AmSouth Bank..
"Apartment Complex" means the real property located in Southaven,
Desoto County, Mississippi, as more fully described in Exhibit A
attached hereto, together with (i) all buildings and other
improvements constructed or to be constructed thereon and (ii)
all furnishings, equipment and personal property located thereon
or otherwise covered by the Mortgages.
"Applicable Percentage" has the meaning set forth in Section
42(b) of the Code.
"Applied Amounts" shall have the meaning set forth in Section
6.10.
"Asset Management Fee" means the fee payable to BCTCF or an
Affiliate thereof pursuant to the provisions of Section 6.12(b).
"Assignee" shall have the meaning set forth in Section 4.1(c).
"Assignment and Pledge" means that certain Assignment and Pledge
of Tax and Insurance, Capital Reserve and Payment Escrow accounts
dated October 1, 1998 by and between AmSouth and the Partnership.
"Assignment and Pledge of Equity Fund Account" means that certain
assignment and pledge dated October 1, 1998, by the Partnership
and the Trustee as assignor and AmSouth.
"Auditors" means Bob Robinson, CPA of Jackson, Mississippi, or
such other firm of independent certified public accountants as
may be engaged by the General Partner with the Consent of the
Special Limited Partner for the purposes of preparing the
Partnership's income tax returns, auditing the books and records
of the Partnership and certifying financial reports of the
Partnership.
"BCTC 94" means BCTC 94, Inc., a Delaware corporation, and its
successors.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, and its successors.
"Best Knowledge" shall mean and include, in the case of a
specified Person, (i) actual knowledge and (ii) that knowledge
which a prudent businessperson (including, in the case of an
Entity, the general or managing partners, officers, directors and
key employees of such Entity) should have obtained in the
management of his or her business affairs after making due
inquiry and exercising due diligence with respect thereto. In
connection therewith, the knowledge (both actual and
constructive) of any general or managing partner, director,
officer or key employee of an Entity shall be deemed to be the
knowledge of the Entity.
"Bond Documents" means the Indenture, the Bonds, the LURA, the
Rebate Agreement and all other documents and instruments executed
and delivered in connection with the issuance and sale of the
Bonds.
"Bond Loan" means the loan in the amount of $9,765,000 to be
provided by the Issuer to the Partnership pursuant to the terms
of the Bond Loan Documents.
"Bond Loan Agreement" means the Loan Agreement dated October 1,
1998, by and between the Issuer and the Partnership, as amended.
"Bond Loan Documents" means the Bond Documents, the Bond Loan
Note, the Bond Loan Mortgage, the Bond Loan Agreement, the Letter
of Credit Documents, the Escrow Agreement and all other documents
executed and/or delivered in connection with the Bond Loan.
"Bond Loan Full Funding Date" means the date on which the
proceeds of the Bond Loan on deposit in the Construction Fund (as
defined in the Indenture) are available to be distributed by the
Trustee to pay Cost of the Project (as defined in the Indenture)
on a dollar for dollar basis with funds on deposit in the Equity
Fund (as defined in the Indenture).
"Bond Loan Note" means the promissory note executed by the
Partnership to evidence its obligations with respect to the Bond
Loan, which note is or shall be secured by the Bond Loan
Mortgage.
"Bonds" means the $9,765,000 of Mississippi Regional Housing
Authority No. II MultiFamily Housing (Bradford Park Apartments)
Series 1998 Bonds issued by the Issuer.
"BPLLC" means Bradford Park, LLC, a Mississippi limited liability
company, and its successors.
"Capital Account" has the meaning set forth in Section 4.1(b).
"Capital Contribution" means the total value of cash or property
contributed and agreed to be contributed to the Partnership by
each Partner, as set forth in Schedule A. Any reference in this
Agreement to the Capital Contribution of a then Partner shall
include a Capital Contribution previously made by any prior
Partner for the Interest of such then Partner.
"Capital Proceeds" means the proceeds of a Capital Transaction.
"Capital Transaction" means a refinancing of any Partnership
indebtedness or a sale, exchange, eminent domain taking, damage
or destruction (whether insured or uninsured), insured title
defect or other disposition of all or any portion of the
Apartment Complex (other than an event generating proceeds of any
business or rental interruption insurance), but excluding the
payment of Capital Contributions.
"Cash Available for Debt Service Requirements" for any period,
means the excess of (i) all cash actually received by the
Partnership on a cash basis from normal operations during such
period, but specifically excluding the proceeds of insurance
(other than business or rental interruption insurance), loans,
Capital Transactions or Capital Contributions over (ii) all cash
requirements of the Partnership properly allocable to such period
of time on an accrual basis (not including distributions to
Partners out of Cash Flow of the Partnership or fees payable from
Cash Flow) and, on an annualized basis, all projected
expenditures, including those of a seasonal nature, which might
reasonably be expected to be incurred on an unequal basis during
a full annual period of operation as determined by the Auditors
but specifically excluding Debt Service Requirements. For
purposes of this definition, (i) cash requirements of the
Partnership shall include to the extent not otherwise covered
above, full funding of reserves (including, without limitation,
funding of the Replacement Reserve), normal repairs, real estate
taxes at fully assessed levels assuming a fully improved property
and necessary capital improvements and (ii) if free rent or other
rental concessions shall have been granted to tenants, the
calculation of rental revenues under clause (i) of the preceding
sentence shall be adjusted so that the effect of such concessions
is amortized equally over the term of all leases (excluding
renewal periods) to which it applies.
"Cash Expenditures" means all disbursements of cash during a
specified Fiscal Year (other than distributions to Partners),
including, without limitation, payment of operating expenses,
payment of principal and interest on any Partnership indebtedness
(other than payments of principal and interest on any
Subordinated Loans or Voluntary Loans), the cost of repairs to
the Apartment Complex, amounts allocated to reserves by the
General Partner and the payment of any fees other than the Asset
Management Fee, the Partnership Management Fee and the
Development Fee. In addition, the net increase during such
Fiscal Year in any escrow account or reserve maintained by or for
the Partnership shall be considered a Cash Expenditure during
such Fiscal Year. The term Cash Expenditures shall not include
Development Costs. Cash Expenditures payable to Partners or
Affiliates of Partners shall be paid after Cash Expenditures
payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash
Expenditures. Cash Flow shall be determined separately for each
Fiscal Year or portion thereof.
"Cash Receipts" means all cash receipts of the Partnership from
whatever source derived other than from a Capital Transaction,
including, without limitation, rental revenues, government
subsidy payments. In addition, the net reduction in any Fiscal
Year in the amounts of any escrow account or reserve maintained
by or for the Partnership (including, without limitation, the
Replacement Reserve) shall be considered a cash receipt of the
Partnership for such Fiscal Year. Notwithstanding the foregoing,
at the election of the General Partner, Cash Receipts received
near the end of a Fiscal Year and intended for use in meeting the
Partnership's obligations (including the cost of acquiring assets
or paying debts or expenses) in the subsequent Fiscal Year shall
not be deemed to be received until such following Fiscal Year.
"Certificate" shall have the meaning set forth in the Preliminary
Statement.
"Class Contribution" means the aggregate Capital Contributions of
all members of a particular class of Partners (i.e., the General
Partner, the Investment Limited Partner, the Special Limited
Partner or any Additional Limited Partner).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations (permanent and temporary)
issued thereunder. References herein to any Code section shall
include any successor provisions.
"Commencement Date" means the first day of the month in which the
Admission Date occurs.
"Competitive Real Estate Commission" means that real estate or
brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size, type
and location of the Apartment Complex or other property.
"Completion Date" means the later of: (i) the date the Investment
Limited Partner shall have received copies of all requisite
certificates or permits permitting occupancy of 100% of the
apartments units in the Apartment Complex as issued by each
Agency having jurisdiction; provided, however, that if such
certificates or permits are of a temporary nature, the Completion
Date shall not be deemed to have occurred unless the General
Partner certifies to the Investment Limited Partner that any work
remaining to be completed is for so-called "punch list items" and
the General Partner knows of no reason why permanent certificates
of occupancy will not be issued upon completion of such "punch
list items"; or (ii) the date as of which the Inspecting
Consultant certifies that the work to be performed by the
Contractor under the Construction Contract is substantially
complete. Any representation by the General Partner under this
Agreement that the Completion Date has occurred shall be subject
to confirmation by the Special Limited Partner pursuant to a
physical inspection of the Apartment Complex; provided, however,
that in the event that the Special Limited Partner does not make
such physical inspection of the Apartment Complex within ten (10)
business days after having received a written representation of
the General Partner that the Completion Date has occurred, then
the Special Limited Partner will be deemed to have waived the
physical inspection requirement.
"Compliance Period" means the fifteen (15)-year period commencing
with the first year of the Credit Period.
"Consent of the Investment Limited Partner" means the prior
written consent or approval of the Investment Limited Partner
which, unless otherwise specifically provided herein, may be
given or withheld in its sole discretion. The Consent of the
Investment Limited Partner shall be exercised by and through the
Investment General Partner, acting in the name and on behalf of
the Investment Limited Partner.
"Consent of the Special Limited Partner" means the prior written
consent or approval of the Special Limited Partner which, unless
otherwise specifically provided herein, may be given or withheld
in its sole discretion.
"Construction Contract" means the construction contract dated as
of August 10, 1998, by and between the Contractor and the
Partnership, as amended.
"Construction Permitting Date" means the first date upon which
the Partnership shall have received the Requisite Approvals for
the commencement of the construction of the Apartment Complex in
accordance with the Plans and Specifications therefor.
"Contractor" means Unicorp, Inc., a Mississippi corporation, and
its successors.
"Contractor Pay-Off Letter" means a letter in form and substance
reasonably satisfactory to the Special Limited Partner delivered
by the Contractor to the Partnership which certifies that (i) all
amounts due to the Contractor from the Partnership have been
paid, (ii) the Partnership is not in default under the
Construction Contract and (iii) the Contractor has paid in full
each materialman and subcontractor who performed work on the
Apartment Complex.
"Controlling Person" has the meaning set forth in Section 15 of
the Securities Act of 1933, as amended.
"Cost Certification" means the date upon which each Limited
Partner shall have received the written certification of the
Auditors, in a form and in substance satisfactory to the Special
Limited Partner, as to the itemized amounts of the construction
and development costs of the Apartment Complex and the Actual
Credit pertaining to each building in the Apartment Complex.
"Credit Agency" means the Mississippi Home Corporation, and its
successors.
"Credit Approval" means the written determinations to be issued
pursuant to Sections 42(m)(1)(D) and 42(m)(2)(D) of the Code
approving low-income housing tax credits for the Project in an
amount of not less than $427,708.
"Credit Period" has the meaning set forth in Section 42(f)(1) of
the Code.
"Credit Recovery Loan" means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully
described in Section 5.1(g). Credit Recovery Loans and interest
thereon shall not be treated as loans or interest, respectively,
for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(i). For the purposes of Article X, the term
Credit Recovery Loan shall not include any portion of such a
deemed advance which shall have theretofore been paid to the
Investment Limited Partner.
"Credit Shortfall" shall have the meaning set forth in Section
5.1(g).
"Debt Service Coverage Ratio" means, for any period with each
month considered individually, a fraction, the numerator of which
is the Cash Available for Debt Service Requirements with respect
to such period and the denominator of which is the Debt Service
Requirements for such period. The achievement by the Partnership
of a specified Debt Service Coverage Ratio shall be confirmed by
the Auditors and shall be subject to the approval of the Special
Limited Partner, which shall not be unreasonably withheld,
provided, however, that no objection by the Special Limited
Partner to the determination of the Auditors shall be valid
unless the General Partner is notified of such objection, and the
specific reasons therefor, within seven (7) business days
following the receipt by the Special Limited Partner of the
Auditor's determination letter and in the event that the Special
Limited Partner does not so notify the General Partner within
such seven business day period, the Special Limited Partner will
be deemed to have waived its right to object to such
determination.
"Debt Service Requirements" means for any period, all debt
service, reserve, mortgage insurance premium, tax and insurance
escrows and/or other cash requirements imposed with respect to
the Mortgage or any other indebtedness (except for the
Subordinated Loans and Voluntary Loans) properly allocable to
such period of time on an annualized accrual basis as determined
by the Auditors.
"Deficit Restoration Obligation" means, for each Partner, the sum
of (i) any amounts which such Partner is obligated to restore to
the Partnership in accordance with the provisions of Sections
1.704-1(b)(2)(ii)(c), 1.704-1(b)(2)(ii)(h) or any other
applicable provisions of the Allocation Regulations, (ii) such
Partner's Share of Partnership Minimum Gain if any, and (iii)
such Partner's Share of Partner Nonrecourse Debt Minimum Gain, if
any.
"Developer" means BPLLC, in its capacity as an independent
developer and not as a General Partner, and its successors.
"Development Agreement" means the Development Agreement, dated as
of October 1, 1998, by and between the Developer and the
Partnership.
"Development Costs" means any and all costs and expenses
necessary to (i) cause the construction of the Apartment Complex
to be completed, in a good and workmanlike manner, free and clear
of all mechanics', materialmen's or similar liens, in accordance
with the Plans and Specifications, (ii) equip the Apartment
Complex with all necessary and appropriate fixtures, equipment
and articles of personal property (including, without limitation,
refrigerators and ranges), (iii) obtain all required certificates
of occupancy for the apartment units and other space in the
Apartment Complex, (iv) pay the Development Fee, (v) finance the
construction of the Apartment Complex and achieve the Completion
Date in accordance with the provisions of the Project Documents,
(vi) discharge all Partnership liabilities and obligations
arising out of any casualty generating insurance proceeds for the
Partnership, (vii) fund any Partnership reserves required
hereunder or under any of the Project Documents, and (viii) pay
any other costs or expenses necessary to achieve the Completion
Date and Rental Achievement.
"Development Fee" means the fees payable by the Partnership to
the Developer pursuant to the terms of the Development Agreement
for its services in connection with the development and
construction of the Apartment Complex.
"Disposition" (including the forms Dispose and Disposing) means,
as to a specified Partner, the assignment, sale, transfer,
exchange or other disposition of all or any part of its Interest.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section 42(d) of
the Code.
"Entity" means any Person, general partnership, limited
partnership, limited liability company, corporation, joint
venture, trust, business trust, cooperative or association.
"Escrow Agreement" means that certain Construction Disbursement
Agreement entered into by and among the Partnership, the Trustee
and the Investment Limited Partner, the terms of which will
govern the disbursement of the First and Second Installment.
"Estoppel Letter" means an estoppel letter in form and substance
reasonably satisfactory to the Special Limited Partner delivered
to the Partnership from each Lender which certifies as to each
Mortgage Loan (i) that there is no default ongoing pursuant to
the Mortgage Loan Documents, (ii) the amounts of interest and
principal paid on such Mortgage Loan to date and (ii) the
outstanding principal balance of such Mortgage Loan, as
applicable.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part of
his property, or ordering the winding-up or liquidation of his
affairs and the continuance of any such decree or order unstayed
and in effect for a period of sixty (60) consecutive days;
(ii) the commencement by such Person of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or the consent by him to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or similar official)
of such Person or for any substantial part of his property, or
the making by him of any assignment for the benefit of creditors,
or the taking of corporate action by the Person in furtherance of
any of the foregoing; or
(iii) the commencement against such Person of an involuntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, which has not been vacated, discharged or
bonded within sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in Section
5.1(h).
"Extended Use Agreement" means the extended use housing
commitment to be executed by the Partnership in accordance with
the requirements of the Credit Agency and the provisions of
Section 42(h)(6)(A) of the Code.
"50% Completion Date" means the date the Inspecting Consultant
(or if none, the Contractor and the General Partner) certifies
that fifty percent (50%) of the projected hard construction costs
for the completion of the Apartment Complex have been incurred by
the Partnership.
"Filing Office" means the Office of the Secretary of State of the
State of Mississippi.
"Fiscal Year" means the twelve (12)-month period which begins on
the first day of January and ends on the thirty-first day of
December of each calendar year (or ends on the date of final
dissolution for the year in which the Partnership is wound up or
dissolved).
"General Partner" means BPLLC and any Person who becomes a
General Partner as provided herein, in its capacity as a general
partner of the Partnership. At any and all times where there is
more than one General Partner, the term General Partner shall
mean such General Partners.
"Governmental Authority" means the Credit Agency or any other
federal, state or local governmental authority having
jurisdiction over the particular matter to which reference is
being made.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value
of such asset, as determined by the contributing Partner and the
Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as
determined by the General Partner, as of the following times:
(a) the acquisition of an additional interest in the Partnership
by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) the distribution by the
Partnership to a Partner of more than a de minimis amount of
Partnership property as consideration for an interest in the
Partnership; and (c) the liquidation of the Partnership within
the meaning of Section 1.704-1(b)(2)(ii)(g) of the Allocation
Regulations; provided, however, that the adjustments pursuant to
clauses (a) and (b) above shall be made only if the General
Partner reasonably determines that such adjustments are necessary
or appropriate to reflect the relative economic interests of the
Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair market value
of such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or
Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant
to Section 1.704-1(b)(2)(iv)(m) of the Allocation Regulations and
Section 4.1 hereof; provided, however, that Gross Asset Values
shall not be adjusted pursuant to this clause (iv) to the extent
that the General Partner determines that an adjustment pursuant
to clause (ii) hereof is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment
pursuant to this clause (iv).
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Section (i), (ii) or (iv) hereof, such Gross
Asset Value shall thereafter be adjusted by the depreciation
taken into account with respect to such asset for purposes of
computing Profits or Losses.
"Guarantor[s]" means, singly and collectively, each of J.H.
Thames, Jr. and Rodney F. Triplett, Jr. and both individuals
collectively, and their respective successors.
"Guaranty" means each of the Guarantys, dated as of October 1,
1998, of each of the Guarantors of all of the obligations of the
General Partner hereunder and of the Developer as set forth in
the Development Agreement, as amended.
"Hazardous Material" has the collective meanings given to the
terms "hazardous material", "hazardous substances", "hazardous
wastes", toxic substances" and analogous terms, in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the
term "radioactive materials" in the context of the Atomic Energy
Act, 28 U.S.C. Sec. 2344, and also includes any meanings given to
such terms in any similar state or local statutes, ordinances,
regulations or by-laws. The term Hazardous Material also
includes oil and any other substance known to be hazardous.
"Immediate Family" means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
children, children-in-law, grandchildren and grandchildren-in-
law.
"Includable Items" shall have the meaning set forth in Section
6.11.
"Indenture" means the Trust Indenture dated as of October 1,
1998, by and between the Issuer and the Trustee.
"Initial Adjustment Date" shall have the meaning set forth in
Section 5.1(e).
"Initial 100% Occupancy Date" means the first date on which not
less than 100% of the 208 apartment units in the Apartment
Complex shall have been leased to and physically occupied by
tenants on such date meeting the terms of the Minimum Set-Aside
Test under executed leases at rentals meeting the requirements
of the Rent Restriction Test.
"Initial Operating Period" means the period commencing upon Cost
Certification and ending on the fifth anniversary of the
Completion Date.
"Inspecting Consultant" means the consultant retained by any
Lender to monitor the progress of the construction of the
Apartment Complex and to certify as to the completion of such
construction.
"Installment" means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
"Insurance Requirements" means the insurance which the General
Partners are required to cause the Partnership to maintain during
the term of the Partnership as set forth on Exhibit D hereto.
"Interest" means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be
entitled hereunder and the obligation of such Partner to comply
with the terms of this Agreement.
"Invested Amount" means (i) as to the Investment Limited Partner,
an amount equal to the Capital Contribution of the Investment
Limited Partner divided by 0.73 and (ii) as to any other Partner,
an amount equal to its paid-in Capital Contribution.
"Investment General Partner" means Boston Capital Associates IV
L.P., a Delaware limited partnership, in its capacity as the
general partner of the Investment Limited Partner, and any other
Person who may become a successor or additional general partner
of the Investment Limited Partner.
"Investment Limited Partner" means BCTCF and any Person or
Persons who replace it as Substituted Limited Partner, but shall
not include any Additional Limited Partner.
"Investment Partnership Agreement" means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from
time to time.
"Issuer" means the Mississippi Regional Housing Authority No. II,
and its successors.
"Lender" means any Person (other than the General Partner or its
Affiliates) who makes a loan to the Partnership, whether or not
such loan is secured by a Mortgage, or the successors and
assigns of such Person in such capacity.
"Letter of Credit" means that certain irrevocable direct-pay
letter of credit to be delivered by AmSouth to the Trustee
pursuant to the terms of the Letter of Credit Agreement in a
principal amount of not less than $9,765,000.
"Letter of Credit Agreement" means that certain Credit Agreement,
dated October 1, 1998, by and between AmSouth and the
Partnership, as amended.
"Letter of Credit Commitment" means that certain commitment by
AmSouth to issue the Letter of Credit.
"Letter of Credit Documents" means the Letter of Credit
Commitment, the Letter of Credit, the Letter of Credit Agreement,
the Letter of Credit Mortgage, the Pledge Agreement, the
Assignment and Pledge of Equity Fund Account, the Assignment and
Pledge, the Security Agreement and any other document executed by
AmSouth, the Partnership and/or the Issuer in connection with the
delivery of the Letter of Credit.
"Letter of Credit Mortgage" means that certain Mortgage, Security
Agreement and Assignment of Rents and Leases executed and
delivered by the Partnership to AmSouth as set forth in the
Letter of Credit Agreement.
"Limited Partners" means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
"Liquidating Event" shall have the meaning set forth in Section
2.4.
"LURA" means the Land Use Restriction Agreement by and among the
Partnership, the Issuer and the Trustee dated as of October 1,
1998.
"Managing General Partner" means any Person designated as such
pursuant to the provisions of Section 6.4.
"Management Agent" means Park Management, Inc., a Mississippi
corporation in its capacity as the initial management and rental
agent for the Apartment Complex, and any successor management and
rental agent designated or appointed at any time.
"Management Agreement" means the agreement between the
Partnership and the Management Agent dated as of October 1, 1998
providing for the management of the Apartment Complex.
"Management Fee" means the Management Fee to which reference is
made in Section 11.1.
"Material Agreement" means any agreement to which the Partnership
is a party or to which the Apartment Complex is subject, the
termination of which would have a material adverse impact on the
Apartment Complex or the business and operations of the
Partnership.
"Material Event" means the occurrence of any of the following
events:
(i) a material breach by a General Partner (or any of its
Affiliates) in the performance of any of its obligations under
this Agreement, or any of the Material Agreements;
(ii) a Terminating Event as to any General Partner or an Event of
Bankruptcy as to the Partnership;
(iii) a material violation by any General Partner of its
fiduciary duties as a General Partner of the Partnership;
(iv) a violation by any General Partner of any law, regulation or
order applicable to the General Partner or the Partnership which
has or may have a material adverse effect on the Partnership or
the Apartment Complex;
(v) a material breach by the Partnership or any General Partner
(or any of their respective Affiliates) under any Project
Document or other material agreement or document affecting the
Partnership or the Apartment Complex;
(vi) the failure to achieve the Completion Date by December 31,
2000;
(vii) the failure to begin the Credit Period by January 1,
2001;
(viii) the commencement of foreclosure proceedings with
respect to any Mortgage, which have not been withdrawn or
dismissed within thirty (30) days after the date of such
commencement;
(ix) the failure of the General Partner to make any payment
required to be made to the Investment Limited Partner pursuant to
the provisions of Section 5.1(e) or (f); or
(x) the fraud, bad faith, gross negligence, or willful
misconduct by a General Partner.
"Minimum Set-Aside Test" means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at
least 40% of the units in the Apartment Complex must be occupied
by individuals with incomes equal to 60% or less of area median
income, as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the Partnership
evidenced by any Note and secured by any mortgage on the
Apartment Complex from the Partnership to any Lender and includes
the Letter of Credit Mortgage; and, where the context admits, the
term "Mortgage" shall mean and include any of the mortgages
securing said indebtedness and any other documents pertaining to
said indebtedness which were required by the Lender as a
condition to making such Mortgage Loan. In case any Mortgage is
replaced by any subsequent mortgage or mortgages, such term shall
refer to any such subsequent mortgage or mortgages. The term
"mortgage" means any mortgage, mortgage deed, deed of trust, deed
to secure debt or any similar security instrument, and
"foreclose" and words of like import include the exercise of a
power of sale under a mortgage or comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by any
Lender and secured by a Mortgage.
"Mortgage Loan Documents" means the Bond Loan Documents and/or
the New Permanent Loan Documents, as the context may require.
"New Allocation" shall have the meaning set forth in Section
10.5(b).
"New Permanent Loan Commitment" means the commitment for a New
Permanent Loan or a new Letter of Credit, as the case may be.
"New Permanent Loan" means any permanent loan provided by the
Permanent Lender to the Partnership on the New Permanent Loan
Conditions pursuant to the terms of the New Permanent Loan
Documents.
"New Permanent Loan Conditions" means, with respect to a proposed
New Permanent Loan, that (a) such Mortgage Loan (i) has a term
which expires after the end of the Compliance Period, (ii) bears
interest at a fixed annual rate and (iii) is nonrecourse, unless
otherwise approved by the Special Limited Partner, and (b) when
such New Permanent Loan is in place, the Debt Service Coverage
Ratio of the Partnership is projected to be not less than 1.15 to
1.00, where such Debt Service Coverage Ratio is based upon
projected operating expenses for the Apartment Complex reasonably
approved by the Special Limited Partner.
"New Permanent Loan Documents" means the New Permanent Note, the
New Permanent Mortgage and all other documents executed and/or
delivered in connection with the New Permanent Loan.
"New Permanent Mortgage" means the Mortgage securing the
Partnership's obligations under the New Permanent Note.
"New Permanent Note" means the Note to be executed by the
Partnership to evidence its obligations with respect to the New
Permanent Loan, which Note shall be secured by the New Permanent
Mortgage.
"Nonrecourse Debt" or "Nonrecourse Liability" means any
indebtedness for which none of the Partners has any Economic Risk
of Loss other than through his or its interest in the Partnership
Property securing such indebtedness, as defined in Section 1.752-
1(a)(2) of the Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to a
Lender evidencing a Mortgage Loan, and shall also mean and
include any Note supplemental to said original Note issued to a
Lender or any Note issued to a Lender in substitution for any
such original Note.
"Operating Deficit" means, for any specified period of time, the
amount by which the Cash Receipts of the Partnership are less
than the amount necessary to pay all Cash Expenditures of the
Partnership.
"Operating Deficit Guaranty Maximum" shall be determined for a
the first Fiscal Year following the Initial 100% Occupancy Date
as the sum of 12 consecutive months of Partnership Reserves
deposits plus 12 consecutive months of Cash Expenditures.
"Operating Profits or Losses" means, with respect to any Fiscal
Year, the Profits or Losses of the Partnership for such Fiscal
Year other than Profits or Losses from a Capital Transaction.
"Original Agreement" has the meaning set forth in the Preliminary
Statement.
"Original Limited Partner" has the meaning set forth in the
Preliminary Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth
in Sections 1.704-2(i)(2) and (3) of the Allocation Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued pursuant to
this Agreement.
"Partnership Items" shall have the meaning set forth in Section
10.4(b)(xvi).
"Partnership Management Fee" shall have the meaning set forth in
Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in Section
1.704-2(d) of the Allocation Regulations.
"Payment Certificate" shall have the meaning set forth in Section
5.1(b)
"Percentage Interests" means the interests of the Partners in
Profits and Losses, tax-exempt income, non-deductible, non-
capitalizable expenditures and Tax Credits, as set forth in
Schedule A.
"Permanent Lender" means any Lender providing permanent financing
for the Apartment Complex who has been approved by the Special
Limited Partner and the General Partner, except as otherwise
provided in Section 3.2.
"Permanent Mortgage Commencement" means the conversion of the
Bond Loan from the construction period to permanent financing or
the execution and delivery of the New Permanent Loan Documents.
"Person" means any individual or Entity.
"Plans and Specifications" means the plans and specifications for
the construction of the Apartment Complex, including, without
limitation, specifications for materials, and all properly
approved amendments and modifications thereof.
"Pledge Agreement" means that certain Pledge Agreement dated
October 1, 1998, by the Partnership and the Trustee.
"Prime Rate" means the rate of interest announced from time to
time by the Wall Street Journal as its base rate.
"Profits or Losses" shall have the meaning set forth in Section
10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan
Documents, this Agreement, the Development Agreement, the
Extended Use Agreement, the Guaranty, the Bond Documents, the
Management Agreement, the Escrow Agreement, all other instruments
delivered to (or required by) any Lender and all other documents
relating to the Apartment Complex and by which the Partnership is
bound, as amended or supplemented.
"Projected Credit" means $13,709 for 1999, $246,755 for 2000,
$427,708 per annum for each of the Fiscal Years 2001 through 2008
(inclusive), $413,999 for 2009, and $180,953 for 2010; provided,
however, that the Projected Credit for 2009 and 2010 shall be
reduced respectively by the amount, if any, by which the Actual
Credit for 1999 exceeds $13,709 or the amount by which the Actual
Credit for 2000 exceeds 246,755, respectively and provided
further, upon the occurrence of any of the events described in
Section 5.1(e), the Projected Credit shall thereafter be the
Revised Projected Credit.
"Projected Rents" means the rents described in Exhibit B attached
hereto and made a part hereof.
"Qualified Basis" has the meaning set forth in Section 42(c) of
the Code.
"Qualified Income Offset Item" means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is
expected to be made (a) pursuant to Section 704(e)(2) of the Code
to a donee of an interest in the Partnership, (b) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Treasury Regulation
Section 1.751-1(b)(2)(ii) as the result of a distribution by the
Partnership of unrealized receivables or inventory items and (2)
a distribution that, as of the end of such year, reasonably is
expected to be made to a Partner to the extent it exceeds
offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the
Partnership taxable year in which such distribution reasonably is
expected to occur.
"Recapture Amount" shall have the meaning set forth in Section
10.6.
"Recapture Event" shall have the meaning set forth in Section
10.6(a).
"Reconstitution Period" shall have the meaning set forth in
Section 7.2(b).
"Recourse Obligations" shall have the meaning set forth in
Section 10.4(b)(i).
"Reduction Amount" shall have the meaning set forth in Section
5.1(f).
"Reduction Year" shall have the meaning set forth in Section
5.1(f).
"Regulations" means the rules and regulations applicable to the
Apartment Complex or the Partnership of the Credit Agency, the
Issuer, the City of Southaven, Mississippi, Desoto County and any
other Governmental Authority having jurisdiction over the
Partnership and/or the Apartment Complex.
"Related Person" means a Person related to a Partner within the
meaning of Treasury Regulation Section 1.752-4(b).
"Remaining Interest" shall have the meaning set forth in Section
7.4(d).
"Rent Restriction Test" means the test pursuant to Section 42 of
the Code whereby the gross rent charged to tenants of the low-
income units in the Apartment Complex may not exceed thirty
percent (30%) of the qualifying income levels.
"Rental Achievement" means the first time following three (3)
consecutive full calendar months of operations, one prior to
Permanent Mortgage Commencement and two months thereafter (with
each month considered individually) that the Apartment Complex
generates a 1.15 to 1.00 Debt Service Coverage Ratio; provided,
however, that for the purposes of this Rental Achievement
definition only, Debt Service Requirements shall be deemed to
include full debt service payments of principal and interest in
respect of the Bond Loan regardless of whether such principal
payments are required to be paid for the month in question.
"Replacement Reserve" shall have the meaning set forth in Section
6.5(e).
"Repurchase Amount" shall have the meaning set forth in Section
5.2(a).
"Requisite Approvals" means any required approvals of each Lender
and Agency to an action proposed to be taken by the Partnership.
"Revised Projected Credit" has the meaning set forth in Section
5.1(e).
"Schedule A" means Schedule A to this Agreement, as amended from
time to time.
"Security Agreement" means that certain Security Agreement for
Interest in Partnership dated October 1, 1998 by and between the
Partnership and AmSouth.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means, for each
Partner an amount equal to his or its "share of partner
nonrecourse debt minimum gain" as determined in accordance with
Section 1.704-2(i)(5) of the Allocation Regulations.
"Share of Partnership Minimum Gain" means for each Partner, an
amount equal to his or its "share of partnership minimum gain" as
determined in accordance with Section 1.704-2(g) of the
Allocation Regulations.
"Site" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Sec. 9601 et seq., as amended, and shall also include
any meaning given to it in any similar state or local statutes,
ordinances, regulations or by-laws.
"Special Limited Partner" means BCTC 94, and any Person who
becomes a Special Limited Partner as provided herein, in its
capacity as a special limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage
Loans, (ii) the net rental income, if any, generated by the
Apartment Complex prior to the Completion Date which is permitted
by the Lenders to be applied to the payment of Development Costs,
(iii) the Capital Contributions of the Investment Limited
Partner, (iv) the Capital Contributions of the General Partner in
the amounts set forth in Schedule A as of the Admission Date, and
(v) any insurance proceeds arising out of casualties occurring
prior to the Completion Date.
"State" means the State of Mississippi.
"State Designation" means the date on which the Partnership
receives an allocation in proper form pursuant to Section 42 of
the Code from the Credit Agency of the Tax Credits, as evidenced
by the execution by or on behalf of the Credit Agency of one or
more Form(s) 8609. For the purposes of determining State
Designation, each building in the Apartment Complex shall be
treated as having received an allocation of Tax Credit in an
amount equal to the lesser of (i) the amount of Tax Credit
carryover allocation received from the Credit Agency as to such
building or (ii) the amount of Tax Credits set forth on the Form
8609 as to such building.
"Subordinated Loan" means any loan made by the General Partner to
the Partnership pursuant to Section 6.5(e), Section 6.10 or any
other provision of this Agreement which specifies advances to be
made as a Subordinated Loan.
"Subordinated Loan Period" shall have the meaning set forth in
Section 6.10.
"Substituted Limited Partner" means any Person who is admitted to
the Partnership as Limited Partner under Section 8.2 or acquires
the Interest of a Limited Partner pursuant to Section 5.2.
"Successor" shall have the meaning set forth in Section 7.5(a).
"Syndication Expenses" means all expenditures classified as
syndication expenses pursuant to Treasury Regulation Section
1.709-2(b). Syndication Expenses shall be taken into account
under this Agreement at the time they would be taken into account
under the Partnership's method of accounting if they were
deductible expenses.
"Tax Accountants" means Reznick, Fedder & Silverman of Bethesda,
Maryland or such other firms of independent certified public
accountants as may be engaged by the Special Limited Partner to
review the Partnership income tax returns.
"Tax Credit" means the low-income housing tax credit described in
Section 42 of the Code.
"Tax Credit Set-Aside" means the date on which the Partnership
receives the Credit Approval in a form reasonably satisfactory to
the Special Limited Partner from the Credit Agency and the
Housing Authority.
"Terminating Event" means the death or permanent disability of,
or a Final Determination of insanity or incompetence as to, an
individual General Partner (unless the Consent of the Special
Limited Partner to a substitute General Partner is received, and
such substitute General Partner is admitted to the Partnership by
the first to occur of (i) the sixtieth day following such event
or (ii) such earlier date as is necessary to prevent a
dissolution of the Partnership under the Act), the Bankruptcy or
dissolution of a General Partner, the transfer of all of its
Partnership Interest by a General Partner, or the voluntary or
involuntary withdrawal of the General Partner from the
Partnership. For purposes of the foregoing, an individual
General Partner shall be deemed to be permanently disabled if he
or she becomes disabled during the term of this Agreement through
any illness, injury, accident or condition of either a physical
or psychological nature and, as a result, is unable to perform
substantially all of his or her duties and responsibilities
hereunder for one hundred twenty (120) days during any period of
three hundred sixty-five (365) consecutive calendar days.
Involuntary withdrawal shall occur whenever a General Partner may
no longer continue as a General Partner by law or pursuant to any
terms of this Agreement. In the case of a General Partner which
is an Entity, a transfer of a majority of the voting stock (or
other beneficial interest) of the General Partner to a Person who
is not an Affiliate of the General Partner or any Entity
constituting the General Partner shall be deemed to be a transfer
by the General Partner of its Partnership Interest.
"Title Policy" means the owner's title insurance policy, or at
the option of the Special Limited Partner an endorsement thereto,
with an effective date on or after the Admission Date, in the
amount of not less than $13,222,463 (debt plus equity) issued to
the Partnership by a title insurance company acceptable to the
Special Limited Partner, evidencing the Partnership's ownership
of the Apartment Complex subject only to such exclusions,
exceptions, conditions and stipulations as may be approved by the
Special Limited Partner in its sole discretion and endorsed with
a zoning endorsement, non-imputation endorsement and a Fairway
endorsement.
"Trustee" means First Tennessee Bank National Association, a
national banking association.
"Vessel" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Sec. 9601 et seq., as amended, and shall also include
any meaning given to it in any similar state or local statutes,
ordinances, regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in Article IX.
"Withdrawal" (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or involuntary
withdrawal or retirement from the Partnership for any reason,
including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this
Agreement. Withdrawal also shall mean the sale, assignment,
transfer or encumbrance by a General Partner of its interest as a
General Partner other than a pledge of assignment by a General
Partner of its Interest required pursuant to the terms of the
Bond Loan Documents and as approved in writing by the Special
Limited Partner. A General Partner which is a corporation,
limited liability company or partnership shall be deemed to have
sold, assigned, transferred or encumbered its interest as a
General Partner in the event (as a result of one or more
transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to the
laws of descent and distribution) or encumbrance of a controlling
interest in a corporate or limited liability company General
Partner or of a general partner interest in a General Partner
which is a partnership to a Person who is not an Affiliate of the
General Partner. For purposes of this definition of Withdrawal,
the term "controlling interest" shall mean the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Southaven Partners I, L.P. The
Partners agree to continue the Partnership which was formed
pursuant to the provisions of the Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 2001 Airport
Road, Suite 304, P.O. Box 741, Jackson, MS 39205-0741, at which
office there shall be maintained those records required by the
Act to be kept by the Partnership. The Partnership may have such
other or additional offices as the General Partner shall deem
desirable. The General Partner may at any time change the
location of the principal office and shall give due notice
thereof to the Limited Partners, provided that doing so shall not
adversely affect the Investment Limited Partner for tax purposes.
(b) The resident agent for the Partnership in the State for
service of process is as follows:
J.H. Thames, Jr.
2001 Airport Road, Suite 304 ( zip code - 39208)
P.O. Box 741
Jackson, MS 39205-0741
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
secure financing for, construct, develop, improve, maintain,
operate, lease and otherwise deal with the Apartment Complex.
The Partnership shall operate the Apartment Complex in accordance
with any applicable Regulations. The Partnership shall not
engage in any other business or activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and effect
until December 31, 2046, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon the
first to occur of the following events ("Liquidating Events"):
(i) The sale or other disposition of all or substantially all of
the assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless the Partnership
is continued as provided in Section 7.2(a);
(iii) The election to dissolve the Partnership made in
writing by the General Partner with the Consent of the Investment
Limited Partner and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not reconstituted
pursuant to the provisions of Section 7.2 or Section 7.3.
(b) Upon the dissolution of the Partnership, the General Partner
(or for purposes of this paragraph, its trustees, receivers or
successors) shall cause the cancellation of the Certificate and
shall liquidate the Partnership assets and apply and distribute
the proceeds thereof in accordance with the provisions of Section
10.3, unless the Investment Limited Partner elects to
reconstitute the Partnership and continue its business as
provided in Section 7.2 or 7.3, in which case the Partnership
assets shall be transferred to the new Partnership as provided in
such Section. Notwithstanding the foregoing, if, during
liquidation, the General Partner shall determine that an
immediate sale of part or all of the Partnership's assets would
be impermissible, impractical or cause undue loss to the
Partners, the General Partner may defer liquidation of, and
withhold from distribution for a reasonable time, any assets of
the Partnership except those necessary to satisfy Partnership
debts and obligations (other than Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The Partnership shall be authorized to obtain the Bond Loan and
the Letter of Credit pursuant to the Bond Loan Documents and the
Letter of Credit Documents, as applicable, to finance the
acquisition, development and construction of the Apartment
Complex. The General Partner and its Affiliates, jointly and
severally, are hereby authorized to incur personal liability for
the repayment of funds advanced by the Issuer and AmSouth (and
interest thereon) pursuant to the Bond Loan Documents and the
Letter of Credit Documents. However, unless otherwise approved
by the Special Limited Partner, neither the General Partner nor
any Related Person shall at any time bear, nor shall the General
Partner permit any other Partner or any Related Person to bear,
the Economic Risk of Loss for the payment of any portion of any
Mortgage Loan unless, prior to the effectiveness of the
transaction in which such Economic Risk of Loss is created or
assumed, the General Partner shall have obtained, at the expense
of the Partnership, an opinion from reputable tax counsel, in
form and substance reasonably satisfactory to the Special Limited
Partner, to the effect that such Economic Risk of Loss will not
result in the reallocation of Tax Credits or Losses from the
Investment Limited Partner and the Special Limited Partner to the
General Partner.
3.2 Refinancings
The Partnership may decrease, increase or refinance any Mortgage
Loan and may make any required transfer or conveyance of
Partnership assets for security or mortgage purposes, provided,
however, any such decrease, increase or refinancing of any
Mortgage Loan (except for the borrowing of the New Permanent Loan
on the New Permanent Loan Conditions and the borrowing of the
original principal amount of the Bond Loan and the Letter of
Credit) may be made by the General Partner only with the Consent
of the Special Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise transfer
or convey all or substantially all the assets of the Partnership
only with the Consent of the Special Limited Partner.
Notwithstanding the foregoing and except as set forth in Section
6.2(a)(vi), no Consent of the Special Limited Partner shall be
required for the execution and delivery of the Bond Loan
Documents and the Letter of Credit Documents, the leasing of
apartments to tenants in the normal course of operations or the
leasing of all or substantially all the apartments to a public
housing authority at rents satisfactory to any Agency or Lender
as expressed in writing, provided (subject to the Rent
Restriction Test) that such rents are not less than the Projected
Rents.
3.4 Real Estate Commissions
The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real Estate
Commission, which shall not exceed ten percent (10%) of the
contract price for the sale of the Apartment Complex or such fee
as is reasonable and customary in Southaven, Mississippi.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the aggregate amount
of the cash and the Gross Asset Value of property contributed by
the General Partner and by the Limited Partners as set forth in
Schedule A. No interest shall be paid by the Partnership on any
Capital Contribution to the Partnership. Schedule A shall be
amended from time to time to reflect the withdrawal or admission
of Partners, any changes in the Partnership Interests held by a
Partner arising from the transfer of an Interest to or by such
Partner and any change in the amounts to be contributed or agreed
to be contributed by any Partner. No Partner shall have the
right to withdraw or receive a return of any of its Capital
Contributions except as set forth in this Agreement.
(b) An individual Capital Account shall be established and
maintained for each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in
the Partnership. The Capital Account of each Partner shall be
maintained in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited
such Partner's Capital Contributions, such Partner's distributive
share of Profits, and any items in the nature of income or gain
that are specially allocated pursuant to Section 10.4 hereof, and
the amount of any Partnership liabilities that are assumed by
such Partner or that are secured by any Partnership Property
distributed to such Partner;
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Partnership
Property distributed to such Partner pursuant to any provision of
this Agreement, such Partner's distributive share of Losses, and
any items in the nature of expenses or losses that are specially
allocated pursuant to Section 10.4 hereof, and the amount of any
liabilities of such Partner that are assumed by the Partnership
or that are secured by any property contributed by such Partner
to the Partnership.
In the event that the Gross Asset Values of Partnership assets
are adjusted pursuant to this Agreement, the Capital Accounts of
all Partners shall be adjusted simultaneously to reflect the
aggregate net adjustment as if the Partnership recognized gain or
loss equal to the amount of such aggregate net adjustment.
(c) The original Capital Account established for any Assignee
(as hereinafter defined) shall be in the same amount as, and
shall replace, the adjusted Capital Account of the Partner which
such Assignee succeeds, and, for the purpose of the Agreement,
such Assignee shall be deemed to have made the Capital
Contribution, to the extent actually paid in, of the Partner
which such Assignee succeeds. The term "Assignee," as used in
this paragraph, shall mean a Person who shall become entitled to
receive a share of the Profits, Losses, Tax Credits and
distributions of the Partnership by reason of such Person
succeeding to the Interest of a Partner by assignment of all or
any part of an Interest. To the extent an Assignee receives less
than 100% of the Interest of a Partner, such Assignee's Capital
Account and Capital Contribution shall be in proportion to the
Partnership Interest such Assignee receives, and the Capital
Account and Capital Contribution of the Partner who retains a
partial interest in the Partnership shall continue, and not be
replaced, in proportion to the Partnership Interest such Partner
retains.
(d) The foregoing provisions and other provisions of this
Agreement relating to the maintenance of the Capital Accounts are
intended to comply with the Allocation Regulations, and shall be
interpreted and applied in a manner consistent with such
Allocation Regulations.
4.2 General Partner
The name, address and Capital Contribution of the General Partner
are as set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and Original
Limited Partner
(a) The Original Limited Partner hereby withdraws as a limited
partner of the Partnership and acknowledges that she no longer
has any Interest in, or rights or claims against, the Partnership
as a Partner as of the Admission Date.
(b) Each of the Special Limited Partner and the Investment
Limited Partner is hereby admitted to the Partnership as a
Limited Partner in substitution for the Original Limited Partner
as of the Admission Date and agrees to be bound by the terms and
provisions of the Project Documents and this Agreement. The name
and address of the Investment Limited Partner and the Special
Limited Partner are as set forth on Schedule A.
(c) Except as otherwise specifically set forth in Sections 4.5
or 7.4, the General Partner shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partner.
4.4 Liability of the Limited Partners
Neither the Investment Limited Partner, the Special Limited
Partner nor any Person who becomes an Additional Limited Partner
shall be liable for any debts, liabilities, contracts or
obligations of the Partnership; such Persons shall be liable only
to pay their respective Capital Contributions as and when the
same are due hereunder and under the Act. After its Capital
Contribution shall be fully paid, no Limited Partner shall,
except as otherwise required by the Act, be required to make any
further capital contributions or payments or lend any funds to
the Partnership.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other than
Section 13.8), to the extent the law of the State is not
inconsistent, the Special Limited Partner shall have the right,
subject to any Requisite Approvals, to:
(i) amend this Agreement provided, however, that no such
amendment affect the vested rights (including, without
limitation, the right to receive any fees, allocable share of
Cash Flow or other distributions, or Profits or Losses and Tax
Credits hereunder) or increase any of the liabilities or
obligations of any General Partner without its prior written
consent;
(ii) dissolve the Partnership provided, however, that such
dissolution shall not be caused by the Special Limited Partner
unless the General Partner has violated a material provision of
any Project Document, which violation has not been cured within
any applicable cure period specified;
(iii) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of such
General Partner's obligations constituting fraud, bad faith,
gross negligence, wilful misconduct or breach of fiduciary duty,
or (B) upon the occurrence of a Material Event.
(iv) continue the business of the Partnership with a substitute
General Partner, provided that the General Partner has been
removed pursuant to Section 4.5(a)(iii) above; and
(v) approve or disapprove the sale of all or substantially all
of the assets of the Partnership.
(b) Upon the removal of a General Partner for cause pursuant to
Section 4.5(a)(iii),
(i) without any further action by any Partner, the Special
Limited Partner shall cause an Affiliate automatically to become
a General Partner (the "Substitute General Partner") and acquire
in consideration of a cash payment of $100 such portion of the
Interest of the removed General Partner as counsel to the Special
Limited Partner shall determine is the minimum appropriate
interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the Act,
(ii) the economic Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new
status of the Special Limited Partner as a Substitute General
Partner,
(iii) the Substitute General Partner shall automatically be
irrevocably delegated all of the powers and duties of the General
Partners pursuant to Section 6.13. A General Partner so removed
will not be liable as a general partner for any obligations of
the Partnership incurred after the effective date of its removal.
Each General Partner hereby grants to the Special Limited Partner
an irrevocable (to the extent permitted by applicable law) power
of attorney coupled with an interest to execute and deliver any
and all documents and instruments on behalf of such General
Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effect the
provisions of this Section 4.5 and to enable the new General
Partner to manage the business of the Partnership, and
(iv) The Substitute General Partner or any Affiliate approved by
such Substitute General Partner shall have the option,
exercisable in its sole discretion, to acquire the remainder of
the Interest of any removed General Partner upon payment of the
agreed or then present fair market value of such interest or
portion thereof. Any dispute as to the value of the Interest or
portion thereof to be acquired pursuant to the immediately
preceding sentence shall be submitted to a committee composed of
three qualified real estate appraisers, one chosen by the removed
General Partner, one chosen by the Substitute General Partner or
the Investment Limited Partner, as the case may be, and the third
chosen by the two so chosen. The proceedings of such committee
shall conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall be
final and binding. The expense of arbitration shall be born
equally by the removed General Partner and the Partnership. The
method of payment to the removed General Partner shall be fair
and must protect the solvency and liquidity of the Partnership.
The method of payment will be deemed presumptively fair where it
provides for an interest-bearing promissory note coming due in no
less than five (5) years with equal installments each year. In
addition, upon removal, the Partnership must promptly pay to the
removed General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that notwithstanding
the language of Section 6.12, Article X, Article XI and any other
provision hereof, no removed General Partner or any Affiliate
thereof shall be entitled to receive any fee, compensation or
other remuneration from the Partnership, other than (x) the
above-described payment for the Interest, or portion thereof, of
the removed General Partner, and (y) any such fee, compensation
or other remuneration which had already been earned in full prior
the date of such removal. The Partnership is not authorized to
enter into any arrangement whereby any fee, compensation or other
remuneration could be payable directly or indirectly to any
General Partner or Affiliate thereof in a manner inconsistent
with the immediately preceding sentence unless the prior written
consent of the Special Limited Partner shall have been obtained
to such particular agreement. The Partnership may offset against
any payments to a General Partner removed under this Section 4.5
any damages suffered by the Partnership as a result of any breach
of the obligations of such General Partner hereunder.
(c) The General Partner is hereby required, within fifteen (15)
days after its receipt of any offer to purchase the Apartment
Complex or all of the Interests in the Partnership, to send a
copy of such offer (or a written description of any such oral
offer) to each of the Limited Partners. In connection with any
proposed sale of the Apartment Complex, the Special Limited
Partner (or its designee) shall have the right to (i) receive and
review copies of all documents relating to the proposed sale,
(ii) participate in the negotiations of the terms and conditions
of the proposed sale, (iii) meet with the proposed purchaser,
(iv) solicit proposals for alternative offers for the Apartment
Complex, and (v) provide such other services in connection with
the proposed sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten
percent (10%) of the then outstanding Limited Partner Interests
may call meetings of the Partnership for any matters for which
the Limited Partners may vote as set forth in this Agreement. A
list of the names and addresses of all Limited Partners shall be
maintained as part of the books and records of the Partnership
and shall be made available upon request to any Limited Partner
or his representative at his cost. Upon receipt of a written
request either in person or by certified mail stating the
purpose(s) of the meeting, the General Partner shall provide all
Limited Partners within ten (10) days after receipt of said
request, written notice of a meeting and the purpose of such
meeting to be held on a date not less than fifteen (15) nor more
than sixty (60) days after receipt of said request, at a time and
place convenient to the Limited Partners.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10
shall be paid in full in cash on the Admission Date. The
Investment Limited Partner's Capital Contribution in the
aggregate amount of $3,165,041 shall be paid in cash installments
(the "Installments"), as follows:
(i) $1,899,024 (the "First Installment") on the latest to occur
of (A) the Admission Date, (B) the Bond Loan Full Funding Date,
and (C) Tax Credit Set-Aside;
(ii) $633,009 (the "Second Installment") on the 50% Completion
Date;
(iii) $316,504 (the "Third Installment"), on the latest to
occur of (A) the Completion Date, (B) Cost Certification, (C)
receipt by the Special Limited Partner of an updated Title Policy
in form and substance satisfactory to the Special Limited
Partner, which policy in no event shall contain a survey
exception (D) receipt by the Special Limited Partner of current
liability insurance certificates conforming to the requirements
of the Partnership Agreement, (E) receipt by the Special Limited
Partner of an Estoppel Letter from each Lender or (F) receipt by
the Special Limited Partner of the Contractor Pay-Off Letter;
(iv) $316,504 (the "Fourth Installment") on the latest to occur
of (A) the Initial 100% Occupancy Date, (ii) the closing and
funding of the New Permanent Loan, if applicable, or (iii) Rental
Achievement;
provided, however, that (x) the General Partner shall give the
Investment Limited Partner not less than fourteen (14) days'
written notice prior to the due date of each Installment
subsequent to the First Installment, and (y) no Installment shall
be due unless and until all conditions to the payment of all
prior Installments have been satisfied.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the General Partner
to the Investment Limited Partner of a written certificate (the
"Payment Certificate") stating that as of the date of such
certificate (i) all the conditions to the payment of such
Installment and each prior Installment have been satisfied, (ii)
all representations and warranties of the General Partner
contained in this Agreement are true and correct and (iii) no
event has occurred which suspends or terminates the obligations
of the Investment Limited Partner to pay Installments under this
Agreement which has not been cured as herein provided, (iv) no
event has occurred which, with the giving of notice, would oblige
the General Partner to repurchase the Interests of the Investment
Limited Partner pursuant to Section 5.2(a). Except as provided
in the final sentence of this Section 5.1(b), acceptance by the
Partnership of any Installment shall constitute a confirmation
that, as of the date of payment, all such conditions are
satisfied and all such representations and warranties are true
and correct. The obligation of the Investment Limited Partner to
pay the First Installment is also conditioned upon delivery by
the General Partner to the Investment Limited Partner of (x) a
legal opinion of independent counsel to the Partnership, the
General Partner, the Developer and the Guarantors, which
opinion(s) must be satisfactory to the Investment Limited Partner
as to form, content and identity of counsel and (y) a photocopy
of a binding commitment, in form and substance satisfactory to
the Special Limited Partner, to issue the Title Policy and
endorsements thereto in form and substance satisfactory to the
Special Limited Partner. In no event shall any Installment
become due until all of the conditions for all of the
Installments listed prior to the Installment in question in
Section 5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an
Installment becomes due and payable, the Partnership has an
Operating Deficit which the General Partner would be required to
fund pursuant to Section 6.10, then the Investment Limited
Partner may, at its option, waive the requirement of the delivery
of the Payment Certificate or any other condition with respect to
part or all of such Installment and pay such part or all of such
Installment, provided that the proceeds of the amount so paid are
used by the Partnership to fully fund such Operating Deficit;
provided, however, that if the proceeds of such amount so paid
are designated in Section 6.12 to be used to pay fee(s), then
such proceeds shall be utilized to pay such fee(s) and the
recipient(s) thereof shall be required to, and hereby agree to,
utilize the proceeds of such fee(s) to fund such Operating
Deficit, in which case the Investment Limited Partner is hereby
authorized to directly fund such Operating Deficit, with the
funds so applied being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be dated
and delivered not less than ten (10) nor more than thirty (30)
days prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise be
due, any statement required to be made in the Payment Certificate
for such Installment cannot be truthfully made in any material
respect, the General Partner shall notify the Investment Limited
Partner of the reason why such statement would be untrue if made,
and the Investment Limited Partner shall not be required to pay
such Installment; provided, however, that if (i) any such
statement can subsequently be truthfully made and (ii) the
Investment Limited Partner shall not have irrevocably lost, in
the good faith judgment of the Investment General Partner, any
material tax or other benefits hereunder (other than tax benefits
for which the Investment Limited Partner has been fully
compensated pursuant to the provisions of paragraphs (e), (f) and
(g) of this Section 5.1), then the Investment Limited Partner
shall pay such Installment to the Partnership thirty (30) days
after delivery by the General Partner to the Investment Limited
Partner of the Payment Certificate together with an explanation
of the manner in which each such statement had become true.
(e) In the event that as of or any time prior to Cost
Certification (the "Initial Adjustment Date"), the Investment
Limited Partner shall receive a written certification of the
Auditors indicating that the aggregate Actual Credit during the
Credit Period will be less than the aggregate Projected Credit
during the Credit Period, then (i) the next succeeding
Installments of the Capital Contributions of the Investment
Limited Partner shall be reduced by an amount equal to the
product of (X) the difference between (1) the aggregate Projected
Credit during the Credit Period and (2) the aggregate Actual
Credit during the Credit Period and (Y) 0.80, and (ii) the
Projected Credit for each Fiscal Year shall thereafter be
redefined to mean the Actual Credit, as so determined (the
"Revised Projected Credit"). Any such reduction pursuant to this
Section 5.1(e) shall be made first to the Installment, if any,
next due to be paid by the Investment Limited Partner, and any
balance of such amount payable by the General Partner in excess
of the amount of such Installment shall be applied to succeeding
Installments, if any, provided that if the amount of any such
reductions exceeds the sum of the remaining Installments, if any,
then an amount equal to the amount of such excess shall be paid
by the General Partner to the Investment Limited Partner promptly
after demand is made therefor, as a payment of damages for breach
of warranty, regardless of the reason for the occurrence of such
event (unless such reduction was caused by an act or omission of
the Investment Limited Partner or its Affiliates, in which event
no such reduction or payment shall be required). No reduction of
any Installment or any payment by the General Partner pursuant to
this Section 5.1(e) shall be deemed to be a Capital Contribution
by the General Partner to the Partnership, nor shall any such
payment constitute a return of capital to the Investment Limited
Partner.
(f) If with respect to any Fiscal Year all or a portion of which
occurs during the Initial Operating Period, the Actual Credit is
or was less than the Projected Credit (or the Revised Projected
Credit, if applicable) for such Fiscal Year (a "Reduction Year"),
then the General Partner shall pay to the Investment Limited
Partner the Reduction Amount. The Reduction Amount shall be equal
to the sum of (A) the excess of the Projected Credit (or the
Revised Projected Credit, if applicable) for such Fiscal Year
over the Actual Credit for such Fiscal Year multiplied by 0.80
plus (B) the Recapture Amount as determined pursuant to Section
10.6 and, to the extent not already accounted for, any interest
or penalties payable by the limited partners and/or holders of
beneficial assignee certificates of the Investment Limited
Partner as a result of such shortfall or Recapture Event,
assuming that each limited partner and/or holder of a beneficial
assignee certificate in the Investment Limited Partner used all
of the Tax Credits allocated to it in the Fiscal Year of
allocation. The Auditors shall make their determination of the
amount of the Actual Credit with respect to each Reduction Year
within thirty (30) days following the end of such Fiscal Year.
The Investment Limited Partner shall be eligible to be paid a
Reduction Amount as hereinabove described with respect to each
Reduction Year. Any Reduction Amount shall first be applied to
the Installment next due to be paid by the Investment Limited
Partner, with any portion of such Reduction Amount in excess of
the amount of such Installment then being applied to succeeding
Installments, provided that if no further Installments remain to
be paid or if the Reduction Amount shall exceed the sum of the
amounts of the remaining Installments, then the entire Reduction
Amount or the balance of the Reduction Amount, as the case may
be, shall be paid by the General Partner to the Investment
Limited Partner promptly after demand is made therefor, as a
payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event (unless such reduction
was caused by an act or omission of the Investment Limited
Partner or its Affiliates, in which event no Reduction Amount
shall be payable). No payment by the General Partner pursuant to
this Section 5.1(f) shall be deemed to be a Capital Contribution
to the Partnership nor shall any such payment constitute a return
of capital to the Investment Limited Partner.
(g) In the event that, for any reason, at any time after the end
of the Initial Operating Period, the amount of the Actual Credit
shall be less than the Projected Credit (or the Revised Projected
Credit, if applicable) with respect to any Fiscal Year of the
Partnership (such difference being hereinafter referred to as a
"Credit Shortfall"), the Investment Limited Partner shall be
treated as having made a constructive advance to the Partnership
with respect to such Fiscal Year (a "Credit Recovery Loan"),
which shall be deemed to have been made on February 1 of such
Fiscal Year in an amount equal to the sum of (A) the Credit
Shortfall for such Fiscal Year plus (B) the Recapture Amount as
determined pursuant to Section 10.6 and, to the extent not
already accounted for, any interest or penalties payable by the
limited partners and/or the holders of beneficial assignee
certificates of the Investment Limited Partner as a result of the
Credit Shortfall for such Fiscal Year, assuming that each limited
partner and/or holder of a beneficial assignee certificate in the
Investment Partnership used all of the Tax Credits allocated to
him in the Fiscal Year of allocation. Credit Recovery Loans
shall be deemed to bear simple (not compounded) interest from the
respective dates on which such principal advances shall have been
deemed to have been made under this Section 5.1(g) at a rate of
nine percent (9%) per annum. Credit Recovery Loans shall be
payable by the Partnership as provided in Section 10.2(b), Clause
Third.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit Benchmarks
and Standards. Upon the occurrence of any of the events (a
"Repurchase Event") listed below in this Section 5.2(a), within
five (5) days of the occurrence thereof, the General Partner
shall send to the Investment Limited Partner and the Investment
Limited Partner notice of such event and of the General Partner's
obligation to repurchase the Interests of the Investment Limited
Partner by paying to the Investment Limited Partner an amount in
cash (the "Repurchase Amount") equal to each such Partner's
Invested Amount minus the portion, if any, of such Partner's
Capital Contribution which shall not yet have been paid (or
deemed to have been paid) to the Partnership plus the amount of
any third-party costs, including, without limitation, attorney's
fees incurred by or on behalf of such Partner in implementing
this Section 5.2(a) in the event the Investment Limited Partner
requires such a repurchase plus interest thereon at the AFR
commencing on the fifth (5th) day after delivery of the notice
referred to in the next sentence. If the Investment Limited
Partner elects to require a repurchase of its Interest and the
payment to it of an amount equal to its Repurchase Amount, it
shall send notice thereof to the Partnership within sixty (60)
days after the mailing date of the General Partner's notice, or
at any time after the occurrence of any of the foregoing if the
General Partner shall not have sent a notice thereof, and the
General Partner shall within thirty (30) days after the
Partnership receives any such notice from a Partner requesting
the purchase of its Interest repurchase the Interest of such
Partner by paying to such Partner an amount equal to its
Repurchase Amount. If, following receipt of the General
Partner's notice, the Investment Limited Partner fails to send
notice to the General Partner by the end of such 30-day period
requesting the General Partner to purchase its Interest, the
Investment Limited Partner, as the case may be, shall be deemed
to have waived its right to cause the General Partner to purchase
its Interest as a result of the event described in the General
Partner's notice. No such waiver, however, shall affect the
right of the Investment Limited Partner to cause the General
Partner to purchase its Interest upon the occurrence of any other
event described in this Section 5.2(a), or upon any subsequent
occurrence of the event described in the General Partner's
notice. The Repurchase Events are as follows:
(i) each of the buildings in the Apartment Complex shall not
have been placed in service by December 31, 2000; or
(ii) by October 31, 2000, the Completion Date shall not have
occurred; or
(iii) construction or operation of the Apartment Complex
shall have been enjoined by a final order (from which no further
appeals are possible) of a court having jurisdiction and such
injunction shall continue for a period of ninety (90) days; or
(iv) State Designation shall not have occurred by February 1,
2001 (or any later date fixed by the General Partner with the
Consent of the Investment Limited Partner) and by said date the
General Partner shall not have made any payment as described in
the next to last sentence of Section 5.1(e) or, if the Investment
Limited Partner shall have elected to have all or a portion of
any payment under Section 5.1(e) applied toward future
Installment obligations of the Investment Limited Partner,
amendments to this Agreement shall not have been adopted and
filed in the Filing Office, reflecting such event; or
(v) if by the date which is twelve (12) months following the
Completion Date, Rental Achievement shall not have been achieved;
or
(vi) the Partnership shall fail to meet the Minimum Set-Aside
Test or the Rent Restriction Test by the close of the first year
of the Credit Period and/or fails to continue to meet either of
such tests at any time during the sixty (60)-month period
commencing on such date; or
(vii) (A) foreclosure proceedings shall have commenced under
any Mortgage and such proceedings shall not have been dismissed
within thirty (30) days, (B) any of the commitments of a Lender
to provide a Mortgage Loan and/or any subsidy financing shall be
terminated or withdrawn and not reinstated or replaced within
sixty (60) days with terms at least as favorable to the
Partnership or terms for which the Consent of the Investment
Limited Partner and any Requisite Approvals shall have been
obtained, or (C) the Issuer, acting in good faith and in
accordance with the provisions of the Bond Loan Documents, shall
have irrevocably refused to make any further advances under the
Bond Loan Documents and such decision shall not have been
reversed or the Issuer replaced within thirty (30) days; or
(viii) at any time the General Partner fails to advance
Subordinated Loans and such failure continues for ten (10) days;
or
(ix) any action is commenced to foreclose any mechanics, or any
other lien (other than the lien of a Mortgage) against the
Apartment Complex and such action has not within thirty (30) days
been either bonded against in such a manner as to preclude the
holder of such lien from having any recourse to the Apartment
Complex or to the Partnership for payment of any debt secured
thereby, or affirmatively insured against by the title insurance
policy or an endorsement thereto issued to the Partnership by a
reputable title insurance company (which insurance company will
not have indemnity from or recourse against Partnership assets by
reason of any loss it may suffer by reason of such insurance) in
an amount satisfactory to the Investment Limited Partner; or
(x) a casualty occurs resulting in substantial destruction of
all or a portion of the Apartment Complex, and the insurance
proceeds (if any) are insufficient to restore the Apartment
Complex or the Apartment Complex is not so restored within
twenty-four (24) months following such casualty.
(b) Lender/Agency Disapproval. If any Agency or Lender shall
disapprove, or fail to give any required approval of, the
Investment Limited Partner and/or the Special Limited Partner as
a Limited Partner hereunder within one hundred eighty (180) days
of the Admission Date, then the Partner being disapproved or not
approved shall, effective as of such time or such later time as
may be elected by the Partner being disapproved or not approved
as may be specified by such Agency or Lender in its disapproval,
at the option of the Partner being disapproved or not approved
(if not directed by such Agency or Lender to withdraw), cease to
be a Limited Partner. The General Partner shall, within ten (10)
days of the effective date of such cessation, pay to the Partner
being disapproved or not approved an amount equal to its Invested
Amount minus the amount, if any, of such Partner's Capital
Contribution which shall not yet have been paid (or deemed to
have been paid) to the Partnership plus the amount of any third
party costs, including, but not limited to attorney's fees,
incurred by or on behalf of such Partner in implementing this
Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner of
the amount due to it pursuant to either Section 5.2(a) or Section
5.2(b), the Interest of such Partner shall terminate, and the
General Partner shall indemnify and hold harmless such Partner
from and against any Adverse Consequences to which such Partner
(as a result of its participation hereunder) may be subject,
provided that such Adverse Consequences do not result from such
Partner's acts or omissions.
(d) Waiver of Repurchase Right. Each of the Investment Limited
Partner and the Special Limited Partner shall have the right to
irrevocably waive its right to have its Interest repurchased
pursuant to any clause or clauses of Section 5.2(a), or any
portion thereof, at any time during which any of such rights
shall be in effect. Such a waiver shall be exercised by delivery
to the General Partner of a written notice stating that the
rights being waived pursuant to any specified clause or clauses
of Section 5.2(a), or any specified portion thereof, are thereby
waived for a specified period of time.
(e) Additional General Partner. If the General Partner shall
fail to make on the due date therefor any payment required under
Section 5.2(a) or Section 5.2(b), time being of the essence, at
any time thereafter the Special Limited Partner shall have the
option, exercisable in its sole discretion, to cause itself or
its designee to be admitted as an additional General Partner,
receiving from the existing General Partner, in consideration of
the payment of ten dollars ($10.00), a one one-hundredth of one
per cent (0.01%) interest in the Profits, Losses, Tax Credits and
distributions of the Partnership, with the Special Limited
Partner retaining its status as such and its economic interest in
the Partnership as the Special Limited Partner (or its designee
as an additional General Partner). If the Special Limited
Partner exercises the option described in this Section 5.2(e),
each of the other General Partner hereby agrees that all of its
rights and powers hereunder as a General Partner shall
automatically be irrevocably delegated to the Special Limited
Partner pursuant to Section 6.13 without the necessity of any
further action by any Partner. Each Partner hereby grants to the
Special Limited Partner an irrevocable (to the extent permitted
by applicable law) power of attorney coupled with an interest to
take any action and to execute, deliver and file or record any
and all documents and instruments on behalf of such Partner and
the Partnership as the Special Limited Partner may deem necessary
or appropriate in order to effectuate the provisions of this
Section 5.2(e) and to allow the additional General Partner to
manage the business of the Partnership. The admission of the
Special Limited Partner or its designee as an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional General
Partner on an after-tax basis from and against any and all
Adverse Consequences sustained by such additional General Partner
in connection with its status as a General Partner (other than
Adverse Consequences arising solely from the gross negligence or
willful misconduct of such additional General Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3, Section
6.15 and all other provisions of this Agreement, the General
Partner for, in the name and on behalf of the Partnership, is
hereby authorized, in furtherance of the purposes of the
Partnership:
(i) to acquire by purchase, lease, exchange or otherwise any
real or personal property;
(ii) to construct, rehabilitate, operate, maintain, finance and
improve, and to own, sell, convey, assign, mortgage or lease any
real estate and any personal property;
(iii) to borrow money and issue evidences of indebtedness and
to secure the same by mortgage, pledge or other lien on the
Apartment Complex or any other assets of the Partnership;
(iv) to execute the Mortgage Loan Documents and the other Project
Documents and all such other documents as the General Partner
deems to be necessary or appropriate in connection with the
acquisition, development, construction and financing of the
Apartment Complex;
(v) subject to Section 3.2, to prepay in whole or in part,
refinance or modify any Mortgage Loan or other financing
affecting the Apartment Complex;
(vi) to employ the Management Agent (which may be an Affiliate of
the General Partner) and, subject to the provisions of Article
XI, to pay reasonable compensation for its services;
(vii) to employ its Affiliates to perform services for, or
sell goods to, the Partnership provided that (except with respect
to any contract specifically authorized by this Agreement) the
terms of any such transaction with an Affiliate shall not be less
favorable to the Partnership than would be arrived at by
unaffiliated parties dealing at arms' length;
(viii) to execute contracts with any Agency, the State or any
subdivision or agency thereof or any other Governmental Authority
to make apartments or tenants in the Apartment Complex eligible
for any public-subsidy program;
(ix) to execute leases of some or all of the apartment units of
the Apartment Complex to individuals and/or to a public housing
authority and/or to a non-profit corporation, cooperative or
other non-profit Entity;
(x) to employ or engage such engineers, architects, technicians,
accountants, attorneys and other Persons, as may be necessary,
convenient or incidental to the accomplishment of the purposes of
the Partnership; and
(xi) to enter into any kind of activity and to perform and carry
out contracts of any kind which may be lawfully carried on or
performed by a partnership and to file all certificates and
document which may be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partner shall have no authority to perform any act in
violation of the Act, any other applicable law, Agency or other
government regulations, the requirements of any Lender, or the
Project Documents. In the event of any conflict between the
terms of this Agreement and any applicable Regulations or
requirements of any Lender, the terms of such Regulations or the
requirements of such Lender, as the case may be, shall govern.
Subject to the provisions of Section 6.2(b), the General Partner,
acting in its capacity as General Partner, shall not have the
authority, without the Consent of the Special Limited Partner:
(i) to have unsecured borrowings in excess of twenty thousand
dollars ($20,000.00) in the aggregate at any one time
outstanding, except borrowings constituting Subordinated Loans or
Credit Recovery Loans;
(ii) to borrow from the Partnership or commingle Partnership
funds with the funds of any other Person;
(iii) following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the character or use of the Apartment Complex
or which cost in excess of twenty thousand dollars ($20,000.00)
in a single Fiscal Year, except (x) replacements and remodeling
in the ordinary course of business or under emergency conditions
or (y) construction paid for from insurance proceeds;
(iv) to acquire any real property in addition to the Apartment
Complex;
(v) except as otherwise provided in Article III, to increase,
decrease or modify the terms of or refinance any Mortgage Loan,
such Consent of the Special Limited Partner not to be
unreasonably withheld;
(vi) to rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Minimum
Set-Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the
Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a proceeding seeking
any decree, relief, order or appointment in respect to the
Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state
bankruptcy, insolvency or similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Partnership or for any other
substantial part of the Partnership's business or property, or to
cause the Partnership to consent to any such decree, relief,
order or appointment initiated by any Person other than the
Partnership;
(x) to execute contracts with any Agency, the State or any
subdivision or agency thereof or any other Governmental Authority
to make apartments or tenants in the Apartment Complex eligible
for any public-subsidy program;
(xi) to amend in any material respect any construction contract;
(xii) to pledge or assign any of the Capital Contributions of
the Investment Limited Partner or the proceeds thereof (except to
the extent required by the terms of the Bond Loan Documents and
the Letter of Credit Documents and agreed to in writing by the
Special Limited Partner);
(xiii) to amend any Project Document, or to permit any party
thereunder to waive any provision thereof, to the extent that the
effect of such amendment or waiver would be to materially
eliminate, diminish or defer any obligation or undertaking of the
Partnership, the General Partner or its Affiliates which accrues,
directly or indirectly, to the benefit of, or provides additional
security or protection to, the Investment Limited Partner
(notwithstanding that the Investment Limited Partner is neither a
party to nor express beneficiary of such provision or was not a
partner when such provision became effective);
(xiv) to approve any changes to the plans and specifications
for the Apartment Complex which would result, either individually
or in the aggregate, in an overall development cost increase or
decrease in excess of $25,000;
(xv) to permit the merger, termination or dissolution of the
Partnership; or
(xvi) to do any act required to be approved or ratified by
all limited partners under the Act.
(b) In the event that any General Partner violates any provision
of Section 6.2(a), the Special Limited Partner in its sole
discretion and without prejudice to its rights under Sections
405(b) and 7.6(a), may cause itself or its designee to be
admitted as an additional General Partner without any further
action by any other Partner. Upon any such admission of an
additional General Partner, each existing General Partner shall
be deemed to have assigned proportionally to the additional
General Partner, automatically and without further action, such
portion of its General Partnership Interest so that the
additional General Partner shall receive not less than a one one-
hundredth of one percent (0.01%) interest in the Profits, Losses,
Tax Credits and distributions of the Partnership in consideration
of one dollar ($1.00) and any other consideration which may be
agreed upon. An additional General Partner so admitted shall
automatically become the Managing General Partner and shall be
irrevocably delegated all of the power and authority of all of
the General Partner pursuant to Section 6.13. Any such
additional General Partner shall have the right to withdraw as a
General Partner at any time, leaving the prior General Partner
once again as the only General Partner, the provisions of Article
VII notwithstanding. Each Partner hereby grants to the Special
Limited Partner a special power of attorney, irrevocable to the
extent permitted by law and coupled with an interest, to amend
this Agreement and to do anything else which, in view of the
Special Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 6.2(b) or to enable any
additional General Partner admitted pursuant to this Section
6.2(b) to manage the business of the Partnership. The admission
of an additional General Partner shall not relieve any other
General Partner of any of its economic obligations hereunder, and
each other General Partner on an after-tax basis shall fully
indemnify and hold harmless the additional General Partner from
and against any and all Adverse Consequences sustained by the
additional General Partner in connection with its status as a
General Partner (other than Adverse Consequences arising solely
from the gross negligence or wilful misconduct of such additional
General Partner).
(c) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive any salary
or other direct or indirect compensation for any services or
goods provided in connection with the Partnership or the
Apartment Complex, except as may be specifically provided in
Section 6.12, Section 6.15 and Article XI or as to which the
Consent of the Special Limited Partner shall have been obtained
to the precise terms thereof prior to the commencement of such
services or the provision of such goods. Any Partner may engage
independently or with others in other business ventures of every
nature and description, including the ownership, operation,
management, syndication and development of real estate; neither
the Partnership nor any other Partner shall have any rights in
and to such independent ventures or the income or profits derived
therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the General
Partner shall have the exclusive right to control the business of
the Partnership. If at any time there is more than one General
Partner, the powers and duties of the General Partners hereunder
shall be exercised in the first instance by a Managing General
Partner who, subject to the terms and provisions of this
Agreement, shall manage the business and affairs of the
Partnership. The Managing General Partner may bind the
Partnership by executing and delivering, in the name and on
behalf of the Partnership, any documents which this Agreement
authorizes the General Partners to execute hereunder without the
requirement that any other General Partner execute such
documents. The initial Managing General Partner shall be BPLLC;
if it is unwilling or unable to serve in such capacity or shall
cease to be a General Partner, the remaining General Partners may
from time to time designate a new Managing General Partner. If
for any reason no designation is in effect, the powers of the
Managing General Partner shall be exercised by a majority in
interest of the General Partners. Any action required or
permitted to be taken by a corporate General Partner hereunder
may be taken by such of its proper officers or agents as it shall
validly designate for such purpose.
(b) The Managing General Partner shall have control over the
business of the Partnership and shall have all rights, powers and
authority conferred by law as necessary, advisable or consistent
in connection therewith. Without limiting the generality of the
foregoing, the Managing General Partner shall have the right,
power and authority to execute any documents relating to the
acquisition, financing, construction, operation and sale of all
or any portion of the Apartment Complex with the prior approval
of the other General Partners, if any. The Managing General
Partner shall be responsible for administering any construction
loan draw requests for the development of the Apartment Complex.
(c) Neither the Investment Limited Partner nor the Special
Limited Partner shall have any right to take part in the
management or control of the business of the Partnership or to
transact any business in the name of the Partnership. No
provision of this Agreement which makes the Consent of the
Investment Limited Partner or the Consent of the Special Limited
Partner a condition for the effectiveness of an action taken by
the General Partner is intended, and no such provisions shall be
construed, to give the Investment Limited Partner or the Special
Limited Partner, as the case may be, any participation in the
control of the Partnership business. Each of the Special Limited
Partner and the Investment Limited Partner hereby consents to the
exercise by the General Partner of the powers conferred on it by
law and this Agreement, and the General Partner agrees to
exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the provisions of
this Section 6.4 be invoked by any General Partner or by any
other Person as a defense against or as an impediment to the
ability of either the Investment Limited Partner or the Special
Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of the
Partnership to the best of its ability, shall use its best
efforts to carry out the purpose of the Partnership, and shall
devote to the Partnership such time as may be necessary for the
proper performance of its duties and the business of the
Partnership. The General Partner shall promptly take all action
which may be necessary or appropriate for the proper development,
construction, maintenance and operation of the Apartment Complex
in accordance with the provisions of this Agreement, the Project
Documents and any applicable laws and Regulations. The General
Partner is responsible for the management and operation of the
Partnership, including the oversight of the rent-up and
operational stages of the Apartment Complex.
(b) Subject to the provisions of Section 6.5(g), the General
Partner shall use its diligent good faith efforts to cause the
Partnership to generate Cash Flow for distribution to the
Partners at the maximum realizable level in view of (i) any
applicable Regulations, (ii) the Minimum Set-Aside Test, (iii)
the Rent Restriction Test and (iv) the Projected Rents, and, if
necessary, the General Partner also shall use its best efforts to
obtain approvals and implementation of appropriate adjustments in
the rental schedule of the Apartment Complex.
(c) The General Partner shall cause the Partnership to obtain
and keep in force, during the term of the Partnership, insurance
policies in accordance with the Insurance Requirements set forth
on Exhibit C hereto. Throughout the term of the Partnership, the
General Partner shall provide copies of all such policies (or
binders) to the Investment Limited Partner within thirty (30)
days after their receipt thereof. The General Partner shall
cause the applicable insurer to name the Investment Limited
Partner as an "additional insured" on each Partnership insurance
policy. Each Partnership insurance policy shall include a
provision requiring the insurance company to notify the
Investment Limited Partner in writing no less than thirty (30)
days prior to any cancellation, non-renewal or material change in
the terms and conditions of coverage. The General Partner shall
review regularly all of the Partnership and Apartment Complex
insurance coverage to insure that it is adequate and continuing.
In particular, the General Partner shall review at least annually
the insurance coverage required by this Section 6.5(c) to insure
that it is in an amount at least equal to the then current full
replacement value of the Apartment Complex.
Without limitation of the foregoing, the General Partner shall
deliver to the Investment Limited Partner on or before the
Admission Date one or more certificates or memoranda of
insurance, in form reasonably acceptable to the Investment
Limited Partner, evidencing, (i) the existence of the insurance
policies and coverages specified on Exhibit C, (ii) that the
Partnership and its Partners (including the Investment Limited
Partner) are named insured on such policies, and (iii) that such
insurance policies will not be cancelled by the insurers except
within thirty (30) days' written notice to the Investment Limited
Partner. From time to time following the Admission Date, the
General Partner shall deliver to the Investment Limited Partner
such further certificates or memoranda of insurance as the
Investment Limited Partner may reasonably require to confirm that
such insurance and notice provisions with respect to insurance
under this Agreement have been complied with.
(d) If at any time there is more than one General Partner, the
obligations of the General Partners hereunder shall be the joint
and several obligations of each General Partner. Except as
otherwise provided in Sections 4.5(b) and 7.1, such obligations
shall survive any Withdrawal of a General Partner from the
Partnership.
(e) The General Partner shall establish and maintain reasonable
reserves (the "Replacement Reserve") to provide for working
capital needs, improvements, replacements and any other
contingencies of the Partnership. At a minimum, beginning on
February 1, 2000, the General Partner shall cause the Partnership
to annually deposit $41,600 from Cash Flow into the Replacement
Reserve; to the extent that Cash Flow (as determined before
deduction of such reserve deposit) for any Fiscal Year shall be
insufficient to make such deposit in full, the General Partner
shall fund such shortfall from its own funds as a Subordinated
Loan.
(f) Each General Partner shall be bound by the provisions of the
Project Documents, and no additional General Partner shall be
admitted if he, she or it has not first agreed to be bound by
this Agreement (and assume the obligations of a General Partner
hereunder) and by the Project Documents to the same extent and
under the same terms as each of the other General Partners.
(g) The General Partner shall take all actions appropriate to
ensure that the Investment Limited Partner receives the full
amount of the Projected Credit, including, without limitation,
the rental of apartments to appropriate tenants and the filing of
annual certifications as may be required. In this regard, the
General Partner shall, inter alia, cause (i) the Partnership to
satisfy the Minimum Set-Aside Test, the Rent Restriction Test and
all other requirements imposed from time to time under the Code
with respect to rental levels and occupancy by qualified tenants
by the close of the first year of the Credit Period and
throughout the Compliance Period so as to permit the Partnership
to be entitled to the maximum available Tax Credit (ii) the
Partnership to comply with all State Tax Credit monitoring
procedures, (iii) all dwelling units in the Apartment Complex to
be leased for initial periods of not less than six months to
individuals satisfying the Rent Restriction Test, (iv) the
Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex
to be of equal quality with comparable amenities available to
low-income tenants on a comparable basis without separate fees.
(h) On or before the Admission Date, the General Partner shall
provide to the Special Limited Partner either (i) an appraisal of
the Apartment Complex prepared by a competent independent
appraiser or (ii) completed FmHA Forms 1924-13 (estimate and
certificate of actual cost) and 1930-7 (statement of budget,
income and expense) or HUD project cost and budget analysis on
Form 2264, or any successor FmHA or HUD form, any comparable form
of a state or other Governmental Authority, including any
applicable Credit Agency, setting forth estimates with respect to
construction, rehabilitation and mortgage financing costs and
initial rental income and operating expense figures for the
Apartment Complex.
(i) The General Partner shall (i) not store or dispose of
(except in compliance with all laws, ordinances, and regulations
pertaining thereto) any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a
General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor
indirectly transport or arrange for the transport of any
Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any
General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or
from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, any Affiliate of a
General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General Partner's
receipt of any notice to such effect from any federal, state, or
other Governmental Authority; and (z) upon any General Partner's
obtaining knowledge of any incurrence of any expense or loss by
any such government authority in connection with the assessment,
containment, or removal of any Hazardous Material for which
expense or loss any General Partner may be liable or for which
expense or loss a lien may be imposed on the Apartment Complex.
(j) The General Partner shall promptly request in writing of any
Lender that such Lender cause the Special Limited Partner to be
named as an "interested party" in the applicable Mortgage Loan
Documents, so that such Lender will notify the Special Limited
Partner of any default under the applicable Mortgage or the
General Partner shall itself notify the Special Limited Partner
of any such default.
(k) The General Partner shall provide the Special Limited
Partner with a true and accurate copy of each Bond Loan
requisition and any supporting documents and information which
has been submitted for approval by the Issuer or the Bank
(whether submitted before or after the Admission Date).
(l) The General Partner shall have a fiduciary responsibility
for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its immediate possession or
control. The General Partner shall not employ, or permit another
to employ, such funds or assets in any manner except for the
exclusive benefit of the Partnership. No General Partner shall
contract away the fiduciary duty owed at common law to the
Limited Partners.
6.6 Representations and Warranties
The General Partner represents and warrants to the Investment
Limited Partner and the Special Limited Partner as follows:
(a) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State
and has complied with all filing requirements necessary for its
existence and to preserve the limited liability of the Investment
Limited Partner and the Special Limited Partner.
(b) No event or proceeding has occurred or is pending or, is to
the Best Knowledge of the General Partner, threatened which would
(i) materially adversely affect the Partnership or its
properties, or (ii) materially adversely affect the ability of
the General Partner or any of its Affiliates to perform their
respective obligations hereunder or under any other agreement
with respect to the Apartment Complex, other than legal
proceedings which have been bonded against without recourse to
Partnership assets in such manner as to stay the effect of the
proceedings or otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation, the
following: (x) legal actions or proceedings before any court,
commission, administrative body or other Governmental Authority
having jurisdiction over the zoning applicable to the Apartment
Complex; (y) labor disputes; and (z) acts of any Governmental
Authority.
(c) No default (or event which, with the giving of notice or the
passage of time or both, would constitute a default) has occurred
and is continuing under this Agreement or under any material
provision of the Project Documents, and the Project Documents are
in full force and effect.
(d) Except as specifically permitted under Section 3.1, no
Partner or Related Person bears (or will bear) the Economic Risk
of Loss with respect to any Mortgage Loan. No General Partner
has, either on its own behalf or on behalf of the Partnership,
incurred any financial obligation with respect to the Partnership
prior to the Admission Date, other than as disclosed in writing
to the Special Limited Partner prior to the Admission Date.
(e) The Apartment Complex will be, is being or has been
constructed in a timely manner in substantial conformity with the
Project Documents. To the Best Knowledge of the General Partner,
there is no violation by the Partnership or the General Partner
of any zoning, environmental or similar regulation applicable to
the Apartment Complex which could have a material adverse effect
thereon, and the Partnership has complied and will comply with
all applicable municipal and other laws, ordinances and
regulations relating to such construction and use of the
Apartment Complex. All appropriate public utilities, including,
but not limited to, water, electricity, gas (if called for in
the Plans and Specifications), and sanitary and storm sewers, are
or will be available and operating properly for each unit in the
Apartment Complex at the time of the initial occupancy of such
unit, except for Acts of God or acts beyond the control of the
General Partner.
(f) The Partnership owns good and marketable fee simple title to
the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (i) are both permitted by the
Project Documents and are noted or excepted in the Title Policy,
(ii) do not materially interfere with use of the Apartment
Complex (or any part thereof) for its intended purpose or, other
than the permitted Mortgages, have a material adverse effect on
the value of the Apartment Complex, or (iii) have been bonded or
insured against in such a manner as to preclude the holder of
such lien or such surety or insurer from having any recourse to
the Apartment Complex or the Partnership for payment of any debt
secured thereby, which bond(s) or insurance have been approved by
the Lenders.
(g) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or limited
liability company have been or will be duly authorized by all
necessary corporate or other actions, and the consummation of any
such transactions with or on behalf of the Partnership will not
constitute a breach or violation of, or a default under, the
charter or by-laws of such Affiliate or any agreement by which
such Affiliate or any of its properties is bound, nor constitute
a violation of any law, administrative regulation or court
decree.
(h) Any General Partner (or partner or member of a General
Partner) which is a corporation or limited liability company (a
"Corporation/LLC") has been duly organized, is validly existing
and in good standing under the laws of the State and has all
requisite corporate and other power to be a General Partner and
to perform its duties and obligations as contemplated by this
Agreement and the Project Documents. Neither the execution and
delivery by any Corporation/LLC of this Agreement nor the
performance of any of the actions of any Corporation/LLC
contemplated hereby has constituted or will constitute a
violation of (a) the articles of incorporation, operating
agreement, by-laws and any other organizational documents of such
Corporation/LLC, (b) any agreement by which such Corporation/LLC
is bound or to which any of its property or assets is subject, or
(c) any law, administrative regulation or court decree.
(i) No Event of Bankruptcy has occurred with respect to the
Partnership, any General Partner or the Developer.
(j) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by any Agency or Lender.
(k) The aggregate net worth of the General Partner and the
Guarantor is not less than $1,000,000.
(l) All anticipated payments and expenses required to be made or
incurred in order to complete the construction of the Apartment
Complex in conformity with the Project Documents, to fund any
reserves hereunder or under any other Project Document required
to be funded at or prior to the Completion Date, to satisfy all
requirements under the Project Documents and to pay the
Development Fee and all other fees, have been or will be paid or
provided for utilizing only (i) the funds available from the Bond
Loan, (ii) the Capital Contributions of the Investment Limited
Partner, (iii) the Capital Contributions of the General Partner
in the amounts set forth on Schedule A as of the Admission Date,
(iv) the available net rental income, if any, earned by the
Partnership prior to the Completion Date (to the extent that it
is permitted to be used for such purposes by any Agency or
Lender), (v) any Cash Flow generated subsequent to the Completion
Date (to the extent provided in Section 10.2(a)), (vi) any
insurance proceeds and (vii) any funds furnished by the General
Partner pursuant to Sections 6.5(e) and 6.11(a).
(m) The aggregate amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is
$13,709 for 1999, $246,755 for 2000, $427,708 per annum for each
of the Fiscal Years 2001 through 2008 (inclusive), $413,999 for
2009 and $180,953 for 2010; provided, however, that the Projected
Credit for 2009 and 2010 shall be respectively reduced by the
amount, if any, by which the Actual Credit for 1999 exceeds
$13,709 and the amount, if any, by which the Actual Credit for
2000 exceeds $246,755 provided, however, that the General Partner
shall have no liability to the Investment Limited Partner or the
Special Limited Partner for any breach of the representation
contained in this paragraph (m) if (but only to the extent that)
the adjuster provisions set forth in Sections 5.1(e), (f) and (g)
have become operative and all required payments or adjustments
have been made thereunder in accordance with the terms thereof.
(n) The Apartment Complex will be, is being or has been
constructed and operated in a manner which satisfies Section 42
of the Code and shall continue to satisfy all existing and
anticipated restrictions applicable to projects generating Tax
Credits.
(o) The General Partner has provided the Investment Limited
Partner with a complete copy of "Phase I" hazardous waste site
assessment report for the Apartment Complex. No General Partner,
Affiliate of a General Partner or Person for whose conduct any
General Partner is or was responsible has ever: (i) owned,
occupied, or operated a Site or Vessel on which any Hazardous
Material was or is stored, transported, or disposed of, except if
such storage, transport or disposition was and is at all times in
compliance with all laws, ordinances, and regulations pertaining
thereto; (ii) directly or indirectly transported, or arranged for
transport, of any Hazardous Material (except if such transport
was and is at all times in compliance with all laws, ordinances
and regulations pertaining thereto); (iii) caused or was legally
responsible for any release or threat of release of any Hazardous
Material; (iv) received notification from any federal, state or
other Governmental Authority of (x) any potential, known, or
threat of release of any Hazardous Material from the Apartment
Complex or any other Site or Vessel owned, occupied, or operated
by any General Partner, by any Affiliate of a General Partner, or
by any Person for whose conduct any General Partner is or was
responsible or whose liability may result in a lien on the
Apartment Complex; or (y) the incurrence of any expense or loss
by any such Governmental Authority or by any other Person in
connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from the
Apartment Complex or any such Site or Vessel.
(p) To the Best Knowledge of the General Partner, no Hazardous
Material was ever or is now stored on, transported, or disposed
of on the land comprising the Apartment Complex, except to the
extent any such storage, transport or disposition was at all
times in compliance with all laws, ordinances, and regulations
pertaining thereto.
(q) The General Partner has fulfilled and will continue to
fulfill all of its duties and obligations under Section 6.5.
(r) Certifications have been obtained or will be obtained in a
timely fashion from the Credit Agency and the Housing Authority,
to the extent required in accordance with Code Sections
42(m)(1)(D) and 42(m)(2)(D), which confirm their determinations
that (i) the Apartment Complex satisfies the requirements for
allocation of Tax Credits under the qualified allocation plan
applicable to the area in which the Apartment Complex is located,
and (ii) the Tax Credits to be claimed with respect to the
Apartment Complex do not exceed the amount necessary for the
financial feasibility of the Apartment Complex and its viability
as a qualified low-income housing project throughout the
Compliance Period.
(s) At least 50% of the aggregate basis of the Apartment Complex
has been or will be financed by the proceeds of bonds (i) the
interest from which is exempt from federal income taxation under
Section 103 of the Code, (ii) which are taken into account under
Section 146 of the Code and (iii) which will be redeemed within a
reasonable period using principal payments on the bond loan.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall at any
time bear the Economic Risk of Loss for the payment of any
portion of any Mortgage Loan, and the General Partner shall not
permit any other Partner or any Related Person to bear the
Economic Risk of Loss for the payment of any portion of any
Mortgage Loan, except as may be expressly permitted pursuant to
the provisions of Article III or with the Consent of the Special
Limited Partner.
6.8 Indemnification of the General Partner
(a) Except as provided by Article V, no General Partner or any
Affiliate thereof shall have liability to the Partnership or to
any Limited Partner for any loss suffered by the Partnership
which arises out of any action or inaction of any General Partner
or Affiliate thereof if such General Partner or Affiliate thereof
in good faith determined that such course of conduct was in the
best interest of the Partnership and such course of conduct did
not constitute gross negligence or willful misconduct of such
General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof shall be
indemnified by the Partnership from and against any Adverse
Consequences sustained in connection with the business and
operations of the Partnership, provided that all of the following
conditions are met: (i) such General Partner has determined, in
good faith, that the course of conduct which caused the loss,
judgment, liability, expense or amount paid in settlement was in
the best interests of the Partnership; and (ii) such Adverse
Consequences were not the result of gross negligence or willful
misconduct on the part of such General Partner or Affiliate
thereof; and (iii) such indemnification or agreement to hold
harmless is recoverable only out of the assets of the
Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no Partner or any Affiliate
thereof performing services for the Partnership or any broker-
dealer shall be indemnified for any Adverse Consequences arising
from or out of an alleged violation of federal or state
securities laws unless there has been a successful adjudication
on the merits of each count involving securities laws violations
as to the particular indemnitee and the court finds that
indemnification of the settlement and related costs should be
made. In any claim for indemnification for federal or state
securities law violations, the party seeking indemnification
shall, prior to seeking court approval for such indemnification,
place before the court the positions of the Securities and
Exchange Commission, the Massachusetts Securities Division and
any other applicable state securities administrator with respect
to the issue of indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of
any insurance, other than public liability insurance or course of
construction insurance, which insures any party against any
liability as to which such party is herein prohibited from being
indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves an
activity in which such Affiliates acted in the capacity of a
General Partner.
(f) For purposes of this Section 6.8 only, the term "Affiliate"
shall mean (i) any Person performing services on behalf of the
Partnership who (x) directly or indirectly controls, is
controlled by or is under common control with a General Partner;
(y) owns or controls ten percent (10%) or more of the outstanding
voting securities of a General Partner or (z) is an officer,
director, partner, member, manager or trustee of a General
Partner; and (ii) any Person for whom the General Partner acts as
an officer, director, partner or trustee. For purposes of this
Section 6.8 only, the term "controls" and any form of such term
shall mean the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partner will indemnify and hold the Partnership
and the Limited Partners harmless from and against any and all
Adverse Consequences which the Partnership or any Limited Partner
may incur by reason of (i) the past, present or future actions or
omissions of the General Partner or any of its Affiliates
constituting gross negligence or willful misconduct, or (ii) any
liabilities to which either the Partnership or the Apartment
Complex is subject other than (x) any Mortgage or (y) necessary
contractual obligations incurred pursuant to the requirements of
any Agency or Lender in connection with the operation of the
Apartment Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or
omission for which the Partnership is required to indemnify such
General Partner under Section 6.8, except as provided by Article
V.
(c) The General Partner shall indemnify, defend, and hold the
Limited Partners harmless on an after-tax basis from and against
any Adverse Consequences related to or arising out of the
presence of any Hazardous Material at the Apartment Complex
(other than any Adverse Consequences resulting from the acts or
omissions of the Limited Partners). Any claim or loss described
in the immediately preceding sentence may be defended,
compromised, settled, or pursued by the Limited Partners with
counsel of the Limited Partners' selection, but at the expense of
the General Partner. Notwithstanding anything else set forth
herein, this indemnification shall survive the withdrawal of any
General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner shall be
obligated during the period from Rental Achievement until the
later of the third (3rd) anniversary of Rental Achievement or the
closing of the New Permanent Loan (the "Subordinated Loan
Period"), to promptly advance funds to eliminate any Operating
Deficit up to the Operating Guaranty Deficit Maximum. In the
event that the General Partner shall fail to make any such
advance as aforesaid, (a) the Partnership shall utilize amounts
(the "Applied Amounts") otherwise payable to the General Partner
or its Affiliates under Section 6.12 and/or Article X to meet the
obligations of the General Partner pursuant to this Section 6.10,
with such utilization of Applied Amounts constituting payment and
satisfaction of the corresponding amounts payable to the General
Partner or its Affiliates under Section 6.12 and/or Article X,
with the proceeds thereof being applied to such obligations, and
with the obligation of the Partnership to make such payments to
the General Partner or its Affiliates pursuant to Section 6.12
and/or Article X being deemed to have been satisfied to the
extent thereof and (b) the Special Limited Partner shall have the
option, exercisable in its sole discretion, to cause it or one or
more of its designees to be admitted to the Partnership as
additional General Partner(s). An additional General Partner so
admitted shall automatically, without the need for any further
action by any Partner, become the Managing General Partner and
shall be delegated all of the powers and authority of all of the
General Partners pursuant to Section 6.13, and each Partner
hereby grants to any such additional General Partner a power of
attorney, coupled with an interest and irrevocable to the extent
permitted by law, to execute and deliver any and all instruments
and documents which it believes to be necessary or appropriate in
order to accomplish the purposes of this Section 6.10 and to
manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General
Partner of any of its economic obligations hereunder, and each
other General Partner shall indemnify and hold harmless the
additional General Partner from and against any and all Adverse
Consequences sustained in connection with the additional General
Partner's status as a General Partner (other than Adverse
Consequences arising solely out of the negligence or misconduct
of such additional General Partner). For the purpose of this
Section 6.10, all expenses shall be paid on a sixty (60)-day
current basis. Moreover, the General Partner may in its sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in
order to facilitate the Partnership's compliance with the Rent
Restriction Test. All advances pursuant to Section 6.5(e) and
this Section 6.10 (including any Applied Amounts), shall
constitute non-interest-bearing Subordinated Loans. Subordinated
Loans shall be repaid in accordance with the provisions of
Article X. The form and provisions of all Subordinated Loans
shall conform to any applicable Regulations.
6.11 Obligation to Complete the Construction of the Apartment
Complex
(a) The Developer and the General Partner shall be obligated to
complete the construction of the Apartment Complex, to achieve
Permanent Mortgage Commencement and to achieve Rental Achievement
in the manner set forth in this Agreement and the Development
Agreement.
(b) The completion of the Apartment Complex shall be secured by
the Guaranty.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as compensation
for the Developer's services in connection with the development
and construction of the Apartment Complex, the Partnership shall
pay to the Developer a development fee (the "Development Fee") in
the amount and at the times set forth in the Development
Agreement. If the Development Fee has not been fully paid by the
tenth (10th) anniversary of the Completion Date, the General
Partner shall make a Capital Contribution to the Partnership in
an amount sufficient to enable the Partnership to pay any unpaid
portion of the Development Fee.
(b) The Partnership shall pay to the Special Limited Partner or
an Affiliate thereof a fee (the "Asset Management Fee")
commencing in 2000 for its services in connection with the
Partnership's accounting matters relating to the Investment
Limited Partner and assisting with the preparation of tax
returns and the reports required by Section 12.7 in the annual
amount of $5,000. The Asset Management Fee shall be payable from
Cash Flow in the manner and priority set forth in Section
10.2(a); provided however, that if in any Fiscal Year, Cash Flow
is insufficient to pay the full amount of the Asset Management
Fee, the General Partner shall advance the amount of such
deficiency to the Partnership as a Subordinated Loan. If for any
reason the Asset Management Fee is not paid in any Fiscal Year,
the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first Fiscal Year in which there is
sufficient Cash Flow or Capital Proceeds as provided in Article
X.
(c) In consideration of the services of the General Partner in
managing the day-to-day business and affairs of the Partnership,
the Partnership shall pay to the General Partner an annual fee
(the "Partnership Management Fee") commencing in 2000 in the
amount of $27,000, payable from Cash Flow in the manner set forth
in Section 10.2(a). If for any reason the Partnership Management
Fee is not paid in any Fiscal Year, the unpaid portion thereof
shall accrue and be payable on a cumulative basis in the first
Fiscal Year in which there is sufficient Cash Flow or Capital
Proceeds as provided in Article X.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or
duties hereunder to another General Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder that
at the time of the delivery thereof (i) the Partnership was in
existence, (ii) this Agreement had not been amended in any manner
so as to restrict the delegation of authority among General
Partners (except as shown in certificates or other instruments
duly filed in the Filing Office) and (iii) the execution and
delivery of such instrument was duly authorized by the General
Partners. Any Person may always rely on a certificate addressed
to him and signed by any General Partner hereunder:
(1) as to who are the General Partners or Limited Partners
hereunder;
(2) as to the existence or nonexistence of any fact which
constitutes a condition precedent to acts by the General Partners
or in any other manner germane to the affairs of the
Partnership;
(3) as to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) as to the authenticity of any copy of this Agreement and any
amendments thereto; or
(5) as to any act or failure to act by the Partnership or as to
any other matter whatsoever involving the Partnership or any
Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and assign
to the Partnership all of their right, title and interest in and
to the Apartment Complex and in and to all of the Project
Documents, including, but not limited to, the following: (i) all
contracts with architects, supervising architects, engineers and
contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings
heretofore prepared or obtained in connection with the Apartment
Complex; (iii) all governmental commitments and approvals
obtained, and applications therefore, including, but not limited
to those relating to planning, zoning, building permits and Tax
Credits; (iv) any and all commitments with respect to any
Mortgage(s); and (v) any and all contracts or rights with respect
to any agreements with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may act as
Management Agent upon the terms and conditions set forth in
Article XI.
(b) The General Partner or any Affiliates thereof shall have the
right to contract or otherwise deal with the Partnership for the
sale of goods or services to the Partnership in addition to those
set forth herein, if (i) compensation paid or promised for such
goods or services is reasonable (i.e., at fair market value) and
is paid only for goods or services actually furnished to the
Partnership, (ii) the goods or services to be furnished shall be
reasonable for and necessary to the Partnership, (iii) the fees,
terms and conditions of such transaction are at least as
favorable to the Partnership as would be obtainable in an arm's-
length transaction, and (iv) no agent, attorney, accountant or
other independent consultant or contractor who also is employed
on a full-time basis by the General Partner or any Affiliate
shall be compensated by the Partnership for his services. Any
contract covering such transactions shall be in writing and shall
be terminable without penalty on sixty (60) days written notice.
Any payment made to the General Partner or any Affiliate for such
goods or services shall be fully disclosed to all Limited
Partners in the reports required under Article XII. Neither the
General Partner nor any Affiliate shall, by the making of lump-
sum payments to any other Person for disbursement by such other
Person, circumvent the provisions of this Section 6.15(b).
6.16 Tax Matters Partner
(a) The General Partner hereby is designated as Tax Matters
Partner of the Partnership, and shall engage in such undertakings
as are required of the Tax Matters Partner of the Partnership as
provided in treasury regulations pursuant to Section 6231 of the
Code. Each Partner, by the execution of this Agreement, consents
to such designation of the Tax Matters Partner and agrees to
execute, certify, acknowledge, deliver, swear to, file and record
at the appropriate public offices such documents as may be
necessary or appropriate to evidence such consent.
(b) The Tax Matters Partner hereby is authorized, but not
required:
(i) to enter into any settlement agreement with the Service with
respect to any tax audit or judicial review, in which agreement
the Tax Matters Partner may expressly state that such agreement
shall bind the other Partners, except that such settlement
agreement shall not bind any Partner who (within the time
prescribed pursuant to the Code and treasury regulations
thereunder) files a statement with the Service providing that the
Tax Matters Partner shall not have the authority to enter into a
settlement agreement on the behalf of such Partner;
(ii) in the event that a notice of final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "Final
Adjustment") is mailed to the Tax Matters Partner, to seek
judicial review of such Final Adjustment, including the filing of
a petition for readjustment with the Tax Court, the District
Court of the United States for the district in which the
Partnership's principal place of business is located, or the
United States Claims Court;
(iii) to intervene in any action brought by any other Partner
for judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment with the
Service at any time and, if any part of such request is not
allowed by the Service, to file an appropriate pleading (petition
or complaint) for judicial review with respect to such request;
(v) to enter into an agreement with the Service to extend the
period for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax purposes,
or an item effected by such item; and
(vi) to take any other action on behalf of the Partners or the
Partnership in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or
Regulations.
(c) The Partnership shall indemnify and reimburse the Tax
Matters Partner for all expenses, including legal and accounting
fees, claims, liabilities, losses and damages incurred in
connection with any administrative or judicial proceeding with
respect to the tax liability of the Partners. The payment of all
such expenses shall be made before any distributions are made
from Cash Flow or any discretionary reserves are set aside by the
General Partner. The General Partner shall have the obligation
to provide Partnership funds for such purpose, but only to the
extent of available Partnership resources. The taking of any
action and the incurring of any expense by the Tax Matters
Partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole discretion of the
Tax Matters Partner and the provisions on limitations of
liability of the General Partner and indemnification set forth in
Section 6.8 of this Agreement shall be fully applicable to the
Tax Matters Partner in its capacity as such.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Voluntary Withdrawal
No General Partner shall have the right to Withdraw voluntarily
from the Partnership or to sell, assign or encumber its Interest
without the Consent of the Investment Limited Partner and each of
the other General Partners (if any) and, if required, any
Requisite Approvals.
7.2 Reconstitution
In the event of the Withdrawal of a General Partner, the
Partnership shall not be dissolved or required to be wound up if
(i) at the time of such Withdrawal there is at least one
remaining General Partner and that General Partner carries on the
business of the Partnership (any such remaining General Partner
being hereby authorized to carry on the business of the
Partnership), or (ii) within ninety (90) days after such
Withdrawal all remaining Partners agree in writing to continue
the business of the Partnership and to the appointment, effective
as of the date of such Withdrawal, of one or more additional
General Partners. Within ten (10) days after the occurrence of
such Withdrawal, the remaining General Partners, if any, shall
notify the Investment Limited Partner thereof:
(i) The reconstituted limited partnership shall continue until
the occurrence of a Liquidating Event as provided in Section 2.4;
(ii) If the successor General Partner is not a former General
Partner, then the provisions of Section 7.4(d) shall apply; and
(iii) All necessary steps shall be taken to cancel this
Agreement and the Certificate and to enter into a new partnership
agreement and certificate of limited partnership, and the
successor General Partner shall be obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the remaining General
Partners may designate a Person to become a successor General
Partner to the Withdrawing General Partner. Any Person so
designated, subject to any Requisite Approvals, the Consent of
the Investment Limited Partner and, if required by the Act or any
other applicable law, the consent of any other Partner so
required, shall become a successor General Partner upon his
written agreement to be bound by the Project Documents and by the
provisions of this Agreement.
(b) If any Withdrawal shall occur at a time when there is no
remaining General Partner and the Partners do not unanimously
elect to continue the business of the Partnership in accordance
with the provisions of clause (ii) of Section 7.2(a) above, then
the Investment Limited Partner shall have the right, subject to
any Requisite Approvals, to designate a Person to become a
successor General Partner upon his written agreement to be bound
by the Project Documents and by the provisions of this Agreement.
(c) If the Investment Limited Partner elects to reconstitute the
Partnership and admit a successor General Partner pursuant to
this Section 7.3, the relationship of the Partners in the
reconstituted Partnership shall be governed by this Agreement.
7.4 Interest of Predecessor General Partner
(a) No assignee or transferee of all or any part of the Interest
as a General Partner of a General Partner shall have any
automatic right to become a General Partner. Until the
acquisition of the Interest of a Withdrawing General Partner
pursuant to Section 7.4(d) or 7.6, such Interest shall be deemed
to be that of an assignee and the holder thereof shall be
entitled only to such rights as an assignee may have as such
under the laws of the State.
(b) Anything herein contained to the contrary notwithstanding,
any General Partner who Withdraws voluntarily in violation of
Section 7.1 shall remain liable for all of its obligations under
this Agreement, for all its other obligations and liabilities
hereunder incurred or accrued prior to the date of its Withdrawal
and for any loss or damage which the Partnership or any of its
Partners may incur as a result of such Withdrawal (except as
provided in Section 6.8(a)).
(c) The estate (which term, for purposes of this Section 7.4(c),
shall include the heirs, distributees, estate, executors,
administrators, guardian, committee, trustee or other personal
representative) of a Withdrawn General Partner shall be liable
for all his liabilities and obligations hereunder, except as
provided in this Section 7.4(c). In the event of the death,
insanity or incompetency of a General Partner, his estate shall
remain liable for all of his obligations and liabilities
hereunder incurred or accrued prior to the date of such event,
and for any damages arising out of any breach of this Agreement
by him, but his estate shall not have any obligation or liability
on account of the business of the Partnership or the activities
of the other General Partners after his death, insanity or
incompetency unless it becomes a General Partner pursuant to
Section 7.3(a).
(d) The Disposition of the General Partner Interest of a General
Partner who or which Withdraws voluntarily in compliance with
this Agreement shall be accomplished in such manner as shall be
acceptable to the remaining General Partners and shall be
approved by Consent of the Investment Limited Partner. Except as
provided in the preceding sentence, upon the Withdrawal of a
General Partner (other than a General Partner who or which is
removed as such pursuant to Section 4.5), such Withdrawn General
Partner shall be deemed to have automatically transferred to the
remaining General Partners, in proportion to their respective
General Partner Interests, or, if there shall be no remaining
General Partner, then to the Partnership for the benefit of the
remaining Partners, all or such portion of the General Partner
Interest of such Withdrawn General Partner which, when aggregated
with the existing General Partner Interests of all such remaining
General Partners, will be sufficient to assure such remaining
General Partners a 0.01% interest in all Profits, Losses, Tax
Credits and distributions of the Partnership under Article X. No
documentation shall be necessary to effectuate such transfer,
which shall be automatic, and no consideration shall be payable
therefor. For the purposes of Article X, the effective date of
the transfer pursuant to the provisions of this Section 7.4(d) of
the General Partner Interest of a Withdrawn General Partner shall
be deemed to be the date on which such Withdrawal occurs. That
portion of the General Partner Interest (the "Remaining
Interest") of the Withdrawing General Partner which shall not
have been transferred pursuant to this Section 7.4(d) (except in
respect of a removed General Partner), shall be retained by such
Withdrawing General Partner (or pass to legal representatives
thereof) who or which shall have the status of a special Limited
Partner, but with the right to receive only that share of the
Profits, Losses, Tax Credits and distributions of the Partnership
to which the Withdrawing General Partner, as such, would have
been entitled had he or it remained, reduced to the extent of the
General Partner Interest transferred hereunder, but such
Withdrawing Partner (or his or its legal representatives, as the
case may be) shall not be considered to be a Special Limited
Partner for the purpose of exercising any rights reserved to the
Special Limited Partner under this Agreement or sharing the
benefits allocated to the Special Limited Partner under Article X
hereof and shall not participate in the votes or consents of the
Limited Partners hereunder; provided, however, that in the case
of a General Partner who or which Withdraws involuntarily without
violation of this Agreement, the Partnership shall have the
option (but not the obligation), exercisable by notice to the
holder of such Interest within six (6) months following the date
of such Withdrawal, to acquire the Remaining Interest of such
Withdrawing General Partner (or the Special Limited Partner
Interest deriving therefrom) in accordance with the valuation and
payment provisions of Section 7.6.
7.5 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant to the
preceding provisions of this Article VII, Schedule A shall be
amended to reflect such admission and an amendment to the
Certificate, also reflecting such admission, shall be filed as
required by the Act.
(b) Each Partner hereby consents to and authorizes any admission
or substitution of a General Partner or any other transaction,
including, without limitation, the continuation of the
Partnership business, which has been authorized under the
provisions of this Agreement, and hereby ratifies and confirms
each amendment of this Agreement necessary or appropriate to give
effect to any such transaction.
7.6 Valuation and Sale of Interest of Former General Partner
(a) Subject to the provisions of Section 7.4(d), if the business
of the Partnership is continued after the Withdrawal of a General
Partner, or if, following such event, the Partnership is
reconstituted and continued, in each case as contemplated by this
Agreement, the Partnership shall purchase such General Partner's
Interest if such removal is without cause or if such Withdrawal
is not in violation of this Agreement (which term, and words of
like import, as used in this Section 7.6 shall refer only to the
"Remaining Interest" of such Withdrawing General Partner as
defined in Section 7.4(d) in all cases where applicable) each for
a price equal to the fair market value thereof. Such fair market
value shall be determined by two independent appraisers, one
selected by the former General Partner or its representative and
one by the Partnership. If such appraisers are unable to agree
on the value of the former General Partner's Interest, they shall
jointly appoint a third independent appraiser whose determination
shall be final and binding. The appraisers may act with or
without a hearing, and the cost of the appraisal will be shared
equally between such former General Partner and the Partnership.
If a General Partner is removed by the Investment Limited Partner
for cause, or if a General Partner has voluntarily withdrawn from
the Partnership in contravention of the terms of this Agreement,
the General Partner shall forfeit its Interest to the
Partnership, not as a penalty but as liquidated damages to
compensate the Partnership for the action of such General Partner
leading to its removal, or for the fact of its violation of the
terms of this Agreement.
(b) Promptly after the determination of the purchase price of a
former General Partner's Interest pursuant to Section 7.6(a), the
Partnership shall deliver to such former General Partner a
promissory note of the Partnership for such purchase price,
payable in five equal consecutive annual installments commencing
on the first anniversary of the date of such note. Such
promissory note shall bear simple interest at the rate per annum
which is at all times the AFR, payable on the last day of each
calendar quarter during which such note is outstanding. Within
one hundred twenty (120) days after the determination of the
purchase price of the former General Partner's Interest, the
Partnership may, with the consent of all remaining General
Partners and the Consent of the Investment Limited Partner, sell
such Interests to one or more Persons, who may be Affiliates of
the remaining General Partner or General Partners, and admit such
Person or Persons to the Partnership as substitute General
Partners; provided, however, that the purchase price to be paid
to the Partnership for the Interest of the former General Partner
shall not be less than its purchase price as determined by the
appraisal and, if applicable, arbitration described above. Such
substitute General Partners may pay said purchase price in
installments in the manner set forth above in this Section
7.6(b).
7.7 Designation of New General Partners
The General Partner may, with the written consent of all
Partners, at any time designate new General Partners, each with
such Interest as a General Partner in the Partnership as the
General Partner may specify, subject to any Requisite Approvals.
Any new General Partner shall, as a condition of receiving any
interest in the Partnership property, agree to be bound by the
Project Documents and any other documents required in connection
therewith and by the provisions of this Agreement, to the same
extent and on the same terms as any other General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent
and distribution) or pursuant to the provisions of Section
8.1(b), no Limited Partner may assign all or any part of its
Interest without the written consent of the General Partner, the
giving or withholding of which is exclusively within its
discretion.
(b) A Limited Partner, without the consent of the General
Partner, may assign to any Person all or any portion of the
economic benefits of the ownership of such Limited Partner's
Interest; provided, however, that such assignment shall not be
binding on the Partnership until there shall have been filed with
the Partnership by registered mail certified copies of an
executed and acknowledged assignment and the written acceptance
by the assignee of all the terms and provisions of this
Agreement; if such assignment and acceptance are not so filed,
the Partnership need not recognize such assignment for any
purpose. An assignee of a Limited Partner who does not become a
Substituted Limited Partner shall have the right to receive the
allocable share of any Profits, Losses, Tax Credits or
distributions of the Partnership to which the assigning Limited
Partner would have been entitled with respect to the Interest (or
portion thereof) so assigned if no such assignment had been made
by such Limited Partner. Any assigning Limited Partner whose
permitted assignee becomes a Substituted Limited Partner shall
thereupon cease to be a Limited Partner and shall no longer have
any of the rights or privileges of a Limited Partner. Where the
assignee does not become a Substituted Limited Partner, the
Partnership shall recognize such assignment not later than the
last day of the calendar month following receipt of notice of
assignment and all documentation required in connection
therewith.
(c) Each assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further assignment of its Interest
shall be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to the
provisions of Section 8.3, the General Partner may, in its sole
discretion, permit an assignee to become a Substituted Limited
Partner. The consent of the General Partner to an assignment of
a Limited Partner's Interest under Section 8.1 shall not, in and
of itself, constitute its consent to the admission of the
assignee as a Substituted Limited Partner under this Section 8.2.
(b) Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General
Partner to signify the agreement of such Substituted Limited
Partner to be bound by all the provisions of this Agreement and
shall pay the Partnership's reasonable legal fees and filing
costs in connection with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be made if
such Disposition would violate the provisions of Sections 8.1,
8.2 or 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partner may, in addition to any other
requirement it may impose, require as a condition of any
Disposition of a Limited Partner Interest that the transferor (i)
assume all costs incurred by the Partnership in connection
therewith and (ii) furnish the Partnership and the other Partners
with an opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable
federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition of a
Limited Partner Interest in contravention of any of the
provisions of this Section 8.3 shall be void and ineffectual and
shall not bind or be recognized by the Partnership.
(e) Notwithstanding any other provision contained in this
Article VIII, if at any time there is more than one Investment
Limited Partner, each Investment Limited Partner shall have a
right of first refusal to purchase the Interest of any other
Investment Limited Partner who wishes to sell or otherwise
transfer its Interest at a price equal to and on terms identical
to those of the prospective purchaser thereof, to the extent
reasonably practical, and shall have at least fifteen (15)
business days in which to exercise such right after receiving
notice thereof. If there shall be more than two non-selling or
transferring Investment Limited Partners, each of which desires
to exercise such a right of first refusal, they may do so pro
rata or, to the extent one does not so desire to exercise such
right, to the extent of the entire Interest being so sold or
transferred.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement and the Project Documents and may be made from any
source, including Partners and their Affiliates. Any Partnership
borrowings from any Partner shall be subject to any Requisite
Approvals. If any Partner shall lend any monies to the
Partnership, the amount of any such loan shall not increase such
Partner's Capital Contribution. If any Partner shall so lend
monies, each such loan (a "Voluntary Loan") shall be an
obligation of the Partnership and (except for Subordinated Loans)
shall be repayable to such Partner on the same basis and with the
same rate of interest as would be applicable to a comparable loan
to the Partnership from a third party. Funds advanced by the
General Partner to the Partnership pursuant to the provisions of
Section 6.10 shall not constitute borrowings for the purposes of
this Article IX or for any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and Section
10.4, for each Partnership Fiscal Year or portion thereof, all
Operating Profits and Losses, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and Tax Credits
incurred or accrued on or after the Commencement Date shall be
allocated ninety-nine and ninety-nine one hundredths percent
(99.99%) to the Investment Limited Partner and one one-hundredth
of one percent (0.01%) to the General Partner.
(b) Except as otherwise specifically provided in this Article,
all Profits and Losses arising from a Capital Transaction shall
be allocated to the Partners as follows:
As to Profits:
First, that portion of Profits (including any Profits treated as
ordinary income for federal income tax purposes) shall be
allocated to the Partners who have negative Capital Account
balances in proportion to the amounts of such balances, provided
that no Profits shall be allocated to a Partner under this Clause
First to increase any such Partner's Capital Account above zero;
and
Second, Profits in excess of the amounts allocated under Clause
First above shall be allocated to and among the Partners in the
same percentages as cash is distributed under Clauses Seventh,
Eighth, and Ninth of Section 10.2(b);
As to Losses:
First, an amount of Losses shall be allocated to the Partners to
the extent and in such proportions as shall be necessary such
that, after giving effect thereto, the respective balances in all
Partners' Capital Accounts shall be in the ratio of 99.99% for
the Investment Limited Partner and 0.01% for the General Partner;
Second, an amount of Losses shall be allocated to the Partners
until the balance in each Partner Capital Account equals the
amount of such Partner's Capital Contribution (after the
allocation under Clause First above);
Third, an amount of Losses shall be allocated to the Partners to
the extent of and in proportion to such Partners' Capital Account
balances (after the allocations under Clauses First and Second
above); and
Fourth, any remaining amount of Losses after the allocation under
Clauses First, Second and Third above shall be allocated to the
Partners in accordance with the manner in which they bear the
Economic Risk of Loss associated with such Loss; provided,
however, that in the event that no Partner bears an Economic Risk
of Loss then any remaining Losses shall be allocated 99.99% to
the Investment Limited Partner and 0.01% to the General Partner.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals and the provisions of the Bond
Loan Documents and Letter of Credit Documents, Cash Flow for each
Fiscal Year or portion thereof shall be applied as follows (i)
prior to the Completion Date, Cash Flow shall be deposited with
the Trustee to be disbursed pursuant to the Trust Indenture and
(ii) from and after the Completion Date:
First, to the payment of the Asset Management Fee for such Fiscal
Year and for any previous Fiscal Year(s) as to which the Asset
Management Fee shall not yet have been paid in full;
Second, to the payment of any unpaid portion of the Development
Fee;
Third, to the repayment of any Subordinated Loans;
Fourth, to the payment of the Partnership Management Fee for such
Fiscal Year and for any previous Fiscal Year(s) as to which the
Partnership Management Fee shall not yet have been paid in full;
and
Fifth, the balance thereof, if any, shall be distributed
annually, seventy-five (75) days after the end of the Fiscal
Year, 10% to the Investment Limited Partner and 90% to the
General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution, if Capital Proceeds are available for
distribution from a Capital Transaction, such Capital Proceeds
shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the
Partnership incident to such Capital Transaction), excluding (i)
debts and liabilities of the Partnership to Partners or their
Affiliates, (ii) all unpaid fees owing to the General Partner or
its Affiliates and (iii) notes delivered and payable pursuant to
Section 7.8(b)(i) and (ii); and to the establishment of any
reserves which the General Partner and the Auditors shall deem
reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, to the payment of any accrued and unpaid Asset Management
Fees;
Third, to the payment to the Investment Limited Partner of the
full amount (including interest) of any Credit Recovery Loans;
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the repayment of any remaining unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them, including,
but not limited to, accrued and unpaid amounts due in respect of
any and all fees (including but not limited to the Development
Fee and the Partnership Management Fee) due and payable to the
General Partner or its Affiliates as set forth in Section 6.12;
provided, however, that any debts or obligations to be repaid to
any Limited Partner or Affiliate thereof pursuant to this Clause
Fifth shall be repaid prior to the repayment of any such debts or
obligations to any General Partner or Affiliate thereof;
Sixth, to the payment to each Limited Partner of an amount equal
to its Invested Amount, in each case minus any prior
distributions made to such Partner under this Clause Sixth, but
never an amount less than zero;
Seventh, to the payment to each General Partner of an amount
equal to its Invested Amount in each case minus any prior
distributions made to such Partner under this Clause Seventh, but
never an amount less than zero; and
Eighth, subject to the provisions of Section 10.3(a), any balance
19.999% to the Investment Limited Partner, .001% to the Special
Limited Partner and 80% to the General Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall be
distributed to the Partners in accordance with the positive
balances in their Capital Accounts after taking into account all
Capital Account adjustments for the Partnership Fiscal Year,
including adjustments to Capital Accounts pursuant to Sections
10.1(b) and 10.3(b). In the event that a General Partner or
Additional Limited Partner has a negative balance in its Capital
Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership Fiscal Year in which such
liquidation occurs, such Partner shall pay to the Partnership in
cash an amount equal to the negative balance in such Partner's
Capital Account. Such payment shall be made by the end of such
Fiscal Year (or, if later, within ninety (90) days after the date
of such liquidation) and shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or
distributed to other Partners in accordance with the positive
balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners
in liquidation or otherwise, (i) any unrealized appreciation or
unrealized depreciation in the values of such assets shall be
deemed to be Profits and Losses realized by the Partnership
immediately prior to the liquidation or other distribution event;
and (ii) such Profits and Losses shall be allocated to the
Partners in accordance with the provisions of Section 10.1(b),
and any property so distributed shall be treated as a
distribution of an amount in cash equal to the excess of such
fair market value over the outstanding principal balance of and
accrued interest on any debt by which the property is encumbered.
For the purposes of this Section 10.3(b), the terms "unrealized
appreciation" or "unrealized depreciation" shall mean the
difference between the fair market value of such assets, taking
into account the fair market value of the associated financing
(but subject to the provisions of Section 7701(g) of the Code),
and the Partnership's adjusted basis for such assets as
determined under the applicable provisions of the Allocation
Regulations. This Section 10.3(b) is merely intended to provide
a rule for allocating unrealized gains and losses upon
liquidation or other distribution event, and nothing contained in
this Section 10.3(b) or elsewhere herein is intended to treat or
cause such distributions to be treated as sales for value. The
fair market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the Consent
of the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all Profits,
tax-exempt income, Losses, non-deductible non-capitalizable
expenditures, Tax Credits and cash distributions shared by a
class of Partners shall be shared by each Partner in such class
in the ratio of such Partner's paid-in Capital Contribution to
the paid-in Class Contribution of the class of Partners of which
such Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Nonrecourse Debt (including, without limitation,
Voluntary Loans or Subordinated Loans) or (b) the Partnership
incurs Losses from extraordinary events which are not recovered
from insurance or otherwise (collectively "Recourse Obligations")
in respect of any Partnership Fiscal Year, then the calculation
and allocation of Profits and Losses shall be adjusted as
follows: first, an amount of deductions attributable to the
Recourse Obligations shall be allocated to the General Partner;
and second, the balance of such deductions shall be allocated as
provided in Section 10.1(a).
(ii) If any Profits arise from the sale or other disposition of
any Partnership asset which shall be treated as ordinary income
under the depreciation recapture provisions of the Code, then the
full amount of such ordinary income shall be allocated among the
Partners in the proportions that the Partnership deductions from
the depreciation giving rise to such recapture were actually
allocated. In the event that subsequently-enacted provisions of
the Code result in other recapture income, no allocation of such
recapture income shall be made to any Partner who has not
received the benefit of those items giving rise to such other
recapture income.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or Section
10.3, the distributions of the cash portion of such purchase
price and the principal amount of such purchase money
indebtedness hereunder shall be allocated among the Partners in
the following manner: On the basis of the sum of the principal
amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds distributable
to each class of Partners based on Section 10.2(b) or Section
10.3, as applicable, treating cash payments and purchase money
indebtedness principal interchangeably for this purpose, and the
respective classes shall receive such respective percentages of
the net cash purchase price and purchase money principal.
Payments on such purchase money indebtedness retained by the
Partnership shall be distributed in accordance with the
respective portions of principal allocated to the respective
classes of Partners in accordance with the preceding sentence,
and if any such purchase money indebtedness shall be sold, the
sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance
with the applicable provisions of the Allocation Regulations and
its basis computed for federal income tax purposes shall be
shared among the Partners so as to take account of such variation
in a manner consistent with the principles of Section 704(c) of
the Code and Section 1.704-1(b)(2)(iv)(g) of the Allocation
Regulations.
(v) The terms "Profits" and "Losses" used in this Agreement
shall mean income and losses, and each item of income, gain,
loss, deduction or credit entering into the computation thereof,
as determined in accordance with the accounting methods followed
by the Partnership and computed in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). Profits and Losses for
federal income tax purposes shall be allocated in the same manner
as set forth in this Article X, except as provided in Section
10.4(b)(iv).
(vi) Nonrecourse Deductions shall be allocated 0.01% to the
General Partner and 99.99% to the Investment Limited Partner.
(vii) Partner Nonrecourse Deductions shall be allocated to
and among the Partners in the manner provided in the Allocation
Regulations.
(viii) Subject to the provisions of Section 10.4(b)(xix), if
there is a net decrease in Partnership Minimum Gain for a
Partnership Fiscal Year, the Partners shall be allocated items of
Partnership income and gain in accordance with the provisions of
Section 1.704-(2)(f) of the Allocation Regulations.
(ix) Subject to the provisions of Section 10.4(b)(xix), if there
is a net decrease in Partner Nonrecourse Debt Minimum Gain for a
Partnership Fiscal Year then any Partner with a Share of such
Partner Nonrecourse Debt Minimum Gain shall be allocated items of
Partnership income and gain in accordance with the provisions of
Section 1.704-2(i)(4) of the Allocation Regulations.
(x) Subject to the provisions of 10.4(b)(vi) through 10.4(b)(ix)
above, in the event that any Limited Partner unexpectedly
receives any adjustments, allocations or distributions described
in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Allocation
Regulations, items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Allocation
Regulations, the Adjusted Capital Account Deficit of such Limited
Partner as quickly as possible. This Section 10.4(b)(x) is
intended to constitute a "qualified income offset" provision
within the meaning of the Allocation Regulations and shall be
interpreted consistently therewith.
(xi) Subject to the provisions of Sections 10.4(b)(vi) through
10.4(b)(x) above, in no event shall any Limited Partner be
allocated Losses which would cause it to have an Adjusted Capital
Account Deficit as of the end of any Partnership Fiscal Year.
Any Losses which are not allocated to a Limited Partner by reason
of the application of the provisions of this Section 10.4(b)(xi)
shall be allocated to the General Partner.
(xii) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(xi) above, in the event that any Limited Partner
has an Adjusted Capital Account Deficit at the end of any
Partnership Fiscal Year, items of Partnership income and gain
shall be specially allocated to each such Limited Partner in the
amount of such Adjusted Capital Account Deficit as quickly as
possible.
(xiii) Syndication Expenses for any Fiscal Year or other
period shall be specially allocated to the Investment Limited
Partner.
(xiv) For purposes of determining the Profits, Losses, Tax
Credits or any other items allocable to any period, Profits,
Losses, Tax Credits and any such other items shall be determined
on a daily, monthly, or other basis, as determined by the General
Partner using any permissible method under Code Section 706 and
the Treasury Regulations thereunder.
(xv) To the extent that interest on loans (or other advances
which are deemed to be loans) made by a General Partner to the
Partnership is determined to be deductible by the Partnership in
excess of the amount of interest actually paid by the
Partnership, such additional interest deduction(s) shall be
allocated solely to such General Partner.
(xvi) Notwithstanding anything to the contrary contained
herein, the General Partner (or, if there is more than one
General Partner, all of the General Partners as a group) shall be
allocated not less than 0.01% of each material item of
Partnership income, gain, loss, deduction and credit
("Partnership Items") at all times during the existence of the
Partnership, provided, however, that temporary nonconformance
with the provisions of this Section 10.4(b)(xvi) shall be
permitted to the extent permitted by Revenue Procedure 89-12 or
any successor provisions. Subject to the foregoing, in the event
that there is no allocation of a material Partnership Item to the
General Partner(s) hereunder or if the amount of any material
Partnership Item allocable to the General Partner(s) hereunder
shall not equal 0.01% of the aggregate amount allocable to all
the Partners without giving effect to this provision, then the
amount of such Partnership Item(s) otherwise allocable to the
Limited Partners hereunder shall be correspondingly reduced in
order to assure the General Partner(s) of its or their 0.01%
share. Any such reduction shall be applied to reduce the share
of all classes of Limited Partners in proportion to their
respective Interests.
(xvii) For purposes of determining each Partner's
proportionate share of the excess Nonrecourse Liabilities of the
Partnership pursuant to Section 1.752-3(a)(3) of the Allocation
Regulations, the Investment Limited Partner shall be deemed to
have a 99.99% interest in Profits and the General Partner shall
be deemed to have a 0.01% interest in Profits.
(xviii) Any recapture of any Tax Credit shall be allocated to
and among the Partners in the same manner in which the Partners
share the expenditures giving rise to such Tax Credit.
(xix) If for any Fiscal Year the application of the minimum
gain chargeback provisions of Section 10.4(b)(viii) or Section
10.4(b)(ix) of this Agreement would cause distortion in the
economic arrangement among the Partners and it is not expected
that the Partnership will have sufficient other income to correct
that distortion, the General Partner may request a waiver from
the Commissioner of the Service of the application in whole or in
part of Section 10.4(b)(viii) or Section 10.4(b)(ix) in
accordance with Section 1.704-2(f)(4) of the Allocation
Regulations. Furthermore, if additional exceptions to the
minimum gain chargeback requirements of the Allocation
Regulations have been provided through revenue rulings or other
Service pronouncements, the General Partner is authorized to
cause the Partnership to take advantage of such exceptions if to
do so would be in the best interest of a majority in interest of
the Partners.
(xx) In the event that any fee payable to any General Partner or
any Affiliate thereof shall instead be determined to be a non-
deductible, non-capitalizable distribution from the Partnership
to a Partner for federal income tax purposes, then there shall be
allocated to such General Partner an amount of gross income equal
to the amount of such distribution.
(xxi) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by Qualified
Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of Cash
Flow under Clause Fifth of Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions of
Capital Proceeds under Clauses Sixth, Seventh or Eighth of
Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4(b)(viii) or Section 10.4(b)(ix).
(5) Capital Accounts shall be increased by any qualified income
offset required under Section 10.4(b)(x).
(6) Capital Accounts shall be increased by allocations of
Operating Profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of
Operating Losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of Losses
under Section 10.1(b).
(9) Capital Accounts shall be increased by allocations of
Profits under Section 10.1(b).
(xxii) To the maximum extent permitted under the Code,
allocations of Profits and Losses shall be modified so that the
Partners' Capital Accounts reflect the amount they would have
reflected if adjustments required by Sections 10.4(b)(x),
10.4(b)(xi) and 10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (and
items thereof) shall be determined and allocated in accordance
with this Agreement to the fullest extent permitted by Section
704(b) of the Code and the Allocation Regulations. In order to
preserve and protect the determinations and allocations provided
for in this Agreement, the General Partner is hereby authorized
and directed to allocate Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and credits (and items
thereof) arising in any Fiscal Year differently than otherwise
provided for in this Agreement to the extent that allocating
Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures or credits (or any item thereof) in
the manner provided for herein would cause the determinations and
allocations of each Partner's distributive share of Profits, tax-
exempt income, Losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be permitted
by Section 704(b) of the Code. Any allocation made pursuant to
this Section 10.5 shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Agreement, and no
amendment of this Agreement or approval of any Partner shall be
required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partner is authorized to act only
after having been advised in writing by the Tax Accountants that,
under Section 704(b) of the Code and/or the Allocation
Regulations, (i) the New Allocation is necessary, and (ii) the
New Allocation is the minimum modification of the allocations
otherwise provided for in this Agreement necessary in order to
assure that, either in the then-current Fiscal Year or in any
preceding Fiscal Year, each Partner's distributive share of
Profits, tax-exempt income, Losses, non-deductible non-
capitalizable expenditures and Tax Credits (or any item thereof)
is determined and allocated in accordance with this Agreement to
the fullest extent permitted by Section 704(b) of the Code and
the Allocation Regulations.
(c) If the General Partner is required by Section 10.5(a) to
make any New Allocation in a manner less favorable to the Limited
Partners than is otherwise provided for herein, then the General
Partner is authorized and directed, only after having been
advised in writing by the Tax Accountants that such an allocation
is permitted by Section 704(b) of the Code and the Allocation
Regulations, to allocate Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and credits (and any
item thereof) arising in later years in such manner so as to
bring the allocations of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and credits (and each
item thereof) to the Limited Partners as nearly as possible to
the allocations thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partner under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the
Tax Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partner to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
10.6 Recapture Amount
(a) If at any time during the "compliance period" (as defined in
Section 42(i)(1) of the Code), the Apartment Complex ceases to be
a "qualified low income housing project" (as defined in Section
42(g)(1) of the Code) or any Low-Income Unit in the Apartment
Complex ceases to be a "low income unit" (as defined in Section
42(i)(3) of the Code), and as a result thereof all or any portion
of credits allowed to the Partnership and its Partners under
Section 42 of the Code are subject to recapture pursuant to
Section 42(j) of the Code (such an occurrence being referred to
herein as a "Recapture Event"), the Investment Limited Partner
shall become entitled to additional cash distributions equal to
the "Recapture Amount".
(b) The Recapture Amount is an amount that, after deduction of
all federal income taxes payable by the Investment Limited
Partner (or its partners) as computed under Section 10.6(d)
below, is equal the sum of (i) the "credit recapture amount"
allocable to the Investment Limited Partner as defined in Section
42(j) of the Code plus (ii) the amount of credits allocable to
the Investment Limited Partner which are disallowed in the year
of the Recapture Event and in each subsequent year.
(c) Any Recapture Amount distributable to the Investment Limited
Partner pursuant to the foregoing provisions shall be distributed
as funds become available for such distributions, but such
distributions shall not be made prior to (i) in the case of the
"credit recapture amount", the year of the Recapture Event and
(ii) in the case of any credits disallowed with respect to any
year subsequent to the Recapture Event, in each such subsequent
year.
(d) Determination of the Recapture Amount shall be made on the
assumption that receipt or accrual by each partner of the
Investment Limited Partner of any amounts distributable to such
partner under Subsection (c) above will currently be subject to
United States federal income tax at the highest marginal rate
applicable to corporations for the year(s) in question (and
assuming the non-applicability of the alternative minimum tax).
(e) All computations required under this Section 10.6 shall be
made reasonably by the Investment Limited Partner, and the
results of such computations, together with a statement
describing in reasonable detail the manner in which such
computations were made, shall be delivered to the Managing
General Partner in writing. Within fifteen (15) days following
receipt of such computation, the Managing General Partner may
request that the Auditors determine whether such computations are
reasonable and are not erroneous. If the Auditors determine that
such computations are unreasonable or contain errors, then the
Auditors shall determine what they believe to be the appropriate
computations. If the Investment Limited Partner does not agree
with the determination of the Auditors, then another accounting
firm other than the Auditors to be selected jointly by the
Investment Limited Partner and the Managing General Partner or,
if they cannot agree, by the American Arbitration Association,
from among the ten largest national accounting firms, shall make
such computations. The computations of the Investment Limited
Partner, the Auditors, or the other accounting firm so selected,
whichever is applicable, shall be final, binding and conclusive
upon the parties. All fees and expenses payable to an accounting
firm other than the Auditors under this paragraph shall be borne
solely by the Managing General Partner. All fees and expenses
payable to the American Arbitration Association shall be borne
equally by the General Partner and the Investment Limited
Partner.
ARTICLE XI
Management Agent
11.1 General
The General Partner shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement. The
Management Agent shall receive a Management Fee of those amounts
payable from time to time by the Partnership to the Management
Agent for management services in accordance with a management
contract approved by any Agency or Lender with the right to
approve the same, or, when any such management contract is not
subject to the approval of any Agency or Lender, in accordance
with a reasonable and competitive fee arrangement; which fee may
equal 5% of gross collected revenues plus an additional 1%
contingent on available Cash Flow as provided in the Management
Agreement provided that (i) there are no unfunded Operating
Deficits, (ii) the Debt Service Coverage Ratio for such Fiscal
Year is 1.15 to 1.00 and (iii) a New Permanent Loan Commitment
has been obtained by the Partnership. The initial Management
Agent shall be Park Management, Inc. From and after the
Admission Date, the Partnership shall not enter into any
Management Agreement or modify in any material respect or extend
on other than substantially similar terms as the immediately
preceding Management Agreement any Management Agreement unless
(i) the General Partner shall have obtained the prior Consent of
the Special Limited Partner to the identity of the Management
Agent and the terms of the Management Agreement or the
modification or extension thereof and (ii) such new Management
Agreement or modified or extended Management Agreement provides
that it is terminable by the Partnership on thirty (30) days'
notice by the Partnership in the event of any change in the
identity of the General Partner. The Management Agent shall
maintain insurance in accordance with the applicable Insurance
Requirements set forth in Exhibit C. Copies of such policies (or
binders) shall be provided to the Partnership and the Investment
Limited Partner within thirty (30) days after the effective date
of the Management Agreement and annually thereafter.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however, should
the Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property
management, rent-up or leasing fees shall be paid to the
Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser
of (i) fees competitive in price and terms with those of non-
affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably
be available to the Partnership, or (ii) five percent (5%) of the
gross revenues of the Apartment Complex. No duplicate property
manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a substantial
building code violation which shall not have been cured within
six (6) months after notice from a Governmental Authority or (ii)
the Partnership shall not have achieved a 1.15 to 1.00 Debt
Service Coverage Ratio during any Fiscal Year commencing on
February 1, 2001, or (iii) an Event of Bankruptcy shall occur
with respect to the Management Agent, or (iv) the Management
Agent shall commit willful misconduct or gross negligence in its
conduct of its duties and obligations under the Management
Agreement or (v) there is any change in the Persons acting as
General Partners (to which the Special Limited Partner has not
consented), or (vi) the Management Agent is cited by the Credit
Agency or any other Tax Credit monitoring or compliance agency of
the State or any other Governmental Authority for a violation or
alleged violation of any applicable rules, regulations or
requirements, including, without limitation, non-compliance with
the Minimum Set-Aside Test, the Rent Restriction Test or any
other Tax Credit-related provision, then, upon request by the
Special Limited Partner and subject to Agency and Lender
approval, if required, the General Partner shall cause the
Partnership to promptly terminate the Management Agreement with
the Management Agent and appoint a new Management Agent selected
by the Special Limited Partner, which new Management Agent shall
not be an Affiliate of a General Partner. Each General Partner
hereby grants to the Special Limited Partner an irrevocable (to
the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute and deliver
any and all documents and instruments on behalf of such General
Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI. Subject to any Requisite
Approvals, the Partnership shall not enter into any future
management arrangement or renew or extend any existing management
arrangement unless such arrangement is terminable without penalty
upon the occurrence of the events described in this Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Act or by any Governmental Authority and may
maintain such other books and records as the General Partner in
its discretion deems advisable. Each Limited Partner, or its
duly authorized representatives, shall have access to the records
of the Partnership at the principal office of the Partnership at
any and all reasonable times, and may inspect and copy any of
such records. A list of the name and addresses of all of the
Limited Partners shall be maintained as part of the books and
records of the Partnership and shall be mailed to any Limited
Partner upon request. The Partnership may require reimbursement
for any out of pocket expenses which it incurs as a result of the
exercise by any Limited Partner of its rights under this Section
12.1, including, without limitation, photocopying expenses.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the
General Partner shall determine. Withdrawals shall be made only
in the regular course of Partnership business on such signature
or signatures as the General Partner may determine. All deposits
(including security deposits and other funds required to be
escrowed by any Lender or Agency) and other funds not needed in
the operation of the business shall be deposited, if required by
applicable law and to the extent permitted by applicable Agency
or Lender requirements, in interest bearing accounts or invested
in United States Government obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partner, all tax returns of the Partnership. Prior to the filing
of the Partnership tax returns, and in no event later than
February 1 of each Fiscal Year, the Auditors shall deliver the
tax returns for the prior Fiscal Year to the Tax Accountants for
their review and comment. If a dispute arises between the
Auditors and the Tax Accountants over the proper preparation of
the tax returns and such dispute cannot be resolved by the
Auditors and the Tax Accountants by March 1 of such Fiscal Year,
then the Tax Accountants shall make the final decision with
respect to whether any changes are necessary. The Partnership
shall reimburse the Investment Limited Partner and its Affiliates
for all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports to
the Partners in accordance with generally accepted auditing
standards.
(c) If the Partnership fails to fulfill any of its obligations
under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the
time periods set forth therein, at any time thereafter upon
written notice from the Special Limited Partner, the General
Partner shall appoint replacement Auditors. If no such notice
from the Special Limited Partner is delivered, the Consent of the
Special Limited Partner must be received to the appointment of
replacement Auditors. If the General Partner fails to appoint
replacement Auditors within thirty (30) days of the notice from
the Special Limited Partner to replace the Auditors, then the
Special Limited Partner shall appoint replacement Auditors of its
own choosing, the cost of which shall be borne by the Partnership
as a Partnership expense. All of the Partners hereby grant to
the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law, coupled with an
interest, to so appoint replacement Auditors and to anything else
which in the judgment of the Special Limited Partner may be
necessary or appropriate to accomplish the purposes of this
Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to
use, so far as permitted by the provisions of the Code,
accelerated cost recovery methods. However, the Partnership may
change to another method of cost recovery if such other method
is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner (and the limited partners and/or
holders of beneficial assignee certificates thereof).
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partner in such
manner as will, in the opinion of the Auditors, be most
advantageous to the Investment Limited Partner and the limited
partners and/or holders of beneficial assignee certificates
thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of
the Investment Limited Partner or a transfer of all or any part
of an interest of a partner and/or a holder of a beneficial
assignee certificate of the Investment Limited Partner, the
Partnership shall elect, upon the request of the Investment
Limited Partner, pursuant to Section 754 of the Code, to adjust
the basis of the Partnership property. Any adjustments made
pursuant to said Section 754 shall affect only the successor in
interest to the transferring Partner or partner or holder of a
beneficial assignee certificate thereof. Each Partner will
furnish the Partnership all information necessary to give effect
to any such election.
12.6 Fiscal Year
Unless otherwise required by law, the Fiscal Year and tax year of
the Partnership shall be the calendar year. The books of the
Partnership shall be maintained on an accrual basis.
12.7 Information to Partners
(a) 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) Within forty-five (45) days after the end of each Fiscal
Year of the Partnership, (A) a balance sheet as of the end of
such Fiscal Year, a statement of income, a statement of partners'
equity, and a statement of cash flows, each for the Fiscal Year
then ended, all of which, except the statement of cash flows,
shall be prepared in accordance with generally accepted
accounting principles and accompanied by a report of the Auditors
containing an opinion of the Auditors, and (B) a report of the
activities of the Partnership during the period covered by the
report. With respect to any distribution to the Investment
Limited Partner, the report called for shall separately identify
distributions from (1) Cash Flow from operations during the
period, (2) Cash Flow from operations during a prior period which
had been held as reserves, (3) proceeds from disposition of
property and investments, (4) lease payments on net leases with
builders and sellers, (5) reserves from the gross proceeds of the
Capital Contributions of the Investment Limited Partner, (6)
borrowed monies, and (7) transactions outside of the ordinary
course of business with a description thereof.
(ii) Within thirty (30) days after the end of each Fiscal Year of
the Partnership, all information relating to the Partnership
and/or the Apartment Complex which is necessary, in the view of
the Tax Accountants, for the preparation of the Limited Partners'
federal income tax returns for the prior Fiscal Year.
(iii) Within thirty (30) days after the end of each quarter
of a Fiscal Year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended, which may
be unaudited;
(C) a statement of cash flows for the quarter then ended, which
may be unaudited;
(D) a certification of the General Partner that the Apartment
Complex and its tenants are in compliance with all applicable
federal, state and local requirements and regulations;
(E) a Tax Credit monitoring form, a copy of the rent roll for
the Apartment Complex for each month during such quarter, a
statement of income and expenses, an operating statement and an
Occupancy/Rental Report, all in a form specified by the Special
Limited Partner;
(F) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities
during the quarter covered by the report; and
(b) Within sixty (60) days after the end of each Fiscal Year of
the Partnership a copy of the annual report to be filed with the
United States Treasury concerning the status of the Apartment
Complex as low-income housing and, if required, a certificate to
the appropriate state agency concerning the same.
(c) upon the written request of the Investment Limited Partner
for further information with respect to any matter covered in
item (a) or item (b) above, the General Partner shall furnish
such information within thirty (30) days of receipt of such
request or such longer time if delay is reasonable and such
additional information shall be delivered at the cost of the
Investment Limited Partner; provided, however, that such expenses
shall be reasonable and comparable to those ordinarily and
customarily incurred for such information.
(d) Prior to October 15 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the Tax Credits, Profits
and Losses of the Partnership for federal income tax purposes for
the current Fiscal Year. Such estimate shall be prepared by the
General Partner and the Auditors and shall be in the form
specified by the Special Limited Partner.
(e) Within fifteen (15) days after the end of any calendar
quarter during which:
(i) there is a material default by the Partnership under any
Project Document or in the payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by application of
funds therein for purposes materially different from those for
which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited Partner,
or
(iv) any Partner has pledged or collateralized its Interest in
the Partnership, the General Partner shall send the Investment
Limited Partner a detailed report of such event.
(f) After the Admission Date, the Partnership shall send to the
Investment Limited Partner copies of all applicable periodic
reports covering the status of project operations and any matters
relating to the Tax Credit as are required by any Lender or
Agency.
(g) On or before May 1 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner a report on
operations, in the form supplied by the Special Limited Partner.
(h) The General Partner hereby consents to each Lender or Agency
providing the Special Limited Partner with copies of all material
communications between any such Lender or Agency and the General
Partner and/or the Partnership, including, but not limited to,
any notices of default.
(i) If the earlier of (A) the Completion Date or (B) the date
upon which tenants first occupied apartment units in the
Apartment Complex after the construction of such units, shall
have occurred six (6) months or more prior to the date on which
the Investment Limited Partner acquired its Interest in the
Partnership, then the General Partner shall cause to be prepared
and delivered to the Investment Limited Partner within sixty (60)
days of the Admission Date the following items:
(i) An unaudited statement of income of the Partnership for the
year (or such shorter period as there may be from the date of the
most recent audited statement of income of the Partnership) ended
on the date upon which the Investment Limited Partner acquired
its Interest in the Partnership; and
(ii) An audited statement of income of the Partnership for any
fiscal year of the Partnership ending between (A) the earlier of
(1) the Completion Date or (2) the date upon which tenants first
occupied apartment units in the Apartment Complex after the
rehabilitation of such units and (B) the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership.
(j) Within thirty (30) days following the Completion Date, the
General Partner shall prepare, or cause the Auditors to prepare,
and deliver to each Limited Partner a Tax Credit basis worksheet
for each building in the Apartment Complex, all in a form
specified by the Special Limited Partner.
(k) Promptly after the closing of any New Permanent Loan, the
General Partner shall send to the Special Limited Partner a
closing binder containing photocopies of the fully executed
versions of all documents signed in connection with the New
Permanent Mortgage. From and after any date upon which the
General Partner receives notice from the Special Limited Partner
that the Special Limited Partner would like copies of the monthly
rent rolls for the Apartment Complex to be sent to the Special
Limited Partner, the General Partner shall send copies of the
rent rolls to the Special Limited Partner no later than ten (10)
days after the expiration of each month.
(l) If the General Partner does not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or Section
12.7(a)(ii) within the time periods set forth therein, the
General Partner shall pay as damages the sum of $250 per day
(plus interest at a rate equal to the Prime Rate plus three
percent (3%)) to the Investment Limited Partner until such
obligations shall have been fulfilled. Such damages shall be
paid forthwith by the General Partner, and the failure to pay any
such damages shall constitute a material default by the General
Partner hereunder. In addition, if the General Partner shall
fail to pay any such damages, the General Partner and its
Affiliates shall forthwith cease to be entitled to the
distribution of any Cash Flow or Capital Proceeds to which they
may otherwise be entitled hereunder. Such distributions of Cash
Flow and Capital Proceeds shall be restored only upon the payment
of such damages in full, and any amount of such damages not so
paid shall be deducted against distributions of Cash Flow and
Capital Proceeds otherwise due to the General Partner or its
Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for
the sale of goods or services or the lending of money to the
Partnership or the General Partners, except for (i) management
services, subject to the restrictions set forth in Article XI,
(ii) loans made by, or guaranteed by, the Investment General
Partner or any of its Affiliates and (iii) those dealings,
contracts or provision of services described in the Investment
Partnership Agreement. Extraordinary circumstances shall only be
presumed to exist where there is an emergency situation requiring
immediate action and the services required are not immediately
available from unaffiliated parties. All services rendered under
such circumstances must be rendered pursuant to a written
contract which must contain a clause allowing termination without
penalty on sixty (60) days' notice. Goods and services provided
under such circumstances must be provided at the lesser of actual
cost or the price charged for such goods or services by
independent parties.
(c) In the event that extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partner nor any of its Affiliates
shall provide such services unless it believes it has an adequate
staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partner. Any such services
must be reasonable for and necessary to the Partnership, actually
furnished to the Partnership, and provided at the lower of one
hundred percent (100%) of the construction contract rate with
respect to the Apartment Complex or ninety percent (90%) of the
competitive price charged for such services by independent
parties for comparable goods and services in the same geographic
location (except that in the case of transfer agent, custodial
and similar banking-type fees, and insurance fees, the
compensation, price or fee shall be at the lesser of costs or the
compensation, price or fee of any other Person rendering
comparable services as aforesaid). Cost of services as used
herein means the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel,
based on the amount of time such personnel spend on such services
or other method of allocation acceptable to the accountants for
the Investment Limited Partner.
(d) All services provided by the Investment General Partner or
any Affiliate thereof pursuant to Section 12.8(c) must be
rendered pursuant to the Investment Partnership Agreement or a
written contract which precisely describes the services to be
rendered and all compensation to be paid and shall contain a
clause allowing termination without penalty upon sixty (60) days'
notice to the Investment General Partner by a vote of a majority
in interest of the limited partners and assignees of beneficial
interests in the Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership to
the Investment General Partner or its Affiliates except as
described in the Investment Partnership Agreement.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition of an Interest may be made if the Interest sought
to be Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve (12) consecutive months
prior to the proposed date of the Disposition, would, in the
opinion of the Tax Accountants or tax counsel to the Partnership,
result in the termination of the Partnership under Section 708 of
the Code. This Section 13.1 shall have no application to any
required repurchase of the Investment Limited Partner's Interest.
Any Disposition in contravention of any of the provisions of this
Section 13.1 shall be void ab initio and ineffectual and shall
not bind or be recognized by the Partnership. Notwithstanding
the foregoing provisions of this Section 13.1, however, the
Investment Limited Partner may waive the provisions of this
Section 13.1 at any time as to a Disposition or series of
Dispositions, and in the event of such a waiver, this Section
13.1 shall have no force or effect upon such Disposition or
series of Dispositions.
13.2 Amendments to Certificates
Within one hundred twenty (120) days after the end of the
Partnership Fiscal Year in which the Investment Limited Partner
shall have received any distributions under Article X, the
General Partner shall file an amendment to the Certificate
reducing the amount of its allocable share of such distribution
the amount of Capital Contribution of the Investment Limited
Partner as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on account
of any such distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of Substitute Limited
Partners, although the General Partner may elect to do so more
frequently. In the case of assignments, where the assignee does
not become a Substitute Limited Partner, the Partnership shall
recognize the assignment not later than the last day of the
calendar month following receipt of notice of assignment and all
documentation required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2, no
such amendments to the Certificate need be filed by the General
Partner if the Certificate is not required to and does not
identify the Limited Partners or their Capital Contributions in
such capacity.
13.3 Notices
Except as otherwise specifically provided herein, all notices,
demands or other communications hereunder shall be in writing and
shall be deemed to have been given when the same are (i)
deposited in the United States mail and sent by certified or
registered mail, postage prepaid, (ii) delivered to a nationally
recognized overnight delivery service, (iii) sent by telecopier
or other facsimile transmission, answerback requested, or (iv)
delivered personally, in each case, to the parties at the
addresses set forth below or at such other addresses as such
parties may designate by notice to the Partnership:
(a) If to the Partnership, at the office of the Partnership set
forth in Section 2.2.
(b) If to a Partner, at its address set forth in the Schedule,
with copies to M. Chrysa Long, Esq., Sherburne, Powers & Needham,
P.C., One Beacon Street, 32nd Floor, Boston, MA, 02108 and Paul
L. Gunn, Esq., Taylor, Covington & Smith, P.A., 315 Tombigbee
Street, Jackson, MS 39201.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to
a subdivision in which such words appear unless the context
otherwise requires. The singular shall include the plural, and
vice versa, and each gender (masculine, feminine and neuter)
shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers
to the corresponding Section or Article of this Agreement, unless
specified otherwise. References to Treasury Regulations
(permanent or temporary) or Revenue Procedures shall include any
successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding
upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties
hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance with
the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the
original or the same counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in effect, (i)
each of the provisions of this Agreement shall be subject to, and
the General Partner covenants to act in accordance with, the
Project Documents; (ii) the Project Documents shall govern the
rights and obligations of the Partners, their heirs, executors,
administrators, successors and assigns to the extent expressly
provided therein; (iii) upon any dissolution of the Partnership
or any transfer of the Apartment Complex, no title or right to
the possession and control of the Apartment Complex and no right
to collect the rent therefrom shall pass to any Person who is
not, or does not become, bound by the Project Documents in a
manner satisfactory to the Lenders and any Agency (to the extent
that its approval is required); (iv) no amendment to any
provision of the Project Documents shall become effective without
the prior written consent of any Lender and/or Agency (to the
extent that its approval is required); and (v) the affairs of the
Partnership shall be subject to the Regulations, and no action
shall be taken which would require the consent or approval of any
Lender and/or Agency unless the prior consent or approval of such
Lender and/or Agency, as the case may be, shall have been
obtained. No new Partner shall be admitted to the Partnership,
and no Partner shall withdraw from the Partnership or be
substituted for without the consent of any Lender and/or Agency
(if such consent is then required). No amendment to this
Agreement relating to matters governed by the Regulations or
requirements shall become effective until any Requisite Approvals
to such amendment shall have been obtained.
(b) Any conveyance or transfer of title to all or any portion of
the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of any Regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable
and (a) if for any reason any provision is determined to be
invalid, such invalidity shall not impair the operation of or
affect those portions of this Agreement which are valid, and (b)
if for any reason any provision would cause the Investment
Limited Partner or the Special Limited Partner (in its capacity
as a Limited Partner) to be bound by the obligations of the
Partnership (other than the Regulations and the other
requirements of any Agency or Lender), such provision or
provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partner only with
the Consent of the Investment Limited Partner and the Consent of
the Special Limited Partner.
13.12 Time of Admission
The Investment Limited Partner shall be deemed to have been
admitted to the Partnership as of the Commencement Date for all
purposes of this Agreement, including Article X, provided,
however, that if treasury regulations are issued under the Code
or an amendment to the Code is adopted which would require, in
the opinion of the Auditors, that the Investment Limited Partner
be deemed admitted on a date other than as of the Commencement
Date, then the General Partner shall select a permitted admission
date which is most favorable to the Investment Limited Partner.
WITNESS the execution hereof under seal as of the ____ day of
October, 1998.
ORIGINAL (WITHDRAWING) GENERAL PARTNER
LIMITED PARTNER:
BRADFORD PARK, LLC, a Mississippi
/s/ Suzan B. Thames limited liability company
Suzan B. Thames
By: /S/ J.H. Thames, Jr.
J.H. Thames, Jr., Member/Manager
SPECIAL LIMITED PARTNER:
BCTC 94, INC., a Delaware corporation
By: /s/ Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-in-
Fact for John P. Manning, President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND
IV L.P., a Delaware limited partnership
by its general partner, Boston Capital
Associates IV L.P., a Delaware limited
partnership, by its general partner,
C&M Associates d/b/a Boston Capital
Associates, a Massachusetts general
partnership
By: /s/ Bonnie Kate Fox
Bonnie Kate Fox, as Attorney-in-
Fact for John P. Manning, a Partner
CONSENTS AND AGREEMENTS
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Article XI of the foregoing First Amended and
Restated Agreement of Limited Partnership notwithstanding any provision of
the Management Agreement to the contrary.
PARK MANAGEMENT, INC., a Mississippi
corporation
By: /s/ J. H. Thames, Jr.
J. H. Thames, Jr., President
The undersigned hereby executes this Agreement for the sole purpose of
agreeing to the provisions of Sections 6.11 and 6.12(a) of the foregoing First
Amended and Restated Agreement of Limited Partnership.
BRADFORD PARK, LLC, a Mississippi limited
liability company
By: /s/ J. H. Thames, Jr.
J. H. Thames, Jr., Member/Manager
SOUTHAVEN PARTNERS I, L.P.
SCHEDULE A
As of October__ 1, 1998
General Partner Capital Contribution Percentage Interests of
Operating Profits and
Losses and Tax Credits
Bradford Park, LLC $100 0.01%
2001 Airport Road, Suite 304
Jackson, MS 39208
Special Limited Partner Capital Contribution Percentage Interests of
Operating Profits and
Losses and Tax Credits
BCTC 94, Inc. $10 0%
c/o Boston Capital Partners, Inc.
One Boston Place, 21st Floor
Boston, MA 02108
Investment Total Agreed-to Paid-In Capital Percentage
Limited Partner Capital Contributio Contribution* Interests of
Operating Profits
and Losses and
Tax Credits
Boston Capital Tax $3,165,041 $1,899,024 99.99%
Credit Fund IV L.P.
One Boston Place,
21st Floor
Boston, MA 02108
*Paid-in Capital Contribution as of the date of this Schedule A. Future
Installments of Capital Contribution are subject to adjustment and are due
at the times and subject to the conditions set forth in the Agreement to
which this Schedule is attached.
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PROJECTED RENTS
EXHIBIT C
INSURANCE REQUIREMENTS
The General Partner shall cause the Partnership to maintain insurance for the
term of the Partnership in accordance with the following:
I. Comprehensive Casualty.
The General Partner shall cause to be maintained comprehensive
casualty insurance including, but not limited to, fire, earthquakes and other
risks generally included under "extended coverage" policies in favor of the
Partnership in an amount not less than the replacement value of the Apartment
Complex and shall include loss of rents coverage in an amount not less than
the Apartment Complex's projected annual gross rent, an agreed amount
endorsement covering all property and rental values, and a standard building
laws endorsement which includes coverage for building ordinance compliance,
demolition and any increased cost of construction of the Apartment Complex.
II. Comprehensive General Liability.
The General Partner shall cause to be maintained commercial general
liability insurance in favor of the Partnership in an amount not less than
$1,000,000 per occurrence (combined single limit) and $2,000,000 in the
aggregate.
III. Worker's Compensation and Employer's Liability.
The General Partner shall cause to be maintained worker's compensation
and employer's liability insurance in favor of the Partnership in an amount
equal to the greater of (i) the amount required by the State's laws governing
such insurance or (ii) $500,000.
IV. Comprehensive Automobile.
The General Partner shall cause to be maintained comprehensive automobile,
including non-owned automobile liability, insurance in favor of the
Partnership in an amount not less than $1,000,000 (combined single limit).
V. Excess or Umbrella Liability.
The General Partner shall cause to be maintained excess or umbrella
liability insurance in favor of the Partnership in an amount not less than
$5,000,000 (combined single limit).
VI. Builder's Risk.
Through the Completion Date, or such later date as may be required by
any Agency or any Lender, the General Partner shall cause the Partnership to
maintain builder's risk insurance in favor of the Partnership in an amount
not less than the greater of (i) the full replacement value of the Apartment
Complex (excluding the value of the underlying land, the site utilities
and the foundations) or (ii) such other amount as shall be required by any
Agency or Lender.
VII. Management Agent.
The Management Agent shall maintain for the term of the Management
Agreement liability insurance in the amount of $1,000,000 per incident and
$2,000,000 in the aggregate, worker's compensation insurance in accordance
with the State's laws governing such insurance, a blanket fidelity bond in
the amount of not less than six (6) months of the Apartment Complex's
projected gross rent, auto liability insurance in the amount of $1,000,000
per incident and error and omissions insurance in the amount of $1,000,000
per incident.
VIII. General Requirements.
All of the policies required above, including those to be maintained
by the Management Agent, shall be issued by insurance carriers which are
currently rated by Standard & Poors as A or better. No deductibles on such
policies shall exceed $25,000 during construction and $5,000 thereafter.
GENERAL PARTNER'S PAYMENT CERTIFICATE
(First Installment)
Certificate, dated as of October __, 1998 (this "Certificate"), of BRADFORD
PARK, LLC, a Mississippi limited liability company (the "General Partner").
This Certificate is delivered pursuant to the provisions of Section 5.1 of
the First Amended and Restated Agreement of Limited Partnership dated as of
February 1, 1998 (the "Partnership Agreement") of SOUTHAVEN PARTNERS I, L.P., a
Mississippi limited partnership (the "Partnership").
The undersigned hereby certify that:
(i) The General Partner has satisfied and continues to satisfy
all of its material obligations under the Partnership Agreement.
(ii) The covenants, representations and warranties set forth in
Sections 6.5 and 6.6 of the Partnership Agreement are true and
correct as of the date hereof.
(iii) The Partnership is not in default under any of the
Project Documents or any other material obligation of the
Partnership.
(iv) The covenants, representations and warranties set forth in
the Tax Certificate issued by the General Partner to BOSTON
CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited partnership,
and dated as of October __, 1998 are correct as of the date
hereof in all material respects.
(v) The facts and representations set forth in the Fact Sheet
attached hereto as Exhibit A and Exhibit B are true and correct
as of the date hereof.
(vi) Each of the conditions precedent to the payment of the First
Installment (as such term is defined in the Partnership
Agreement) has been satisfied as of the date hereof.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed as of the day and year set forth above.
GENERAL PARTNER: BRADFORD PARK, LLC, a Mississippi limited
liability company
By: /s/ J.H. Thames, Jr.
J.H. Thames, Jr., Member/Manager
Exhibit A
FACT SHEET
SOUTHAVEN PARTNERS I, L.P.
1. Sources and Uses of Funds
SOURCES OF FUNDS APPLICATIONS OF FUNDS
Bond Loan $9,765,000 Land $1,000,000
(underlying L/C ($235,000)
$235,000) Less Discount)
Deferred
Development Fee $556,755 Construction Hard
Costs $9,623,605
Investment Limited
Partner Capital
$3,165,041 Construction Soft
Costs $1,495,358
General Partner
Capital $100 Construction
Contingency $213,100
Development Fee $1,154,833
TOTAL $13,486,896 TOTAL $13,486,896
2. Financing
Bond Loan
A. Lender/Trustee: Mississippi Regional Housing Authority
No.II/First Tennessee Bank National
Association
B. Mortgage Amount: $9,765,000
C. Note Date: October 1, 1998
D. Interest Rate: [__%
E. Amortization: 30 years
F. Maturity Date: Mandatory Put date is October 1, 1999
G. Guarantors: Nonrecourse/Letter of Credit Security
Letter of Credit
A. Issuer: AmSouth Bank
B. Amount: $9,765,000
C. Stated Termination Date: no later than October 15, 2001
D. Beneficiary: Bond Trustee
E. Guarantor: J.H. Thames, Jr., Rodney F. Triplett,
Jr.
3. Eligible Basis: $11,948,352
4. Qualified Basis: $11,948,352
5. GP Capital Contribution: $100
6. Type of Credit: 4%, New Construction; Tax-Exempt Bond Financing
7. Rent-up Schedule: 50% by June 30, 2000;
75% by September 30, 2000; and
100% by December 31, 2000;
8. Projected Credit to the
Investment Partnership:
A. $13,709 for 1999,
B. $246,755 for 2000,
C. $427,708 per annum for each of the years 2001 through 2008
(inclusive), and
D. $413,999 for 2009,
E. $180,953 for 2010.
9. Total Projected Credit:
A. $13,710 for 1999,
B. $246,779 for 2000,
C. $427,751 per annum for each of the years 2001 through 2008
(inclusive), and
D. $414,041 for 2009,
E. $180,972 for 2010.
10. Tax Credit Application:
A. Credit Approval Date: August __, 1998
B. Credit Approval Amount: $427,708/year
C. Carryover Allocation Date: N/A
D. Carryover Allocation Amount: N/A
E. Tax Credit Rate on 8609: To be determined
11. Apartment Complex:
A. Name: Bradford Park Apartments
B. Address: Airways Road
Southaven, MS
C. County: Desoto County
D. MSA: Desoto County
E. Type of Project: Multi-family
12. Median Income: $45,000 (Family of Four, 1998)
13. Kind of Apartments:
Number of Number of Total Basic Utility
Bedrooms Units Sq. Ft. Rent Allowance
1 32 958/unit $456/month $45
2 112 1,150/unit $548/month $53
3 64 1,349/unit $635/month $60
14. Rental Assistance: N/A
15. Annual Operating Expense: $527,863 (plus 3% annual
(beginning 1999) inflation)
16. Replacement Reserve Account: $41,600 year
(beginning 1998)
17. Maximum Yearly Distribution of
Cash Flow permitted:
18. Amount of Asset Management Fee
to Boston Capital $5,000/year 1
(commencing 2000)
19. Amount of Total Depreciable Base
Allocated to Personal Property: $609,200
20. Completion Date: July 31, 2000 (anticipated)
21. Total Capital Contribution of
Investment Partnership: $3,165,041
22. Schedule of Capital Contributions
Amount Installment Conditions on Capital Contributions
$1,899,024 First on the latest to occur of (A) the
Admission Date, (B) the Bond Loan
Full Funding Date and (C) Tax Credit
Set-Aside and (D) receipt of Permanent
Mortgage Commitment.
$633,009 Second on the 50% Completion Date;
$316,504 Third on the latest to occur of (A) the
Completion Date, (B) Cost Certification,
(C) receipt of current liability Insurance
Certificates, (D) receipt of an updated
Title Policy in form and substance
satisfactory to the Special Limited
Partner, which policy in no event shall
contain a survey exception or (E) receipt
by the Investment Limited Partner of an
Estoppel Letter from each Lender and
(F) receipt of Contractor Pay-Off Letter.
$316,504 Fourth on the latest to occur of (A) the
Initial 100% Occupancy Date, (ii) Permanent
Mortgage Commencement, (iii) Rental
Achievement;
23. Fees and Special Distributions to be paid from Capital Contributions:
24. General Partner: Bradford Park, LLC
Contact: J. H. Thames, Jr.
Address: P.O. Box 741
Jackson, MS 39205
Telephone: (601) 939-0225
Fax: (601) 932-2532
25. Ownership Interests:
Partner Normal Capital Cash
Operations Transactions Flow
General Partner 0.01% 80% 90%
Investment Limited
Partner 99.99% 19.999% 10%
Special Limited Partner 0% .001% 0%
26. Management Agent: Park Management, Inc.
Contact: Tammy Dykes
Address: P.O. Box 741
Jackson, MS 39205
Telephone: (601) 939-0225
Amount of Fee: 6% of collected rents (5% fixed, 1% contingent)
27. Builder: Unicorp, Inc.
Builder's Profit: $544,732
Builder's Overhead: $177,073
28. Tax Return Preparer/Auditor: Bob Robinson, CPA
Address: 2084 Dunbarton Drive
Jackson, MS 39216
Telephone: (601) 982-3875
29. Partnership Federal ID Number: 64-0898076
30. Operating Deficit Guarantees: Guaranty limited to 12 months Reserves,
Operating Expenses and Debt Service from
Rental Achievement until the later of the
third (3rd) anniversary of Rental
Achievement or the closing of a new
Permanent Loan
31. Building Breakdown: 26 buildings
BIN # of Units
Not yet assigned 208
TOTAL 208
Exhibit B
Certificate of Partnership,
General Partner and Original Limited
Partner Re: Lack of Disqualifications
The Partnership, its Operating General Partner and its Original Limited
Partner (as identified on the Payment Certificate to which this Certificate
is attached as Exhibit B) hereby represent to you that neither (i) the
Partnership, (ii) any predecessor of the Partnership, (iii) any of the
Partnership's affiliates ("affiliate" meaning a person that controls or is
controlled by, or is under common control with, the Partnership), (iv) any
sponsor (meaning any person who (1) is directly or indirectly instrumental
in organizing the Partnership or (2) will directly or indirectly manage or
participate in the management of the Partnership or (3) will regularly
perform, or select the person or entity who will regularly perform, the
primary activities of the Partnership), (v) any officer, director, principal
or general partner of the Partnership or of any sponsor, (vi) any officer,
director, principal, promoter or general partner of the Operating General
Partner, (vii) any beneficial owner of ten percent or more of any class of
the equity securities of the 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
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 Partnership
or any person who, in connection with the founding and organizing of the
business or enterprise of the Partnership, directly or indirectly receives
in consideration of services or property, or both services and property, ten
percent or more of any class of securities of the Partnership or ten percent 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 Partnership in any
capacity:
(1) Has filed a registration statement which is the subject of
any pending proceeding or examination under the securities laws
of any jurisdiction, or which is the subject of any refusal order
or stop order thereunder entered within five years prior to the
date hereof;
(2) Has been convicted of or pleaded nolo contendere to a
misdemeanor or felony or, within the last ten years, been held
liable in a civil action by final judgment of a court based upon
conduct showing moral turpitude in connection with the offer,
purchase or sale of any security, franchise or commodity (which
term, for the purposes of this Certificate shall hereinafter
include commodity futures contracts) or any other aspect of the
securities or commodities business, or involving racketeering,
the making of a false filing or a violation of Sections 1341,
1342 or 1343 of Title 18 of the United States Code or arising out
of the conduct of the business of an issuer, underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
involving theft, conversion, misappropriation, fraud, breach of
fiduciary duty, deceit or intentional wrongdoing including, but
not limited to, forgery, embezzlement, obtaining money under
false pretenses, larceny fraudulent conversion or
misappropriation of property or conspiracy to defraud, or which
is a crime involving moral turpitude, or within the last five
years of a misdemeanor or felony which is a criminal violation of
statutes designed to protect consumers against unlawful practices
involving insurance, securities, commodities, real estate,
franchises, business opportunities, consumer goods or other goods
and services;
(3) Is subject to (a) any administrative order, judgment or
decree entered within five years prior to the date hereof entered
or issued by or procured from a state securities commission or
administrator, the Securities and Exchange Commission ("SEC"),
the Commodities Futures Trading Commission or the U.S. Postal
Service, or to (b) any administrative order or judgment, arising
out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
involving deceit, theft, fraud or fraudulent conduct, or breach
of fiduciary duty, or which is based upon a state banking,
insurance, real estate or securities law or (c) has been the
subject of any administrative order, judgment or decree in any
state in which fraud, deceit, or intentional wrongdoing,
including, but not limited to, making untrue statements of
material fact or omitting to state material facts, was found;
(4) Is subject to any pending proceeding in any jurisdiction
relating to the exemption from registration of any security or
offering, or to any order, judgment or decree in which
registration violations were found or which prohibits, denies or
revokes the use of any exemption from registration in connection
with the offer, purchase or sale of securities, or to an SEC
censure or other order based on a finding of false filing;
(5) Is subject to any order, judgment or decree of any court or
regulatory authority of competent jurisdiction entered within
five years prior to the date hereof, temporarily, preliminarily
or permanently restraining or enjoining such persons from
engaging in or continuing any conduct or practice in connection
with any aspect of the securities or commodities business or
involving the making of any false filing or arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, or investment adviser, or which
restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to
conduct alleged to have violated section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or suspended or
barred from association with a member of, an exchange registered
as a national securities exchange, an association registered as a
national securities association, or any self-regulatory
organization registered pursuant to the Securities Exchange Act
of 1934, or a Canadian securities exchange, or association or
self-regulatory organization operating under the authority of the
Commodity Futures Trading Commission, or is subject to any
currently effective order or order entered within the past five
years of the SEC, the Commodity Futures Trading Commission or any
state securities administrator denying registration to, or
revoking or suspending the registration of, such person as a
broker-dealer, agent, futures commission merchant, commodity pool
operator, commodity trading adviser or investment adviser or
associated person of any of the foregoing, or prohibiting the
transaction of business as a broker-dealer or agent;
(7) Has, in any application for registration or in any report
required to be filed with, or in any proceeding before the SEC or
any state securities commission or any regulatory authority
willfully made or caused to be made any statement which was at
the time and in the light of the circumstances under which it was
made false or misleading with respect to any material fact, or
has willfully omitted to state in any such application, report or
proceeding any material fact which is required to be stated
therein or necessary in order to make the statements made, in the
light of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the Securities Act
of 1933, the Securities Exchange Act of 1934, the Trust Indenture
Act of 1939, the Investment Advisers Act of 1940, the Investment
Company Act of 1940, the Commodity Exchange Act of 1974 or the
securities laws of any state, or any predecessor law, or of any
rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled, commanded, induced
or procured the violation by any other person of any of the
statutes or rules or regulations referred to in subsection (8)
hereof;
(10) Has failed reasonably to supervise his agents, if he is
a broker-dealer, or his employees, if he is an investment
adviser, but no person shall be deemed to have failed in such
supervision if there have been established procedures, and a
system for applying such procedures, which would reasonably be
expected to prevent and detect, insofar as practicable, any
violation of statutes, rules or orders described in subsection
(8) and if such person has reasonably discharged the duties and
obligations incumbent upon him by reason of such procedures and
system without reasonable cause to believe that such procedures
and system were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state securities
administrator within five years prior to the date hereof or is
subject to a currently effective United States Postal Service
fraud order or has engaged in dishonest or unethical practices in
the securities business or has taken unfair advantage of a
customer or is the subject of sanctions imposed by any state or
federal securities agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his
obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his
customers, or has not sufficient financial responsibility to
carry out the obligations incident to his operations or has been
adjudged a bankrupt or made a general assignment for the benefit
of creditors; or
(13) Is selling or has sold, or is offering or has offered
for sale, in any state securities through any unregistered agent
required to be registered under the Pennsylvania Securities Act
of 1972, as amended (the "Pennsylvania Act") or for any broker-
dealer or issuer with knowledge that such broker-dealer or issuer
had not or has not complied with the Pennsylvania Act.
If the Partnership is subject to the requirements of Section 12,
14 or 15(d) of the Securities Exchange Act of 1934, then the
Partnership has filed all reports required by those Sections to
be filed during the 12 calendar months preceding the date hereof
(or for such shorter period that the Partnership was required to
file such reports).
