BELMONT AFFORDABLE HOUSING II, L.P.
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
Dated as of January 1, 1999
BELMONT AFFORDABLE HOUSING II, L.P.
TABLE OF CONTENTS
Page
ARTICLE I Defined Terms 4
ARTICLE II Name and Business 14
2.1 Name; Continuation 14
2.2 Office and Resident Agent 15
2.3 Purpose 15
2.4 Term and Dissolution 15
ARTICLE III Mortgage, Refinancing and Disposition of Property 16
ARTICLE IV Partners 16
4.1 General Partners 16
4.2 Investment Limited Partner, Special Limited Partner and
Nonprofit (Original) Limited Partner 17
4.3 Liability of the Limited Partners 17
4.4 Special Rights of the Investment Limited Partner and the
Special Limited Partner 17
4.5 Meetings 19
4.6 Special Duties of Nonprofit Participant 19
ARTICLE V Capital Contributions of the Investment Limited Partner
and the Special Limited Partner 20
5.1 Payments 20
5.2 Return of Capital Contributions 23
ARTICLE VI Rights, Powers and Duties of General Partners 25
6.1 Authorized Acts 25
6.2 Restrictions on Authority 26
6.3 Personal Services 27
6.4 Business Management and Control; Tax Matters Partner 27
6.5 Duties and Obligations 28
6.6 Representations and Warranties 31
6.7 Liability on the Permanent Mortgages 34
6.8 Indemnification of the General Partners 34
6.9 Indemnification of the Partnership and the Limited Partners
35
6.10 Operating Deficits 35
6.11 Obligation to Complete the Rehabilitation of the Apartment
Complex 36
6.12 Certain Payments to the General Partners and Others 37
6.13 Delegation of General Partner Authority 38
6.14 Assignment to Partnership 38
6.15 Additional Right of General Partners and Affiliates to
Develop Adjacent Property 39
ARTICLE VII Withdrawal of a General Partner;
New General Partners 39
7.1 Withdrawal 39
7.2 Obligation to Continue 40
7.3 Withdrawal of All General Partners 40
7.4 Interest of General Partner After Permitted Withdrawal 40
7.5 Admission of Additional General Partner(s) under Certain
Circumstances 41
ARTICLE VIII Transferability of Limited Partner Interests 41
8.1 Assignments 41
8.2 Substituted Limited Partner 42
8.3 Restrictions 42
ARTICLE IX Borrowings 43
9.1 Borrowings 43
ARTICLE X Profits, Losses, Tax Credits, Distributions and Capital
Accounts 43
10.1 Capital and Capital Accounts 43
10.2 Profits, Losses and Tax Credits 44
10.3 Cash Distributions Prior to Dissolution 45
10.4 Distributions Upon Dissolution 46
10.5 Special Provisions 47
10.6 Authority of the General Partners to Vary Allocations to
Preserve and Protect the Partners' Intent 50
ARTICLE XI Management Agent 51
ARTICLE XII Books and Records, Accounting, Tax Elections, Etc 52
12.1 Books and Records 52
12.2 Bank Accounts 52
12.3 Auditors 52
12.4 Cost Recovery and Elections 53
12.5 Special Basis Adjustments 53
12.6 Fiscal Year 53
12.7 Information to Partners 53
12.8 Expenses of the Partnership 57
12.9 Tax Credit Compliance Records 57
ARTICLE XIII General Provisions 57
13.1 Restrictions by Reason of Section 708 of the Code 57
13.2 Amendments to Certificate 58
13.3 Notices 58
13.4 Word Meanings 58
13.5 Binding Effect 58
13.6 Applicable Law 58
13.7 Counterparts 58
13.8 Financing Regulations 59
13.9 Separability of Provisions 59
13.10 Paragraph Titles 59
13.11 Amendment Procedure 59
13.12 Extraordinary Limited Partner Expenses 59
13.13 Time of Admission 60
13.14 Certain Special Restrictions 60
Schedule A 66
BELMONT AFFORDABLE HOUSING II, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Belmont Affordable Housing II, L.P. (the "Partnership") was
formed as a Pennsylvania limited partnership pursuant to a
Limited Partnership Agreement dated August 30, 1997 (the
"Original Agreement") by and among T2G, Inc., a Pennsylvania
corporation as general partner and Belmont Improvement
Association, Inc. as the special limited partner (the "Original
Limited Partner"). A Certificate of Limited Partnership with
respect thereto (the "Original Certificate") dated October 8,
1997 was filed in the Filing Office on October 20, 1997 and a
Statement of Correction thereto was filed in the Filing Office on
October 21, 1997 (together, the "Original Certificate"). Certain
capitalized terms used herein shall have the respective meanings
specified in Article I.
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 TC "ARTICLE I Defined Terms" \f C \l
"1"
The following defined terms used in this Agreement shall
have the meanings specified below:
Act means the Uniform Limited Partnership Act as adopted by
the State.
Actual Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the Partnership
to the Investment Limited Partner for such year. The Actual
Credit for a year shall be retroactively revised if the amount of
Tax Credit properly allocable to the Investment Limited Partner
for such year is revised after audit or recaptured.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to Section
4.4(b) or Section 7.4.
Admission Date means the first date on which all parties
hereto shall have executed this Agreement, or, if, pursuant to
the Act, the Investment Limited Partner shall not be deemed
admitted to the Partnership on such date, then the next date
thereafter on which the Investment Limited Partner shall be
deemed to be admitted to the Partnership under the Act.
Affiliate means, when used with reference to a specified
Person, (i) any Person that directly or indirectly controls or is
controlled by or is under common control with the specified
Person, (ii) any Person that is an officer of, director of,
partner in or trustee of, or serves in a similar capacity with
respect to, the specified Person or of which the specified Person
is an officer, director, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, (iii)
any Person that, directly or indirectly, is the beneficial owner
of 10% or more of any class of equity securities of the specified
Person or of which the specified Person is directly or indirectly
the owner of 10% or more of any class of equity securities, (iv)
any Person who is an officer, director, general partner, trustee
or holder of 10% or more of the voting securities or beneficial
interests of any of the foregoing or (v) any Person treated as a
Controlling Person. An Affiliate of the Partnership or of a
General Partner does not include a Person who is a partner in a
partnership or joint venture with the Partnership or any other
Affiliate of the Partnership if such Person is not otherwise an
Affiliate of the Partnership or a General Partner. For purposes
of this definition, the term "Affiliate" shall not be deemed to
include any law firm (or member or associate thereof) providing
legal services to the Partnership, the General Partners or any
Affiliate of any of them.
Agency means, as applicable, HUD, the RDA, the Credit Agency
and/or any other government agency having jurisdiction over the
particular matter to which reference is being made.
Agreement means this Amended and Restated Agreement of
Limited Partnership, including Schedule A, as amended from time
to time.
Apartment Complex means the real property located in
Philadelphia, Pennsylvania, as more fully described in the
Permanent Mortgages, together with (i) all buildings and other
improvements constructed or to be constructed thereon and
(ii) all furnishings, equipment, fixtures and personal property
covered by the Mortgages, known or to be known as Belmont Two
Apartments.
Applicable Federal Rate means the "applicable federal rate"
as defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section
42(b) of the Code.
Asset Management Fee means the fee payable to BCCLP or an
Affiliate thereof pursuant to Section 6.12(c).
Auditors means Cogen Sklar LLP of Bala Cynwyd, PA
(Attention: Alan Gubernick, CPA), or such other firm of
independent certified public accountants as may be engaged by the
General Partners with the consent of the Special Limited Partner
for the purposes of preparing the Partnership income tax returns,
auditing the books and records of the Partnership and certifying
financial reports of the Partnership.
BCCLP means Boston Capital Communications Limited
Partnership, a Massachusetts limited partnership, and its
successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, and its successors and assigns.
Capital Account has the meaning specified in
Section 10.1(b).
Capital Contribution means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a then
Partner shall include a Capital Contribution previously made by
any prior Partner for the Interest of such then Partner.
Capital Transaction means any transaction the proceeds of
which are not includable in determining Cash Flow, including,
without limitation, the sale or other disposition of all or
substantially all of the assets of the Partnership, casualty
where any insurance proceeds are not to be used for
reconstruction, condemnation or refinancing of the Apartment
Complex, but excluding the payment of Capital Contributions.
Carryover Certification means the date upon which the
Limited Partners shall have received, in a form and in substance
satisfactory to the Special Limited Partner, the certification of
the Auditors that as of a date no later than December 31, 1997,
the Partnership had owned land or depreciable property
constituting part of the Apartment Complex and had incurred
capitalizable costs with respect to the Apartment Complex of at
least ten per cent (10%) of the Partnership's reasonably expected
basis in the Apartment Complex as of December 31, 1999, so that
each building in the Apartment Complex constitutes a "qualified
building" for the purposes of Section 42(h)(1)(E)(ii) of the
Code.
Cash Flow means, with respect to any fiscal year of the
Partnership, or any other applicable period, from and after the
Commencement Date, subject to any applicable Agency requirements
(a) all Revenues received by the Partnership during such period
plus (b) any amounts which the General Partners, with the prior
written consent of each Lender or Agency whose consent may be
required and the Consent of the Investment Limited Partner,
release from any Partnership reserve account as no longer being
necessary to be held as part of such reserve account, less
(i) operating expenses of the Partnership paid from Revenues
during the applicable period, (ii) all cash payments made from
Revenues during such period to discharge interest and/or
principal obligations of Partnership indebtedness, and (iii) all
amounts from Revenues, if any, added to Partnership reserves
during such period; provided, however, that in no event will the
deductions in determining Cash Flow pursuant to clauses (i) and
(ii) above include payments made on account of the Asset
Management Fee, the Partnership Management Fee or Subordinated
Loans. Cash Flow Shall be determined separately for each fiscal
year and shall not be cumulative.
Certificate means the Original Certificate as amended from
time to time (including any amendment thereto effected by or in
connection with this Agreement).
Class Contribution means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the
General Partners, the Investment Limited Partner, the Special
Limited Partner or any Additional Limited Partner).
Code means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations (permanent 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 latest of (a) the date upon which
the Apartment Complex has been completed as evidenced by the
issuance by the inspecting architect and by each governmental
agency having jurisdiction of certificates of substantial
completion or occupancy (or local equivalents) with respect to
all apartment units in the Apartment Complex and (b) the
Partnership shall have obtained and furnished to the Investment
Limited Partner all due diligence documentation with respect to
the construction and development of the Apartment Complex (which
documentation shall be satisfactory in form and content to the
Investment Limited Partner in its sole discretion), including
without limitation a letter from the contractor stating all
amounts due to it pursuant to the construction contract and
otherwise in connection with the construction and development of
the Apartment Complex have been paid in full and the Partnership
is not in default under said construction contract (or, instead
of such payoff letter, submission to the Investment Limited
Partner of other evidence demonstrating the truth of said payoff
letter statements).
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.
Consortium means The West Philadelphia Community Mental
Health Consortium, a Pennsylvania nonprofit corporation or
another entity which is a "qualified nonprofit organization" as
defined in Section 42(h)(5)(C) of the Code and which has been
approved by the Credit Agency as an acceptable entity to meet the
special needs requirements of the Apartment Complex as set forth
in the Extended Use Agreement and any other applicable Credit
Agency document.
Construction and Development Fee means the fee described in
Section 6.12(b).
Construction Lender means the Collaborative Lending
Initiative, Inc. in its capacity as holder of the Construction
Mortgage, or its successors or assigns in such capacity.
Construction Mortgage means the financing for the
rehabilitation of the Apartment Complex provided by the
Construction Lender in a principal amount of up to $1,700,000.
Controlling Person has the meaning given to it in the
context of Section 15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited
Partner shall have received the written certification of the
Auditors, in a form and in substance satisfactory to the Special
Limited Partner, as to the itemized amounts of the construction
and development costs of the Apartment Complex and the Eligible
Basis and Applicable Percentage pertaining to each building in
the Apartment Complex.
Credit Agency means the Pennsylvania Housing Finance
Authority.
Credit Period has the meaning given to it in Section
42(f)(1) of the Code.
Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully
described in Section 5.1(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(1). For the purposes of Article X, the term Credit
Recovery Loan shall not include any portion of such an advance
which shall have theretofore been paid to the Investment Limited
Partner.
Credit Shortfall has the meaning given to it in
Section 5.1(g).
Developer means T2G, Inc., a Pennsylvania corporation, in
its capacity as the developer of the Apartment Complex.
Development Agreement means the Development Fee Agreement
dated July 15, 1997 between the Partnership and the Developer.
Disposition (including the forms Dispose and Disposing)
means, as to a Limited Partner, the assignment, sale, transfer,
exchange or other disposition of all or any part of its Interest.
Economic Risk of Loss has the meaning set forth in Treasury
Regulation Section 1.752-2.
Eligible Basis has the meaning given to it in Section 42(d)
of the Code.
Entity means any general partnership, limited partnership,
limited liability company, limited liability partnership,
corporation, joint venture, trust, business trust, cooperative or
association.
Extended Use Agreement means the Pennsylvania Housing
Finance Agency Indenture of Restrictive Covenants for Low-Income
Housing Tax Credits dated May 1, 1998 between the Partnership and
the Credit Agency, as amended from time to time.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a
court having jurisdiction in respect of such Person or in
respect of any Controlling Person of such Person in a case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or of any Controlling Person of such Person or for any
substantial part of such Person's property or of the
property of any Controlling Person of such Person, or the
issuance of an order for the winding-up or liquidation of
such Person's affairs or the affairs of any Controlling
Person of such Person and the continuance of any such
decree or order unstayed and in effect for a period of
sixty (60) consecutive days, or
(ii) the commencement by such Person or by any
Controlling Person of such Person of a proceeding seeking
any decree, order or appointment referred to in clause (i),
the consent by such Person or by any Controlling Person of
such Person to any such decree, order or the appointment,
or taking of any action by such Person or by any
Controlling Person of such Person in furtherance of any of
the foregoing.
Filing Office means the Department of State of the State.
First Mortgage means the permanent financing provided, or
to be provided, by the Permanent Lender for the Apartment
Complex following the completion of the rehabilitation thereof
in the initial principal amount of $300,000 and on the terms set
forth in the loan commitment dated March 24, 1998 and the First
Mortgage loan documents dated December 15, 1998.
First Mortgage Lender means PNC Bank, N.A., of
Philadelphia, Pennsylvania in its capacity as maker and holder
of the First Mortgage, together with its successors and assigns
in such capacity.
General Partners means the Persons designated as General
Partners in Schedule A and any Persons who become General
Partners as provided herein, in their capacities as general
partners of the Partnership. At any and all times where there
is only one General Partner, the term General Partners shall
mean such sole General Partner.
Hazardous Material has the collective meanings given to the
terms "hazardous material", "hazardous substances" and
"hazardous wastes" in the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sec. 9601 et seq., as amended, and to the term "radioactive
materials" in the context of the Atomic Energy Act, 28 U.S.C.
Sec. 2344, and also includes any meanings given to such terms in
any similar state or local statutes, ordinances, regulations or
by-laws. In addition, the term Hazardous Material also includes
oil and any other substance known to be hazardous.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law,
children-in-law and grandchildren-in-law.
Incentive Management Fee means the fee payable to the
General Partner pursuant to the provisions of Section 6.12(d).
Initial 100% Occupancy Date means the first date upon which
not less than 100% of the twenty (20) apartment units in the
Apartment Complex shall have been leased to and physically
occupied by Qualified Tenants.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the
Partnership pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be
entitled hereunder and the obligation of such Partner to comply
with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the quotient of (a) the paid-in
Capital Contribution of the Investment Limited Partner divided
by (b) 85% and (ii) as to any other Partner, an amount equal to
its Capital Contribution.
Investment General Partner means Boston Capital
Associates IV L.P., a Delaware limited partnership, in its
capacity as the general 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 Boston Capital Tax Credit
Fund IV L.P., a Delaware limited partnership, specifically
Series 34 thereof, and any Person or Persons who replace it as
Substituted Limited Partner, but shall not include any Special
Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Agreement of
Limited Partnership of the Investment Limited Partner, as amended
from time to time.
Lender means the Construction Lender and Permanent Lenders,
each in its capacity as maker of a Mortgage loan, or its
successors and assigns in such capacity.
Limited Partners means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
Low-Income Apartment Units means the twenty (20) units in
the Apartment Complex with respect to which the Partnership has
agreed to comply with the requirements for the Tax Credit under
Section 42 of the Code.
Management Agent means T.J. Properties, Inc. in its
capacity as the management and rental agent for the Apartment
Complex together with its successors and assigns in such
capacity.
Management Agreement means the agreement between the
Partnership and the Management Agent providing for the
management of the Apartment Complex.
Management Fee means the Management Fee to which reference
is made in Article XI.A.
Minimum Set-Aside Test means the set aside test selected by
the Partnership pursuant to Section 42(g) of the Code whereby at
least 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 the mortgage indebtedness of the Partnership
to a Lender; where the context admits, Mortgage shall mean and
include the mortgage note evidencing such indebtedness, the
mortgage or deed of trust and security agreement securing such
indebtedness, the loan agreement and all other documentation
related thereto which evidence and secure such indebtedness,
including any Agency documentation related thereto.
Nonprofit Participant means Belmont Improvement
Association, Inc., a Pennsylvania nonprofit corporation or any
other entity which is a "qualified nonprofit organization" as
defined in Section 42(h)(5)(C) of the Code and which has been
approved as a material participant of the Apartment Complex by
the Credit Agency.
Nonprofit Participant Agreement means any agreement between
the Partnership and the Nonprofit Participant relating to the
Nonprofit Participant's compensation for its services to the
Apartment Complex, which agreement has been approved by the
Special Limited Partner.
Operating Deficit Fund Agreement means the agreement dated
January ___, 1999 by the Partnership for the benefit of the RDA.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate has the meaning specified in the
Preliminary Statement.
Original Limited Partner has the meaning specified in the
Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability
(a) that is considered non-recourse under Treasury Regulation
Section 1.1001-2 or for which the creditor's right to repayment
is limited to one or more assets of the Partnership and (b) for
which any Partner or Related Person bears the Economic Risk of
Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of
partner nonrecourse debt minimum gain and the net increase or
decrease in partner nonrecourse debt minimum gain determined in
a manner consistent with Treasury Regulation Sections 1.704-2(d)
and 1.704-2(g)(3).
Partnership means the limited partnership continued
pursuant to this Agreement.
Partnership Management Fee means the fee payable to the
General Partners pursuant to the provisions of Section 6.12(a).
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction of such
liability, and by then aggregating the amounts so computed.
Such computations shall be made in a manner consistent with
Treasury Regulation Section 1.704-2(d).
Partnership Non-Recourse Liability means any Partnership
liability (or portion thereof) for which no Partner or Related
Person bears the Economic Risk of Loss.
Permanent Lenders means the First Mortgage Lender and the
Second Mortgage Lender.
Permanent Mortgages means the First Mortgage and the Second
Mortgage.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; (b) the Construction Mortgage shall have been
repaid in full; (c) all liens securing the Construction Mortgage
shall have been released; (d) the principal amount and maturity
date of the Permanent Mortgages shall have been finally
determined; and (e) amortization period of the First Mortgage
shall have commenced.
Person means any individual or Entity.
Project Documents means and includes all documents
evidencing or relating to the Construction Mortgage and the
Permanent Mortgages, the Management Agreement, all other
instruments delivered to (or required by) the Construction
Lender and/or the Permanent Lenders, the Partnership's
application to the Credit Agency for Tax Credit and the
reservation, carryover allocation and related documents
pertaining to the Tax Credits, the Extended Use Agreement, the
Redevelopment Agreement, the Operating Deficit Fund Agreement
and all other documents relating to the Apartment Complex and by
which the Partnership is bound, as amended or supplemented from
time to time.
Projected Credit means $246,870 per annum for each of the
years 1999 through 2008 (inclusive), provided, however, that
upon the occurrence of any of the events described in clauses
(i), (ii) and (iii) of Section 5.1(e), the Projected Credit
shall thereafter be the Revised Projected Credit.
Qualified Basis has the meaning given to it in Section
42(c) of the Code.
Qualified Income Offset Item means (1) an allocation of
loss or deduction that, as of the end of each year, reasonably
is expected to be made (a) pursuant to Section 704(e)(2) of the
Code to a donee of an interest in the Partnership, (b) pursuant
to Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Regulation Section 1.751-
1(b)(2)(ii) as the result of a distribution by the Partnership
of unrealized receivables or inventory items and (2) a
distribution that, as of the end of such year, reasonably is
expected to be made to a Partner to the extent it exceeds
offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the
Partnership taxable year in which such distribution reasonably
is expected to occur.
Qualified Tenant means a tenant (i) with income not
exceeding that permitted by the Minimum Set-Aside Test who
leases a Low-Income Apartment Unit in the Apartment Complex at a
rent which satisfies the Rent Restriction Test and (ii)
complying with any other requirements imposed by the Project
Documents.
RDA means Redevelopment Authority of the City of
Philadelphia, Pennsylvania.
Redevelopment Agreement means the Redevelopment Agreement
dated as of September 17, 1997 between the Partnership and the
RDA.
Related Person means a Person related to a Partner within
the meaning of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42
of the Code whereby the gross rent (as defined therein) charged
to tenants of the Low-Income Apartment Units may not exceed
thirty per cent (30%) of the qualifying income levels.
Rental Achievement means, the thirtieth (30th) day after
the first date on at which, as certified by the General
Partners, there shall have previously occurred a period of four
(4) consecutive full calendar months of Partnership operations
(all of which months occurring after the later of the Admission
Date or Permanent Mortgage Commencement), during each of which
months (x) the Net Operating Income for such month divided by
(y) all debt service and other payments required to be made on
all Mortgages during such month (regardless of any forbearance
thereof) equaled or exceeded 115% "Net Operating Income" for a
period shall be the excess of (a) the Revenues for such period,
over (b) all of the Partnership's expenses for such period on an
accrual basis. For purposes of the foregoing clause (b),
expenses shall (i) include, but not limited to, all operational
costs and expenses, adjusted to include a ratable portion of the
annual amount (as reasonably estimated by the General Partners)
of those seasonal expenses (such as utilities and maintenance
expenses) which might reasonably be expected to be incurred on
an unequal basis during a full annual period of operation,
(ii) include the funding of any reserves required by any Lender,
Agency and/or pursuant to the terms of this Agreement, (iii) be
adjusted, if necessary, so that the expenses of real estate
taxes and insurance are based on the General Partners'
reasonable estimate of the full assessed value and the full
replacement cost, respectively, of the Apartment Complex after
completion of construction, and (iv) exclude all Mortgage
payments referred to in clause (y) above, depreciation,
distributions of Cash Flow and Capital Transaction proceeds to
the Partners and the fees payable pursuant to this Agreement
other than the Asset Management Fee.
Rental Achievement Confirmation means the date upon which
each of the Limited Partners receives (a) a copy of the federal
income tax return of the Partnership and (b) the financial
reports to be provided pursuant to Section 12.7(a)(i), in each
case for the Partnership fiscal year in which Rental Achievement
shall have occurred, evidencing to the satisfaction of the
Special Limited Partner that Rental Achievement occurred in such
year.
Revenues means all cash receipts (actually received) of the
Partnership during a specified period of time, including rental
assistance payments, operating subsidies and the proceeds of
rental interruption insurance receipts, but excluding the
proceeds of Capital Contributions, the proceeds of the sale or
other disposition of Partnership assets, liquidation proceeds,
loan or refinancing proceeds, casualty proceeds, condemnation or
eminent domain proceeds. Any net rental income applied to
complete the construction of the Apartment Complex pursuant to
Section 6.11 prior to the later of the Admission Date or
Permanent Mortgage Commencement shall not be included when
determining Revenues. For the purposes of computing Revenues,
rental receipts shall not include pre-paid rent and, if
attributable to Low-Income Apartment Units, shall be included
only if attributable to Qualified Tenants.
Revised Projected Credit has the meaning given to it in
Section 5.1(e).
Schedule A means Schedule A to this Agreement, as amended
from time to time.
Second Mortgage means the permanent financing provided, or
to be provided, by the Second Mortgage Lender for the Apartment
Complex following the completion of the rehabilitation thereof
in the initial principal amount of $252,675 and on the terms set
forth in the loan commitment dated January ___, 1999. The
Second Mortgage represents Community Development Block Grant
funds received by the RDA on behalf of the City of Philadelphia
(through the RDA) from HUD.
Second Mortgage Lender means the RDA in its capacity as
maker and holder of the Second Mortgage, together with its
successor and assigns in such capacity.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a Delaware
corporation, and any Person who becomes a Special Limited Partner
as provided herein, in its capacity as a special limited partner
of the Partnership.
State means the Commonwealth of Pennsylvania.
State Designation means the date upon which the Partnership
receives the final allocation from the Credit Agency for the
building(s) constituting the Apartment Complex in an annual
dollar amount of not less than $246,895, as evidenced by the
execution by or on behalf of said agency of Form(s) 8609. For
the purposes of determining State Designation, each building in
the Apartment Complex shall be treated as having received an
allocation of Tax Credit in an amount equal to the lesser of
(i) the amount of Tax Credit carryover allocation received from
the Credit Agency as to such building or (ii) the amount of Tax
Credit set forth on the Form 8609 as to such building.
State Designation Filing means the date upon which the
Special and Investment Limited Partners receive copies of all
documentation filed by or on behalf of the Partnership with the
Credit Agency which documents are satisfactory to the Special
Limited Partner as to both form and content, for the purpose of
obtaining Form(s) 8609 evidencing a final allocation of Tax
Credits to the Partnership in an aggregate annual amount of not
less than $246,895.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is
admitted to the Partnership as Limited Partner under Section 8.2
or acquires the Interest of a Limited Partner pursuant to
Section 5.2.
Supporting Services Agreement means an agreement between
the Partnership and the Consortium relating to the special needs
requirements and the Consortium's involvement in the operations
of the Apartment Complex, which agreement has been approved by
the Special Limited Partner.
Tax Accountants means Reznick, Fedder & Silverman of
Bethesda, Maryland or such other firms of independent certified
public accountants as may be engaged by Boston Capital to review
the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant
to Section 42 of the Code.
Vessel has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or
involuntary withdrawal or retirement from the Partnership for
any reason, including whenever a General Partner may no longer
continue as a General Partner by law or pursuant to any terms of
this Agreement. Withdrawal shall also mean the sale,
assignment, transfer or encumbrance by a General Partner of its
interest as a General Partner. A General Partner which is a
corporation or partnership shall be deemed to have sold,
assigned, transferred or encumbered its interest as a General
Partner in the event (as a result of one or more transactions)
of any sale, assignment or other transfer (but specifically
excluding any transfer occurring pursuant to the laws of descent
and distribution) or encumbrance of a controlling interest or
the interest of a Controlling Person in a corporate General
Partner or of a general partner interest in a General Partner
which is a partnership. For purposes of this definition of
Withdrawal, "controlling interest" shall mean the power to
direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise.
ARTICLE II Name and Business TC "ARTICLE II Name and
Business" \f C \l "1"
2.1 Name; Continuation TC "2.1 Name; Continuation" \f C
\l "2"
The name of the Partnership is Belmont Affordable Housing
II, 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 TC "2.2 Office and Resident
Agent" \f C \l "2"
(a) The principal office of the Partnership is
875 Church Road
Springfield, Pennsylvania 19064
at which office there shall be maintained those records required
by the Uniform Act to be kept by the Partnership.
The Partnership may have such other or additional offices as the
General Partners shall deem desirable. The General Partners may
at any time change the location of the Partnership offices and
shall give due notice thereof to the Limited Partners.
(b) The resident agent in the State for the Partnership
for service of process is as follows:
Harold Thomas
875 Church Road
Springfield, Pennsylvania 19064
2.3 Purpose TC "2.3 Purpose" \f C \l "2"
The purpose of the Partnership is to acquire, hold, invest
in, construct, rehabilitate, develop, improve, maintain,
operate, lease and otherwise deal with the Apartment Complex.
The Partnership shall operate the Apartment Complex in
accordance with any applicable Agency regulations and
requirements. The Partnership shall not engage in any other
business or activity.
2.4 Term and Dissolution TC "2.4 Term and Dissolution"
\f C \l "2"
The Partnership shall continue in full force and effect
until December 31, 2047, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially
all of the assets of the Partnership;
(b) The Withdrawal of a General Partner if (i) the
remaining General Partner(s), if any, shall fail to continue the
business of the Partnership and reconstitute the Partnership as
a successor limited partnership as provided in Section 7.2 and
(ii) the Investment Limited Partner and the Special Limited
Partner shall fail to exercise the right provided in Section
7.3;
(c) The election to dissolve the Partnership made in
writing by the General Partners with the Consent of the
Investment Limited Partner and the approval (if required) of
each applicable Agency;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners
(or for purposes of this paragraph, their trustees, receivers or
successors) shall cause the cancellation of the Certificate,
liquidate the assets of the Partnership and apply and distribute
the proceeds thereof in accordance with Section 10.3.
Notwithstanding the foregoing, if, during liquidation, the
General Partners shall determine that an immediate sale of part
or all of the Partnership's assets would be impermissible,
impractical or cause undue loss to the Partners, the General
Partners may defer liquidation of, and withhold from
distribution for a reasonable time, any assets of the
Partnership except those necessary to satisfy Partnership debts
and obligations (other than Subordinated Loans).
ARTICLE III Mortgage, Refinancing and Disposition of
Property TC "ARTICLE III Mortgage, Refinancing and
Disposition of Property" \f C \l "1"
A. The General Partners and their Affiliates, jointly and
severally, are hereby authorized to incur personal liability for
the repayment of funds advanced by the Construction Lender (and
interest thereon) pursuant to the Construction Mortgage.
However, from and after Permanent Mortgage Commencement, neither
any General Partner nor any Related Person shall at any time
bear, nor shall the General Partners permit any other Partner or
any Related Person to bear, the Economic Risk of Loss for the
payment of any portion of any Mortgage except for the First
Mortgage. Notwithstanding the foregoing, the General Partners
shall use their best efforts to have the First Mortgage amended
so as to become a nonrecourse obligation of the Partnership.
B. The Partnership may amend, modify, decrease, increase
or refinance the Construction or Permanent Mortgages and may
make any required transfer or conveyance of Partnership assets
for security or mortgage purposes, provided, however, any such
amendment, modification, decrease (except through the Permanent
Mortgage amortization schedule anticipated at Permanent Mortgage
Commencement), increase or refinancing of the Construction or
Permanent Mortgages may be made by the General Partners only
with the Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or any substantial part of the assets of
the Partnership only with the Consent of the Investment Limited
Partner. Notwithstanding the foregoing and except as set forth
in Section 6.2(6), no Consent of the Investment Limited Partner
shall be required for the leasing of apartments to tenants in
the normal course of operations.
D. The total compensation to all Persons for the sale of
the Apartment Complex shall be limited to a Competitive Real
Estate Commission, not to exceed six per cent (6%) of the
contract price for the sale of the Apartment Complex.
ARTICLE IV Partners TC "ARTICLE IV Partners" \f C \l "1"
4.1 General Partners TC "4.1 General Partners" \f C
\l "2"
The name, address and Capital Contribution of each General
Partner are as set forth on Schedule A. The General Partner
shall be obligated to make an additional Capital Contribution to
the Partnership on January 1, 2009 in the amount equal to the
amount of any unpaid Development Fee.
4.2 Investment Limited Partner, Special Limited Partner
and Original Limited Partner TC "4.2 Investment Limited
Partner, Special Limited Partner and Original Limited Partner"
\f C \l "2"
The Original Limited Partner hereby withdraws as a limited
partner of the Partnership and acknowledges that the Original
Limited Partner has no longer any Interest in, or rights or
claims against, the Partnership as a Limited Partner as of the
Admission Date. The Investment Limited Partner and the Special
Limited Partner are hereby admitted to the Partnership as the
sole Limited Partners in substitution for the Original Limited
Partner as of the Admission Date and agree to be bound by the
terms and provisions of the Project Documents and this
Agreement. The names and addresses of the Investment Limited
Partner and the Special Limited Partner are as set forth on
Schedule A. The General Partners shall have no authority to
admit additional Limited Partners without the Consent of the
Investment Limited Partner.
4.3 Liability of the Limited Partners TC "4.3 Liability
of the Limited Partners" \f C \l "2"
None of the Investment Limited Partner, the Special Limited
Partner and any Person who becomes an Additional Limited Partner
shall be liable for any debts, liabilities, contracts or
obligations of the Partnership and shall only be liable to pay
their respective Capital Contributions as and when the same are
due hereunder and under the Act.
4.4 Special Rights of the Investment Limited Partner and
the Special Limited Partner TC "4.4 Special Rights of the
Investment Limited Partner and the Special Limited Partner" \f C
\l "2"
(a) Notwithstanding any other provision herein, to the
extent the law of the State is not inconsistent, each of the
Investment Limited Partner and the Special Limited Partner shall
have the right, subject to the prior written consent of any
Lender or Agency (if such consent is required) to:
(i) amend this Agreement in any particular which may
be necessary for tax compliance or to comply with any
Mortgage or Agency requirement;
(ii) remove any General Partner and elect a new
General Partner (A) on the basis of the performance and
discharge of any General Partner's obligations constituting
fraud, bad faith, negligence, misconduct or breach of
fiduciary duty, or (B) upon the occurrence of any of the
following: (1) a General Partner shall have violated any
provisions of any Project Document or other document
required in connection with any Mortgage, or any provisions
of any Agency regulations applicable to the Apartment
Complex; (2) a General Partner shall have violated any
provision of this Agreement, including, but not limited to,
any obligation to fund any Partnership expense under
Section 6.10, or a General Partner shall have violated any
provision of applicable law; (3) any Mortgage shall have
gone into default; (4) the termination of the Partnership
for Federal income tax purpose; (5) the treatment of the
Partnership for federal income tax purposes as an
association taxable as a corporation; or (6) the
Partnership failing to pay on a timely basis any of its
real estate or personal property tax obligations to any
county. city, town or other local government;
(iii) continue the business of the Partnership
with a substitute General Partner;
(iv) approve or disapprove the sale of all or
substantially all of the assets of the Partnership; and
(v) approve or disapprove any amendment to this
Agreement in any particular.
(b) Upon the removal of a General Partner, (i) without any
further action by any Partner, the Special Limited Partner or
its designee shall automatically become a General Partner and
acquire in consideration of a cash payment of $100 such portion
of the Interest of the removed General Partner as counsel to the
Investment Limited Partnership shall determine is the minimum
appropriate interest in order to assure the continued status of
the Partnership as a partnership under the Code and under the
Uniform Act, (ii) the remaining portion of the Interest of the
removed General Partner shall automatically be converted to an
equal Interest as an Additional Limited Partner, (iii) the
Interest of the Special Limited Partner as the Special Limited
Partner shall continue unaffected by the new status of the
Special Limited Partner or its designee as a General Partner,
and (iv) the new General Partner shall automatically be
irrevocably delegated all of the powers and duties of the
General Partners pursuant to Section 6.13. The Special Limited
Partner or any successor General Partner proposed by the Special
Limited Partner shall have the option, exercisable in its sole
discretion, to acquire the Additional Limited Partner Interest,
or any portion thereof, of any removed General Partner upon
payment of the agreed or then present fair market value of such
Interest or portion thereof. Any dispute as to the value of the
Interest or portion thereof to be acquired pursuant to the
immediately preceding sentence shall be submitted to a committee
composed of three qualified real estate appraisers, one chosen
by the removed General Partner, one chosen by the successor
General Partner, and the third chosen by the two so chosen. The
committee of appraisers shall meet in Boston, Massachusetts, and
the proceedings of such committee shall conform to the rules of
the American Arbitration Association, as far as appropriate, and
its decision shall be final and binding. The expense of
arbitration shall be born equally by the removed General Partner
and the Partnership. The method of payment to the removed
General Partner shall be fair and must protect the solvency and
liquidity of the Partnership. The method of payment will be
deemed presumptively fair where it provides for an interest-
bearing promissory note coming due in no less than five (5)
years with equal installments each year. In addition, upon
removal, the Partnership must promptly pay to the removed
General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that notwithstanding
the language of Section 6.12, Article X, Article XI and any
other provision hereof, no removed General Partner or any
Affiliate thereof shall be entitled to receive any fee,
compensation or other remuneration from the Partnership, other
than (i) the above-described payment for the Interest, or
portion thereof, of the removed General Partner, and (ii) any
such fee, compensation or other remuneration which had already
been earned in full prior to the date of such removal. The
Partnership is not authorized to enter into any arrangement
whereby any fee, compensation or other remuneration could be
payable directly or indirectly to any General Partner 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 arrangement. The Partnership may offset against any
payments to a General Partner removed under this Section 4.4 any
damages suffered by the Partnership as a result of any breach of
the obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a general partner for
any obligations of the Partnership incurred after the effective
date of its removal. Each General Partner hereby grants to the
Special Limited Partner an irrevocable (to the extent permitted
by applicable law) power of attorney coupled with an interest to
execute and deliver any and all documents and instruments on
behalf of such General Partner and the Partnership as the
Special Limited Partner may deem to be necessary or appropriate
in order to effect the provisions of this Section 4.4 and to
enable the new General Partner to manage the business of the
Partnership.
(c) In order to implement Section 4.4(a)(iv), the General
Partners are hereby required, within five (5) days after their
receipt of any offer to purchase the Apartment Complex or all of
the Interests in the Partnership, to send a copy of such offer
(or a written description of any such oral offer) to each of the
Limited Partners. If, within thirty (30) days of its receipt of
any such copy of such an offer, the Special Limited Partner
shall send notice to the General Partners that the Special
Limited Partner desires that the Partnership accept such offer,
then the General Partners shall be required to accept such offer
on behalf of the Partnership and proceed promptly to close such
transaction unless otherwise instructed by the Special Limited
Partner at any point prior to the closing of such transaction.
To the extent, if any, that the Special Limited Partner shall
determine, in its reasonable discretion, that the General
Partners are not proceeding in a manner satisfactory to it with
respect to any such offer or closing, each Partner hereby grants
to the Special Limited Partner an irrevocable (to the extent
permitted by law) power of attorney coupled with an interest to
execute and deliver any and all documents and instruments on
behalf of the Partnership and any Partner as the Special Limited
Partner may deem to be necessary or appropriate in order to
effect the acceptance of and/or closing pursuant to any such
offer in such a manner as the Special Limited Partner shall, in
its discretion, determine to be satisfactory.
4.5 Meetings TC "4.5 Meetings" \f C \l "2"
The General Partners or Limited Partners holding more than
ten per cent (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
General or Limited Partner or his representative at his cost.
Upon receipt of a written request either in person or by
certified mail stating the purpose(s) of the meeting, the
General Partners shall provide all Limited Partners within ten
(10) days after receipt of said request, written notice (either
in person or by certified mail) of a meeting and the purpose of
such meeting to be held on a date not less then fifteen (15) nor
more than sixty (60) days after receipt of said request, at a
time convenient to the Limited Partners. All meetings shall be
held at the principal office of the Partnership.
4.6 Special Duties of Nonprofit Participant. TC "4.6
Special Duties of Nonprofit Participant" \f C \l "1" The
Nonprofit Participant shall materially participate in the
affairs of the Partnership as required by the Credit Agency
throughout the Compliance Period, and its duties and obligations
shall consist, without limitation, of the following:
(i) assist the General Partner in the application to the
RDA and the City of Philadelphia, Pennsylvania for the
acquisition of the Apartment Complex;
(ii) provide input and advice with respect to the community
development aspects of the Apartment Complex;
(iii) assist in the marketing of the Apartment Complex
and obtain and locate qualified tenants to occupy units in the
Apartment Complex; and
(iv) provide such assistance and support as may be
reasonably requested by the General Partner in the furtherance
of the business of the Partnership.
ARTICLE V Capital Contributions of the Investment Limited
Partner and the Special Limited Partner TC "ARTICLE
V Capital Contributions of the Investment Limited
Partner and the Special Limited Partner" \f C \l "1"
5.1 Payments TC "5.1 Payments" \f C \l "2"
(a) The Special Limited Partner's Capital Contribution
shall be $10, payable in full in cash on the Admission Date.
The Investment Limited Partner may deliver to the Partnership,
on behalf of the Special Limited Partner, the Special Limited
Partner's Capital Contribution. The Investment Limited
Partner's Capital Contribution shall be paid in cash
installments (the "Installments"), as follows:
(2) $1,379,388 (the "Second Installment") on the
latest of (ii) the Admission Date, or (ii) the Completion
Date;
(2) $196,793 (the "Second Installment") on the latest
to occur of (i) Cost Certification, (ii) State Designation
Filing, or (iii) Permanent Mortgage Commencement, or
(iv) receipt by the Special Limited Partner of an
endorsement to the Title Policy required under
Section 5.1(b) hereof evidencing the discharge of the
Construction Mortgage and the recordation of the Second
Mortgage, which endorsement shall be acceptable to the
Special Limited Partner in its sole discretion, or
(v) satisfaction of all of the conditions to the payment of
the First Installment;
(3) $76,016 (the "Third Installment") on the later to
occur of (i) State Designation or (ii) the full principal
amount of the Second Mortgage has been fully disbursed to
the Partnership or (iii) satisfaction of all of the
conditions to payment of the Second Installment;
(4) $176,987 (the "Fourth Installment") on the latest
to occur of (i) Initial 100% Occupancy Date, (ii) Rental
Achievement, or (iii) satisfaction of all of the conditions
of payment of the Third Installment; and
(5) $10,000 (the "Fifth") on the later of (i) Rental
Achievement Confirmation or (ii) satisfaction of all of the
conditions of payment of the Fourth Installment;
provided, however, that the General Partners shall give the
Investment Limited Partner not less than twenty-one (21) days'
written notice prior to the due date of each Installment
subsequent to the First Installment.
The proceeds of the First Installment shall be directly
applied to fully repay all of the outstanding principal and
accrued interest under the Construction Mortgage; the balance,
if any, shall then be used for Partnership expenses permitted by
the terms of this Agreement.
(b) The obligation of the Investment Limited Partner to
pay each Installment is conditioned upon delivery by the General
Partners to the Investment Limited Partner of a written
certificate (the "Payment Certificate") stating that as of the
date of such certificate (i) all the conditions to the payment
of such Installment have been satisfied and (ii) all
representations and warranties of the General Partners contained
in this Agreement are true and correct. Except as provided in
the final sentence of this Section 5.1(b), acceptance by the
Partnership of any Installment shall constitute a confirmation
that, as of the date of payment, all such conditions are
satisfied and all such representations and warranties are true
and correct. In addition, the obligation of the Investment
Limited Partner to pay the First Installment is also conditioned
upon delivery by the General Partners to the Investment Limited
Partner of (i) a legal opinion of independent counsel to the
Partnership, which opinion must be satisfactory to the
Investment Limited Partner as to form, content and identity of
counsel and (ii) a photocopy of an owner's title insurance
policy, or an endorsement thereto, issued to the Partnership
with respect to the Apartment Complex with an effective date on
or after the Admission Date, in an insured amount of not less
than $2,671,600, from a title insurance company reasonably
satisfactory to the Investment Limited Partner and evidencing
the Partnership's ownership of the Apartment Complex subject
only to such exclusions, exceptions, conditions and stipulations
as shall be acceptable to the Investment Limited Partner, in its
sole discretion (the "Title Policy"). 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 any
unpaid items enumerated in the numbered clauses of the second
sentence of Section 6.11 or an "Operating Deficit" (expenses in
excess of revenues which the General Partners 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
unpaid item and/or Operating Deficit; provided, however, that if
the proceeds so paid are designated in this Agreement to be used
to pay fee(s) or distributions to the General Partners of their
Affiliates, then such proceeds shall be deemed to have first
been paid to the General Partners or their Affiliates as such
fees or distributions and then applied by the General Partners
to fund such unpaid item and/or Operating Deficit as provided in
said Sections 6.11 or 6.10, as the case may be.
(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; provided,
however, that as long as the Second Installment becomes due and
payable not later than January 10, 1999, the minimum ten (10)
day requirement for delivery of the Payment Certificate shall be
waived.
(d) If, as of the date when an Installment would otherwise
be due, any statement required to be made in the Payment
Certificate for such Installment cannot be truthfully made, the
General Partners shall notify the Investment Limited Partner of
the reason why such statement would be untrue if made, and the
Investment Limited Partner shall not be required to pay such
Installment; provided, however, that if (i) any such statement
can subsequently be 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, then the Investment Limited
Partner shall pay such Installment to the Partnership thirty
(30) days after delivery by the General Partners to the
Investment Limited Partner of the Payment Certificate together
with an explanation of the manner in which each such statement
had become true.
(e) In the event that (i) State Designation does not occur
by August 1, 1999, or (ii) by April 1, 1999, the Limited
Partners shall not have received a written certification of the
Auditors in a form and in substance satisfactory for the purpose
of achieving Cost Certification and indicating that the product
of the Apartment Complex's Qualified Basis and its Applicable
Percentage is such that the Apartment Complex will be eligible
to receive Tax Credit in an annual amount of at least $246,895,
or (iii) at any time after the Completion Date the product of
the Apartment Complex's Qualified Basis and its Applicable
Percentage is determined by the Auditors, the Tax Accountants or
the Service to be such that the Apartment Complex will not be
eligible to receive Tax Credit in an annual dollar amount of at
least $246,895, then (a) the General Partners shall pay to the
Investment Limited Partner an amount equal to 99.99% of the
product of (A) the difference between (i) $2,468,950 and
(ii) the total amount of Tax Credit actually allocated or
expected to be allocated to the Partnership over the entire
Credit Period and (B) 0.745, and (b) the Projected Credit for
each year shall thereafter be redefined to mean 99.99% of the
annual amount of Tax Credit actually so allocated to the
Partnership (the "Revised Projected Credit"). Any amount
payable by the General Partners to the Investment Limited
Partner pursuant to this Section 5.1(e) shall, at the option of
the Investment Limited Partner, (i) be applied first to the
Installment, if any, next due to be paid by the Investment
Limited Partner, and any balance of such amount payable by the
General Partners in excess of the amount of such Installment
shall be applied to succeeding Installments, if any, and/or (ii)
be paid in its entirety by the General Partners directly to the
Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event.
(f) If with respect to any fiscal year commencing during
the sixty (60)-month period commencing on the later of (i) the
Admission Date or (ii) the date on which the first building in
the Apartment Complex is placed in service for the purposes of
Section 42 of the Code (a "Reduction Year") the Actual Credit is
or was less than the Projected Credit, then the General Partners
shall pay to the Investment Limited Partner the Reduction
Amount. The Reduction Amount shall be equal to the sum of
(A) 87.6% of the excess of the Projected Credit for such year
over the Actual Credit for such year, plus (B) the amount of any
recapture, interest or penalty payable by the limited partners
and/or holders of beneficial assignee certificate of the
Investment Limited Partner as a result of such shortfall,
assuming that each limited partner and/or holders of beneficial
assignee certificate in the Investment Limited Partner used all
of the Tax Credits allocated to it in the year of allocation and
that each such Person was subject to interest at the rate set
forth in Section 6621(a)(2) of the Code and to the penalty for
understatement of tax set forth in Section 6662(d) of the Code.
The Auditors shall make their determination of the amount of the
Actual Credit with respect to each Reduction Year within thirty
(30) days following the end of such year but such amount shall
be subject to later adjustment by the Auditors or by the Service
in connection with an audit. The Investment Limited Partner
shall be eligible to be paid a Reduction Amount as hereinabove
described with respect to each Reduction Year and may receive
multiple payments of Reduction Amounts in the event of multiple
changes in the Actual Credit. Any Reduction Amount shall, at
the option of the Investment Limited Partner, (i) first be
applied to the Installment next due to be paid by the Investment
Limited Partner, with any portion of such Reduction Amount in
excess of the amount of such Installment then being applied to
succeeding Installments, and/or (ii) be paid in its entirety by
the General Partners directly 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.
(g) In the event that, for any reason, with respect to any
fiscal year following the fiscal years referred to in
Section 5.1(f), the amount of the Actual Credit shall be less
than the Projected Credit (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 (a "Credit Recovery Loan"), which shall be
deemed to have been made on January 1 of such year in an amount
equal to the sum of (i) the Credit Shortfall for such year plus
(ii) the amount of any recapture, interest or penalty payable by
the limited partners of the Investment Limited Partner as a
result of the Credit Shortfall for such year, assuming that each
limited partner in the Investment Partnership used all of the
Tax Credits allocated to it in the year of allocation and that
each such Person was subject to interest at the rate set forth
in Section 6621(a)(2) of the Code and to the penalty for
understatement of tax set forth in Section 6662(d) of the Code.
Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such
constructive advances shall have been deemed to have been made
under this Section 5.1(g) at 9% per annum. Credit Recovery
Loans shall be payable by the Partnership as provided in
Section 10.3(b), Clause Third.
5.2 Return of Capital Contributions TC "5.2 Return of
Capital Contributions" \f C \l "2"
(a) Failure to Achieve Developmental and/or Tax Credit
Benchmarks and Standards. If:
(1) all of the Low-Income Apartment Units shall not
have been placed in service by August 1, 1999 (or any later
date fixed by the General Partners with the Consent of
Investment Limited Partner), or
(2) by August 1, 1999 (or any later date fixed by the
General Partners with the Consent of the Investment Limited
Partner) less than 20 apartment units in the Apartment
Complex shall have been occupied by Qualified Tenants, or
(3) Permanent Mortgage Commencement shall not have
occurred prior to April 1, 1999 (or any later date fixed by
the General Partners with the Consent of the Investment
Limited Partner), or
(4) State Designation shall not have occurred by
August 1, 1999 (or any later date fixed by the General
Partners with the Consent of the Investment Limited
Partner), or
(5) the Partnership shall fail to meet the Minimum
Set-Aside Test or the Rent Restriction Test by the close of
the first year of the Credit Period and/or fails to
continue to meet either of those Tests at any time during
the sixty (60)-month period commencing on such date, or
(6) prior to Permanent Mortgage Commencement,
(a) foreclosure proceedings shall have commenced under the
Construction Mortgage and such proceedings shall not have
been dismissed within thirty (30) days, (b) any of the
commitments of any Lender or Agency to provide the
Permanent Mortgage and/or any subsidy financing shall be
terminated or withdrawn and not reinstated or replaced
within sixty (60) days with terms equally or more favorable
to the Investment Limited Partner or terms for which the
Consent of the Investment Limited Partner and (if required)
the approval of any Agency or other Lender shall have been
obtained, or (c) the Construction Lender shall have
irrevocably refused to make any further advances under the
Construction Mortgage and such decision shall not have been
reversed or the Construction Lender replaced within thirty
(30) days, or
(7) if at any time it shall be determined by the
Service or by the Tax Accountants that as of December 31,
1997 the Partnership had not incurred capitalizable costs
with respect to the Apartment Complex of at least ten
per cent (10%) of the Partnership's reasonably expected
basis in the Apartment Complex as of December 31, 1999, or
(8) if by April 1, 1999 (or any later date fixed by
the General Partners with the Consent of the Investment
Limited Partner) Cost Certification shall not have
occurred, or
(9) if by December 1, 1999 (or any later date fixed
by the General Partners with the Consent of the Investment
Limited Partner) Rental Achievement shall not have been
achieved, or
(10) the General Partners fail to make any advances
necessary to fund payment of the Asset Management Fee
pursuant to Section 6.10,
then the General Partners shall, within five (5) days of the
occurrence thereof, send to the Investment Limited Partner and
the Special Limited Partner notice of such event and of the
General Partners' obligation to repurchase the Interests of the
Investment Limited Partner and the Special Limited Partner by
paying to the Investment Limited Partner and the Special Limited
Partner an amount (the "Repurchase Amount") equal to each such
Partner's Invested Amount minus the amount, if any, of such
Partner's Capital Contribution which shall not yet have been
paid (or deemed to have been paid) to the Partnership plus the
amount of any third-party costs, including, but not limited to,
attorney's fees incurred by or on behalf of such Partner in
implementing this Section 5.2(a) in the event the Investment
Limited Partner and/or the Special Limited Partner requires such
a repurchase. If either the Special Limited Partner or the
Investment Limited Partner elects to require a repurchase of its
Interest and the payment to it of an amount equal to its
Repurchase Amount, it shall send notice thereof to the
Partnership within thirty (30) days after the mailing date of
the General Partners' notice, or at any time after the
occurrence of any of the foregoing if the General Partners shall
not have sent notice thereof, and the General Partners shall
within ten (10) 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.
(b) Lender Disapproval. If any Lender and/or Agency 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 such Limited Partner shall,
effective as of such time or such later time as may be selected
by such Limited Partner (or such other time as may be specified
by the Lender and/or Agency in its disapproval), at the option
of such Limited Partner (if not directed by the Lender and/or
Agency to withdraw), cease to be a Limited Partner. The General
Partners shall, within ten (10) days of the effective date of
such cessation, pay to such Limited Partner an amount equal to
its Invested Amount minus the amount, if any, of such Limited
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 Partners shall indemnify and
hold harmless such Partner from any losses, damages, and
liabilities to which such Partner (as a result of its
participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited
Partner shall have the right to irrevocably waive its right to
have its Interest repurchased pursuant to any clause or clauses
of Section 5.2(a), or any portion thereof, at any time during
which any of such rights shall be in effect. Such a waiver
shall be exercised by delivery to the General Partners of a
written notice stating that the rights being waived pursuant to
any specified clause or clauses of Section 5.2(a), or any
specified portion thereof, are thereby waived from that date
forward.
(e) Failure to Perform. If the General Partners shall
fail to make on the due date therefor any payment required under
Section 5.2(a) or Section 5.2(b), time being of the essence,
then, in addition to all other remedies available for such
failure, the Special Limited Partner shall have the rights set
forth in Section 7.5.
ARTICLE VI Rights, Powers and Duties of General Partners TC
"ARTICLE VI Rights, Powers and Duties of General
Partners" \f C \l "1"
6.1 Authorized Acts TC "6.1 Authorized Acts" \f C \l "2"
Subject to Section 6.2, Section 6.3 and all other
provisions of this Agreement, the General Partners for, in the
name and on behalf of the Partnership, are hereby authorized to
do the following in furtherance of the purposes of the
Partnership:
(1) To acquire by purchase, lease, exchange or
otherwise any real or personal property and to lease the
apartment units of the Apartment Complex to Qualified
Tenants pursuant to the requirements of this Agreement and
the Project Documents;
(2) To construct, operate, maintain, finance and
improve, and to own, sell, convey, assign, mortgage or
lease any real estate and any personal property;
(3) To borrow money and issue evidences of
indebtedness and to secure the same by mortgage, pledge or
other lien on the Apartment Complex or any other assets of
the Partnership;
(4) To execute the Construction and Permanent
Mortgages, the other Project Documents and all such other
documents as the General Partners deem necessary or
appropriate in connection with the acquisition, development
and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or amend
or modify the Construction and Permanent Mortgages or any
other financing affecting the Apartment Complex;
(6) To employ the Management Agent (which may be an
Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To employ their respective Affiliates to perform
services for, or sell goods to, the Partnership;
(8) To execute contracts with the State or any
subdivision or agency thereof or any other government
agency to make apartments or tenants in the Apartment
Complex eligible for any public-subsidy program;
(9) To execute leases of some or all of the apartment
units of the Apartment Complex to or at the direction of a
public housing authority and/or to a non-profit
corporation, cooperative or other non-profit Entity; and
(10) To enter into any kind of activity and to enter
into, perform and carry out contracts of any kind which may
be lawfully carried on or performed by a partnership and to
file all certificates and documents which may be required
under the laws of the State.
6.2 Restrictions on Authority TC "6.2 Restrictions on
Authority" \f C \l "2"
Notwithstanding any other Section of this Agreement, the
General Partners shall have no authority to perform any act in
violation of applicable law, Agency or other government
regulations, requirements of any Lender, or the Project
Documents. In the event of any conflict between the terms of
this Agreement and any applicable Agency or other government
regulations or requirements of the Lender, the terms of such
regulations or requirements shall govern. Neither shall the
General Partners have any authority to do any of the following
acts without the Consent of the Investment Limited Partner and
the prior written consent of the Special Limited Partner, and in
the event that any General Partner violates any provision of
this Section 6.2, the Special Limited Partner shall have the
rights set forth in Section 7.5:
(1) To have borrowings in excess of $10,000 in the
aggregate at any one time outstanding on the general credit
of the Partnership, except borrowings constituting
Subordinated Loans;
(2) To borrow from the Partnership or commingle
Partnership funds with funds of any other Person;
(3) Following the Completion Date, to construct any
new or replacement capital improvements on the Apartment
Complex which substantially alter the Apartment Complex or
its use or which are at a cost in excess of $10,000 in a
single Partnership fiscal year, except (a) replacements and
remodeling in the ordinary course of business or under
emergency conditions or (b) construction paid for from
insurance proceeds;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) To increase, decrease (except through the
amortization schedule provided for in the Permanent
Mortgage), amend or modify the terms of or refinance the
Construction or Permanent Mortgages;
(6) To rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements
of the Minimum Set-Aside Test, the Rent Restriction Test or
any Agency or Lender requirements;
(7) To sell, exchange or otherwise convey or transfer
the Apartment Complex or all or any substantial part of the
assets of the Partnership;
(8) To terminate any agreement with any Agency;
(9) To cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect
to the Partnership under the federal bankruptcy laws, as
now or hereafter constituted, or under any other federal or
state bankruptcy, insolvency or similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the
Partnership or for any substantial part of the
Partnership's business or property, or to cause the
Partnership to consent to any such decree, relief, order or
appointment initiated by any Person other than the
Partnership;
(10) To amend the Architect's Contract or the
Construction Contract, except for change orders approved by
the Lender;
(11) To pledge or assign any of the Capital
Contribution of the Investment Limited Partner or the
proceeds thereof;
(12) To amend the Nonprofit Participant Agreement or
the Supporting Services Agreement; or
(13) To do any act required to be approved or ratified
by all limited partners under the Act.
6.3 Personal Services TC "6.3 Personal Services" \f C
\l "2"
No General Partner or Affiliate thereof shall receive any
salary or other direct or indirect compensation for any services
or goods provided in connection with the Partnership or the
Apartment Complex, except as may be specifically provided in
Section 6.12 and Article XI or as to which the prior written
consent of the Special Limited Partner shall have been obtained
to the precise terms thereof prior to the commencement of such
services or the provision of such goods. Any Partner may
engage independently or with others in other business ventures
of every nature and description including the ownership,
operation, management, syndication and development of competing
real estate in accordance with Section 6.15, if applicable;
neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or
profits derived therefrom. Any and all contractual
relationships between the Partnership and any General Partner or
Affiliate thereof must (i) be cancelable upon sixty (60) days'
notice from the Special Limited Partner and (ii) not provided
for payments in excess of those determined by the Special
Limited Partner to be reasonable. Any and all compensation
received directly or indirectly by any General Partner or
Affiliate thereof pursuant to any such relationship must be
fully disclosed and specifically itemized in reports pursuant to
Section 12.7.
6.4 Business Management and Control; Tax Matters Partner
TC "6.4 Business Management and Control; Tax Matters Partner"
\f C \l "2"
Subject to the provisions of this Agreement, the General
Partners shall have the exclusive right to control the business
of the Partnership. The Investment Limited Partner shall have
no right to take part in the management or control of the
business of the Partnership or to transact any business in the
name of the Partnership. No provision of this Agreement which
makes the Consent of the Investment Limited Partner a condition
for the effectiveness of an action taken by the General Partners
is intended, and no such provision shall be construed, to give
the Investment Limited Partner any participation in the control
of the Partnership business. Each of the Special Limited
Partner and the Investment Limited Partner hereby consents to
the exercise by the General Partners of the powers conferred on
them by law and this Agreement, and the General Partners agree
to exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the provisions of
this Section 6.4 be invoked by any General Partner or by any
other Person as a defense against or as an impediment to the
ability of the Investment Limited Partner or the Special Limited
Partner to take any action hereunder. All Partners hereby agree
that T2G, Inc. shall serve as the "Tax Matters Partner." In the
case of litigation, the Tax Matters Partner is required to file
suit in the United States Tax Court unless the Consent of the
Investment Limited Partner is obtained to file suit in the
United States Claims Court or the United States District Court.
Nothing herein shall be construed to restrict the Partnership
from engaging the Auditors to assist the Tax Matters Partner in
discharging its duties hereunder.
6.5 Duties and Obligations TC "6.5 Duties and
Obligations" \f C \l "2"
(a) The General Partners shall manage the affairs of the
Partnership to the best of their ability, shall use their best
efforts to carry out the purpose of the Partnership, and shall
devote to the Partnership such time as may be necessary for the
proper performance of their duties and the business of the
Partnership. The General Partners shall promptly take all
action which may be necessary or appropriate for the proper
development, maintenance and operation of the Apartment Complex
in accordance with the provisions of this Agreement, the Project
Documents and applicable laws and regulations, including,
without limitation, funding the Construction and Development Fee
to the extent Capital Contributions are insufficient. The
General Partners shall be responsible for the management and
operation of the Partnership, including the oversight of the
rent-up and operational stages of the Apartment Complex.
(b) The General Partners shall use their best efforts to
cause the Partnership to generate Cash Flow for distribution to
the Partners at the maximum realizable level in view of (i) any
applicable Agency and other regulations, (ii) the Minimum Set-
Aside Test and (iii) the Rent Restriction Test, and, if
necessary, the General Partners shall also use their best
efforts to obtain approvals and implementation of appropriate
adjustments in the rental schedule of the Apartment Complex.
(c) The General Partners shall cause the Partnership to
obtain and keep in force, during the term of the Partnership,
comprehensive casualty insurance, including, but not limited to,
fire and other risks generally included under "extended
coverage" policies, workmen's compensation and public liability
insurance in favor of the Partnership (i) with such companies
and in such amounts as shall be satisfactory to the Lenders and
any Agency, or, if the Apartment Complex is no longer subject to
Lender or Agency regulation or requirements, as shall be
customary for apartment complexes similar to the Apartment
Complex, and (ii) in amounts which shall be (A) no less than
those amounts which are customary in the area for apartment
complexes such as the Apartment Complex, (B) in the case of the
"extended coverage" portion, no less than the full original
replacement value of the Apartment Complex, (C) no less than
such amounts as may be reasonably requested by the Investment
Limited Partner and/or the Special Limited Partner from time to
time, and (D) in any event, sufficient to prevent the
Partnership from becoming a co-insurer under any such policies.
No deductibles on such policies may exceed $1,000. The public
liability insurance in favor of the Partnership shall be in an
amount not less than $5,000,000. Through the Completion Date,
or such later date as may be required by the Construction Lender
or any Agency, the General Partners shall also cause the
Partnership to obtain and keep in force a builder's risk policy
in favor of the Partnership in an amount not less than the
greater of (i) the full replacement value of the Apartment
Complex (excluding the value of the underlying land, the site
utilities and the foundations) or (ii) such other amount as
shall be required by any Agency or the Construction Lender. In
addition to the foregoing, the General Partner shall cause the
Partnership to obtain fidelity insurance coverage for each
employee of the Management Agent in an amount of not less than
$50,000. Throughout the term of the Partnership, the General
Partners shall provide copies of all such policies (or binders)
to the Investment Limited Partner promptly after their receipt
thereof or upon request but no less frequently than annually.
The General Partners shall cause the applicable insurer to name
the Investment Limited Partner as an "additional insured" on
each Partnership insurance policy. Prior to the expiration date
for any such Partnership insurance policy, the General Partners
shall deliver to the Investment Limited Partner a copy of the
comparable new or replacement policy, including all
endorsements, exhibits and riders thereto.
(d) The obligations of the General Partners hereunder
shall be the joint and several obligations of each General
Partner. Except as otherwise provided in Sections 4.4(b) and
7.1, such obligations shall survive any Withdrawal of a General
Partner from the Partnership.
(e)(1) The General Partners shall establish and maintain
reasonable reserves to provide for working capital needs,
improvements, replacements and any other contingencies of the
Partnership. At a minimum, the General Partners shall deposit
$15,195 from the proceeds of the Fourth Installment into a
segregated replacement reserve account and shall cause the
Partnership to annually deposit, commencing in 1999, $5,100 per
annum from its Cash Flow into replacement reserves; to the
extent that Cash Flow (as determined before deduction of this
reserve deposit) for any year shall be insufficient to make such
deposit in full, the General Partners shall fund such shortfall
from their own funds as a Subordinated Loan.
(e)(2) In addition to the requirements of Section
6.5(e)(1), in order (a) to secure the General Partners'
obligation to fund operating expenses as provided in
Section 6.10 and (b) to meet operating expenses of the
Partnership which exceed operating income available for the
payment thereof after expiration or termination of such
obligation of the General Partners, the General Partners shall
deposit $50,000 from the proceeds of the Second Installment and
an additional $50,000 from the proceeds of the Fourth
Installment into a segregated operating reserve account.
Beginning on the first anniversary of Rental Achievement and
continuing on each anniversary of Rental Achievement up to and
including the fourth anniversary of Rental Achievement, an
annual amount equal to the difference between $12,000 and the
amount, if any, of funds drawn on the operating reserve account
during the immediately preceding one year period to pay
Partnership operating expenses for such period shall, at the
General Partner's request, be released from the operating
reserve account provided that the Partnership operations for the
six (6) consecutive full calendar months immediately preceding
the applicable anniversary date had achieved a 115% debt service
coverage ratio, as determined in accordance with the provisions
for determining Rental Achievement. Upon the later of (i) the
60-month anniversary of Rental Achievement or (ii) the first
date after which both of the following have occurred: (A) the
Partnership has achieved Rental Achievement (calculated for
purposes of this clause only for a period of twelve (12)
consecutive full months rather than four (4) consecutive months)
and (B) the Apartment Complex has been leased to and occupied by
Qualified Tenants for twelve (12) consecutive months, the funds,
if any, remaining in such reserve shall, at the General
Partner's request, be released from the operating reserve
account provided that the Partnership operations for the
immediately preceding six (6) consecutive full calendar months
had achieved a 115% debt service coverage ratio, as determined
in accordance with the provisions for determining Rental
Achievement and provided further that as of the release date,
the replacement reserve account required pursuant to
Section 6.5(e)(1) has been fully funded to its required level.
Any funds utilized from such reserve to pay Partnership
operating expenses shall constitute Subordinated Loans. All
disbursements and releases from the operating reserve account
(including any interest earned thereon) shall require the
signature of the General Partner and the Special Limited
Partner. Funds released from the operating reserve account
pursuant to this Section 6.5(e)(2), subject to all Agency
requirements and the terms of the Operating Deficit Fund
Agreement, shall be returned to the general operating account of
the Partnership and applied to Partnership obligations as they
become due and payable, including without limitation, payment of
any outstanding Development Fee.
(e)(3) In addition to the requirements of Section
6.5(e)(1) and (e)(2), the General Partner shall deposit $7,000
from the proceeds of the Fourth Installment into another
segregated account to be used only to fund the allowances
described in the Supporting Services Agreement which have been
approved by the Special Limited Partner.
(e)(4) In addition to the requirements of Sections
6.5(e)(1), (2) and (3) hereof, the General Partner shall deposit
$17,886 from the proceeds of the Second Installment into a
segregated account to be used only to pay Partnership real
estate taxes and insurance premiums.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be admitted
if he, she or it has not first agreed to be bound by this
Agreement (and assume the obligations of a General Partner
hereunder) and by the Project Documents to the same extent and
under the same terms as the other General Partners.
(g) The General Partners shall take all actions necessary
to ensure that the Investment Limited Partner receives the full
amount of the Projected Credit, including, without limitation,
the rental of apartments to Qualified Tenants, the filing of
annual certifications as may be required and the maintenance and
storage of Tax Credit compliance records as required in
Section 12.9. In this regard, the General Partners shall, inter
alia, cause (i) the Partnership to satisfy all requirements
imposed from time to time under the Code with respect to rental
levels and occupancy by Qualified Tenants by the close of the
first year of the Credit Period and throughout the Compliance
Period so as to permit the Partnership to be entitled to the
maximum available Tax Credit, (ii) the Partnership to comply
with all Tax Credit monitoring procedures, (iii) all Low-Income
Apartment Units to be occupied pursuant to leases to Qualified
Tenants for periods of not less than six (6) months, (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 available for rental by the general public and to
be of equal quality and all Apartment Complex amenities to be
made available to all tenants on a comparable basis without
separate fees.
(h) Intentionally Omitted.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations pertaining
thereto) or dispose of any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied,
or operated either by any General Partner, any Affiliate of a
General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor
indirectly transport or arrange for the transport of any
Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any
General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or
from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, any Affiliate of a
General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General Partner's
receipt of any notice to such effect from any Federal, state, or
other governmental authority; and (z) upon any General Partner's
obtaining knowledge of any incurrence of any expense or loss by
any such governmental authority in connection with the
assessment, containment, or removal of any Hazardous Material
for which expense or loss any General Partner may be liable or
for which expense or loss a lien may be imposed on the Apartment
Complex.
(j) The General Partners shall promptly request in writing
of First Mortgage Lender that such Lender cause the Investment
Limited Partner to be named as an "interested party" in the
Permanent Mortgage documents, so that such Lender will notify
the Investment Limited Partner of any default or other problem
under the Permanent Mortgage.
(k) The General Partners shall take all actions necessary
to ensure that the involvement of both the Nonprofit Participant
and the Consortium meets the requirements of the Extended Use
Agreement and any other requirements imposed by the Credit
Agency.
6.6 Representations and Warranties TC "6.6
Representations and Warranties" \f C \l "2"
The General Partners represent and warrant to the
Investment Limited Partner and the Special Limited Partner as
follows:
(1) The Partnership is a duly organized limited
partnership validly existing and in good standing under the
laws of the State and has complied with all filing
requirements necessary for its existence and to preserve
the limited liability of the Investment Limited Partner and
the Special Limited Partner.
(2) No event or proceeding has occurred or is pending
or threatened which would (a) materially adversely affect
the Partnership or its properties, or (b) materially
adversely affect the ability of the General Partners or any
of their Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the
Apartment Complex, other than legal proceedings which have
been bonded against without recourse to Partnership assets
in such manner as to stay the effect of the proceedings or
otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without
limitation, the following: (x) legal actions or
proceedings before any court, commission, administrative
body or other governmental authority having jurisdiction
over the zoning applicable to the Apartment Complex;
(y) disputes with suppliers of labor and/or materials; and
(z) acts of any governmental authority.
(3) No default (or event which, with the giving of
notice or the passage of time or both, would constitute a
default) has occurred and is continuing under this
Agreement or under any provision of the Project Documents,
and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic
Risk of Loss with respect to any Permanent Mortgage,
except as may be expressly permitted by Article III. No
General Partner has, either on its own behalf or on behalf
of the Partnership, incurred any financial responsibility
with respect to the Partnership prior to the Admission
Date, other than as disclosed in writing to the Investment
Limited Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been
completed in a timely manner in conformity with the Project
Documents. There is no violation by the Partnership or the
General Partners of any zoning, environmental or similar
regulation applicable to the Apartment Complex which could
have a material adverse effect thereon, and the Partnership
has complied with all applicable municipal and other laws,
ordinances and regulations relating to such construction
and use of the Apartment Complex. All appropriate public
utilities, including, but not limited to, water,
electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will
be available and operating properly for each unit in the
Apartment Complex at the time of the first occupancy of
such unit.
(6) The Partnership owns good and marketable fee
simple title to the Apartment Complex, subject to no
material liens, charges or encumbrances other than those
which (a) are both permitted by the Project Documents and
are noted or excepted in title insurance policy
number ________________ dated January ____, 1999 issued by
Security Search & Abstract Company of Philadelphia, Inc.
Title Insurance Company to the Partnership, and (b) do not
materially interfere with use of the Apartment Complex (or
any part thereof) for its intended purpose or have a
material adverse effect on the value of the Apartment
Complex.
(7) The execution and delivery of all instruments and
the performance of all acts heretofore or hereafter made or
taken pertaining to the Partnership or the Apartment
Complex by each Affiliate of a General Partner which is a
corporation or a limited liability company have been or
will be duly authorized by all necessary organizational
action, and the consummation of any such transactions with
or on behalf of the Partnership will not constitute a
breach or violation of, or a default under, the charter,
by-laws or other organizational documents of such Affiliate
or any agreement by which such Affiliate or any of its
properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation or
limited liability company has been duly organized, is
validly existing and in good standing under the laws of its
state of organization and has all requisite power to be a
General Partner and to perform its duties and obligations
as contemplated by this Agreement and the Project
Documents. Neither the execution and delivery by such
General Partner of this Agreement nor the performance of
any of the actions of such General Partner contemplated
hereby has constituted or will constitute a violation of
(a) the articles of organization, by-laws, operating
agreement or other organizational documents of such General
Partner, (b) any agreement by which such General Partner is
bound or to which any of its property or assets is subject,
or (c) any law, administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect
to any General Partner or any Controlling Person of a
General Partner.
(10) 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 the Lenders and/or any Agency.
(11) As of the Admission Date, the collective net
worth of the General Partners is not less than $267,000,
and no General Partner shall thereafter take any voluntary
action which would cause the collective net worth of the
General Partners to fall below such amount.
(12) All payments and expenses required to be made or
incurred in order to complete the rehabilitation of the
Apartment Complex in conformity with the Project Documents,
to fund any reserves hereunder or under any other Project
Document required to be funded at or prior to the later of
the Admission Date or Permanent Mortgage Commencement, to
satisfy all requirements under the Project Documents and/or
which form the basis for determining the principal sum of
the Permanent Mortgages and to pay the Construction and
Development Fee have been or will be paid or provided for
utilizing only (a) the funds available from the
Construction Mortgage, (b) the Capital Contribution of the
Investment Limited Partner, (c) the Capital Contributions
of the General Partners in the amounts set forth on
Schedule A as of the Admission Date, (d) the available net
rental income, if any, earned by the Partnership prior to
Permanent Mortgage Commencement (to the extent that it is
permitted to be used for such purposes by the Lenders
and/or any Agency), (e) any insurance proceeds and (f) any
funds furnished by the General Partners pursuant to
Sections 6.5(a) and 6.11.
(13) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited
Partner is $246,870 per annum for each of the years 1999
through 2008 (inclusive).
(14) The Apartment Complex is being rehabilitated in a
manner which satisfies and shall continue to satisfy all
restrictions, including tenant income and rent
restrictions, applicable to projects eligible for Tax
Credits.
(15) The General Partners have provided to the
Investment Limited Partner copies of the lead wipe test
reports on all buildings of the Apartment Complex from an
industrial hygiene laboratory and a complete copy of a
"Phase I" hazardous waste site assessment report for the
4203 West Grand Avenue property, all prepared in accordance
with ASTM standards. 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.
(16) To the best of the General Partners' knowledge,
no Hazardous Material was ever or is now stored on,
transported, or disposed of on the land comprising the
Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance
with all laws, ordinances, and regulations pertaining
thereto.
(17) The General Partners have fulfilled and will
continue to fulfill all of their duties and obligations
under Section 6.5.
(18) The Nonprofit Participant is a not-for-profit
corporation which is a qualifying corporation under
Section 501(c)(3) of the Code and is exempt from tax under
Section 501(a) of the Code.
(19) There shall at all times throughout the
Compliance Period be a "qualified nonprofit organization"
as that term is defined in Section 52(h)(5)(C) of the Code
which materially participates in the development and
operations of the Code.
6.7 Liability on the Permanent Mortgages TC "6.7
Liability on the Permanent Mortgages" \f C \l "2"
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 Permanent Mortgage, and the General Partners
shall not permit any other Partner or any Related Person to bear
the Economic Risk of Loss for the payment of any portion of any
Permanent Mortgage, except as may be expressly permitted
pursuant to Article III.
6.8 Indemnification of the General Partners TC "6.8
Indemnification of the General Partners" \f C \l "2"
(a) No General Partner nor any Affiliate thereof shall
have liability to the Partnership or to any Limited Partner for
any loss suffered by the Partnership which arises out of any
action or inaction of any General Partner or Affiliate thereof
if such General Partner or Affiliate thereof in good faith
determined that such course of conduct was in the best interest
of the Partnership and such course of conduct did not constitute
negligence or misconduct of such General Partner or Affiliate
thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership, provided
that all of the following conditions are met: (i) such General
Partner has determined, in good faith, that the course of
conduct which caused the loss, judgment, liability, expense or
amount paid in settlement was in the best interests of the
Partnership; and (ii) such loss, judgment, liability, expense or
amount paid in settlement was not the result of negligence or
misconduct on the part of such General Partner or Affiliate
thereof; and (iii) such indemnification or agreement to hold
harmless is recoverable only out of the assets of the
Partnership, and not from the Limited Partners.
(c) Notwithstanding the above, no General Partner or any
Affiliate thereof performing services for the Partnership or any
broker-dealer shall be indemnified for any losses, liabilities
or expenses arising from or out of an alleged violation of
Federal or state securities laws unless (i) there has been a
successful adjudication on the merits of each count involving
securities laws violations as to the particular indemnitee and
the court approves the indemnification of such litigation costs,
(ii) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction as to the particular
indemnitee and the court approves the indemnification of such
litigation costs or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular
indemnitee and the court finds that indemnification of the
settlement and related costs should be made. In any claim for
indemnification for Federal or state securities law violations,
the party seeking indemnification shall, prior to seeking court
approval for such indemnification, place before the court the
positions of the Securities and Exchange Commission, and any
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 and
casualty insurance, which insures any party against any
liability as to which such party is herein prohibited from being
indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves
activity in which such Affiliates acted in the capacity of a
General Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on behalf
of the Partnership who (i) directly or indirectly controls, is
controlled by or is under common control with a General Partner;
(ii) owns or controls ten per cent (10%) or more of the
outstanding voting securities of a General Partner; (iii) is an
officer, director, partner or trustee of a General Partner; or
(iv) if a General Partner is an officer, director, partner or
trustee, is any company for which such General Partner acts in
any such capacity.
6.9 Indemnification of the Partnership and the Limited
Partners TC "6.9 Indemnification of the Partnership and the
Limited Partners" \f C \l "2"
(a) The General Partners will indemnify and hold the
Partnership and the Limited Partners harmless from and against
any and all losses, damages and liabilities which the
Partnership or any Limited Partner may incur by reason of the
(a) past, present or future actions or omissions of the General
Partners or any of their Affiliates, or (b) any liabilities to
which either the Partnership or the Apartment Complex is
subject; provided, however, that the foregoing indemnification
shall not apply to (i) any Mortgage or (ii) necessary
contractual obligations incurred pursuant to Agency or Lender
requirements in connection with the operation of the Apartment
Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner
shall be liable to a Limited Partner or the Partnership for any
act or omission for which the Partnership is required to
indemnify such General Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold
the Limited Partners harmless from and against any claim brought
or threatened against any Limited Partner or loss (as well as
from any and all attorneys' fees and expenses incurred in
connection with any such claim or loss) on account of the
presence of any Hazardous Material at the Apartment Complex.
Any claim or loss described in the immediately preceding
sentence may be defended, compromised, settled, or pursued by
the Limited Partners with counsel of the Limited Partners'
selection, but at the expense of General Partners.
Notwithstanding anything else set forth herein, this
indemnification shall survive the withdrawal of any General
Partner and/or the termination of this Agreement.
6.10 Operating Deficits TC "6.10 Operating Deficits" \f C
\l "2"
The General Partners shall be obligated to promptly advance
funds to meet operating expenses (including full payment of the
Asset Management Fee and reserve deposits required pursuant to
Section 6.5(e) or by any Lender or Agency) and debt service of
the Partnership from Rental Achievement through the period
ending forty-eight (48) months after such Rental Achievement
which exceed operating income attributable to such period and
available for the payment thereof; provided, however, that the
obligation to advance funds to pay the Asset Management Fee
shall continue for the entire term of the Partnership, and
further provided that the advances required hereunder shall be
limited such that the aggregate principal amount of all
outstanding advances shall not exceed $100,000. In the event
that the General Partners shall fail to make any such advance as
aforesaid, (a) the Partnership shall utilize amounts (the
"Applied Amounts") otherwise payable to the General Partners or
Affiliates thereof under Section 6.12 and/or Article X to meet
the obligations of the General Partners pursuant to this
Section 6.10, with such utilization of Applied Amounts
constituting payment and satisfaction of the corresponding
amounts payable to the General Partners or Affiliates thereof
under Section 6.12 and/or Article X, with the proceeds thereof
being applied to such obligations, and with the obligation of
the Partnership to make such payments to the General Partners or
Affiliates thereof pursuant to Section 6.12 and/or Article X
being deemed satisfied to the extent thereof and (b) the Special
Limited Partner shall have the rights set forth in Section 7.5.
For the purpose of this Section 6.10, all expenses shall be paid
on a sixty (60)-day current basis. Moreover, the General
Partners may in their sole discretion at any time advance funds
to the Partnership to pay operating expenses and/or debt service
of the Partnership in order to facilitate the Partnership's
compliance with the Rent Restriction Test. All advances
pursuant to this Section 6.10 (including any Applied Amounts)
shall be Subordinated Loans repayable without interest in
accordance with the provisions of Article X.
6.11 Obligation to Complete the Rehabilitation of the
Apartment Complex TC "6.11 Obligation to Complete the
Rehabilitation of the Apartment Complex" \f C \l "2"
The General Partners and the Developer shall complete the
rehabilitation of the Apartment Complex substantially in
accordance with the plans and specifications approved by the
Lenders and/or any Agency and all requirements necessary to
obtain the required certificates of occupancy for dwelling
units, or cause the same to be completed, in a good and
workmanlike manner, free and clear of all mechanics',
materialmen's or similar liens, and shall equip the Apartment
Complex or cause the same to be equipped with all necessary and
appropriate fixtures, equipment and articles of personal
property, including refrigerators and ranges, and shall cause
all necessary certificates of occupancy for all apartment units
in the Apartment Complex to be obtained, all in accordance with
the Project Documents. If the proceeds of the Construction and
Permanent Mortgages, the net rental income, if any, of the
Apartment Complex generated prior to Rental Achievement and
which is permitted by the Lenders and/or any Agency to be
utilized for any of the purposes hereinafter set forth, the
Capital Contribution of the Investment Limited Partner, the
Capital Contributions of the General Partners in the amounts set
forth on Schedule A as of the Admission Date, and any insurance
proceeds arising out of casualties prior to Rental Achievement
as available from time to time are insufficient to (i) acquire
and complete the rehabilitation of the Apartment Complex and
satisfy all other obligations, all as provided in the first
sentence of this Section 6.11, (ii) pay the Construction and
Development Fee, (iii) arrive at Permanent Mortgage Commencement
in conformity with the Project Documents, (iv) discharge all
Partnership liabilities and obligations arising out of any
casualty giving rise to any such insurance proceeds, and
(v) provide for all other payments and expenses required to be
made or incurred through Rental Achievement, including the
funding of any reserves required hereunder or under any other
Project Document and the repayment in full of all obligations
under the Construction Mortgage, the General Partners in their
capacity as developers shall be responsible for and obligated to
pay such deficiencies and shall, to the extent permitted under
the Project Documents and any applicable regulations or
requirements of the Lenders and/or any Agency, be reimbursed at
or prior to Rental Achievement only out of the proceeds
designated in this sentence available from time to time after
payment of all costs described in this sentence. Any amounts
not reimbursed through Rental Achievement or from the proceeds
of the Capital Contribution of the Investment Limited Partner as
provided in Section 5.1 shall not be reimbursable or otherwise
change the Interest of any Person in the Partnership but shall
be borne by the General Partners in their capacity as
developers; provided, however, that, notwithstanding the
foregoing, to the extent any such amounts represent items which
are properly included in the Partnership's Qualified Basis and
result in an increase in the amount of Tax Credit allocated and
available to the Partnership over and above the amount of Tax
Credit required in order to achieve State Designation
("Includable Items"), the General Partners shall make an
additional Capital Contribution in the amount of the Includable
Items and the Partnership shall utilize the proceeds of such
additional Capital Contribution to pay the Includable Items. In
the event that the General Partners and/or the Developer shall
fail to fund any such deficiency as required by this
Section 6.11, an amount not in excess of the unpaid portion of
the Construction and Development Fee due to the Developer, the
General Partners or any of their Affiliates under Section 6.12
or any other provision hereof shall be applied by the
Partnership to meet such obligation of the General Partners
and/or the Developer, and, to the extent there may still be a
deficiency, any amounts otherwise payable as the Partnership
Management Fee or distributable to the General Partners pursuant
to Article X shall also be so applied. Any such application of
funds as described in the immediately preceding sentence shall
constitute a payment of the amount of the Fee or such other item
which such funds had been earmarked to pay, and the obligation
of the General Partners and/or the Developer to advance such
amount under this Section 6.11 shall be satisfied to the extent
of such application.
6.12 Certain Payments to the General Partners and Others
TC "6.12 Certain Payments to the General Partners and Others"
\f C \l "2"
(a) The Partnership shall pay to the General Partners a
non-cumulative fee (the "Partnership Management Fee") commencing
in 1999 for their services in connection with the administration
of the day to day business of the Partnership in an amount equal
to $1,500 per annum. The Partnership Management Fee for each
fiscal year of the Partnership shall be payable from Cash Flow
in the manner and priority set forth in Section 10.3(a) only to
the extent Cash Flow is available therefor for such year.
(b) In consideration of their consultation, advice and
other services in connection with the construction and
development of the Apartment Complex and as consideration for
the assignment described in Section 6.14, the Partnership shall
pay to the General Partners (or their designee) a construction
and development fee (the "Construction and Development Fee") in
the amount of $209,972, $41,994.40 of which was earned in
October, 1997 according to the terms of the Development
Agreement and the remaining $167,977.60 was earned as to each
building in the Apartment Complex as of the date such building
was completed. The Construction and Development Fee shall be
payable from Cash Flow and/or Capital Transaction proceeds in
accordance with Article X; provided, however, in the event any
portion of the Development Fee remains unpaid on January 1,
2009, such amount shall be paid by the Partnership on said date
from the proceeds of the additional capital contribution to be
made by the General Partner pursuant to Section 4.1.
(c) The Partnership shall pay to BCCLP or an Affiliate
thereof a fee (the "Asset Management Fee") commencing in 1999
for its services in connection with the Partnership's accounting
matters relating to the Investment Limited Partner and assisting
with the preparation of tax returns and the reports required by
Section 12.7 in the annual amount of $1,500. The Asset
Management Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.3(a); provided, however, that
if in any fiscal year commencing with 1999, Cash Flow is
insufficient to pay the full amount of the Asset Management Fee
and the shortfall is not paid from funds advanced pursuant to
Section 6.10, the unpaid portion thereof shall accrue and be
payable on a cumulative basis in the first year in which there
is sufficient Cash Flow or from the proceeds of a Capital
Transaction as provided in Article X.
(d) Incentive Management Fee. Beginning in 1999, The
Partnership shall pay to the General Partner a non-cumulative
annual Incentive Management Fee payable, only to the extent
funds are available for the payment thereof, in the amount of
25% of the Cash Flow remaining in such year after application
thereof to make payments described in Clauses First through
Fifth of Section 10.3(a); provided, however, that in no event
shall the aggregate amount of the annual Incentive Management
Fee and the annual fee paid to the Management Agent for such
year exceed ten percent (10%) of gross rents collected from the
Apartment complex for such fiscal year. Such fee shall be paid
for management oversight services, for planning, supervising and
developing a marketing program for the Project and for assisting
the Management Agent in coordinating efforts to achieve a
desirable tenant selection before and during occupancy.
6.13 Delegation of General Partner Authority TC "6.13
Delegation of General Partner Authority" \f C \l "2"
If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or
duties hereunder to another General Partner or General Partners.
Every contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder
that at the time of the delivery thereof (a) the Partnership was
in existence, (b) this Agreement had not been amended in any
manner so as to restrict the delegation of authority among
General Partners (except as shown in certificates or other
instruments duly filed in the Filing Office) and (c) the
execution and delivery of such instrument was duly authorized by
the General Partners. Any Person may always rely on a
certificate addressed to him and signed by any General Partner
hereunder:
(1) As to who are the General Partners or Limited
Partners hereunder;
(2) As to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the
General Partners or in any other manner germane to the
affairs of the Partnership;
(3) As to who is authorized to execute and deliver
any instrument or document of the Partnership;
(4) As to the authenticity of any copy of this
Agreement, the Certificate and 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 TC "6.14 Assignment to
Partnership" \f C \l "2"
The General Partners hereby transfer and assign to the
Partnership all of their right, title and interest in and to the
Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts
with architects, supervising architects, engineers and
contractors with respect to the development and rehabilitation
of the Apartment Complex; (ii) all plans, specifications and
working drawings heretofore prepared or obtained in connection
with the Apartment Complex; (iii) all governmental commitments
and approvals obtained, and applications therefor, including,
but not limited to, those relating to planning, zoning, building
permits and Tax Credit; (iv) any and all commitments with
respect to any Mortgage(s); (v) any and all contracts or rights
with respect to any agreements with the Lenders and any Agency;
and (vi) any other work product related to the Apartment Complex
and/or the Partnership, all of which shall have an agreed to
value of $1.00 for purposes of determining the opening Capital
Account of the General Partners.
6.15 Additional Right of General Partners and Affiliates to
Develop Adjacent Property TC "6.15 Additional Right of
General Partners and Affiliates to Develop Adjacent Property" \f
C \l "2"
In the event that the land on which any part of the
Apartment Complex is situated is partially contiguous or across
the street from a parcel of land (the "Adjacent Land") which is
owned or may be acquired by one or more of the General Partners
or Affiliates of the General Partners, the General Partners or
their Affiliates may develop the Adjacent Land as an apartment
or housing complex or otherwise; provided, however, that the
General Partners shall not develop nor permit any other Person
or Affiliate to develop the Adjacent Land (or any portion
thereof) in the future if such development would materially
adversely affect the operation of the Apartment Complex.
The General Partners, on behalf of the Partnership, are
hereby authorized to grant whatever easements may reasonably be
necessary for the General Partners or their Affiliates to
develop or operate the Adjacent Land, including, but not limited
to, easements for right-of-way, ingress and egress, sanitary
sewers, storm drains and utilities; provided, however, that the
grant or use of such easements shall not in any way diminish the
fair market value of the Apartment Complex or disrupt the
operations of the Partnership, unless the General Partners shall
have obtained the Consent of the Investment Limited Partner
thereto. All costs with respect to such easements, including,
without limitation, legal, filing and construction costs, shall
be borne solely by the General Partners or their Affiliates
(other than the Partnership).
ARTICLE VII Withdrawal of a General Partner; New General
Partners TC "ARTICLE VII Withdrawal of a General
Partner; New General Partners" \f C \l "1"
7.1 Withdrawal TC "7.1 Withdrawal" \f C \l "2"
(a) No General Partner shall Withdraw from the Partnership
(other than by reason of death or adjudication of incompetence
or insanity) or sell, assign or encumber its Interest without
the Consent of the Investment Limited Partner and all the other
General Partners, except that if the Special Limited Partner or
a designee thereof becomes a General Partner, it shall not
require the consent of any other General Partner to transfer all
or any portion of its interest as a General Partner, other than
as may be required under the Act. In the event of any
Withdrawal by a General Partner in violation of this
Section 7.1, such General Partner, in addition to being subject
to any and all other legal remedies which may be pursued by the
Partners, shall forfeit to the Special Limited Partner or its
designee, such General Partner's Interest and all unpaid fees
from the Partnership and shall remain liable for all of the
Withdrawing General Partner's obligations under this Agreement.
In addition, upon such Withdrawal and transfer, the Special
Limited Partner or its designee shall automatically become a
General Partner on the terms set forth in Section 7.5 without
further action by the Withdrawing General Partner or any other
Partner, and each Partner hereby consents to such transfer and
to the admission of the Special Limited Partner or its designee
as a General Partner in such a situation. Such transfer shall
occur automatically upon such Withdrawal without further action
by such Withdrawing General Partner.
(b) If at any time the only General Partners shall be one
or more corporations (or partnerships with corporations as sole
general partners), they shall be obligated to have a net worth
which satisfies the 89-12 Requirements. If the General Partners
shall at any time fail to meet the requirements of this
Section 7.1(b), then they shall be deemed to have withdrawn from
the Partnership in violation of the provisions of this
Section 7.1 and shall be subject to the provisions of
Section 7.1(a). Notwithstanding the foregoing, the provisions
of this Section 7.1(b) shall not apply to the Special Limited
Partner or its designee in the event it becomes the sole General
Partner.
7.2 Obligation to Continue TC "7.2 Obligation to
Continue" \f C \l "2"
Upon the Withdrawal of a General Partner, the remaining
General Partners shall have the right and obligation to continue
the business of the Partnership employing its assets and name,
all as contemplated by the Act. Within thirty (30) days after
they obtain knowledge of the Withdrawal of a General Partner,
the remaining General Partners shall notify the Limited Partners
of such Withdrawal.
7.3 Withdrawal of All General Partners TC "7.3
Withdrawal of All General Partners" \f C \l "2"
If, following the Withdrawal of a General Partner, there is
no remaining General Partner, the Investment Limited Partner and
the Special Limited Partner may elect to reconstitute the
Partnership and continue the business of the Partnership for the
balance of the term specified in Section 2.4 by selecting a
successor General Partner. If the Investment Limited Partner
and the Special Limited Partner elect to reconstitute the
Partnership pursuant to this Section 7.3 and admit the
designated successor General Partner, the relationship among the
then Partners shall be governed by this Agreement.
7.4 Interest of General Partner After Permitted
Withdrawal TC "7.4 Interest of General Partner After Permitted
Withdrawal" \f C \l "2"
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in
Section 4.4(b), the Withdrawing General Partner hereby covenants
and agrees to transfer to the remaining General Partners or to a
successor General Partner selected in accordance with
Section 7.3, as the case may be, such portion of the Withdrawing
General Partner's Interest as such remaining or successor
General Partners may designate, such transfer to be made in
consideration of the payment by the transferee of either the
agreed value of such Interest or, if such value is not agreed
to, the fair market value of such Interest as determined by a
committee of three qualified real estate appraisers, one
selected by the Withdrawing General Partner, one selected by the
transferee and a third selected by the other two. The portion
of the Withdrawing General Partner's Interest designated to be
transferred in accordance with the provisions of this
Section 7.4 shall be sufficient to ensure the continued
treatment of the Partnership as a partnership under the Code and
as a limited partnership under the Act, and, for the purposes of
Article X, shall be deemed to be effective as of the date of
Withdrawal, but the Partnership shall not make any distributions
to the designated transferee until the transfer shall have been
made. Any holder of any portion of the Interest of a
Withdrawing General Partner which is not designated to be
transferred to the remaining or successor General Partners
pursuant to the provisions of this Section 7.4 shall become an
Additional Limited Partner but (i) with the same share of the
profits, losses, tax credits, Cash Flow and other distributions
to which the holder of such Interest was entitled when held as a
General Partner Interest, and (ii) shall not participate in the
votes or Consents of the Investment Limited Partner hereunder.
The admission of any successor or additional General Partner
shall be subject to the consent of the Lenders and any Agency
(if required) and the Consent of the Investment Limited Partner.
7.5 Admission of Additional General Partner(s) under
Certain Circumstances TC "7.5 Admission of Additional
General Partner(s) under Certain Circumstances" \f C \l "2"
In the event that a General Partner violates any provision
of this Agreement which violation shall not be cured to the
Special Limited Partners satisfaction within five (5) days after
notice of such violation and which violation has or may have in
the Special Limited Partners determination, a material adverse
effect on the Investment Limited Partner, the Apartment Complex
or the Partnership, the Special Limited Partner, in its sole
discretion, shall have the option at any time thereafter to
cause itself or its designee to be admitted as an additional
General Partner on the terms set forth herein without any
further action by any other Partner. Upon any such admission of
an additional General Partner and in consideration of the
payment of $10, all pre-existing General Partners shall be
deemed to have transferred (ratably in accordance with their
respective Interests) to the additional General Partner such
portion of their respective General Partner interests so that
the additional General Partner shall receive not less than a one
percent (1%) interest in all profits, losses, tax credits and
distributions of the Partnership (such transfer notwithstanding,
the Special Limited Partner shall also retain its status as
such, and its interest in the Partnership as the Special Limited
Partner shall not be affected). An additional General Partner
so admitted shall automatically become the Managing General
Partner and be irrevocably delegated all of the power and
authority of all of the other General Partners pursuant to
Section 6.13. Any such additional General Partner shall have
the right to withdraw as a General Partner at any time, leaving
the pre-existing General Partners once again as the only General
Partners, the provisions of this Article VII notwithstanding.
Each Partner hereby grants to the Special Limited Partner a
special power of attorney, irrevocable to the extent permitted
by law and coupled with an interest, to amend the Certificate
and this Agreement and to do anything else which, in the view of
the Special Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 7.5 or to enable any
additional General Partner admitted pursuant to this Section 7.5
to manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General
Partner of any of its obligations hereunder, and each other
General Partner shall fully indemnify and hold harmless the
additional General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in settlement
of any claims sustained in connection with its capacity as a
General Partner.
ARTICLE VIII Transferability of Limited Partner Interests TC
"ARTICLE VIII Transferability of Limited Partner
Interests" \f C \l "1"
8.1 Assignments TC "8.1 Assignments" \f C \l "2"
(a) Except by operation of law (including the laws of
descent and distribution), no Limited Partner may assign all or
any part of its Interest without the written consent of the
General Partners, the giving or withholding of which is
exclusively within their discretion.
(b) An assignee of a Limited Partner who does not become a
Substituted Limited Partner shall have, and shall only have, the
right to receive the share of allocations and distributions of
the Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof)
so assigned if no such assignment had been made by such Limited
Partner. Any assigning Limited Partner whose permitted assignee
becomes a Substituted Limited Partner shall thereupon cease to be
a Limited Partner and shall no longer have any of the rights or
privileges of a Limited Partner. Where the assignee does not
become a Substituted Limited Partner, the Partnership shall
recognize such assignment not later than the last day of the
calendar month following receipt of notice of assignment and all
documentation required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this
Article VIII.
8.2 Substituted Limited Partner TC "8.2 Substituted
Limited Partner" \f C \l "2"
No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to
Section 8.3, the General Partners may, however, in their sole
discretion, permit an assignee to become a Substituted Limited
Partner. The consent of the General Partners to an assignment of
a Limited Partner Interest under Section 8.1 shall not, in and of
itself, constitute permission under this Section 8.2.
Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General
Partners to signify the agreement of such Substituted Limited
Partner to be bound by all the provisions of this Agreement and
shall pay the Partnership's reasonable legal fees and filing
costs in connection with its substitution as a Limited Partner.
8.3 Restrictions TC "8.3 Restrictions" \f C \l "2"
(a) No Disposition may be made if such Disposition would
violate Section 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partners may, in addition to any other
requirement they may impose, require as a condition of any
Disposition that the transferor (i) assume all costs incurred by
the Partnership in connection therewith and (ii) furnish the
Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable Federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition in
contravention of any of the provisions of this Section 8.3 shall
be void and ineffectual and shall not bind or be recognized by
the Partnership.
ARTICLE IX Borrowings TC "ARTICLE IX Borrowings" \f C \l
"1"
9.1 Borrowings TC "9.1 Borrowings" \f C \l "2"
All Partnership borrowings shall be subject to the terms of
this Agreement, including, but not limited to, the restrictions
of Section 6.2, and may be made from any source, including
Partners and their Affiliates. Any Partnership borrowings from
any Partner shall be subject to the prior written consent of the
Special Limited Partner and any Lender or Agency (if required
under applicable Lender or Agency regulations or requirements).
If any Partner shall lend any monies to the Partnership, the
amount of any such loan shall not be an increase of such
Partner's Capital Contribution. If any Partner shall so lend
monies, each such 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 provided by the General Partners to the
Partnership pursuant to Section 6.11 shall not constitute
borrowings for the purposes of this Section 9.1 or for any other
purposes.
ARTICLE X Profits, Losses, Tax Credits, Distributions and
Capital Accounts TC "ARTICLE X Profits, Losses, Tax
Credits, Distributions and Capital Accounts" \f C \l
"1"
10.1 Capital and Capital Accounts TC "10.1 Capital and
Capital Accounts" \f C \l "2"
(a) The Capital Contribution of each Partner shall be as
set forth on Schedule A. No interest shall be paid on any
Capital Contribution. No Partner shall have the right to
withdraw its Capital Contribution or to demand and receive
property of the Partnership in return for its Capital
Contribution, except as may be specifically provided in this
Agreement or required by law.
(b) An individual Capital Account shall be established and
maintained on behalf of each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in
the Partnership. In accordance with Treasury Regulation
Section 1.704-1(b), the Capital Account of each Partner shall
consist of (i) the amount of cash such Partner has contributed to
the Partnership plus (ii) the fair market value of any property
such Partner has contributed to the Partnership net of any
liabilities assumed by the Partnership or to which such property
is subject plus (iii) the amount of profits or income (including
tax-exempt income) allocated to such Partner less (iv) the amount
of losses and deductions allocated to such Partner less (v) the
amount of all cash distributed to such Partner less (vi) the fair
market value of any property distributed to such Partner net of
any liabilities assumed by such Partner or to which such property
is subject less (vii) such Partner's share of any other
expenditures which are not deductible by the Partnership for
Federal income tax purposes or which are not allowable as
additions to the basis of Partnership property and shall be
(viii) subject to such other adjustments as may be required under
the Code. The Capital Account of a Partner shall not be affected
by any adjustments to basis made pursuant to Section 743 of the
Code but shall be adjusted with respect to adjustments to basis
made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as,
and shall replace, the Capital Account of the Partner which such
Substituted Partner succeeds, and, for the purposes of this
Agreement, such Substituted Partner shall be deemed to have made
the Capital Contribution, to the extent actually paid in, of the
Partner which such Substituted Partner succeeds. The term
"Substituted Partner," as used in this paragraph, shall mean a
Person who shall become entitled to receive a share of the
allocations and distributions of the Partnership by reason of
such Person succeeding to all or any part of the Interest of a
Partner by assignment of all or any part of a Partner's Interest.
To the extent a Substituted Partner receives less than 100% of
the Interest of a Partner he succeeds, the original Capital
Account of such transferee Substituted Partner and his Capital
Contribution shall be in proportion to the portion of the
transferor Partner's Interest prior to the transfer which the
transferee receives, and the Capital Account of the transferor
Partner who retains a portion of his former Interest and his
Capital Contribution shall continue, and not be replaced, in
proportion to the portion of the transferor Partner's Interest
prior to the transfer which the transferor Partner retains.
Nothing in this Section 10.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or
Article VIII.
10.2 Profits, Losses and Tax Credits TC "10.2 Profits,
Losses and Tax Credits" \f C \l "2"
(a) Except as otherwise specifically provided in this
Article, for each Partnership fiscal year or portion thereof, all
profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures and tax credits incurred or
accrued on or after the Commencement Date, other than those
arising from a Capital Transaction, shall be allocated 99.99% to
the Investment Limited Partner and 0.01% to the General Partners.
(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, an amount of profit equal to the aggregate
negative balances (if any) in the Capital Accounts of all
Partners having negative balance Capital Accounts shall be
allocated to such Partners in proportion to their negative
Capital Account balances until all such Capital Accounts
shall have zero balances; and
Second, an amount of profits shall be allocated to each
of the Partners until the positive balance in the Capital
Account of each Partner equals, as nearly as possible, the
amount of cash which would be distributed to such Partner if
the aggregate amount in the Capital Accounts of all Partners
were cash available to be distributed in accordance with the
provisions of Clauses Third, Sixth, Seventh and Eighth of
Section 10.3(b)
As to losses:
First, an amount of losses equal to the aggregate
positive balances (if any) in the Capital Accounts of all
Partners having positive balance Capital Accounts shall be
allocated to such Partners in proportion to their positive
Capital Account balances until all such Capital Accounts
shall have zero balances; provided, however, that if the
amount of losses so to be allocated is less than the sum of
the positive balances in the Capital Accounts of those
Partners having positive balances in their Capital Accounts,
then such losses shall be allocated to the Partners in such
proportions and in such amounts so that the Capital Account
balances of each Partner shall equal, as nearly as possible,
the amount such Partner would receive if an amount equal to
the excess of (a) the sum of all Partners' balances in their
Capital Accounts computed prior to the allocation of losses
under this clause First over (b) the aggregate amount of
losses to be allocated to the Partners pursuant to this
clause First were distributed to the Partners in accordance
with the provisions of Clauses Third, Sixth, Seventh and
Eighth of Section 10.3(b); and
Second, the balance, if any, of such losses shall be
allocated 0.01% to the General Partners and 99.99% to the
Investment Limited Partner.
(c) Notwithstanding the foregoing provisions of
Sections 10.2(a) and 10.2(b), in no event shall any losses be
allocated to the Investment Limited Partner, the Special Limited
Partner, or to any additional General Partner admitted pursuant
to any of Section 4.4(b) or Section 7.5, if and to the extent
that such allocation would cause, as of the end of the
Partnership taxable year, the negative balance in such Partner's
Capital Account to exceed such Partner's obligation (actual or
deemed under Treasury Regulation Section 1.704-1(b)(2)(ii)(c)) to
restore a deficit balance in such Partner's Capital Account plus
such Partner's share of Partnership Minimum Gain plus such
Partner's share of Partner Non-Recourse Debt Minimum Gain. Any
losses which are not allocated to a Partner by virtue of the
application of this Section 10.2(c) shall be allocated to the
General Partners. For the purposes of this Section 10.2(c), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.3 Cash Distributions Prior to Dissolution TC "10.3 Cash
Distributions Prior to Dissolution" \f C \l "2"
(a) Cash Flow
Subject to Agency and Lender approval (if required), Cash
Flow for each fiscal year or portion thereof of the Partnership
shall be applied in the following priority:
First, to the payment of the Asset Management Fee for such
year and for any previous year(s) as to which the Asset
Management Fee shall not yet have been paid in full;
Second, to the Nonprofit Participant, payment of the annual
fee set forth in the Nonprofit Participant Agreement;
Third, to the Developer, payment of any outstanding
Development Fee pursuant to Section 6.12(b);
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the payment of the Partnership Management Fee
attributable to such year;
Sixth, to the payment of the Incentive Management Fee
attributable in such year; and
Seventh, the balance thereof, if any, shall be distributed
annually, within seventy-five (75) days after the end of the
fiscal year, 20% to the Investment Limited Partner and 80% to the
General Partners; provided, however, that during such time as
Agency regulations are applicable to the Apartment Complex, the
total amount of Cash Flow which may be so distributed to the
Partners in respect to any fiscal year shall not exceed such
amounts as Agency regulations permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall
determine from time to time that cash is available for
distribution from a Capital Transaction, such cash shall be
applied or distributed as follows:
First, to the payment of all matured debts currently due and
liabilities of the Partnership (including, but not limited to,
all expenses of the Partnership incident to the Capital
Transaction), excluding (i) debts and liabilities of the
Partnership to Partners or their Affiliates and (ii) all unpaid
fees owing to the General Partners or their Affiliates; and to
the establishment of any reserves which the General Partners and
the Auditors shall deem reasonably necessary for contingent,
unmatured or unforeseen liabilities or obligations of the
Partnership;
Second, 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 then-unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them, including,
but not limited to, any unpaid Construction and Development Fee
and the Partnership Management Fee for the fiscal year of the
Capital Transaction; provided, however, that any debts or
obligations to be repaid to the Investment Limited Partners or
any 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 the Investment 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 repayment to the General Partner of its
paid-in capital contributions in the amount set forth on
Schedule A attached hereto as of the Admission Date minus any
prior distributions made to them under this Clause Seventh; and
Eighth, any balance 19.999% to the Investment Limited
Partner, 0.001% to the Special Limited Partner and 80% to the
General Partners.
10.4 Distributions Upon Dissolution TC "10.4
Distributions Upon Dissolution" \f C \l "2"
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall be
distributed to the Partners in accordance with the positive
balances in their Capital Accounts after taking into account all
Capital Account adjustments for the Partnership taxable year,
including adjustments to Capital Accounts pursuant to
Sections 10.3(b) and 10.4(b). In the event that a General
Partner, other than a General Partner admitted pursuant to any of
Section 4.4(b) or Section 7.5, or Additional Limited Partner has
a negative balance in its Capital Account following the
liquidation of the Partnership or such Partner's Interest, after
taking into account all Capital Account adjustments for the
Partnership taxable year in which such liquidation occurs, such
Partner shall pay to the Partnership in cash an amount equal to
the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such taxable year (or, if
later, within 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 Section 10.3(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 10.4(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market
value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of
the Code), and the Partnership's adjusted basis for such assets
as determined under Regulation Section 1.704-1(b). This Section
10.4(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 10.4(b)
or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be
selected by the General Partners with the Consent of the
Investment Limited Partner.
10.5 Special Provisions TC "10.5 Special Provisions" \f C
\l "2"
(a) Except as otherwise provided in this Agreement, all
profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, tax credits and cash distributions
shared by a class of Partners shall be shared by each Partner in
such class in the ratio of such Partner's paid-in Capital
Contribution to the paid-in Class Contribution of the class of
Partners of which such Partner is a member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations
or Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses
from extraordinary events which are not recovered from
insurance or otherwise (collectively "Recourse Obligations")
in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations (consisting of
deductions other than cost recovery deductions) shall be
allocated to the General Partners; and second, the balance
of deductions (including all cost recovery deductions) shall
be allocated as provided in Section 10.2(a). For purposes
of this section, extraordinary events include casualty
losses, losses resulting from liability to third parties for
tortuous injury, losses resulting from a breach of legal
duty by the Partnership or by the General Partners, and
losses resulting from other liabilities which are not
incurred in the ordinary course of business. Nothing in
this Section 10.5(b)(i) shall prevent the Partnership from
recovering an extraordinary loss from a General Partner who
is liable therefor by law or under this Agreement.
(ii) If any Recourse Obligations shall be repaid from
Cash Flow generated in respect of any Partnership taxable
year, then the allocation of profits and losses under
Section 10.2(a) for such year shall be adjusted as follows:
first, the General Partners shall be allocated an amount of
the gross income of the Partnership equal to the lesser of
(i) the amount of items of Loss previously allocated to the
General Partner under Section 10.5(b)(i) and not previously
offset by allocations of Profits or items thereof, and (ii)
the amount of the Excess Expenses repaid in such year.
(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 10.3(b) or Section 10.4, 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
Partner based on Section 10.3(b) or Section 10.4 as
applicable, treating cash payments and purchase money
indebtedness principal interchangeably for this purpose,
and the respective Partners 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 Partners in accordance
with the preceding sentence, and if any such purchase money
indebtedness shall be sold, the sale proceeds shall be
allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to
any asset which has a variation between its basis computed
in accordance with Treasury Regulation Section 1.704-1(b)
and its basis computed for Federal income tax purposes shall
be shared among the Partners so as to take account of such
variation in a manner consistent with the principles of
Section 704(c) of the Code and Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this
Agreement shall mean income and losses, and each item of
income, gain, loss, deduction or credit entering into the
computation thereof, as determined in accordance with the
accounting methods followed by the Partnership and computed
in accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv). Profits and losses for federal income tax
purposes shall be computed and allocated in the same manner
as set forth in this Article X, except as provided in
Section 10.5(b)(iv).
(vi) If there is a net decrease in Partnership Minimum
Gain during a Partnership taxable year, each Partner will be
allocated items of income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain during the year,
before any other allocation of Partnership items for such
taxable year. A Partner shall not be subject to this
mandatory allocation of income or gain to the extent that
any of the exceptions provided in Treasury Regulation
Section 1.704-2(f)(2)-(5) applies. All allocations pursuant
to this Section 10.5(b)(vi) shall be in accordance with
Treasury Regulation Section 1.704-2(f). This provision is a
"minimum gain chargeback" within the meaning of Treasury
Regulation Section 1.704-2(f) and shall be construed as
such.
(vii) If there is a net decrease in Partner
Non-Recourse Debt Minimum Gain during a Partnership taxable
year, then each Partner with a share of the minimum gain
attributable to such debt at the beginning of such year will
be allocated items of income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Non-Recourse
Debt Minimum Gain during the year. A Partner is not subject
to this Partner Non-Recourse Debt Minimum Gain chargeback to
the extent that any of the exceptions provided in Treasury
Regulation Section 1.704-2(i)(4) applied consistently with
Treasury Regulation Section 1.704-2(f)(2)-(5) applies. Such
allocations shall be made in a manner consistent with the
requirements of Treasury Regulation Section 1.704-2(i)(4)
under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives
(a) an allocation of loss or deduction or expenditures
described in Section 705(a)(2)(B) of the Code made
(1) pursuant to Section 704(e)(2) of the Code to a donee of
an Interest, (2) pursuant to Section 706(d) of the Code as
the result of a change in any Partner's Interest, or
(3) pursuant to Regulation Section 1.751-1(b)(2)(ii) as a
result of a distribution by the Partnership of unrealized
receivables or inventory items or (b) a distribution, and
such allocation and/or distribution would cause the negative
balance in such Partner's Capital Account to exceed (i) such
Partner's share of Partnership Minimum Gain plus (ii) the
amount of such Partner's obligation (actual or deemed), to
restore a negative balance in such Partner's Capital Account
plus (iii) such Partner's share of Partner Non-Recourse Debt
Minimum Gain, then such Partner shall be allocated items of
income and gain in an amount and manner sufficient to
eliminate such negative balance as quickly as possible. For
purposes of this Section 10.5(b)(viii), a Partner's Capital
Account shall be treated as reduced by Qualified Income
Offset Items.
(ix) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined
to be a non-deductible, non-capitalizable distribution from
the Partnership to a Partner for Federal income tax
purposes, then there shall be allocated to such General
Partner in the year(s) of payment an amount of gross income
equal to the amount of such distribution in such year.
(x) In applying the provisions of Article X with
respect to distributions and allocations, the following
ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be
reduced by Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Section 10.3(a).
(3) Capital Accounts shall be reduced by
distributions from Capital Transactions under
Section 10.3(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section 10.5(b)(vi) or
Section 10.5(b)(vii).
(5) Capital Accounts shall be increased by any
qualified income offset under Section 10.5(b)(viii).
(6) Capital Accounts shall be increased by
allocations of profits under Section 10.2(a).
(7) Capital Accounts shall be reduced by
allocations of losses under Section 10.2(a).
(8) Capital Accounts shall be reduced by
allocations of losses under Section 10.2(b).
(9) Capital Accounts shall be increased by
allocations of profits under Section 10.2(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that
the Partners' Capital Accounts reflect the amounts they
would have reflected if adjustments required by
Sections 10.5(b)(vi), 10.5(b)(vii) and 10.5(b)(viii) had not
occurred.
10.6 Authority of the General Partners to Vary Allocations
to Preserve and Protect the Partners' Intent TC "10.6 Authority
of the General Partners to Vary Allocations to Preserve and
Protect the Partners' Intent" \f C \l "2"
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items
thereof) shall be determined and allocated in accordance with
this Agreement to the fullest extent permitted by Section 704(b)
of the Code. In order to preserve and protect the determinations
and allocations provided for in this Agreement, the General
Partners are hereby authorized and directed to allocate profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any year
differently than otherwise provided for in this Agreement to the
extent that allocating profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive
share of profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures or credits (or any item thereof) not
to be permitted by Section 704(b) of the Code. Any allocation
made pursuant to this Section 10.6 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 10.6(a), the General Partners are authorized to act only
after having been advised in writing by the Tax Accountants or
the Special Limited Partner that, under Section 704(b) of the
Code, (i) the New Allocation is necessary, and (ii) the New
Allocation is the minimum modification of the allocations
otherwise provided for in this Agreement necessary in order to
assure that, either in the then-current year or in any preceding
year, each Partner's distributive share of profits, tax-exempt
income, losses, non-deductible non-capitalizable expenditures and
credits (or any item thereof) is determined and allocated in
accordance with this Agreement to the fullest extent permitted by
Section 704(b) of the Code.
(c) If the General Partners are required by Section 10.6(a)
to make any New Allocation in a manner less favorable to the
Limited Partners than is otherwise provided for herein, then the
General Partners are authorized and directed, only after having
been advised in writing by the Tax Accountants or the Special
Limited Partner that such an allocation is permitted by Section
704(b) of the Code, to allocate profits, tax-exempt income,
losses, non-deductible non-capitalizable expenditures and credits
(and any item thereof) arising in later years in such manner so
as to bring the allocations of profits, tax-exempt income,
losses, non-deductible non-capitalizable expenditures and credits
(and each item thereof) to the Limited Partners as nearly as
possible to the allocations thereof otherwise contemplated by
this Agreement.
(d) New Allocations made by the General Partners under
Section 10.5(a) and Section 10.5(c) in reliance upon the advice
of the Tax Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partners to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
ARTICLE XI Management Agent TC "ARTICLE XI Management Agent" \f
C \l "1"
A. The General Partners 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 each Agency (if such approval is
required) or, when the Apartment Complex is not subject to Agency
regulation, in accordance with a reasonable and competitive fee
arrangement and in no event in excess of 6% of gross rental
income from the Apartment Complex. From and after the Admission
Date, the Partnership shall not enter into any Management
Agreement or modify or extend any Management Agreement unless (i)
the General Partners shall have obtained the prior written
consent of the Special Limited Partner to the identity of the
Management Agent and the terms of the Management Agreement or the
modification or extension thereof and (ii) such new Management
Agreement or modified or extended Management Agreement provides
that it is terminable by the Partnership on thirty (30) days'
notice by the Partnership in the event of any change in the
identity of the General Partners.
B. No duplicate property management fees shall be paid to
any Person.
C. If (i) the Management Agent is a General Partner or an
Affiliate of a General Partner, and (a) the Apartment Complex
shall be subject to a substantial building code violation which
shall not have been cured within six months after notice from the
applicable governmental agency or department or (b) the
Partnership shall not have Cash Flow of at least $1,500 during
any year after 2000, or (ii) an Event of Bankruptcy shall occur
with respect to the Management Agent, or (iii) the Management
Agent shall commit willful misconduct or gross negligence in its
conduct of its duties and obligations under the Management
Agreement or (iv) there is any change in the identity of the
General Partners, or (v) the Management Agent is cited by any
Agency, including the Credit Agency or any other governmental
agency, for a violation or alleged violation of any applicable
rules, regulations or requirements, including, but not limited
to, non-compliance with the Minimum Set-Aside Test, the Rent
Restriction Test or any other Tax Credit-related provision, then,
upon request by the Special Limited Partner and subject to
Agency approval, if required, the General Partners must cause the
Partnership to promptly terminate the Management Agreement with
the Management Agent and appoint a new Management Agent selected
by the Special Limited Partner, which new Management Agent shall
not be an Affiliate of a General Partner. Each General Partner
hereby grants to the Special Limited Partner an irrevocable (to
the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute and deliver
any and all documents and instruments on behalf of such General
Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI.C. Subject to Agency approval, if
required, the Partnership shall not enter into any future
management arrangement or renew or extend any existing management
arrangement unless such arrangement is terminable without penalty
upon the occurrence of the events described in this Article XI.
D. The General Partners shall have the duty to manage the
Apartment Complex during any period when there is no Management
Agent.
ARTICLE XII Books and Records, Accounting, Tax Elections, Etc.
TC "ARTICLE XII Books and Records, Accounting, Tax Elections,
Etc." \f C \l "1"
12.1 Books and Records TC "12.1 Books and Records" \f C
\l "2"
The Partnership shall maintain all books and records which
are required under the Uniform Act or by any governmental agency
having jurisdiction (including without limitation Tax Credit
compliance records as required in Section 12.9) and may maintain
such other books and records as the General Partners in their
discretion deem advisable. Every Limited Partner, or its duly
authorized representatives, shall at all times have access to the
records of the Partnership at the principal office of the
Partnership at any and all reasonable times, and may inspect and
copy any of such records. A list of the names and addresses of
all of the Limited Partners shall be maintained as part of the
books and records of the Partnership and shall be mailed to any
Limited Partner upon request. A reasonable charge for copy work
may be charged by the Partnership.
12.2 Bank Accounts TC "12.2 Bank Accounts" \f C \l "2"
The bank accounts of the Partnership shall be maintained in
the Partnership's name with such financial institutions as the
General Partners shall determine; provided, however, that no such
account may be held in a bank which is an Affiliate of any
General Partner unless the prior written consent of the Special
Limited Partner shall have been received thereto. Withdrawals
shall be made only in the regular course of Partnership business
on such signature or signatures as the General Partners may
determine. All deposits (including security deposits and other
funds required to be escrowed by the Lenders) 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 Mortgage requirements, in interest-bearing
accounts or invested in United States Government obligations
maturing within one year.
12.3 Auditors TC "12.3 Auditors" \f C \l "2"
(a) The Auditors shall prepare, for execution by the
General Partners, all tax returns of the Partnership. Prior to
the filing of the Partnership tax returns, and in no event later
than February 1 of each year, the Auditors shall deliver the tax
returns for such year to the Tax Accountants for their review and
comment. If a dispute arises between the Auditors and the Tax
Accountants over the proper preparation of the tax returns and
such dispute cannot be resolved by the Auditors and the Tax
Accountants by March 1 of such year, then the Tax Accountants
shall make the final decision on whether any changes are
necessary. The Partnership shall reimburse BCCLP for all
reasonable costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall audit and 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 notice from the Special Limited Partner that a change in the
identity of the Auditors is desired, the General Partners, on
behalf of the Partnership, shall promptly terminate the
Partnership's engagement of the Auditors, and the prior written
consent of the Special Limited Partner must be received to the
appointment of replacement Auditors. If no such consent is
received to the appointment of replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to
replace the Auditors, then the Special Limited Partner shall
appoint replacement Auditors of its own choosing, the cost of
which shall be borne by the Partnership as a Partnership expense.
All Partners hereby grant to the Special Limited Partner a
special power of attorney, irrevocable to the extent permitted by
law, coupled with an interest, to so appoint replacement Auditors
and to do anything else which in the view of the Special Limited
Partner may be necessary or appropriate to accomplish the
purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections TC "12.4 Cost Recovery
and Elections" \f C \l "2"
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to
use, so far as permitted by the provisions of the Code,
accelerated cost recovery methods. However, the Partnership may
change to another method of cost recovery if such other method
is, in the opinion of the Auditors, more advantageous to the
Investment Limited Partner and the limited partners and/or
holders of beneficial assignee certificates thereof.
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partners in such
manner as will, in the opinion of the Auditors, be most
advantageous to the Investment Limited Partner and the limited
partners.
12.5 Special Basis Adjustments TC "12.5 Special Basis
Adjustments" \f C \l "2"
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 holder of
beneficial assignee certificates of the Investment Limited
Partner, the Partnership shall elect, upon the request of the
Investment Limited Partner, pursuant to Section 754 of the Code,
to adjust the basis of the Partnership property. Any adjustments
made pursuant to said Section 754 shall affect only the successor
in interest to the transferring Partner or partner and/or holder
of beneficial assignee certificates thereof. Each Partner will
furnish the Partnership all information necessary to give effect
to such election.
12.6 Fiscal Year TC "12.6 Fiscal Year" \f C \l "2"
The fiscal and tax year of the Partnership shall be the
calendar year. The books of the Partnership shall be kept on an
accrual basis.
12.7 Information to Partners TC "12.7 Information to
Partners" \f C \l "2"
(a) The General Partners shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
fiscal year of the Partnership:
(i) Within forty-five (45) days after the end of each
fiscal year of the Partnership, (A) a balance sheet as of
the end of such fiscal year, a statement of income, a
statement of partners' equity, and a statement of cash
flows, each for the year then ended, all of which, except
the 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 Contribution of the
Investment Limited Partner, (6) borrowed monies, and
(7) transactions outside of the ordinary course of business
with a description thereof.
(ii) Within 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 together with a draft of the Partnership's Federal
income tax return and, promptly following the filing thereof
with the Service, a final copy of such return as filed.
(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 and expenses for the
quarter then ended, which may be unaudited, in the form
specified by BCCLP;
(C) a statement of cash flows for the quarter
then ended, which may be unaudited;
(D) a certification of the General Partners that
the Apartment Complex and its tenants are in compliance
with all applicable federal, state and local
requirements and regulations;
(E) a low-income housing tax credit monitoring
form and an Occupancy/Rental Report, all in the form
specified by BCCLP;
(F) a copy of the rent roll for the Apartment
Complex; and
(G) all other information which would be
pertinent to a reasonable investor regarding the
Partnership and its activities during the quarter
covered by the report.
(iv) Within forty five (45) days after the end of each
fiscal year of the Partnership a copy of the annual report
or Form(s) 8609 to be filed with the United States
Department of the Treasury concerning the status of the
Apartment Complex as low-income housing and any reports
filed in connection with the compliance monitoring conducted
by the Credit Agency.
(b) Upon the written request of the Investment Limited
Partner for further information with respect to any matter
covered in item (a) above, the General Partners shall furnish
such information within thirty (30) days of receipt of such
request.
(c) Within ninety (90) days after the end of each fiscal
year of the Partnership, the General Partners shall provide to
the Limited Partners:
(i) a certification from the General Partners that (A)
all Construction and/or Permanent Mortgage payments and
taxes and insurance with respect to the Apartment Complex
are current as of the date of the year-end report, (B) there
is no default under the Project Documents or this Agreement,
or if there is any such default, a detailed description
thereof, and (C) there is no building, health or fire code
violation or similar violation of a governmental law,
ordinance or regulation against the Apartment Complex or, if
there is any such violation, a detailed description thereof;
and
(ii) a descriptive statement of all transactions during
the fiscal year between the Partnership and General Partners
or any Affiliate thereof, including the nature of the
transaction and the payments involved.
(d) 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 Partners shall send the Investment Limited Partner a
detailed report of such event.
(e) After the Admission Date, the Partnership shall send to
the Investment Limited Partner, on or before the tenth day of
each month, the monthly housing credit monitoring form in a form
prescribed by BCCLP, as well as copies of all applicable periodic
reports covering the status of project operations from the
previous period, as may be required by the Credit Agency or any
other Agency.
(f) On or before ninety (90) days after the expiration of
each fiscal year of a General Partner, such General Partner shall
send to the Investment Limited Partner copies of the balance
sheet and income statement of such General Partner for such
fiscal year, which financial statements shall be reviewed by an
independent certified public accountant in the case of a General
Partner who is a natural person and reviewed by an independent
certified public accountant in the case of a General Partner
which is an Entity.
(g) Upon receipt, the Partnership shall send to the
Investment Limited Partner copies of all documents evidencing any
"carryover allocation" pursuant to Section 42(h)(1)(E) of the
Code and the Form(s) 8609 evidencing the Tax Credit allocation.
Promptly after Permanent Mortgage Commencement, the General
Partners shall send to BCCLP a closing binder containing
photocopies of the fully-executed versions of all documents
signed in connection with the Permanent Mortgage. The General
Partners hereby consent to any Agency's providing BCCLP with
copies of all material communications between any such office and
the General Partners and/or the Partnership, including, but not
limited to, any notices of default. From and after any date upon
which the General Partners receive notice from the Investment
Limited Partner that the Investment Limited Partner would like
copies of the monthly rent rolls for the Apartment Complex to be
sent to BCCLP, the General Partners shall send copies of the rent
rolls to BCCLP no later than ten (10) days after the expiration
of each month.
(h) If either (A) the Completion Date or (B) the date upon
which tenants first occupied apartment units in the Apartment
Complex after the rehabilitation of such units shall have
occurred six months or more prior to the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership, then the General Partners shall cause to be prepared
and delivered to the Investment Limited Partner within sixty (60)
days of the Admission Date the following items:
(i) An unaudited statement of income of the
Partnership for the year (or such shorter period as there
may be from the date of the most recent audited statement of
income of the Partnership) ended on the date upon which the
Investment Limited Partner acquired its Interest in the
Partnership; and
(ii) An 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.
(i) Within thirty (30) days of the Completion Date, the
General Partners shall prepare, or cause the Auditors to prepare,
and deliver to each Limited Partner a Tax Credit basis worksheet
for each building in the Apartment Complex, all in a form
specified by BCCLP.
(j) Prior to October 15 of each year, the Partnership shall
send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the tax credits, profits
and losses of the Partnership for Federal income tax purposes for
the current fiscal year. Such estimate shall be prepared by the
General Partners and the Auditors and shall be in the form
specified by BCCLP.
(k) Prior to December 1 of each year, the Partnership shall
send to the Investment Limited Partner the operating budget for
the Apartment Complex for the next fiscal year, which shall show
in reasonable detail, for such next fiscal year compared to the
current fiscal year, the General Partners' best estimate of
(i) rental and other revenues and (ii) expenditures for debt
service and all customary categories of operating expenses.
(l) On or before January 31st (beginning in the year 2000)
of each Partnership fiscal year, the Partnership shall send to
the Investment Limited Partner copies of the complete insurance
policies satisfactory to the Investment Limited Partner so that
the Investment Limited Partner will be able to determine that
insurance policies required to be maintained on the Apartment
Complex pursuant to Section 6.5(c) are in force, accompanied by a
certificate of the General Partners stating that such insurance
policies satisfy the requirements of Section 6.5(c).
(m) If the General Partners do not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or
Section 12.7(a)(ii) within the time periods set forth therein,
the General Partners shall pay as damages the sum of $250 per day
to the Investment Limited Partner until such obligations shall
have been fulfilled. Such damages shall be paid forthwith by the
General Partners, and failure to so pay shall constitute a
material default of the General Partners hereunder. In addition,
if the General Partners shall fail so to pay, the General
Partners and their Affiliates shall forthwith cease to be
entitled to the Partnership Management Fee and to the payment of
any Cash Flow or Capital Transaction proceeds to which they may
otherwise be entitled hereunder. Such payments of the
Partnership Management Fee, Cash Flow and Capital Transaction
proceeds shall be restored only upon the payment of such damages
in full, and any amount of such damages not so paid shall be
deducted against payments of the Partnership Management Fee, Cash
Flow and Capital Transaction proceeds otherwise due to the
General Partners or their Affiliates.
12.8 Expenses of the Partnership TC "12.8 Expenses of the
Partnership" \f C \l "2"
All expenses of the Partnership shall be billed directly to
and paid by the Partnership.
12.9 Tax Credit Compliance Records TC "12.9 Tax Credit
Compliance Records" \f C \l "2"
Except to the extent that another record storage method
shall have been approved in writing by the Special Limited
Partner, the General Partners shall cause all tenant leases,
income certifications and other records required by the Code and
the Agency to evidence that all tenants occupying Low-Income
Apartment Units are Qualified Tenants to be stored in fireproof
file cabinets in a secure location. Without limiting the
foregoing, all such records relating to initial occupancy of each
Low-Income Apartment Unit by Qualified Tenants and evidencing
timely satisfaction of the Minimum Set-Aside Test shall be stored
as aforesaid throughout the entire Compliance Period.
ARTICLE XIII General Provisions TC "ARTICLE XIII General
Provisions" \f C \l "1"
13.1 Restrictions by Reason of Section 708 of the Code TC
"13.1 Restrictions by Reason of Section 708 of the Code" \f C
\l "2"
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior
to the proposed date of the Disposition, could, in the opinion of
tax counsel to the Partnership, result in the termination of the
Partnership under Section 708 of the Code. This Section 13.1
shall have no application to any required repurchase of the
Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1 shall
be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing
provisions of this Section 13.1, however, the Investment Limited
Partner may waive the provisions of this Section 13.1 at any time
as to a Disposition or series of Dispositions, and in the event
of such a waiver, this Section 13.1 shall have no force or effect
upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate TC "13.2 Amendments to
Certificate" \f C \l "2"
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner
shall have received any distributions under Article X, the
General Partners shall file an amendment to the Certificate
reducing by the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment
Limited Partner as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on account
of any such distribution. The Partnership shall amend the
Certificate as necessary to effect the substitution of
substituted Limited Partners.
Notwithstanding the foregoing provisions of this Section
13.2, no such amendments to the Certificate need be filed by the
General Partners if the Certificate is not required to and does
not identify the Limited Partners or their Capital Contributions
in such capacity.
13.3 Notices TC "13.3 Notices" \f C \l "2"
Any notice called for under this Agreement shall be in
writing and shall be deemed adequately given if actually
delivered or if sent by registered or certified mail, postage
prepaid, to the party for whom such notice is intended at such
party's last address of record on the Partnership books.
13.4 Word Meanings TC "13.4 Word Meanings" \f C \l "2"
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 TC "13.5 Binding Effect" \f C \l "2"
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 TC "13.6 Applicable Law" \f C \l "2"
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts TC "13.7 Counterparts" \f C \l "2"
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 TC "13.8 Financing
Regulations" \f C \l "2"
So long as any of the Project Documents are in effect,
(a) each of the provisions of this Agreement shall be subject to,
and the General Partners covenant to act in accordance with, the
Project Documents; (b) the Project Documents shall govern the
rights and obligations of the Partners, their heirs, executors,
administrators, successors and assigns to the extent expressly
provided therein; (c) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the
possession and control of the Apartment Complex and no right to
collect the rent therefrom shall pass to any Person who is not,
or does not become, bound by the Project Documents in a manner
satisfactory to each Agency; (d) no amendment to any provision of
the Project Documents shall become effective without the prior
written consent of each Agency (if required); and (e) the affairs
of the Partnership shall be subject to Agency regulation, and no
action shall be taken which would require the consent or approval
of any Agency unless the prior consent or approval of such Agency
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 each
Agency (if such consent is then required). No amendment to this
Agreement relating to matters governed by Agency regulations or
requirements shall become effective until the prior written
consent of each Agency (if required) to such amendment shall have
been obtained.
Any conveyance or transfer of title to all or any portion of
the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of Agency rules and regulations applicable
thereto.
13.9 Separability of Provisions TC "13.9 Separability of
Provisions" \f C \l "2"
Each provision of this Agreement shall be considered
separable and (a) if for any reason any provision is determined
to be invalid, such invalidity shall not impair the operation of
or affect those portions of this Agreement which are valid, and
(b) if for any reason any provision would cause the Investment
Limited Partner to be bound by the obligations of the Partnership
(other than the rules and regulations of an Agency and the
requirements of any Lender), such provision or provisions shall
be deemed void and of no effect.
13.10 Paragraph Titles TC "13.10 Paragraph Titles" \f
C \l "2"
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 TC "13.11 Amendment
Procedure" \f C \l "2"
This Agreement may be amended by the General Partners only
with the Consent of the Investment Limited Partner and the prior
written consent of the Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses TC "13.12
Extraordinary Limited Partner Expenses" \f C \l "2"
Any and all reasonable costs and expenses incurred by the
Investment Limited Partner and/or the Special Limited Partner in
connection with exercising rights and remedies against the
General Partners with respect to this Agreement, including
without limitation, reasonable attorneys' fees, shall be paid by
the General Partners on demand. All amounts due to the
Investment Limited Partner and/or the Special Limited Partner
pursuant to this provision shall bear interest from demand at a
rate of 9%.
If any General Partner breaches any provision of this
Agreement, the Investment Limited Partner and/or the Special
Limited Partner may employ an attorney or attorneys to protect
its rights hereunder, and the General Partners shall pay on
demand the reasonable attorneys' fees and expenses incurred by
the Investment Limited Partner and/or the Special Limited
Partner, whether or not a legal action is actually commenced
against any General Partner by reason of such breach. All
amounts due to the Investment Limited Partner and/or the Special
Limited Partner pursuant to this provision shall bear interest
from demand at a rate equal to 9%.
13.13 Time of Admission TC "13.13 Time of Admission"
\f C \l "2"
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 regulations are issued under the Code or an
amendment to the Code is adopted which would require, in the
opinion of the Auditors, that the Investment Limited Partner be
deemed admitted on a date other than as of the Commencement Date,
then the General Partners shall select a permitted admission date
which is most favorable to the Investment Limited Partner.
13.14 Certain Special Restrictions TC "13.14 Certain
Special Restrictions" \f C \l "2"
A. Notwithstanding the amount of the Partnership
Management Fee set forth in Section 6.12(a), such fee shall never
be more than the excess of (A) one-half of one per cent (0.5%) of
the Aggregate Cost of the Apartment Complex over (B) the amount
of the Asset Management Fee attributable to such year.
Furthermore, Notwithstanding the amount of the Partnership
Management Fee set forth in Section 6.12(a), such fee shall never
be more than the excess of one-half of one per cent (0.5%) of the
Aggregate Cost of the Apartment Complex. "Aggregate Cost" means
the sum of (i) the total Capital Contributions made or
anticipated to be made by the Investment Limited Partner plus
(ii) the proportionate amount of the mortgage loans on, and other
debts related to, the Apartment Complex, which proportionate
amount is equal to the Investment Limited Partner's initial pro
rata interest in the profits, losses, and tax credits of the
Partnership. The amount of the Aggregate Cost shall be
determined upon payment of the last of the Installments of the
Capital Contribution of the Investment Limited Partner and shall
not thereafter be reduced.
B. Notwithstanding anything to the contrary in Article XI
hereof, 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 per cent (5%) of
the gross revenues of the Apartment Complex.
C. (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
Section 13.14(B), (ii) loans made by, or guaranteed by, the
Investment General Partner or any of its Affiliates, and
(iii) those dealings, contracts or provision of services
described in the Investment Partnership Agreement or the
Prospectus. Extraordinary circumstances shall only be presumed to
exist where there is an emergency situation requiring immediate
action and the services required are not immediately available
from unaffiliated parties. All services rendered under such
circumstances must be rendered pursuant to a written contract
which must contain a clause allowing termination without penalty
on sixty (60) days' notice. Goods and services provided under
such circumstances must be provided at the lesser of actual cost
or the price charged for such goods or services by independent
parties.
D. In the event extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partner nor any of its Affiliates
shall provide such services unless it believes it has an adequate
staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partner. Any such services
must be reasonable for and necessary to the Investment Limited
Partner, actually furnished to the Investment Limited Partner,
and provided at the lower of ten percent (10%) of the
construction contract rate with respect to the Apartment Complex
or ninety percent (90%) of the competitive price charged for such
services by independent parties for comparable goods and services
in the same geographic location (except that in the case of
transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the
lesser of costs or the compensation, price or fee of any other
Person rendering comparable services as aforesaid). Cost of
services as used herein means the pro rata cost of personnel,
including an allocation of overhead directly attributable to such
personnel, based on the amount of time such personnel spent on
such services or other method of allocation acceptable to the
accountants for the Investment Limited Partner.
E. All services provided by the Investment General Partner
or any Affiliate thereof pursuant to Section 13.14(D) 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.
F. No compensation or fees may be paid by the Partnership
to the Investment General Partner or its Affiliates except as
described in the Investment Partnership Agreement or in the
Prospectus. "Prospectus" means the prospectus contained in the
registration statement filed with the Securities and Exchange
Commission on behalf of the Investment Limited Partner for the
registration of beneficial assignee certificates and/or limited
partnership interests under the Securities Act of 1933, as
amended, in the final form in which said prospectus is filed with
said Commission and as thereafter amended and/or supplemented
from time to time pursuant to Rule 424 under said Act, or
otherwise.
G. 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.
[This page 61 ends here]
WITNESS the execution hereof under seal as of the 1st day of
January, 1999.
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT
FUND IV L.P., a Delaware
limited partnership
By: Boston Capital
Associates IV L.P., its
general partner
By: C&M Associates
d/b/a Boston Capital
Associates, its
general partner
By:/d/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact
for John P.
Manning, a Partner
GENERAL PARTNER:
T2G, INC
By: /s/Harold Thomas
Harold Thomas, its
President
SPECIAL LIMITED PARTNER:
BCTC 94, INC
By: /s/Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact
for John P. Manning,
President
ORIGINAL (WITHDRAWING)
LIMITED PARTNER:
BELMONT IMPROVEMENT
ASSOCIATION, INC.
By: its President
MANAGEMENT AGENT CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the
foregoing Amended and Restated Agreement of Limited Partnership
notwithstanding any provision of the Management Agreement to the
contrary.
MANAGEMENT AGENT
T.J. Properties, Inc.
By: /s/Harold Thomas
Harold Thomas, President
DEVELOPER CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Sections 6.11, 6.12(b)
and 6.12(d) of the foregoing Amended and Restated Agreement of
Limited Partnership notwithstanding any provision of any
development or other agreement to the contrary.
DEVELOPER
T2G, Inc.
By: /s/Harold Thoams
Harold Thomas, its President
STATE OF ______________________ )
) SS.
COUNTY OF ___________________ )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named Harold
Thomas, known to me to be the President of T2G, Inc., a
Pennsylvania corporation who, being duly sworn, acknowledged that
the statements therein are true and that he did sign the same as
his free act and deed and that the same is the duly authorized
free act and deed of T2G, Inc.
WITNESS my hand and official seal this _________ day of
____________, 199__.
_________________________________
_
Notary Public
_________________________________
_
Name (Printed)
My Commission Expires:
____________
My County of Residence:
___________
STATE OF ______________________ )
) SS.
COUNTY OF ___________________ )
BEFORE ME, the undersigned Notary Public in and for said
County and State, personally appeared the above-named
______________, known to me to be the _________ of Belmont
Improvement Association, Inc., who, being duly sworn,
acknowledged that the statements therein are true and that he did
sign the foregoing instrument as his free act and deed and that
the same is the duly authorized free act and deed of Belmont
Improvement Association, Inc.
WITNESS my hand and official seal this ___________ day of
____________, 199__.
_________________________________
_
Notary Public
_________________________________
_
Name (Printed)
My Commission Expires:
____________
My County of Residence:
___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said
County and Commonwealth, personally appeared Bonnie Kate Fox, in
her capacity as Attorney-in-Fact for the John P. Manning, a
partner of C&M Associates d/b/a Boston Capital Associates, which
is the general partner of Boston Capital Associates IV L.P.,
which is the general partner of Boston Capital Tax Credit
Fund IV L.P., who, being duly sworn, acknowledged that she did
sign the foregoing instrument, that the statements therein
contained are true and that the same is his free act and deed and
the duly authorized free act and deed of the aforesaid parties.
WITNESS my hand and official seal this ________ day of
January, 1999.
_________________________________
_
Notary Public
_________________________________
_
Name (Printed)
My Commission Expires:
____________
My County of Residence:
___________
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said
County and Commonwealth, personally appeared the above-named
Bonnie Kate Fox, known to me to be the attorney-in-fact for John
P. Manning, the President of BCTC 94, Inc., who, being duly
sworn, acknowledged that she did sign the foregoing instrument,
that the statements therein contained are true and that the same
is her free act and deed and the duly authorized free act and
deed of John P. Manning and BCTC 94, Inc.
WITNESS my hand and seal this _____ day of January, 1999.
_________________________________
_
Notary Public
_________________________________
_
Name (Printed)
My Commission Expires:
____________
My County of Residence:
___________
BELMONT AFFORDABLE HOUSING II, L.P.
Schedule A TC "Schedule A" \f C \l "1"
As of
January 1, 1999
General Partners Capital Contributions
T2G, Inc. $37,453
675 Church Street
Springfield, Pennsylvania
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
Investment Limited Partner Capital Contribution
Boston Capital Tax Credit Fund IV L.P. Total Agreed To:
$1,839,184
(Series 34) Paid In: $1,576,181*
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to
adjustment and are due at the times and subject to the
conditions set forth in this Agreement.
